On June 28, 2023, Servotronics, Inc. entered into a Financing Agreement with Rosenthal & Rosenthal, Inc. and closed on its new secured credit facility to replace its existing credit facility with Bank of America, N.A. The new credit facility of up to $7,000,000 has a term of three years, subject to acceleration in the event of customary events of default. The Company’s obligations to repay amounts borrowed under the Financing Agreement are secured by liens on substantially all of the non-real property assets of the Company and the amount available for borrowing under the Financing Agreement is limited to the lesser of the facility total and the calculated borrowing base, which is based on certain loan percentages applied to eligible accounts receivable of the Company. The interest rate per annum is the greater of prime or 7% (herein referred to as “Prime”) plus 1%.

The Company will pay a commitment fee of 0.5% on the average daily amount of the facility available, but unused. The credit facility is subject to a customary facility fee and administration fee. The Financing Agreement contains customary representations, warranties, affirmative and negative covenants, limitations and events of default.

All obligations to Bank of America, N.A. under the Company’s previous credit facility were paid in full in the aggregate amount of approximately $3,600,000 upon closing of the Financing Agreement.