Document:

EXHIBIT 10.5

 

INDEMNIFICATION
AGREEMENT

 

This Indemnification Agreement (this “Agreement”), dated as of [ __________ ]
[ __ ], 2005, is made by and between Inland American Real Estate
Trust, Inc., a Maryland corporation (the “Company” or the “Indemnitor”),
as indemnitor, and the director, officer, employee or agent of the Company
executing this Agreement as of or subsequent to the date hereof whether by
separate instrument, counterpart or otherwise, as indemnitee (the “Indemnified
Party”).  Capitalized terms used herein but
not otherwise defined herein shall have the meanings ascribed to them in the
Company’s Articles of Incorporation (as amended or restated from time to time, the
“Articles”).

 

R E C I T A L S

 

A.                                   The
Company was formed on October 4, 2004, and intends to operate as a real
estate investment trust (a “REIT”) for federal and state income tax purposes.

 

B.                                     The
Articles and the Company’s Bylaws (as amended or restated from time to time, the
“Bylaws”) authorize the Company to indemnify and advance expenses to the
Indemnified Party, subject to certain limitations and conditions.

 

C.                                     The
Indemnified Party has requested that the Company enter into a contract for
indemnity and advancement of expenses pursuant to the applicable sections of the
Articles and Bylaws, and the Company is willing to enter into such a contract.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

 

1.                                       Company
Indemnification of the Indemnified Parties.

 

(a)                                  Subject
to paragraphs (b), (c) and (d) of this Section 1, the
Company shall indemnify and pay, advance or reimburse reasonable expenses to the
Indemnified Party from and against any liability or loss to which the
Indemnified Party may become subject or which the Indemnified Party may incur
by reason of his or her services as a director, officer, employee or agent of
the Company.

 

(b)                                 The
Company shall not indemnify the Indemnified Party unless:

 

(i)                                     the
Directors have determined, in good faith, that the course of conduct which
caused the liability or loss was in the best interest of the Company;

 

(ii)                                  the
Indemnified Party was acting on behalf of or performing services on the part of
the Company;

 

 

(iii)                               the
liability or loss was not the result of negligence or misconduct on the part of
the Indemnified Party except that in the event the Indemnified Party is or was
an Independent Director, the liability or loss shall not have been the result
of gross negligence or willful misconduct;

 

(iv)                              the indemnification is recoverable only out
of the Net Assets of the Company and not from the Stockholders; and

 

(v)                                 in respect to an indemnification or reimbursement
of legal fees, the requisite Board of Directors, special legal counsel or
stockholders determination has been made that indemnification or reimbursement
is proper.

 

(c)                                  Notwithstanding
anything to the contrary in paragraph (b) above, the Company shall not
indemnify the Indemnified Party for liabilities or losses arising from or out
of an alleged violation of federal or state securities laws by the Indemnified Party unless one or more
of the following conditions are met:

 

(i)                                     there
has been a successful adjudication on the merits of each count involving
alleged securities law violations as to the Indemnified Party;

 

(ii)                                  the
claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the Indemnified Party; or

 

(iii)                               a
court of competent jurisdiction approves a settlement of the claims and finds
that indemnification of the settlement and related costs should be made and the
court considering the request has been advised of the position of the
Securities and Exchange Commission and the published opinions of any state securities
regulatory authority in which securities of the Company were offered or sold as
to indemnification for violations of securities laws.

 

(d)                                 The
Company shall advance amounts to the Indemnified Party for legal and other
expenses and costs incurred as a result of any legal action for which indemnification is being sought only in
accordance with Section 2-418 of the Maryland General Corporation Law, and
only if all of the following conditions are satisfied:

 

(i)                                     the
legal action relates to acts or omissions with respect to the performance of
duties or services by the Indemnified Party for or on behalf of the Company;

 

(ii)                                  the
legal action is initiated by a third party who is not a Stockholder or the
legal action is initiated by a Stockholder acting in his or her capacity as
such and a court of competent jurisdiction specifically approves the advancement;
and

 

(iii)                               the
Indemnified Party receiving the advances undertakes in writing to repay the
advanced funds to the Company, together with the applicable legal rate of
interest thereon, in the event that the Indemnified Party is found not to be
entitled to indemnification.

