Exhibit 10.2
LEASE AGREEMENT
 
THIS LEASE AGREEMENT (this “Agreement”), effective as of November 3, 2009 (the
“Effective Date”), is by and between AERO, INC., an Arkansas corporation having
an address at 600 South Mill Street, Nashville, Arkansas 71852 (“Landlord”), and
AERO METAL PRODUCTS, INC., a Delaware corporation having an address at 1110
Maple Street, Elma, New York 14059 (“Tenant”). SERVOTRONICS, INC., a Delaware
corporation having an address at 1110 Maple Street, Elma, New York 14059 is
executing this Agreement solely for the purpose of Section 24.
 
WHEREAS, Landlord is the owner of certain real property and improvements locally
known as 600 South Mill Street, Nashville, Arkansas 71852, and further described
by the legal description on as Exhibit A attached hereto and made a part hereof
(the “Demised Premises”).
 
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth,
and other good and valuable consideration, receipt whereof is hereby
acknowledged, the parties hereto hereby covenant and agree as follows:
 
1.    Property Leased.  Landlord does hereby demise, let and lease unto Tenant
and Tenant does hereby lease from Landlord the Demised Premises.
 
2.    Term of Lease.  The term of this Agreement (the “Term”) will commence on
the Effective Date (the “Commencement Date”) and will end on the first
anniversary of the Effective Date.
 
3.    Purchase Option.
 
(a)           Tenant will have the option (the “Purchase Option”) exercisable by
Tenant’s delivery of written notice to Landlord at any time from and after
ninety (90) days after the Effective Date until the end of the Term (the “Option
Period”) to purchase the Demised Premises.   The purchase price for the Demised
Premises under the Purchase Option will be equal to Five Hundred and Six
Thousand Dollars ($506,000”) minus the amount of rent which has been paid in
advance by Tenant under this Agreement covering the period following the date
the Demised Premises is purchased by Tenant under the Purchase Option (the
“Refunded Rent”).  For example, if there are four months left in the Term after
such closing date, the purchase price under the Purchase Option will be $506,000
minus $20,000 (four months times $5,000 pro rated rent per month) for a purchase
price of $486,000.  If Tenant exercises the Purchase Option, the parties will be
deemed to have entered into the Purchase Contract attached hereto as Exhibit
B and made a part hereof.
 
(b)           Notwithstanding anything contained herein or elsewhere to the
contrary, Tenant must exercise the Purchase Option and proceed to closing
pursuant thereto if Tenant receives incentives from the Arkansas Department of
Economic Development or another party which include Tenant receiving a mortgage
at a below market rate having a term of ten or more years.  If Tenant does not
receive such incentives, Tenant may nevertheless exercise the Purchase Option
during the Option Period in Tenant’s sole discretion.
 
 
 

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4.    Rent; Reimbursement for Environmental Assessment.  Tenant shall pay to
Landlord annual rent of Sixty Thousand Dollars ($60,000), payable in full and in
advance upon Tenant’s execution and delivery of this Agreement. Tenant shall
also pay to Landlord upon Tenant’s execution and delivery of this Agreement the
cost incurred by Landlord in obtaining the environmental assessment of the
Demised Premises prepared by Pollution Management, Inc.; provided, however, that
the maximum amount Tenant will pay to Landlord for such environmental assessment
will not exceed $45,000.
 
5.    Net Lease.  This is a Net, Net, Net lease, that is, it is intended that
Tenant is to pay all charges connected with the Demised Premises other than
mortgage payments, mortgage interest, Federal and State income taxes, gift and
estate taxes.  Landlord shall receive all rent and other payments hereunder to
be made by Tenant free from charges, expenses, and deductions of any kind
whatsoever.  Landlord shall not be required to furnish Tenant any facilities or
services of any kind whatsoever. Tenant shall be solely responsible for all
expenses of any kind or nature whatsoever (i.e., capital and noncapital, seen
and unforeseen, ordinary and extraordinary) related to the repair, maintenance
and, if necessary, replacement of the Demised Premises.  Without limiting the
generality of the foregoing, Tenant shall be solely responsible for all costs
and expenses related to the upkeep, maintenance, repair and, if necessary, the
mechanical systems at the Demised Premises.  In the event that Tenant shall fail
to perform any item of repair, maintenance, or replacement required hereunder,
then, and in that event, Landlord shall have the right to perform any such
function and bill the cost thereof back to Tenant as additional rental.
 
6.    Payment of Taxes.  Tenant shall, at its own expense, bear, pay and
discharge all taxes on the Demised Premises, or any parts thereof, assessments,
special assessments and payments extraordinary as well as ordinary, as may be
laid, levied, assessed or imposed upon or brought due or payable out of or for
or by reason of the Demised Premises, or any part thereof, of which may become
payable during the Term (but excluding any taxes due for periods prior to the
Commencement Date), by virtue of any present or future law or regulation of the
United States of America or of any bureau, or department thereof, or of the
State of Arkansas, or of any bureau, department, county, or municipality
thereof, except as hereinafter provided.  All of the said taxes, assessments or
payments to be made by Tenant as herein provided shall be paid by Tenant, as and
when the same shall become due and payable, without penalty or interest, to the
department, officer or bureau charged with the collection thereof.
 
