Exhibit 10.1
 
PERSONAL PROPERTY LEASE
 
THIS PERSONAL PROPERTY LEASE (this “Lease”) effective as of November 3, 2009
(the “Effective Date”), is between AERO METAL PRODUCTS, INC., a Delaware
corporation having an address at 1110 Maple Street, Elma, New York 14059
(“Lessee”), and AERO, INC., an Arkansas corporation having an address at 600
South Mill Street, Nashville, Arkansas 71852 (“Lessor”).  SERVOTRONICS, INC., a
Delaware corporation having an address at 1110 Maple Street, Elma, New York
14059 is executing this Lease solely for the purpose of Section 19.
 
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Lease and other valuable consideration, the receipt and adequacy of which are
acknowledged, the parties agree as follows:
 
1.           Personal Property Leased.  Lessor hereby leases to Lessee, and
Lessee hereby leases from Lessor, the personal property owned by Lessor on the
Effective Date which is used in producing product and is located at 600 South
Mill Street, Nashville, Arkansas (the “Premises”) including, but not limited to,
any personal property which secures any financing obtained by Lessor from a
third party or otherwise serves as collateral for any obligations of Seller
(collectively, the “Personal Property”).
 
2.           Term; Termination.
 
(a)           This Lease commences on the Effective Date and will end on the
seventh (7th) anniversary of the Effective Date, unless terminated earlier in
accordance with the provisions of this Lease (the “Term”).
 
(b)           Either party may terminate this Lease, with or without cause, upon
twelve (12) months’ prior written notice of termination given to the other
party.
 
3.           Rent Payments.  For the lease of the Personal Property during the
Term, Lessee will pay Lessor a monthly rent in the amount of Seven Thousand Five
Hundred Dollars ($7,500), payable monthly on the first of each month during the
Term.
 
4.           Location of Personal Property; Inspection.  The Personal Property
will be primarily located at the Premises during the Term, and Lessee may not
remove the Personal Property from the Premises without Lessor’s prior written
consent. Lessor may inspect the Personal Property and observe its use at any
time during the Term and during Lessee’s business hours so long as any
inspection of the Personal Property does not unreasonably disrupt Lessee’s use
of the Personal Property.
 
5.           Purchase Option or Return of Personal Property.
 
(a)           Upon the expiration of the Term (other than due to a termination
because of Lessee’s default of its obligations under this Lease), Lessee will
have the option to purchase all of the Personal Property for a purchase price of
One Thousand Dollars ($1,000).  Lessee must deliver to Lessor prior to the
expiration of the Term written notice of Lessee’s intent to exercise its
purchase option. Upon Lessee’s exercise of such option and delivered of such
purchase price, Lessor will execute and deliver to Lessee a bill of sale or
other document(s), in form and substance acceptable to Lessee, under which
Lessor will convey good and marketable title to the Personal Property to Lessee,
free and clear of any liens or other encumbrances. The parties acknowledge that
the Personal Property is currently encumbered by a Uniform Commercial Code
Financing Statement from Lessor to the Arkansas Department of Economic
Development, filed for record July 31, 2003, as filing #31253356260 and amended
by filing #7130667521, filed in the offices of the Arkansas Secretary of State.
 
 

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(b)           Upon the expiration of the Term (other than due to a termination
because of Lessee’s default of its obligations under this Lease), if the option
to purchase has not been exercised or if a new lease agreement has not been
executed, Lessee will return the Personal Property to Lessor in the condition in
which it was received, normal wear and tear excepted, at the sole cost and
expense of Lessee.
 
6.           Personal Property.  The Personal Property is and will remain the
personal property of Lessor irrespective of its use or manner of attachment to
the Premises or to any other real property.  All additions, repairs, accessories
and accessions made to the Personal Property during the Term will become part of
the Personal Property and the personal property of Lessor.  None of the Personal
Property will be deemed to be a fixture even if affixed to, or installed in or
on, real property or personal property not constituting part of the Personal
Property.
 
7.           Title to the Personal Property.  Title to the Personal Property
will remain in Lessor at all times and Lessee will not have any right, title or
interest in any of the Personal Property, unless Lessee purchases the Personal
Property under its purchase option in accordance with the terms of Section
5.  Lessor and Lessee intend that this Lease will be deemed to constitute a
“true lease” in all respects.
 
8.           Insurance; Loss and Damage; Personal Property Taxes.
 
(a)           Lessee will maintain during the Term a)an insurance policy
covering the Personal Property for any loss, destruction or theft of, or damage
to, any of the Personal Property from any cause (each, a “Casualty”) for not
less than the replacement value of the Personal Property which names Lessor as
the loss payee pursuant to a loss payable clause satisfactory to Lessor.  Lessee
will deliver to Lessor upon request evidence of the insurance required by this
Section 8 reasonably satisfactory in form and substance to Lessor.
 
(b)           Lessee will bear the entire risk of any Casualty or other claims
described in Section 8(a), whether or not occurring while any of the Personal
Property affected is at the Premises, in transit to or from the Premises or in
the possession or under the control of Lessee.  No Casualty will release or
suspend any obligation of Lessee under this Lease.  Upon acquiring knowledge of
any Casualty, Lessee will give notice of the Casualty to Lessor.  Upon Lessor’s
request, Lessee will, at its own cost and expense and at the sole option of
Lessor: (i) restore all of the Personal Property affected by any Casualty to as
good a condition as when first delivered to Lessee, ordinary wear and tear
excepted or (ii) return such Personal Property to Lessor, whereupon this Lease
will terminate with respect to the Personal Property affected by the Casualty.
 