 

2

 

(e)                                  The
Company shall have the power to purchase and maintain insurance or provide
similar protection on behalf of the Indemnified Party against any liability or
loss asserted that was incurred in any capacity with the Company or arising out
of this status; provided, however, that the Company shall not
incur the costs of any liability insurance that insures any Person against liability
or loss for which he, she or it could not be indemnified under the Articles.

 

(f)                                    Nothing
contained in this Agreement shall constitute a waiver by the Indemnified Party
of any right that the Indemnified Party may have against any Person under
federal or state securities laws.

 

2.                                       Notices.  All notices or other communications required
or permitted to be given or delivered hereunder shall be deemed to have been
properly given or delivered to the following address: (i) when delivered
personally or by commercial messenger; (ii) one business day following
deposit with a recognized overnight courier service, provided the deposit
occurs prior to the deadline imposed by the overnight courier; or (iii) when
transmitted, if sent by facsimile copy, provided confirmation of receipt is
received by sender and the notice is sent by an additional method provided
hereunder, in each case above provided the notice or other communication is
addressed to the intended recipient thereof as set forth below:

 

	
  Indemnitor:

  	
  Inland
  American Real Estate Trust, Inc.

  
	
   

  	
  2901
  Butterfield Road

  
	
   

  	
  Oak Brook,
  IL 60523

  
	
   

  	
  Attn:  Ms. Roberta
  S. Matlin,

  Vice President, Administration

  
	
   

  	
  Telephone:

  	
  (630)
  218-8000

  
	
   

  	
  Facsimile:

  	
  (630)
  218-4955

  
	
   

  	
   

  
	
   

  	
   

  
	
  Indemnified Party:

  	
  To the address
  set forth by the Indemnified

  Party on the signature page hereto

  

 

3.                                       Counterparts.
 This Agreement may be executed in
one or more counterparts, all or which taken together shall constitute one and
the same agreement, and shall become effective when the counterparts have been
signed by each party hereto and delivered to the other parties hereto.

 

4.                                       Governing
Law.  This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the
internal laws of the State of Maryland, without giving effect to the principles
of conflicts of laws thereof.

 

5.                                       Amendments.  This Agreement may be amended or modified,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed by the parties
hereto, or in the case of a waiver, by the party waiving compliance.

 

3

 

6.                                       Headings.  The descriptive headings in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

 

7.                                       Severability.  In the event that any part of this Agreement
is declared by any court or other judicial or administrative body to be null,
void or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in
full force and effect.

 

8.                                       Successor
and Assigns.  All references herein
to the Company hereunder shall be deemed to include all successors and assigns
of the Company.  The Indemnified Party
may not assign its benefits hereunder to any third party beneficiaries or
successors or assigns without the prior written consent of the Company.

 

[SIGNATURES
ON FOLLOWING PAGE]

 

4

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

 

	
   

  	
  INDEMNITOR:

  
	
   

  	
   

  
	
   

  	
  INLAND AMERICAN REAL ESTATE TRUST, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNIFIED PARTY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile:Exhibit 10(A)(1)

                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT  AGREEMENT  ("Agreement")  between  SERVOTRONICS,  INC.
("Employer")  and NICHOLAS D. TRBOVICH,  SR.  ("Employee" ), dated July 1, 2005,
hereby  supersedes  the parties'  Amendment  to and  Restatement  of  Employment
Agreement dated August 8, 1986 ("1986 Agreement") and all amendments thereto.

                               W I T N E S S E T H
                               -------------------

         WHEREAS,  the Board of Directors  of Employer  believes it to be in the
best  interests  of  Employer  and its  shareholders  to assure  the  Employee's
continued service to Employer, and Employee agrees to continue in the service of
Employer under the terms set forth below; and

         WHEREAS,  the  parties  believe  that  adoption  of  a  new  Employment
Agreement at this time is beneficial  given the numerous  amendments made to the
1986 Agreement and the need to update the 1986 Amendment to conform with current
laws and regulations;

         NOW,  THEREFORE,  in  consideration  of  his  continued  employment  by
Employer and other good and valuable  consideration  and intending to be legally
bound,  Employee  hereby  agrees to be employed by Employer,  upon the following
terms and conditions:

