Note 9 - Commitments and contingencies

Rents and operating leases

Hudson utilizes leased facilities and operates equipment under non-cancelable operating leases through August 31, 2018 as follows:

Properties

Location	Annual Rent		Lease Expiration Date
Auburn, Washington	$	51,000	8/2018
Baton Rouge, Louisiana	$	15,000	4/2017
Trousdale, Tennessee	$	36,000	3/2016
Champaign, Illinois	$	457,000	12/2017
Charlotte, North Carolina	$	63,000	3/2016
Escondido, California	$	36,000	Month to Month
Hampstead, New Hampshire	$	28,000	8/2017
Nashville, Tennessee	$	162,000	3/2018
Ontario, California	$	87,000	12/2018
Pearl River, New York	$	93,000	8/2018
Pottsboro, Texas	$	9,600	8/2017
San Juan, Puerto Rico	$	151,000	11/2020
Stony Point, New York	$	117,000	6/2016
Tulsa, Oklahoma	$	27,000	12/2017

The Company rents properties and various equipment under operating leases. Rent expense for the years ended December 31, 2015 and 2014 totaled approximately $1,215,000 and $830,000, respectively. In addition to the properties above, the Company does at times utilize public warehouse space on a month to month basis. The Company typically enters into short-term leases for the facilities and wherever possible extends the expiration date of such leases.

Future commitments under operating leases are summarized as follows:

Years ended December 31,	Amount
(in thousands)
-2016	$	1,297
-2017		1,085
-2018		421
-2019		165
-2020		150
Total	$	3,118

Legal Proceedings

On April 1, 1999, the Company reported a release of approximately 7,800 lbs. of R-11 refrigerant (the “1999 Release”), at its former leased facility in Hillburn, NY (the “Hillburn Facility”), which the Company vacated in June 2006.

Since September 2000, last modified in March 2013, the Company signed an Order on Consent with the New York State Department of Environmental Conservation (“DEC”) whereby the Company agreed to operate a remediation system to reduce R-11 refrigerant levels in the groundwater under and around the Hillburn Facility and agreed to perform periodic testing at the Hillburn Facility until remaining groundwater contamination has been effectively abated. The Company accrued, as an expense in its consolidated financial statements, the costs that the Company believes it will incur in connection with its compliance with the Order of Consent through December 31, 2018. There can be no assurance that additional testing will not be required or that the Company will not incur additional costs and such costs in excess of the Company’s estimate may have a material adverse effect on the Company financial condition or results of operations. The Company has exhausted all insurance proceeds available for the 1999 Release under all applicable policies.

In May 2000, the Hillburn facility as a result of the 1999 release, was nominated by EPA for listing on the National Priorities List (“NPL”) pursuant to CERCLA. In September 2003, the EPA advised the Company that it had no current plans to finalize the process for listing of the Hillburn facility on the NPL.

During the year ended December 31, 2014 the Company incurred $53,000 in additional remediation costs in connection with the matters above. There were no costs incurred during the year ended December 31, 2015. There can be no assurance that the ultimate outcome of the 1999 Release will not have a material adverse effect on the Company's financial condition and results of operations. There can be no assurance that the EPA will not change its current plans and seek to finalize the process of listing the Hillburn Facility on the NPL, or that the ultimate outcome of such a listing will not have a material adverse effect on the Company's financial condition and results of operations.

Employment Agreement

The Company has entered into a two-year employment agreement with its Chief Excutive Officer, Kevin J. Zugibe, which currently expires in October 2018 and is automatically renewable for successive two-year terms unless either party gives notice of termination at least ninety days prior to the then expiration date of the then current term. Pursuant to the agreement, Mr. Zugibe is receiving an annual base salary of $384,000 with such increases and bonuses as the Company’s Board of Directors may determine. The Company is the beneficiary of a "key-man" insurance policy on the life of Mr. Zugibe in the amount of $1,000,000.