7.    Contest of Taxes, etc.
 
(a)           Tenant shall have the right to contest by legal proceedings or
otherwise, conducted promptly at its own expense, in the name of Landlord or
otherwise, any taxes, assessments, or charges imposed upon or against the
Demised Premises; and upon the determination of such proceedings, Tenant shall
pay the amount, if any, plus penalties and interest that shall be finally
assessed or imposed upon said disputed or contested items.
 
 
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(b)           If any applications, proceedings or actions for the reduction of
any taxes, assessments or charges are, under the law, required to be taken by
Landlord and cannot otherwise be taken by Tenant, Landlord agrees that Landlord
will make such applications and take such proceedings and actions as may be
necessary or required by Tenant, but the expense thereof shall be borne and paid
by Tenant, and Tenant shall furthermore save Landlord harmless from all expenses
arising from any such applications, proceedings or actions.
 
8.    Insurance.
 
(a)           Tenant agrees that it will, at all times, maintain public
liability insurance on the buildings and improvements leased hereunder,
including the parking facilities and land areas.  The limits of liability under
such insurance shall not be less than $1,000,000 in case of injury or death, and
not less than $1,000,000 for property damage.  Such liability insurance shall
name Landlord as additional insured. Tenant further agrees to maintain, at all
times, fire insurance with extended coverage on all buildings and improvements
which comprise the Demised Premises in an amount not less than the full
replacement cost thereof.  Such fire insurance shall be maintained in the name
of Tenant and name Landlord as loss payee.  All insurance provided for herein
shall be written by insurance companies licensed to do business in the State of
Arkansas.  Tenant agrees to provide Landlord with certificates of insurance for
all required insurance coverage.
 
(b)           All proceeds from any fire insurance policies covering the Demised
Premises shall be paid to Landlord, unless Tenant shall be required to or shall
elect to repair the Demised Premises as provided in Paragraph 9 of this
Agreement.
 
9.    Destruction of Demised Premises.
 
(a)           In the event of the partial destruction of the Demised Premises or
damage thereto by fire, explosion, or otherwise so as to render the Demised
Premises partially untenantable or unfit for occupancy, the rent for the period
required for such repairs shall not be reduced and Tenant shall, at its own cost
and expense, repair and restore the Demised Premises with all due diligence.
 
(b)           In the event of the destruction by fire, explosion, the elements
or otherwise during the Term of the entire Demised Premises or so much thereof
so that in the reasonable opinion of Tenant restoration of the same is not
feasible, Tenant may terminate this Agreement by giving Landlord written notice
to that effect, not more than 15 days following the date of such damage,
whereupon all proceeds payable pursuant to any insurance policies covering the
Demised Premises shall be paid over or assigned to Landlord, this Agreement
shall terminate and neither party shall have any rights hereunder against the
other.
 
(c)           In the event Tenant does not elect to terminate the Lease as
provided in subparagraph (b), Tenant shall repair and restore the Demised
Premises with all due diligence at its sole cost and expense.  All insurance
proceeds shall thereupon be paid over to Tenant.
 
 
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(d)           In the event of partial destruction of the Demised Premises, or in
the event of total or substantial destruction of the Demised Premises, and the
Lease is not terminated and Tenant elects to restore the Demised Premises as
aforesaid, the repairs and cost of restoration shall be paid by Tenant, and all
the insurance proceed available after payment, if any, to the mortgagee, shall
be paid over to Tenant.  Landlord shall not be obligated to pay any amount
toward such repair or restoration.
 
(e)           Tenant shall notify Landlord as soon as practicable in case of
damage, by fire or otherwise, to the Demised Premises.
 
10.    Eminent Domain.
 
(a)           If the whole or any material part of the improvements constituting
the Demised Premises shall be acquired or condemned by right of eminent domain
for any public use or purpose, or be acquired by deed in lieu thereof, with the
result that use of the Demised Premises can no longer be used for the business
conducted by Tenant, then Tenant, at its election, may terminate this Agreement
by giving one hundred and twenty (120) days written notice to Landlord of its
election to terminate this Agreement and, in such event, all rents shall be
apportioned and adjusted as of the date of termination.  If the Term shall not
be terminated as aforesaid, then the Term shall continue in full force and
effect, and Tenant shall, immediately after possession is physically taken,
repair or rebuild what may remain of the Demised Premises or parking area for
the occupancy of Tenant.
 
(b)           Landlord reserves to itself and Tenant assigns to Landlord, all
rights to any award accruing on account of any such taking or condemnation, or
by reason of any act of any public or quasi-public authority for which an award
is payable, except as hereinafter provided.  Tenant agrees to execute such
reasonable and necessary instruments or assignment as may be needed by Landlord,
to join with Landlord in any petition for the recovery of any award, if required
by Landlord and to turn over to Landlord any such award belonging to Landlord
that may be recovered in any such proceeding.
 