         1.   Employer hereby employs  Employee and Employee hereby accepts such
employment for a multi-year term extending to and including July 1, 2010, on the
terms  and  conditions  hereinafter  set  forth.  When one year  remains  on the
original or any extended term of this Agreement, the term of this Agreement will
be  automatically  extended for one additional  year beyond its then  expiration
date unless either party  previously  has notified the other in writing that the
term will not be  extended  beyond that  expiration  date.  If  Employer  elects
pursuant to this  paragraph  not to extend  this  Agreement,  Employee  shall be
entitled  to a  severance  payment in an amount  equivalent  to nine (9) months'
salary  and  benefits  at the rate in  effect at the time of  termination.  Such
amount shall be paid within 30 days  following  the date of  expiration  of this
Agreement under this paragraph.

         2.   Employee  shall  perform the duties and  functions of Chairman and
President  of  Employer,  which  duties  and  functions  will be  similar to and
generally  consistent with those Employee is performing for Employer at the date
of this Agreement.

         3.   Subject to the  provisions  of  paragraphs 5, 6, 12 and 16 of this
Agreement, Employer shall pay and Employee shall accept as full compensation for
all services rendered hereunder a minimum annual salary of $397,400.00,  or such
greater  amount  as may be  hereafter  fixed  by the  Board,  payable  in  equal
installments every two weeks.

         4.   Employer  will  reimburse  Employee  for all  reasonable  expenses
incurred in the performance of his services hereunder.

         5.   In  addition  to  the  compensation  provided  to  Employee  under
paragraph 3 of this Agreement,  Employee shall be entitled to participate in all
employee  benefit plans,  including  without  limitation  stock options,  profit
sharing,  pension,  bonus,  participation,  extra  compensation,  disability  or
deferred  compensation plans, group insurance or other benefits or arrangements,

<PAGE>

to at least the same extent as do Employer's  other senior  executive  officers,
except as to any plan as to which Employee has specifically consented in writing
to his  exclusion  therefrom.  In its  discretion  the Board may grant  Employee
benefits in addition to or greater than those  enumerated above and in paragraph
16 of this Agreement.

         6.   Employment  under  this  Agreement  shall  terminate  prior to the
expiration of its term or any extended  term upon the death or total  disability
of Employee.

              "Total  disability"  is  Employee's   inability  to  substantially
perform his duties and obligations under this Agreement for a consecutive period
of four months by reason of illness or physical or mental impairment.  If either
party asserts that total  disability  has occurred and the other party  disputes
that  assertion,  Employer and Employee  shall submit the dispute (for a written
decision as described below) to a physician  jointly selected by them who (i) is
licensed to practice in New York, (ii) has  professional  experience in the area
or branch of medicine related to the cause of the claimed disability,  (iii) has
rendered no professional services to or on behalf of either party within the two
prior years and (iv) is not a shareholder,  officer, director or employee of, or
in a business  relationship with,  Employer or Employee.  Employer shall pay all
expenses  incurred by both parties to resolve the dispute in this manner.  After
making such  examinations and  investigations  as he shall deem necessary,  that
physician shall make his decision in writing, and the decision shall be given to
both Employer and Employee in accordance  with paragraph 19. Neither party shall
contest the physician's  decision,  which shall be final and conclusive,  except
for fraud. If the physician decides that total disability has not occurred, this
Agreement and Employee's  employment  hereunder  shall continue as if no dispute
had occurred.

              Termination  of  employment  shall be  effective  upon  Employee's
death.  Termination of Employment for total  disability  shall be effective five
business  days after either party has given  written  notice to the other of the
existence of total  disability  unless,  before the  expiration of that five-day
period,  the party  receiving  notice shall give the other party written  notice
that he or it  disputes  the  existence  of total  disability;  if the notice of
dispute is so given,  termination  of  employment  will occur when the physician
gives notice to both parties of his decision in accordance with paragraph 19.

