Document:

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                                PAGE 1 OF 31                      EXHIBIT 4.1(B)

                           SECOND AMENDED AND RESTATED
                               TERM LOAN AGREEMENT

         THIS AGREEMENT, made the 26th day of February, 1999, by and between
FLEET NATIONAL BANK, successor in interest to FLEET BANK OF NEW YORK, having an
office and place of business at 10 Fountain Plaza, Buffalo, New York
(hereinafter called "Bank") and SERVOTRONICS, INC., a corporation organized and
existing under the laws of the State of Delaware, and having its principal
office and place of business at 1110 Maple Road, Elma, New York 14059
(hereinafter called "Borrower").

                              W I T N E S S E T H:

         WHEREAS, the parties have entered into a Term Loan Agreement dated
October 4, 1993 (the "Existing Loan Agreement") pertaining to a term loan in the
original principal amount of $964,285.00 and having a current principal balance
of approximately $206,630.17 (the "Existing Loan"); and

         WHEREAS, the Existing Loan was evidenced by Borrower's Promissory Note
dated October 4, 1993 in the principal amount of $964,285.00; and

         WHEREAS, the parties desire to amend and restate the Existing Loan
Agreement in its entirety by the substitution and replacement thereof by this
Second Amended and Restated Term Loan Agreement to provide for, among other
things, an additional loan to the Borrower from the Bank and to refinance the
Existing Loan as provided in this Second Amended and Restated Term Loan
Agreement.

         NOW, THEREFORE, it is agreed as follows:

     1. DEFINITIONS. The following terms shall have the following meanings in
this Agreement:

          1.1. "ACCOUNTING TERMS" shall mean all accounting terms not
specifically defined in this Agreement and shall be construed in accordance with
generally accepted accounting principles consistent with those applied in the
preparation of the financial statements referred to in Section 4.6.

          1.2. "BORROWER DOCUMENTS" shall have the meaning ascribed to such term
in Section 3.1(i) hereof.

          1.3. "BUSINESS DAY" means a day on which commercial banks are not
authorized or required to close in New York, New York; provided further that in
the context of calculation of the amount or due date of a payment obligation
which is calculated by reference to any LIBOR Based Rate, Business Day means a
day on which commercial banks are not authorized or required to close in both
New York and London.

<PAGE>   2

                                  Page 2 of 31                    EXHIBIT 4.1(B)

          1.4. "CONSOLIDATED SUBSIDIES" means Subsidiaries having accounts
consolidated with the accounts of Borrower in the Borrower's consolidated
financial statements prepared in accordance with GAAP.

          1.5. "COST OF FUNDS" means the per annum rate of interest which Bank
is required to pay, or is offering to pay, for wholesale liabilities, adjusted
for reserve requirements and such other requirements as may be imposed by
federal, state or local government and regulatory agencies, as determined by
Fleet Treasury Group.

          1.6. "CURRENT ASSETS" shall include those assets of Borrower and its
consolidated subsidiaries classified as current in accordance with generally
accepted accounting principles.

          1.7. "CURRENT LIABILITIES" shall include those liabilities of Borrower
and its consolidated subsidiaries classified as current in accordance with
generally accepted accounting principles with adequate provisions for all
accrued liabilities, including, without limitation, all federal and state taxes
except those taxes for which offsetting carry forward net operating losses of
the Borrower are available and those classified as deferred in accordance with
generally accepted accounting principles.

          1.8. "DEBT SERVICE COVERAGE RATIO" shall refer to the sum of
Borrower's and Borrower's consolidated subsidiaries, net profits, depreciation,
interest expense and non-cash charges for such period, compared to the sum of
Borrower's and Borrower's consolidated subsidiaries' current maturities of
long-term debt including leases that are capitalized, interest expense and
capital expenditures not funded by long-term debt owing to Bank or incurred
pursuant to and under the IDA Bond Issue and Related Financing, for such period.

          1.9. "DEFAULT INTEREST RATE" means the Stated Prime Rate, as the same
may change from time to time, plus four percent (4%) per annum, provided,
however, that if any portion of the principal of the Term Notes bears interest
calculated by reference to a LIBOR Based Rate at the time of maturity or
acceleration, such principal shall bear interest at four percent (4%) over such
rate until the end of the LIBOR Period then in effect and shall thereafter bear
interest at the Stated Prime Rate plus four percent (4%) until paid.

