On August 25, 2015, Precision Aerospace Components, Inc. established a new revolving credit facility in an aggregate principal amount of up to $7.5 million by entering into a Credit Agreement with Webster Business Credit Corporation, as Lender The Company's wholly owned subsidiaries, Freundlich Supply Company, Inc., Tiger-Tight Corp., Aero-Missile Components, Inc. and Creative Assembly Systems serve as guarantors of the Revolving Loan. Borrowings under the Revolving Loan may be used to finance working capital and other general corporate purposes. On August 25, 2015, pursuant to the Credit Agreement, the Company used an initial advance of $5,125,000.00 under the Revolving Loan to repay $5,000,000.00 of principal on that Senior Secured Note issued by the Subsidiaries in favor of C3 Capital Partners III, L.P. (C3") in the amount of $5,500,000 on January 16, 2015.

A principal balance of $500,000.00 remains on the Senior Secured Note. Pursuant to the partial repayment to C3, the Company incurred a $250,000 prepayment penalty, of which $125,000 was paid to C3 on August 25, 2015. The remaining $125,000.00 is due in installments during the fourth quarter of 2015.

Borrowings under the Credit Agreement bear interest, at the Company's election, at a rate tied to one of the following rates: (i) the prime lending rate plus 1.25% or (ii) the adjusted daily LIBOR rate plus 2.75%. The outstanding principal amount of any borrowings under the Revolving Loan will be due and payable on August 25, 2018, subject to an earlier maturity date upon an event of default. The Credit Agreement contains usual and customary covenants for financings of this type, including, among other things: requirements to deliver financial statements, other reports and notices; restrictions on indebtedness; restrictions on dividends, distributions and redemptions of equity and repayment of subordinated indebtedness; restrictions on liens; restrictions on making certain payments; restrictions on investments; restrictions on asset dispositions and other fundamental changes; and restrictions on transactions with affiliates.

The obligations of the Company and its Subsidiaries under the Credit Agreement are secured by liens and security interests on all assets of the Company and its Subsidiaries, including a pledge of 100% of the equity of the Subsidiaries.