              In the event of termination of employment due to Employee's  total
disability  or death,  Employer  shall pay to the  Employee,  or in the event of
Employee's  death,  to  Employee's  designated  beneficiary,  or if none, to his
estate,  compensation  during the remainder of the term or extended term of this
Agreement  at the  rate  of  50%  of the  total  compensation  in  effect  under
paragraphs 3 and 5 of this Agreement  immediately prior to the termination.  The
foregoing  payment shall be in lieu of the 9-month severance payment required by
reason of termination of employment pursuant to paragraph 1 of this Agreement.

         7.   Nothing  contained in this Agreement shall deprive Employee of, or
limit his entitlement to, any rights to pensions or other  retirement  payments,
to stock options or other rights with respect to Employer's securities or to any
other benefits granted or to be granted to Employee by Employer,  whether or not
such payments,  options,  rights or benefits are referred to in this  Agreement,
except that the  disability  payment  provided in paragraph 6 and the  severance
payment  in  paragraph  13 shall  be in lieu of the  9-month  severance  payment
provided in paragraph 1.

         8.   Employee agrees that from and after the date of this Agreement and
during the term hereof he will not,  unless  acting as an officer or employee of

                                        2
<PAGE>

Employer or with the prior written consent of Employer,  directly or indirectly,
engage or  participate  in, or own,  manage,  operate,  join or  control,  or be
connected  as an officer,  director,  employee,  partner,  investor or otherwise
with, any business  manufacturing  or selling products or services similar to or
competing  with  products  or  services  manufactured  or  sold by  Employer  or
otherwise engage directly or indirectly in competition  with Employer.  Employee
acknowledges  that the remedy at law for any breach by him of the foregoing will
be inadequate and that Employer shall be entitled to injunctive relief.  Nothing
herein contained, however, shall prevent Employee from purchasing for investment
3% or  less  of  any  outstanding  class  of  securities  of any  company  whose
securities are held by the general public.

         9.   In consideration of past and future services performed by Employee
on behalf of Employer,  Employer agrees that it shall have no right to terminate
this Agreement,  or to terminate any obligation of Employer hereunder,  prior to
the end of the term or any extension hereof,  except for the willful malfeasance
of Employee in the  performance of his duties  hereunder.  Any such  termination
shall be determined by Employer's  Board of Directors at a meeting  validly held
and conducted as provided by Employer's  By-laws and applicable law and shall be
subject to Employee's rights set forth in paragraph 5. Employee will be entitled
to be heard by the Board of  Directors  prior to any  determination  under  this
paragraph, to be advised during the hearing by an attorney of his choice and, if
he chooses,  to have his attorney be heard by the Board of  Directors;  Employer
will pay the fees and disbursements of Employee's attorney for services rendered
in this dispute if the Employee shall be the prevailing party. A decision by the
Board of Directors  hereunder is not final, but is subject to arbitration  under
paragraph 18.

         10.  Employee may  terminate  his  employment  hereunder for any one or
more of the following  reasons:  (A) a change in control of Employer (as defined
below), (B) a change in the  responsibilities,  titles or offices of Employee as
currently in effect, without the express written consent of Employee,  except in
connection  with  the  termination  of  Employee's  employment  for  disability,
retirement  or pursuant to  paragraph 8 above,  (C) a relocation  of  Employee's
office or  principal  place of work  without  his express  written  consent to a
location  more than 50 miles from 1110 Maple  Street,  P.O. Box 300,  Elma,  New
York,   except  for  required  travel  on  Employer's   business  to  an  extent
substantially  consistent with Employee's business travel practices as currently
in effect,  or (D) a failure by Employer to comply  with any  provision  of this
Agreement  which  has not been  cured  within  five  days  after  notice of such
noncompliance  has been given by  Employee  to  Employer.  For  purposes of this
Agreement, a "change in control of Employer" shall mean a change in control of a
nature  that would be  required  to be reported in response to Item 5.01 of Form
8-K  promulgated  under the  Securities  Exchange  Act of 1934,  as amended (the
"Exchange  Act"), or any similar  successor  provision;  provided that,  without
limitation, such a change in control shall be deemed to have occurred if (X) any
"person"  (as such term is used in Sections  13(d) and 14(d) of the Exchange Act
or any similar  successor  provision),  other than  Employee,  is or becomes the
"beneficial  owner"  (as  defined in Rule 13d-3  under the  Exchange  Act or any
similar successor provision),  directly or indirectly, of securities of Employer
representing  22% or  more of the  combined  voting  power  of  Employer's  then
outstanding  securities,  or (Y)  Employee,  while  living,  shall cease to be a
director of  Employer,  unless  Employee  shall have  voluntarily  resigned  his
position on the Board in writing or  consented  in writing to not be included in
the slate of nominees  for  director  proposed by the Board for  election at any
meeting of the shareholders of Employer at which directors are to be elected, or
(Z) if at any time more than  one-third  of the  members  of the Board  shall be
persons who shall have been elected by the shareholders of Employer or appointed
by the Board in  opposition  to  Employee's  recommendation  and without  having