11.    Tenant’s Covenant.
 
Tenant covenants and agrees as follows:
 
(a)           To allow Landlord, in person or by agent, to enter the said
Demised Premises at all reasonable times of the day;
 
(b)           To peaceably and quietly leave, surrender and yield to Landlord on
the last day of the Term, the Demised Premises, broom clean and in good order
and repair, subject to Paragraphs 9 and 10 above and ordinary wear and tear
excepted.  Tenant on or before the last day of the Term shall remove all of its
property from the Demised Premises.  Tenant shall indemnify Landlord from
liability resulting from delay by Tenant in so surrendering the Demised
Premises;
 
(c)           To provide and pay for its own utility service, including heat,
electricity, gas and water and use of sewer;
 
 
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(d)           To observe and comply promptly with all requirements of law,
ordinances, regulations or orders or any other governmental authority affecting
the Demised Premises or the use and occupation thereof.  Tenant shall pay all
costs and expenses incidental to such compliance and shall save Landlord
harmless from all expenses and/or damages by reason of any notice, order,
violations or penalties filed against or imposed upon the Demised Premises or
upon Landlord as owner hereof, because of the failure of Tenant to comply with
this covenant;
 
(e)           To keep in good repair and order, subject to Paragraphs 9 and 10
above, ordinary wear and tear excepted, and so maintain, at its own expense, the
Demised Premises and all improvements now or at any time during the Term
situated on the Demised Premises, including, without limitation, roadways and
parking areas, including snow removal, the sidewalks, electrical systems, water
and sewer connections, water and gas pipes and heating/air conditioning systems,
and that it will not suffer or permit any waste or injury thereto or call upon
Landlord for any payment or outlay for any such or similar purpose during the
Term.  In case any damage shall be caused to the Demised Premises by any third
party and Tenant shall make such repairs occasioned thereby, Landlord agrees to
and does hereby transfer and assign unto Tenant any and all claims, rights,
actions and causes of action which Landlord may have in consequences
thereof.  Landlord agrees to execute any and all further papers and instruments
in reference to such assignment when requested to do so by Tenant.  Tenant shall
obtain Landlord’s consent, such consent not to be unreasonably withheld, prior
to undertaking any repairs, maintenance or alterations to any building system
(including mechanical, plumbing or electrical) or other structural element of
the Demised Premises;
 
(f)           Not to abandon the Demised Premises during the Term;
 
(g)           To indemnify and save harmless Landlord of and from all fines,
suits, claims, demands, and actions of any kind by reason of any breach,
violation, or non-performance of any condition hereof on the part of
Tenant.  Landlord shall not be liable for any injury or damage to person or
property happening on or about the Demised Premises, however caused or
occasioned, except injuries or damages caused or occasioned by Landlord, its
agent, servants or employees, and Tenant agrees to indemnify and save harmless
Landlord from any such liability therefor; and Tenant shall indemnify and hold
harmless Landlord of and from any and all such damage or liability for anything
arising from or out of the occupancy of the Demised Premises by Tenant,
including, but not limited to acts or defaults of Tenant, its agents, servants,
employees, customers, or licensees.
 
12.    Alterations, Additions and Improvements.
 
(a)           In addition to the improvements presently on the Demised Premises,
Tenant may, at Tenant’s option, subject to Landlord’s written permission, which
shall not be unreasonably withheld, at any time during the Term, alter or
improve the Demised Premises.  Such alterations or improvements shall be at the
sole cost and expense of Tenant.  Tenant shall have the right, subject to the
written approval of Landlord and any and all governmental bodies, to erect and
maintain, at its own expense, electric and ordinary signs (both flat and
extension) on the buildings and elsewhere on the Demised Premises and to equip,
fixture, stock and maintain and alter the arrangements of fixtures, equipment,
stock and displays in the interior of the Demised Premises provided that Tenant
shall at all times comply with all laws and regulations applicable
thereto.  Tenant shall not do or suffer anything to be done whereby the Demised
Premises or any part thereof may be encumbered by any materialmen’s, mechanics’,
contractors’ or other liens, and shall, whenever and as any such lien is filed
against the Demised Premises or any part thereof for labor or materials
furnished or to be furnished to Tenant, discharge the same of record within
thirty (30) days after the date of filing.
 
 
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(b)           If Tenant fails to discharge any such mechanics lien within such
period, then, in addition to any other right or remedy of Landlord, Landlord
may, but shall not be obligated to, discharge the same either by payment of the
amount claimed or by procuring discharge of such lien by deposit in court or
giving of security or in such other manner as may be prescribed by law.
 
13.    Environmental Indemnity.
 
(a)           Tenant will indemnify and hold harmless Landlord against and in
respect of, any and all damages, claims, losses, liabilities, and expenses that
may be imposed on, incurred by, or asserted against Landlord by any other party
or parties (including, without limitation, a governmental entity), arising out
of, in connection with any Environmental Condition (as defined below) arising
after the Commencement Date caused by the acts or omissions of Tenant or any
violation of any Environmental Law (as defined below) with respect to the
Demised Premises or any facilities or operations thereon, arising from and after
the Commencement Date caused by the acts or omissions of Tenant.
 