          1.10. "ESOP" shall refer to the Servotronics, Inc. Employee Stock
Ownership Plan (the "Plan") executed May 15, 1985, effective as of January 1,
1985, as amended, which is a stock bonus plan qualified under Section 401(a) of
the Internal Revenue Code of 1954 (the "Code"), as amended, and an employee
stock ownership plan under Section 4975(e)(7) of the Code and Section 407(d)(6)
of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended.

          1.11. "EVENT OF DEFAULT" means the occurrence of any of the events set
forth in Section 6.1 hereof, including the giving of notice and the lapse of
time as specified in Section 6.1.

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                                  Page 3 of 31                    EXHIBIT 4.1(B)

          1.12. "FIXED RATE" means the Cost of Funds on the date that the Linked
Deposit Program shall become effective for the Term Loans plus one-half of one
percent (1/2 of 1%) per year (computed on the basis of thE Cost of Funds plus
two and one half percent per year reduced by two percent (2%) per year pursuant
to the Linked Deposit Program).

          1.13. "FIXED RATE TERM" means the two-year period during which the
Linked Deposit Program shall be in effect in respect of the Term Loans, which
period is anticipated to commence on February 26, 1999.

          1.14. "FIXED RATE TRANCHE" means that portion of the principal amount
of the Term Loans outstanding under Term Note B which bears interest at the
Fixed Rate.

          1.15. "GAAP" means generally accepted accounting principals in the
United States of America.

          1.16. "IDA BOND ISSUE AND RELATED FINANCING" means the Erie County
Industrial Development Agency Industrial Development Revenue Bonds (1994
Servotronics, Inc. Project) together with related financing assisted by the
Regional Economic Development Program and Industrial Access Program in the State
of New York and all other financing assisted by governmental authorities and
related to such Project.

          1.17. "LIBOR" means, as applicable to the LIBOR Tranche, the rate per
annum (rounded upward, if necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for deposits in U.S. dollars, for a
period of time comparable to the corresponding LIBOR Period which appears on the
Telerate page 3750 as of 11:00 a.m. London time on the day that is two London
Banking Days preceding the first day of such LIBOR Period; provided, however, if
the rate described above does not appear on the Telerate System on any
applicable interest determination date, the LIBOR rate shall be the rate
(rounded upwards as described on the Reuters Page "LIBO" (or such other page as
may replace the LIBO Page on that service for the purpose of displaying such
rates), as of 11:00 a.m. (London Time), on the day that is two (2) London
Banking Days prior to the beginning of such LIBOR Period. "Banking Day" shall
mean, in respect of any city, any date on which commercial banks are open for
business in that city.

If both the Telerate and Reuters system are unavailable, then the rate for that
date will be determined on the basis of the offered rates for deposits in U.S.
dollars for a period of time comparable to such LIBOR Period which are offered
by four major banks in the London interbank market at approximately 11:00 a.m.
London time, on the day that is two (2) London Banking Days preceding the first
day of such LIBOR Period as selected by the Calculation Agent. The principal
London office of each of the four major London banks will be requested to
provide a quotation of its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S.
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                                  Page 4 of 31                    EXHIBIT 4.1(B)

dollars to leading European banks for a period of time comparable to
such LIBOR Period offered by major banks in New York City at approximately 11:00
a.m. New York City time, on the day that its two London Banking Days preceding
the first day of such LIBOR Period. In the event that Bank is unable to obtain
any such quotation as provided above, it will be deemed that LIBOR pursuant to a
LIBOR Period cannot be determined and the outstanding principal amount of the
Term Loans shall bear interest at the Stated Prime Rate commencing on the day on
which any current LIBOR Period or Fixed Rate Term (as applicable) then in effect
shall expire until the Bank using commercially reasonable efforts is able to
obtain such a quotation as provided above.

In the event that the Board of Governors of the Federal Reserve System shall
impose a Reserve Percentage with respect to LIBOR deposits of Bank then for any
period during which such Reserve Percentage shall apply, LIBOR shall be equal to
the amount determined above divided by an amount equal to 1 minus the Reserve
Percentage.