                                        3
<PAGE>

received  the  affirmative  vote of  Employee  either as a  shareholder  or as a
Director.

         11.  Any  termination  of Employee's  employment  by Employee  shall be
communicated by written Notice of Termination to Employer.  For purposes of this
Agreement,  a "Notice of  Termination"  shall mean a notice which shall indicate
the specific  termination  provision or provisions in this Agreement relied upon
(although the failure to include in such notice any other termination  provision
shall not be deemed to be a waiver of such provision). No failure of Employee to
exercise his right to terminate this Agreement shall, by reason of lapse of time
or otherwise,  be deemed to constitute a waiver of such right;  and no Notice of
Termination in which  Employee  notifies  Employer that he is  terminating  this
Agreement  because of a breach of this  Agreement by Employer shall be deemed to
constitute a waiver by Employee of his right to terminate the Agreement  because
of a change in control of Employer, notwithstanding that a change in control may
have occurred prior to Employee's Notice of Termination.

         12.  "Date of  Termination"  shall mean,  if  Employee's  employment is
terminated  pursuant  to  paragraph  10  above,  the date on  which a Notice  of
Termination  is given.  The date on which a Notice of Termination is given shall
be the date when  hand-delivered  in person to any  officer of  Employer  except
Employee  or the next  business  day after  deposit  thereof  in the U.S.  mail,
postage  prepaid,  for delivery as registered or certified mail,  return receipt
requested, addressed to the corporate headquarters of Employer.

         13.  If (A) Employer shall terminate Employee's employment in breach of
this Agreement (it being understood  that,  without  limitation,  a breach shall
have  occurred if a  termination  pursuant to  paragraph 9 hereof is  thereafter
found  upon  arbitration  pursuant  to  paragraph  18 to be not  justifiable  or
otherwise  improper) or (B) Employee  shall  terminate  his  employment  for any
reason specified in paragraph 10, then

              (i)    Employer  shall pay  Employee  his full salary and benefits
through  the Date of  Termination  at the rate in effect  at the time  Notice of
Termination is given;

              (ii)   in lieu of any salary  payments  to  Employee  for  periods
subsequent to the Date of Termination  and in lieu of the 9-month  severance pay
provided in paragraph  1,  Employer  shall pay as  severance  pay to Employee an
amount  equal to the product of 2.99  multiplied  by a base amount  equal to the
average annual compensation paid by Employer to Employee which was includible in
Employee's gross income for federal income tax purposes for the most recent five
taxable  years ending before the date on which the change in control of Employer
occurs;

              (iii)  the parties  intend  that the base amount in the  preceding
subparagraph  (ii) shall be the highest base amount permitted by Section 280G of
the  Internal  Revenue Code of 1986,  as amended,  or any  successor  provisions
without  causing  any  portion of the  severance  pay to  constitute  an "excess
parachute  payment"  thereunder,  and if any  amendment  of Section  280G or any
successor  provision defines such a base amount so as to permit a greater amount
than defined in the preceding sentence, the greater base amount permitted by the
amended  provision  shall be  applicable,  provided,  however,  that (1) nothing
contained  herein shall reduce the severance  payment below the amount resulting
from  applying  the base  amount  set  forth in  subparagraph  (ii) and (2) this
subparagraph (iii) shall not be applicable after July 1, 2010 unless the parties
hereto expressly agree in writing to the extension of the  applicability of this
subparagraph;

                                        4
<PAGE>

              (iv)   if  termination  of Employee's  employment  arises out of a
breach by Employer of this  Agreement,  Employer  shall pay all other damages to
which  Employee  may be entitled as a result of such breach,  including  but not
limited to damages for any loss of benefits to Employee and  including all legal
fees and expenses incurred by him as a result of such termination.