(b)           Landlord will indemnify and hold harmless Tenant against and in
respect of, any and all damages, claims, losses, liabilities, and expenses that
may be imposed on, incurred by, or asserted against Tenant by any other party or
parties (including, without limitation, a governmental entity), arising out of,
in connection with any Environmental Condition arising prior to the Commencement
Date or any violation of any Environmental Law with respect to the Demised
Premises or any facilities or operations thereon, arising prior to the
Commencement Date.
 
(c)           As used herein, the term “Environmental Law” means any applicable,
or relevant and appropriate, statutes, ordinances, by-laws, directives or
other  laws, any rules or regulations, licenses, permits, orders, judgments,
notices or other requirements issued pursuant thereto, enacted, promulgated or
issued by any government or public authority, relating to pollution or
protection of public health or the environment (including, but not limited to,
any air, surface water, groundwater, land surface or sub-surface strata, whether
outside, inside or under any structure) from Hazardous Materials, or relating to
the identification, reporting, generation, manufacture, processing,
distribution, use, handling, treatment, storage, disposal, transporting,
presence, release or threatened release, of any Hazardous Material.  The term
“Hazardous Material” means any petroleum, PCBs, asbestos, material, chemical
substance, waste, pollutant or contaminant, defined in, or regulated by, any
Environmental Law.  The term “Environmental Condition” means any condition with
respect to the environment (including, but not limited to, any air, surface
water, groundwater, land surface or sub-surface strata, whether outside, inside
or under any structure) on or off the Property, whether or not yet discovered,
which could or does result in any damage, loss, cost, expense, claim, demand,
order, or liability to or against Tenant or Landlord.
 
 
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14.    Events of Default.  The following events are referred to, collectively,
as “Events of Default” or, individually, as an “Event of Default”:
 
(a)           Tenant defaults in the due and punctual payment of any rent or
additional rent, and such default continues for 5 days after written notice from
Landlord;
 
(b)           Tenant vacates or abandons the Demised Premises;
 
(c)           This Agreement or the Demised Premises or any part of the Demised
Premises are taken upon execution or by other process of law directed against
Tenant, or are taken upon or subject to any attachment by any creditor of Tenant
or claimant against Tenant, and said attachment is not discharged or disposed of
within 15 days after its levy;
 
(d)           Tenant files a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United States or
under any insolvency act of any state, or admits the material allegations of any
such petition by answer or otherwise, or is dissolved or makes an assignment for
the benefit of creditors;
 
(e)           Involuntary proceedings under any such bankruptcy law or
insolvency act or for the dissolution of Tenant are instituted against Tenant,
or a receiver or trustee is appointed for all or substantially all of the
property of Tenant, and such proceeding is not dismissed or such receivership or
trusteeship vacated within 60 days after such institution or appointment; or
 
(f)           Tenant breaches any of the other agreements, terms, covenants, or
conditions that this Agreement requires Tenant to perform, or breaches any of
the agreements, terms, covenants or conditions of that certain Security
Agreement of even date herewith between Landlord and Tenant, and such breach
continues for a period of 30 days after written notice from Landlord to Tenant
or, if such breach cannot be cured reasonably within such 30-day period, if
Tenant fails to diligently commence to cure such breach within 30 days after
written notice from Landlord and to complete such cure within a reasonable time
thereafter not to exceed ninety (90) days.
 
15.    Landlord’s Remedies.
 
(a)           If any one or more Events of Default set forth in Paragraph 14
occurs then Landlord has the right, at its election:
 
(i)           To give Tenant ten (10) days’ written notice of the expiration of
the Term and upon the giving of such notice and the expiration of such ten (10)
day period, Tenant’s right to possession of the Demised Premises will cease and
this Agreement will be terminated, except as to Tenant’s liability, as if the
expiration of the term fixed in such notice were the end of the Term;
 
(ii)           Without further demand or notice, to reenter and take possession
of the Demised Premises or any part of the Demised Premises, repossess the same,
expel Tenant and those claiming through or under Tenant, and remove the effects
of both or either, using such force for such purposes as may be necessary,
without being liable for prosecution, without being deemed guilty of any manner
of trespass, and without prejudice to any remedies for arrears of rent,
additional rent or other amounts payable under this Agreement or as a result of
any preceding breach of covenants or conditions; or
 
 
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(iii)           Without further demand or notice to cure any Event of Default
and to charge Tenant for the cost of effecting such cure.
 
(b)           If this Agreement is terminated on account of the occurrence of an
Event of Default, Tenant will remain liable to Landlord for damages in an amount
equal to any rent, additional rent and other amounts that would have been owing
by Tenant for the balance of the Term, had this Agreement not been terminated,
less the net proceeds, if any, of any reletting of the Demised Premises by
Landlord subsequent to such termination, after deducting all of Landlord’s
expenses in connection with such reletting, including without limitation, the
expenses enumerated above. Landlord will be entitled to collect such damages
from Tenant on the days on which any rent, additional rent other amounts would
have been payable under this Agreement if this Agreement had not been
terminated, and Landlord will be entitled to receive such rent, additional rent
and other amounts from Tenant on each such day.
 
