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                                 EXHIBIT 10.1

















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                           VARIABLE RATE COMMERCIAL
                               PROMISSORY NOTE
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"LENDER":                              "BORROWER":


NORTHERN NATIONAL BANK                Nortech Systems Incorporated
201 Third Street                      4050 Norris Court
Bemidji, MN 56601-0790                Bemidji, MN 56601
(218) 751-1530

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Officer   Interest  Principal Amount  Funding Date  Maturity   Customer   Loan
Initials    Rate                                     Date       Number   Number
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BAS       VARIABLE    $1,500,000.00     12/31/96    6/30/98              533910
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                                PROMISE TO PAY

    For value received, the undersigned Borrower promises to pay to the order
of Lender indicated above, the principal amount of One Million, Five Hundred
Thousand and No/100ths Dollars ($1,500,000.00) plus interest on the unpaid
balance at the rate and in the manner described below. All amounts received
by Lender shall be applied first to late payment charges and expenses, then
to accrued interest, and then to principal or in any other order as
determined by Lender, in Lender's sole discretion, as permitted by law.

    LOAN AGREEMENT; INTEREST RATE:  This Note evidences a loan or loans made
under, and is subject to acceleration as provided in, and the other terms and
conditions of, that certain Commercial Loan Agreement dated as of December 29,
1995, as amended by an Amendment to Loan Agreement dated as of November 4,
1996, and by a Second Amendment to Loan Agreement dated as of December 31,
1996, by and among Nortech Systems Incorporated, Nortech Medical Services,
Inc. and Northern National Bank (as the same may be amended, restated,
modified or supplemented from time to time, the "Loan Agreement"). Interest
on the principal amount hereunder remaining unpaid from time to time shall be
calculated at the rates set forth in Loan Agreement.

    PAYMENT SCHEDULE: Borrower shall pay the principal and interest according
to the following schedule:

    Interest only payments beginning February 1, 1997, and continuing at monthly
    time intervals thereafter. A final payment of the unpaid principal
    balance plus accrued interest is due and payable on June 30, 1998.



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All payments will be made to First Bank National Association, a national
banking association, as provided in the Loan Agreement, in lawful currency of
the United States of America.

    RENEWAL: This Note is a renewal of loan number 533910 and is not in
payment of that Note.

    SECURITY: To secure the payment and performance of obligations incurred
under this Note, Borrower grants Lender a security interest in, and pledges
and assigns to Lender all of Borrower's rights, title and interest, in all
monies, instruments, savings, checking and other deposit accounts of
Borrower's, (excluding IRA, Keogh and trust accounts and deposits subject to
tax penalties if so assigned) that are now or in the future in Lender's
custody or control. Upon default, and to the extend permitted by applicable
law, Lender may exercise any or all of its rights or remedies as a secured
party with respect to such property which rights and remedies shall be in
addition to all other rights and remedies granted to Lender including,
without limitation, Lender's common law right of setoff. The obligations
under this Note are also secured by a lien  and/or security interest in the
property described in the documents executed in connection with this Note as
well as any other property designated as security now or in the future.

    PREPAYMENT: This Note may be prepaid in part or in full on or before its
maturity date. If this Note contains more than one installment, all
prepayments will be credited as determined by Lender and as permitted by law.
If this Note is prepaid in full, there will be no prepayment penalty.

    LATE PAYMENT CHARGE: If a payment is received more than ten (10) days
late, Borrower will be charged a late payment charge of 5.00% of the unpaid
late installment.

    GENERAL TERMS AND CONDITIONS: This Note is subject to the following
general terms and conditions:


                         GENERAL TERMS AND CONDITIONS

1.  DEFAULT:  Borrower will be in default under this Note in the event that
    Borrower or any guarantor or any other third party: (a) fails to make any
    payment on this Note or any other indebtedness to Lender when due; (b) fails
    to perform any obligation or breaches any warranty or covenant to Lender
    contained in this Note or any other present or future written agreement
    regarding this or any indebtedness of Borrower to Lender; (c) provides or
    causes any false or misleading signature or representation to be provided to
    Lender; (d) allows the collateral securing this Note (if any) to be lost,
    stolen, destroyed, damaged in any material respect, or subjected to seizure
    or confiscation; (e) permits the entry or service of any garnishment,
    judgment, tax levy, attachment or lien against Borrower, any guarantor, or
    any of their property or the Collateral; (f) dies, becomes legally
    incompetent,



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    is dissolved or terminated, ceases to operate its business, becomes
    insolvent, makes an assignment for the benefit of creditors, fails to pay
    debts as they become due, or becomes the subject of any bankruptcy,
    insolvency or debtor rehabilitation proceeding; or (g) causes Lender to deem
    itself insecure for any reason, or Lender, for any reason, in good faith
    deems itself insecure.