         14.  Any payment of Employer to Employee required by paragraph 13 above
shall be made in full no later than the next  business day following the date on
which Notice of  Termination is given as determined in paragraph 12 above or, if
applicable,  within five (5) business days of an arbitrator's ruling pursuant to
paragraph 18 of this Agreement (the "Payment Date").  Any failure by Employer to
make  payment in full to Employee  on or before the Payment  Date of all amounts
required  to be paid  to  Employee  pursuant  to this  Agreement  shall  entitle
Employee,  in addition to such amounts,  to liquidated damages equivalent to the
amount of  salary  and  benefits  to which  Employee  would  have been  entitled
pursuant to paragraph 3 of this  Agreement  (as such  paragraph may hereafter be
amended) if this Agreement had not been terminated  during the period  beginning
with and  including  the Payment  Date and ending on and  including  the date on
which  Employer  pays to Employee  all sums owing to  Employee  pursuant to this
Agreement.

         15.  Employee  shall not be  required  to  mitigate  the  amount of any
payment provided for in this Agreement by seeking other employment or otherwise.

         16.  In  recognition  of  Employee's  decades of  service to  Employer,
Employer agrees that after  termination of Employee's  employment  hereunder for
any reason,  whether such termination is pursuant to paragraph 1, 6, 9, 10 or 13
of this Agreement  (other than a termination  due to death pursuant to paragraph
6),  Employer  shall  provide  and pay for, at a minimum,  disability,  medical,
hospital and other health care benefits and life insurance  benefits that are no
less than the maximum  benefits  which were  provided to Employee and any spouse
and/or  children of his that were  covered  under  Employer's  plans at the time
Employee's employment is terminated (hereinafter "Post Employment Benefits").

              a.     Employer  further agrees that Employee will not be required
to  assume  co-pay  or  employee  contribution  costs  greater  than he had been
required to assume (if any) during that period of his  employment  when  maximum
benefits were provided to him.

              b.     Employer  shall  pay the  cost  of all of  Post  Employment
Benefits  until the  Employee's  death,  except that  Employer's  obligation  to
provide  and pay for Post  Employment  Benefits  for  Employee's  spouse  and/or
children shall terminate when said spouse and/or child dies or otherwise becomes
ineligible  for benefits  under any of the  applicable  plans,  if such an event
occurs prior to Employee's death.

              c.     If  Employer  is  unable  to  provide  the Post  Employment
Benefits as part of the plan or plans which provide  benefits to other employees
of the  Employer,  it shall  create a  special  or  individual  plan or plans to
provide the benefits; and if Employer is unable to provide such benefits through
a special or  individual  plan, it shall pay Employee  monthly an amount,  which
will equal the sum of the cost to Employee of his obtaining benefits  equivalent
to the Post Employment Benefits plus any additional federal and state income tax
cost,  to  Employee  of  receiving  such  payments  in lieu  of Post  Employment
Benefits.

                                        5
<PAGE>

              d.     Because of the  uncertainty  of the effect on certain terms
of this  Agreement  of  Internal  Revenue  Code  ("Code")  Section  409A and the
regulations and guidance  interpreting and implementing  Code Section 409A, with
Employee's prior written consent, Employer agrees to timely make such amendments
to this  Agreement  as may be necessary to avoid the  imposition  of  penalties,
interest and  additional  taxes under Code Section 409A and agrees that any such
amendment will provide Employee with economically the same payments and benefits
as would have been provided hereunder prior to such amendment.

         17.  If, by reason of any  amendment  to the  Internal  Revenue Code of
1986, as amended, subsequent to July 1, 2005, there may be imposed upon Employee
any  federal  tax in  excess of the  amount of  federal  income  tax that  would
otherwise  be imposed  upon  Employee  upon the  recognition  by Employee of any
payment by  Employer  to Employee  pursuant  to  paragraph  13 above as ordinary
income of Employee for federal income tax purposes,  then Employee,  at his sole
option,  may elect to receive from  Employer such lesser amount of severance pay
as Employee  shall  designate in his sole  discretion.  Such  election  shall be
deemed to have been properly made by Employee if set forth in Employee's  Notice
of Termination provided to Employer in accordance with paragraph 11 above.