(c)           Any suit or suits for the recovery of the amounts and damages set
forth above may be brought by Landlord, from time to time, at Landlord’s
election, and nothing in this Agreement will be deemed to require Landlord to
await the date upon which this Agreement or the Term would have expired had
there occurred no Event of Default. Each right and remedy provided for in this
Agreement is cumulative and is in addition to every other right or remedy
provided for in this Agreement or now or after the Lease Date existing at law or
in equity or by statute or otherwise, and the exercise or beginning of the
exercise by Landlord of any one or more of the rights or remedies provided for
in this Agreement or now or after the Lease Date existing at law or in equity or
by statute or otherwise will not preclude the simultaneous or later exercise by
Landlord of any or all other rights or remedies provided for in this Agreement
or now or after the Lease Date existing at law or in equity or by statute or
otherwise. All costs incurred by Landlord in collecting any amounts and damages
owing by Tenant pursuant to the provisions of this Agreement or to enforce any
provision of this Agreement.
 
16.    Assignment and Sublease.  Tenant may not without the consent of Landlord
assign this Agreement or sublet the Demised Premises or any part thereof for all
or any part of the Term which consent shall not be unreasonably withheld by
Landlord.  Any assignment or subletting consented to by Landlord shall not in
any way release Tenant from any of its liabilities or obligations under the
terms of this Agreement.
 
17.    Notices.  All notices, demands, offers and requests by either party to
the other, unless otherwise specifically provided herein shall be in writing and
served personally, or sent by certified mail, return receipt requested,
addressed to the parties hereto as follows or at such other place as they may
from time to time designate by written notice:
 
 
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If to Landlord:                             Aero, Inc.
  Attention:                  President
  600 South Mill Street
  Nashville, Arkansas 71852

If to Tenant:                                Aero Metal Products, Inc.
  Attention:                  President
  1110 Maple Street
  Elma, New York 14059

With a Copy to:                          Jaeckle Fleischmann & Mugel
  Attention:                  William Schapiro
  12 Fountain Plaza
  Buffalo, NY 14202

  Hodgson Russ LLP
  Attention:                  Kenneth P. Friedman, Esq.
  140 Pearl Street, Suite 100
 Buffalo, New York 14202

18.    Miscellaneous.  The covenants and agreements herein contained shall bind
and inure to the benefit of the parties hereto, their legal representatives and
assigns.  This Agreement constitutes the entire agreement between the parties
and may not be changed orally.  The rights of the parties hereto shall be
cumulative, and not alternative.  The obligations of the parties shall be joint
and severable.  Waiver of strict performance of any term or condition hereof by
either Landlord or Tenant shall not be deemed a waiver of the same or any other
provision of this Agreement, or any waiver or consent to any breach or any
subsequent breach of the same or any other provision. The headline words
appearing in this Agreement are intended merely for convenience and shall not be
determinative of the construction or interpretation of the paragraphs to which
they refer.
 
19.    Landlord’s Right to Cure. In the event that Tenant fails to make any
payments or to do any acts permitted or required of it hereunder which shall
affect in any way any interest Landlord may have in said Demised Premises,
Landlord shall give Tenant written notice of its failure to make such payments
or do such acts and in the event Tenant shall fail to cure its default within
ten (10) days after the date of such notice, Landlord shall have the right to
cure such default.
 
20.    Tenant’s Right to Cure.  In the event that Landlord fails to perform any
of its obligations pursuant to any mortgage now or hereafter encumbering the
Demised Premises, Tenant shall have the right to perform such obligation,
following thirty (30) days’ written notice to Landlord, and thereafter to deduct
the amount expended by Tenant in effecting such cure from any sums thereafter
becoming due pursuant to this Agreement.
 
21.    No Partnership or Joint Venture.  Nothing herein shall be construed or be
deemed as making Landlord a co-partner or joint venture with, or principal of,
Tenant.
 
 
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22.    Covenant of Quiet Enjoyment.  Upon payment by Tenant of the rents herein
provided, and upon the observance and performance of all the covenants, terms
and conditions on Tenant’s part to be observed and performed, Tenant shall
peaceably and quietly hold and enjoy the Demised Premises for the Term without
hindrance or interruption by Landlord or any other person or persons lawfully or
equitably claiming by, through or under Landlord, subject, nevertheless, to the
terms and conditions of this Agreement.
 
23.    Landlord Indemnification.  Landlord will indemnify and save harmless
Tenant of and from all fines, suits, claims, demands, and actions of any kind by
reason of any breach, violation, or non-performance of any condition hereof on
the part of Landlord.  Landlord shall indemnify and save harmless Tenant from
injuries or damages caused or occasioned by Landlord, its agent, servants or
employees.
 
24.    Servotronics Guaranty. Servotronics, Inc., the sole shareholder of
Tenant, hereby guarantees the obligations of Tenant to Landlord under this
Agreement.
 