 
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(c)           In the event of any damage to any of the Personal Property from
any cause whatsoever during the Term, whether or not covered by insurance, the
Personal Property’s repair will be the responsibility and obligation of
Lessee.  In this event, Lessee will repair or cause the Personal Property to be
repaired (unless Lessor elects to require that Lessee return the Personal
Property).  Lessor agrees to assign to Lessee any and all rights Lessor may have
under the insurance policy required by this Section 8 with respect to such
damage to the extent necessary to reimburse Lessee for any amounts expended by
Lessee in connection with the repair of the Personal Property.
 
(d)           Lessee will be responsible for the payment of any personal
property taxes due with respect to the Personal Property during the Term of this
Agreement.
 
9.           Indemnification.  Each party will indemnify the other party and its
officers, directors, agents, affiliates and employees (each an “Indemnified
Party”) and hold each Indemnified Party harmless from and against all loss,
liability, claim, damage, costs and expenses (including, but not limited to,
reasonable attorneys’ fees and costs) arising as a result of the indemnifying
party’s breach of the terms of this Agreement.
 
10.           Assignment.  No party may without the prior written consent of the
other party, (a) assign, transfer or pledge this Lease or the Personal Property
or any interest therein or (b) sublet or lend the Personal Property, except that
Lessee may assign its rights and obligations under this Agreement to an
Affiliate of Lessee. For purposes of this Agreement, the term “Affiliate” means,
with respect to Lessee, any person or entity which directly or indirectly
controls, or is under common control with, or is controlled by, Lessee.  As used
in this definition, “control” (including, with its correlative meanings,
“controlled by” and “under common control with”) means possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities, ownership of partnership or other
equity interests, by contract or otherwise).
 
11.           Costs and Expenses.  Either party will be entitled to recover its
costs and expenses (including, but not limited to, attorneys’ fees and
disbursements) from the other party incurred by a party in any action to enforce
any of its rights under this Lease if such enforcing party prevails in such
action.
 
12.           Notices.  Any notice, request, instruction or other document to be
given under this Lease by either party to the other must be in writing and
delivered personally by Federal Express or similar national overnight delivery
service, or certified mail, postage prepaid, return receipt requested to the
address set forth above.  Delivery will be effective: (a) if given by hand
delivery, when left at the address of the addressee listed above, (b) if given
by overnight delivery service, upon receipt of confirmation of delivery or (c)
if given by mail, on the third business day after the communication is deposited
in the mail, addressed as listed above.  Either party may designate any other
address to which notices should be sent to it by delivering written notice of
the new address to the other party in accordance with this section.
 
13.           Entire Lease.  This Lease constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes each course of
dealing or other conduct previously pursued, accepted or acquiesced in, and each
oral or written agreement and representation previously made, by the parties
with respect to such subject matter, whether or not relied or acted upon.
 
 
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14.           Applicable Law.  This Lease is governed by and will be interpreted
and enforced in accordance with the internal law of the State of New York,
without regard to principles of conflict of laws.
 
15.           Binding.  This Lease is binding upon and inures to the benefit of
the parties and each of the successors and permitted assigns of the parties.
 
16.           Severability.  Whenever possible, each provision of this Lease
will be interpreted in such manner as to be effective and valid under applicable
law.  If, however, any provision is prohibited by or invalid under applicable
law, it will be deemed modified to conform to the minimum requirements of the
law, or if for any reason it is not deemed so modified, it will be prohibited or
invalid only to the extent of such prohibition or invalidity without the
remainder thereof or any other such provision being prohibited or invalid.
 
17.           Execution.  This Lease may be executed in one or more
counterparts, each of which is deemed an original and all of which taken
together constitute one and the same instrument.  Either party may execute this
Lease by facsimile or PDF signature and the other party will be entitled to rely
on such facsimile or PDF signature as evidence that this Lease has been duly
executed by such party.
 
18.           Waiver.  No failure of a party to require, and no delay by a party
in requiring, the other to comply with any provision of this Lease will
constitute a waiver of the right to require such compliance.  No failure of a
party to exercise, and no delay by a party in exercising, any right or remedy
under this Lease will constitute a waiver of such right or remedy.  No waiver by
a party of any right or remedy under this Lease will be effective unless made in
writing.  Any waiver by a party of any right or remedy under this Lease will be
limited to the specific instance and will not constitute a waiver of such right
or remedy in the future.
 
19.           Servotronics Guaranty. Servotronics, Inc., the sole shareholder of
Lessee, hereby guarantees the obligations of Lessee to Lessor under this Lease.
 

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IN WITNESS WHEREOF, the Parties duly have executed this Personal Property Lease
as of the date first written above.
 

AERO METAL PRODUCTS, INC.

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

AERO, INC.

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

 
Secretary & Treasurer

Name:
Title:

SERVOTRONICS, INC., solely for the purpose of Section 19

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