2.  RIGHTS OF LENDER ON DEFAULT:  If there is a default under this Note,
    Lender will be entitled to exercise one or more of the following remedies
    without notice or demand (except as required by law): (a) to declare the
    principal amount plus accrued interest under this Note and all other present
    and future obligations of Borrower immediately due and payable in full;
    (b) to collect the outstanding obligations of Borrower with or without
    resorting to judicial process; (c) to take possession of any collateral in
    any manner permitted by law; (d) to require Borrower to deliver and make
    available to Lender any collateral at a place reasonably convenient to
    Borrower and Lender; (e) to sell, lease or otherwise dispose of any
    collateral and collect any deficiency balance with or without resorting to
    legal process; (f) to set-off Borrower's obligations against any amounts due
    to Borrower including, but not limited to, monies, instruments, and deposit
    accounts maintained with Lender; and (g) to exercise all other rights
    available to Lender under any other written agreement or applicable law.
    Lender's rights are cumulative and may be exercised together, separately,
    and in any order. Lender's remedies under this paragraph are in addition to
    those available at common law, including, but not limited to, the right of
    set-off.

3.  FINANCIAL INFORMATION:  Borrower will provide Lender with current
    financial statements and other financial information (including, but not
    limited to, balance sheets and profit and loss statements) upon request.

4.  MODIFICATION AND WAIVER:  The modification or waiver of any of Borrower's
    obligations or Lender's rights under this Note must be contained in a
    writing signed by Lender. Lender may perform any of Borrower's obligations
    or delay or fail to exercise any of its rights without causing a waiver of
    those obligations or rights. A waiver on one occasion will not constitute a
    waiver on any other occasion. Borrower's obligations under this Note shall
    not be affected if Lender amends, compromises, exchanges, fails to exercise,
    impairs or releases any of the obligations belonging to any co-borrower or
    guarantor or any of its rights against any co-borrower, guarantor or
    collateral.

5.  SEVERABILITY AND INTEREST LIMITATION:  If any provision of this Note is
    invalid, illegal or unenforceable, the validity, legality, and
    enforceability of the remaining provisions shall not in any way be affected
    or impaired thereby. Notwithstanding anything contained in this Note to the
    contrary, in no event shall interest accrue under this Note, before or after
    maturity, at a rate in excess of the highest rate permitted by applicable
    law, and if interest (including any charge or fee held to be interest by a
    court of competent jurisdiction) in excess thereof be paid, any excess shall
    constitute a payment of, and be



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    applied to, the principal balance hereof, and if the principal balance
    has been fully paid, then such interest shall be repaid to Borrower.

6.  ASSIGNMENT: Borrower will not be entitled to assign any of its rights,
    remedies or obligations described in this Note without the prior written
    consent of Lender which may be withheld by Lender in its sole discretion.
    Lender will be entitled to assign some or all of its rights and remedies
    described in this Note without notice to or the prior consent of Borrower in
    any manner.

7.  NOTICE:  Any notice or other communication to be provided to Borrower or
    Lender under this Note shall be in writing and sent to the parties at the
    addresses described in this Note or such other address as the parties may
    designate in writing from time to time.

8.  APPLICABLE LAW:  This Note shall be governed by the laws of the state
    indicated in Lender's address. Borrower consents to the jurisdiction and
    venue of any court located in the state indicated in Lender's address in the
    event of any legal proceeding pertaining to the negotiation, execution,
    performance or enforcement of any term or condition contained in this Note
    or any related loan document and agrees not to commence or seek to remove
    such legal proceeding in or to a different court.

9.  COLLECTION COSTS:  If Lender hires an attorney to assist in collecting
    any amount due or enforcing any right or remedy under this Note, Borrower
    agrees to pay Lender's attorney's fees, to the extent permitted by
    applicable law, and collection costs.

10. RETURNED CHECK:  If a check for payment is returned to Lender for any
    reason, Lender will charge an additional fee of $15.00.

11. MISCELLANEOUS:  This Note is being executed for commercial/agricultural
    purposes. Borrower and Lender agree that time is of the essence. Borrower
    waives presentment, demand for payment, notice of dishonor and protest. If
    Lender obtains a judgment for any amount due under this Note, interest will
    accrue on the judgment at the judgment rate of interest permitted by law.
    All references to Borrower in this Note shall include all of the parties
    signing this Note. If there is more than one Borrower, their obligations
    will be joint and several. This Note and any related documents represent the
    complete and integrated understanding between Borrower and Lender pertaining
    to the terms and conditions of those documents.

12. JURY TRIAL WAIVER:  BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN
    ANY CIVIL ACTION ARISING OUT OF, OR BASED UPON THIS NOTE OR THE COLLATERAL
    SECURING THIS NOTE.



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BORROWER ACKNOWLEDGES THAT BORROWER HAS READ, UNDERSTANDS, AND AGREES TO THE
TERMS AND CONDITIONS OF THIS NOTE, INCLUDING THE GENERAL TERMS AND CONDITIONS
SET FORTH ABOVE. BORROWER ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS NOTE.


Note Date:  December 31, 1996


BORROWER:

NORTECH SYSTEMS INCORPORATED

By: /s/ G M Anderly
   -------------------------
     Garry M. Anderly

     Its: Vice President



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