[SIGNATURE PAGE FOLLOWS]

 
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
the day and year first above written.

AERO, INC.

 
By:
   /s/Pam Trbovich, Chairman, Vice President,
 

 
   Secretary & Treasurer

   Name:
   Title:

AERO METAL PRODUCTS, INC.

By:          /s/Timothy McNulty,
President                                                                   
   Name:
   Title:

SERVOTRONICS, INC., solely for the purpose of Section 24

By:          /s/Cari L. Jaroslawsky, Chief Financial Officer 
Name:
Title:

 
 

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EXHIBIT A
 
DEPICTION OF PROPERTY
 
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF HOWARD, STATE OF
ARKANSAS AND IS DESCRIBED AS FOLLOWS:
 
Part of the W/2 of the SW/4 of the SW/4 of Section 25, and part of the SE/4 of
the SE/4 of Section 26, all in Township 9 South, Range 27 West, more
particularly described as follows:  beginning at a point 60 feet West and 164
feet North of the Southeast corner of the SE/4 of SE/4 of Section 26, and run
thence North 482.2 feet, thence East 298 feet, thence North 229 feet, thence
East 122 feet, thence South 711.2 feet, thence West 420 feet to the Point of
Beginning, less and except any and all rights-of-way now owned by the Graysonia,
Nashville and Ashdown Rail Company, its successors and assigns or others within
the above mentioned lands, less and except all rights-of-way and easements of
record, and subject to any state of facts that would be disclosed by an accurate
survey of the property.
 
AND ALSO:  A tract of land located in the SW/4 of the SW/4 of Section 25,
Township 9 South, Range 27 West, Nashville, Howard County, Arkansas, more
particularly described as follows:  Beginning at a point 673.8 feet South and
238 feet East of the Northwest corner of said SW/4 SW/4, thence East 100 feet,
thence South 482 feet, thence West 100 feet, thence North 482.2 feet to the
Point of Beginning.
 
LESS AND EXCEPT:  A tract of land located in the SW/4 of the SW/4 of Section 25,
Township 9 South, Range 27 West, Nashville, Howard County, Arkansas,
particularly described as follows:  Beginning at a point 673.8 feet South and
238 feet East of the Northwest corner of said SW/4  of  SW/4, thence run North
229 feet, thence East 122 feet, thence South 229 feet, thence West 122 feet, to
the Point of Beginning.
 

 
 

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EXHIBIT B
 
PURCHASE CONTRACT TERMS
 
THIS PURCHASE CONTRACT is made by and between AERO, INC., an Arkansas
corporation having an address at 600 South Mill Street, Nashville, Arkansas
71852 (“Seller”) and AERO METAL PRODUCTS, INC., a Delaware corporation having an
address at 1110 Maple Street, Elma, New York 14059 (“Purchaser” and together
with Seller the “Parties” and each individually a “Party”).
 
NOW, THEREFORE, for one dollar ($1.00) and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
 
ARTICLE 1
 
DEFINITIONS
 
1.1           Agreement means this Purchase Contract.
 
1.2           Casualty Loss means any damage to the Property caused by fire,
storm or other casualty.
 
1.3           Closing means the closing of title to the Property to be held at
the time and place set forth in Section 3.1 of this Agreement.
 
1.4           Closing Date means the fifteenth (15th) day after the Effective
Date, as such date may be extended hereunder, or such other time as Seller and
Purchaser shall agree in writing.
 
1.5           Deed means a warranty deed in form and substance acceptable to
Purchaser and the title company Purchaser uses to issue a title insurance policy
covering the Property.
 
1.6           Effective Date means the date on which the Purchaser notifies
Seller pursuant to Section 3 of the Lease of its exercise of the Purchase
Option.
 
1.7           Encumbrances means all liens, security, interests, claims,
encumbrances, easements, rights-of-way, encroachments, reservations,
restrictions, covenants, conditions and any other matters affecting title to the
Property.
 
1.8           Lease means that certain Lease, effective as of Novemer 3, 2009,
between Seller, as Landlord, and Purchaser, as Tenant.
 
 
 

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1.9           Property means the Demised Premises, as defined in the Lease, as
more particularly described on Schedule A attached hereto, together with all
rights, privileges, interests, easements, hereditaments and appurtenances
thereunto in any way incident, appertaining or belonging, including, but not
limited to: (a) all right, title and interest in and to adjacent streets,
alleys, rights of way and any adjacent strips or gores of real estate; and (b)
all right, title and interest in and to all oil, gas and other minerals in, on
or that may be produced from the property, all mineral leases, royalty interests
and bonuses relating thereto, and all agreements relating to the production,
development, exploration or exploitation thereof.
 
1.10           Permitted Encumbrances means any Encumbrances which Purchaser
agrees in writing to accept.
 
1.11           Purchase Option means the option to purchase contained in the
Lease.
 
1.12           Purchase Price means Five Hundred and Six Thousand Dollars
($506,000) minus the amount of the Refunded Rent.
 