         18.  Any  controversy,  claim or dispute  arising out of or relating to
this  Agreement,  including,  without  limitation,  any claim for breach of this
Agreement,  shall be settled by arbitration in accordance  with the Rules of the
American Arbitration  Association except as otherwise  specifically  provided in
this  paragraph.  Judgment upon any award rendered by the  arbitrators  pursuant
hereto may be entered in any court  having  jurisdiction  thereof.  Either party
shall have the right to  initiate  arbitration  proceedings  except  that (i) no
arbitration shall be commenced on a controversy  arising under paragraph 9 until
a decision  has been made by the Board of  Directors  as provided  therein,  but
Employee may initiate arbitration prior to such a decision if he shall have been
terminated  without  that  decision  having  occurred or if Employer  shall have
refused to pay the fees and disbursements of Employee's counsel;  (ii) paragraph
6 provides the exclusive  method of determining a dispute as to whether Employee
has total  disability,  and (iii)  Employer  must apply to a court having proper
jurisdiction  to obtain the  injunctive  relief  referred to in paragraph 8. Any
arbitration  shall take place in the County of Erie,  State of New York,  unless
both parties shall consent to another location.  Employer shall pay the costs of
the arbitration.

         19.  Subject to the  provisions  of paragraph 12 of this  Agreement,  a
notice to a party shall be effectively given to the Employee when hand-delivered
to the  Employee  and to the  Employer  when  hand-delivered  to any  officer of
Employer  except  Employee.  Notice  may also be  effectively  given on the next
business day after deposit in the U.S. mail,  postage  prepaid,  for delivery as
registered or certified mail, return receipt requested, addressed as follows:

              To Employee,  at 28 Tanglewood Drive West,  Orchard Park, New York
14127, unless Employee notifies Employer in writing of a new address.

              To Employer,  at its corporate  headquarters.  For all purposes of
this  paragraph  and  paragraph  11,  Employee  may assume  that the  Employer's
corporate headquarters is 1110 Maple Street, P.O. Box 300, Elma, New York 14059,
unless Employer notifies Employee in writing of a new address.

                                        6
<PAGE>

         20.  This  Agreement  constitutes  the  entire  agreement  between  the
parties  with  respect  to the  subject  matter  hereof  and  any  amendment  or
modification  of this Agreement is without effect unless it is in a writing duly
executed by both parties hereto.

         21.  This  Agreement  is made in the  State of New  York  and  shall be
interpreted under the laws of that State.

         22.  If any term or  provision  of this  Agreement  shall be held to be
invalid  or  unenforceable  for any  reason,  such  term or  provison  shall  be
ineffective  to the  extent  of  such  invalidity  or  unenforceability  without
invalidating the remaining terms and provisions hereof, and this Agreement shall
be construed as if such invalid or unenforceable  term or provision had not been
contained herein.

         23.  This  Agreement  shall be binding upon the parties  hereto,  their
successors and assigns; provided, however, neither party shall assign any of its
rights  hereunder  without the prior written  consent of the other party hereto.
Employer may not transfer, convey or otherwise dispose of all or any substantial
part of its assets or business (whether directly or indirectly, by sale, merger,
consolidation  or  otherwise)  unless the  transferee  assumes  in  writing  the
obligations of Employer  hereunder or Employee in his sole discretion  waives in
writing compliance with this provision.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.

                                        SERVOTRONICS, INC.

[SEAL]                                  By /s/ LEE D. BURNS, TREASURER/SECRETARY
                                           ------------------------------------
                                        Name: Lee D. Burns
                                              ---------------------------------
                                        Title: Treasurer/Secretary
                                               --------------------------------

ATTEST:

/s/ BERNADINE E. KUCINSKI
------------------------                /s/ NICHOLAS D. TRBOVICH, SR.
                                        --------------------------------------
                                            NICHOLAS D. TRBOVICH, SR.

                                       7

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