1.13           Refunded Rent is defined in the Lease.
 
ARTICLE 2
 
PURCHASE AND SALE
 
2.1           Subject to the terms and conditions set forth in this Agreement,
Seller agrees to sell, convey, transfer and assign to Purchaser and Purchaser
agrees to purchase from Seller, all of Seller’s right, title and interest in and
to the Property.
 
ARTICLE 3
 
CLOSING
 
3.1           The Closing shall take place on the Closing Date at a location
mutually acceptable to the Parties.
 
ARTICLE 4
 
PAYMENT OF PURCHASE PRICE
 
4.1           On the Closing Date, the Purchase Price shall be paid by Purchaser
to Seller in cash or by certified funds.
 
ARTICLE 5
 
SELLER’S CLOSING OBLIGATIONS
 
At the Closing, Seller shall deliver to Purchaser:
 
5.1           The Deed, properly executed and in proper form for recording,
conveying to the Purchaser good and marketable title to the Property, subject to
Permitted Encumbrances;
 
5.2           Such affidavits as Purchaser’s title company shall reasonably
require in order to omit from any title policies being obtained by Purchaser all
exceptions for judgments, bankruptcies or other returns against persons or
entities whose names are the same as the Seller’s name;
 
 
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5.3           Evidence satisfactory to Purchaser and its title company that the
person executing the documents at the Closing on behalf of Seller have the full
right, power and authority to do so;
 
5.4           Possession of the Property; and
 
5.5           Any other documents reasonably required by this Agreement or
Purchaser’s title company to be delivered by Seller.
 
ARTICLE 6
 
PURCHASER’S CLOSING OBLIGATIONS
 
6.1           Record the Deed;
 
6.2           Deliver the Purchase Price to Seller, in accordance with this
Agreement;
 
6.3           Deliver evidence satisfactory to Purchaser’s title company and
Seller that the persons executing documents at the Closing on behalf of
Purchaser have the full right, power and authority to do so; and
 
6.4           Deliver any other documents reasonably required by this Agreement
or Purchaser’s title company to be delivered by Purchaser.
 
ARTICLE 7
 
TAXES; TITLE; CLOSING COSTS
 
7.1           Purchaser shall pay all recording and filing fees incurred in
connection with recording the Deed and all amounts payable to Purchaser’s title
insurer in respect of the title commitment for the Property, copies of
exceptions and the title policy, including premiums and search fees.
 
7.2           All transfer taxes due in connection with the transfer of the
Property shall be paid by Purchaser.
 
ARTICLE 8
 
CONDITIONS TO PURCHASER’S OBLIGATION TO CLOSE
 
Purchaser’s obligation to purchase the Property at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Purchaser, in whole or in part, in its sole
discretion):
 
8.1           All of Seller’s representations and warranties in this Agreement
to the best of Seller’s knowledge will have been accurate in all material
respects as of the date of this Agreement, and will be accurate in all material
respects as of the time of the Closing as if then made.
 
 
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8.2           Purchaser will have received unconditional and binding commitments
to issue policies of title insurance in form and substance satisfactory to
Purchaser and its lender, if applicable, insuring Purchaser’s and its lender’s
interest in the Property or interest therein.
 
8.3           All Encumbrances on the Property, other than Permitted
Encumbrances, shall have been released.
 
ARTICLE 9
 
CASUALTY LOSS
 
9.1           The Parties acknowledge and agree that risk of loss to the
Property between the Effective Date and the Closing Date shall remain with the
Seller.
 
9.2           Upon the occurrence of any Casualty Loss, Seller shall (a) give
Purchaser prompt written notice thereof, (b) Seller shall transfer to Purchaser
at Closing all of its right to any unpaid insurance proceeds, claims, awards and
other payments arising out of such Casualty Loss, (c) Seller shall pay to
Purchaser all sums received by Seller as insurance proceeds, awards or other
payments arising out of such Casualty Loss and (d) Seller shall credit against
the portion of the Purchase Price due at Closing the amount of any deductible
relating to any Casualty Loss.  Seller shall not voluntarily compromise, settle
or adjust any amounts payable by reason of any Casualty Loss without Purchaser’s
prior written consent.
 
ARTICLE 10
 
BROKER
 
10.1           The Parties agree that this Agreement was brought about by direct
negotiations between the Parties, and that neither Seller nor Purchaser knows of
any real estate brokers entitled to a commission in connection with this
transaction.
 
ARTICLE 11
 
REPRESENTATIONS AND WARRANTIES OF SELLER
 
11.1           Organization; Good Standing.  Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Arkansas, with full corporate power and authority to conduct its business as
it is now being conducted, to own or use the properties and assets that it
purports to own or use.
 
11.2           Enforceability; Authority; No Conflict.
 
(a)           This Agreement constitutes the legal, valid and binding obligation
of Seller, enforceable against Seller in accordance with its terms and is the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms.  Seller has the absolute and unrestricted right,
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement and such action has been duly authorized by all
necessary action by Seller’s directors and shareholders.
 
 
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(b)           Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated hereby will,
directly or indirectly (with or without notice or lapse of time) breach any
provision of any agreement which Seller is a party to or bound by or result in
the imposition or creation of any Encumbrance upon or with respect to the
Property.
 
11.3           Property.  To Seller’s knowledge, (a) there are no condemnation
or eminent domain proceedings pending or, to the knowledge of Seller,
contemplated or threatened against Seller’s interest in the Property, (b) Seller
has not received notice of any pending or threatened proceeding or investigation
before any governmental body which relates to the ownership, maintenance, use or
operation of Seller’s interest in the Property, except for the consent
administrative order from the Arkansas Department of Environmental Quality, and
in Arkansas Department of Environmental Quality v. Aero, Inc., Howard County
Arkansas Circuit Court, Case No. CV2008-95-2, (c) no labor has been performed or
material furnished on behalf of or at the request of Seller for the Property for
which a mechanic’s or materialman’s lien or liens, or any other lien, has been
or could be claimed by any Person on Seller’s interest in such real property and
(d) there are no existing or, to the knowledge of Seller, contemplated or
threatened, general or special assessments affecting Seller’s interest in the
Property or any portion thereof.
 
11.4           Title to Property; Encumbrances.  At the time of the Closing,
Seller will own good and marketable title to the Property, free and clear of any
Encumbrances, other than Permitted Encumbrances.  True and complete copies of
(a) all deeds, existing title insurance policies and surveys of or pertaining to
the Property and (b) all instruments, agreements and other documents evidencing,
creating or constituting any Encumbrances on the Property have been delivered to
Purchaser.  Seller warrants to Purchaser that, at the time of Closing, the
Property will be free and clear of all Encumbrances, other than Permitted
Encumbrances.
 
11.5           Condition of Property.  To the knowledge of Seller, use of the
Property for the various purposes for which it is presently being used is
permitted as of right under all applicable zoning and subdivision legal
requirements and is not subject to “permitted nonconforming” use or structure
classifications.  Property is supplied with public or quasi-public utilities and
other services appropriate for the operation of the facilities located thereon
and is not located within any flood plain or area subject to wetlands regulation
or any similar restriction.
 
ARTICLE 12
 
MISCELLANEOUS PROVISIONS
 
12.1           This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Arkansas, without regard to principles
of conflict of laws.
 
12.2           This Agreement embodies and constitutes the entire understanding
between the Parties with respect to the transaction contemplated herein, and all
prior agreements, understandings, representations and statements, oral or
written, are merged into this Agreement.  Neither this Agreement nor any
provision hereof may be waived, modified, amended, discharged or terminated
except by an instrument signed by the Party against whom enforcement of such
waiver, modification, amendment, discharge or terminations is sought, and then
only to the extent set forth in such instrument.
 
 
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12.3           No waiver by either Party of any failure or refusal by the other
Party to comply with its obligations hereunder shall be deemed a waiver of any
other or subsequent failure or refusal by such Party to so comply.
 
12.4           The captions in this Agreement are inserted for convenience of
reference only and in no way define, describe or limit the scope or intent of
this contract or any of the provisions hereof.
 
12.5           This Agreement shall be binding upon and shall inure to the
benefit of the Parties and their respective heirs or successors and assigns.
 

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SCHEDULE A
 
TO PURCHASE CONTRACT
 

 
LEGAL DESCRIPTION OF PROPERTY
 
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF HOWARD, STATE OF
ARKANSAS AND IS DESCRIBED AS FOLLOWS:
 
Part of the W/2 of the SW/4 of the SW/4 of Section 25, and part of the SE/4 of
the SE/4 of Section 26, all in Township 9 South, Range 27 West, more
particularly described as follows:  beginning at a point 60 feet West and 164
feet North of the Southeast corner of the SE/4 of SE/4 of Section 26, and run
thence North 482.2 feet, thence East 298 feet, thence North 229 feet, thence
East 122 feet, thence South 711.2 feet, thence West 420 feet to the Point of
Beginning, less and except any and all rights-of-way now owned by the Graysonia,
Nashville and Ashdown Rail Company, its successors and assigns or others within
the above mentioned lands, less and except all rights-of-way and easements of
record, and subject to any state of facts that would be disclosed by an accurate
survey of the property.
 
AND ALSO:  A tract of land located in the SW/4 of the SW/4 of Section 25,
Township 9 South, Range 27 West, Nashville, Howard County, Arkansas, more
particularly described as follows:  Beginning at a point 673.8 feet South and
238 feet East of the Northwest corner of said SW/4 SW/4, thence East 100 feet,
thence South 482 feet, thence West 100 feet, thence North 482.2 feet to the
Point of Beginning.
 
LESS AND EXCEPT:  A tract of land located in the SW/4 of the SW/4 of Section 25,
Township 9 South, Range 27 West, Nashville, Howard County, Arkansas,
particularly described as follows:  Beginning at a point 673.8 feet South and
238 feet East of the Northwest corner of said SW/4 SW/4, thence run North 229
feet, thence East 122 feet, thence South 229 feet, thence West 122 feet, to the
Point of Beginning.