          1.18. "LIBOR BASED RATE" means LIBOR plus two percent (2%).

          1.19. "LIBOR PERIOD" means a period of time having a duration of 1, 2,
3, 6 or 12 months as selected by the Borrower in respect of each LIBOR Tranche,
provided that each LIBOR Period selected must terminate on or before the date on
which the final payment is due to the Bank under the corresponding Term Note.

          1.20. "LIBOR TRANCHE" means that portion of the principal amount of
debt evidenced by the Term Notes for which interest is computed on a LIBOR Based
Rate for a LIBOR Period.

          1.21. "LINKED DEPOSIT PROGRAM" means the New York State Excelsior
Linked Deposit Program whereby interest on loans for specified borrowers is
reduced in consideration for deposits maintained with the Bank by the State of
New York.

          1.22. "LIABILITIES" shall have the meaning usually given to that word
in accordance with generally accepted accounting principles, and shall refer to
the total liabilities of Borrower and its consolidated subsidiaries.

          1.23. "NET WORKING CAPITAL" shall refer to the excess of Current
Assets over Current Liabilities as those terms are defined in Sections 1.4 and
1.5.

          1.24. "OBLIGATIONS" means all debts, liabilities and obligations of
Borrower to Bank now existing or hereafter arising or created (including but not
limited to all Obligations of Borrower under this Agreement and the Term Note),
without limitation as to amount, and including without limitation all debts,
liabilities and obligations which are direct or indirect, absolute or
contingent, and any sums which Bank receives in payment of Obligations and is
obligated by a Bankruptcy Court or other legal authority to repay and does so
repay.

          1.25. "PERMITTED ENCUMBRANCES" means:
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                                  Page 5 of 31                    EXHIBIT 4.1(B)

     (a) liens imposed by law for taxes that are not yet due or are being
     contested by Borrower in good faith and by appropriate proceedings;

     (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and
     other like Liens imposed by law, arising in the ordinary course of business
     and securing obligations that are not overdue by more than 30 days or are
     being contested by Borrower in good faith and by appropriate proceedings;

     (c) pledges and deposits made in the ordinary course of business in
     compliance with workers' compensation, unemployment insurance and other
     social security laws or regulations;

     (d) deposits to secure the performance of bids, trade contracts, leases,
     statutory obligations, surety and appeal bonds, performance bonds and other
     obligations of a like nature, in each case in the ordinary course of
     business;

     (e) easements, zoning restrictions, rights-of-way and similar encumbrances
     on real property imposed by law or arising in the ordinary course of
     business that do not secure any monetary obligations and do not materially
     detract from the value of the affected property or interfere with the
     ordinary conduct of business of the Borrower or any Consolidated
     Subsidiary; and

     (f) security interests granted to Bank and security interests granted as
     security for the payment of purchase money indebtedness permitted by
     Sections 5.1 and 5.5 hereof.

          1.26. "RESERVE PERCENTAGE" means, with respect to a LIBOR Based Rate
and a LIBOR Period, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such LIBOR Period under Regulation D of the Board of Governors of the
Federal Reserve Board by member banks of the Federal Reserve System in New York
City with deposits exceeding $1,000,000,000 against "Eurocurrency Liabilities"
(as such term is used in Regulation D). Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves required to
be maintained by such member banks by reason of any regulatory change against
(i) any category of liabilities which includes deposits by reference to which
the LIBOR Based Rate for a LIBOR Tranche is to be determined or (ii) any
category of extensions of credit or other assets which include LIBOR Rate
Tranches.

          1.27. "STATED PRIME RATE" means the variable per annum rate of
interest so designated from time to time by the Bank as its prime rate. The
Stated Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate being charged to any customer.

          1.28. "SUBSIDIARY" means any corporation, partnership, joint venture,
limited liability company, trust or estate of which (or in which) more than 50%
of (a) the issued and outstanding capital stock having ordinary voting power to
elect a

<PAGE>   6
                                  Page 6 of 31                    EXHIBIT 4.1(B)

majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by Borrower, by Borrower and one or more of its other Subsidiaries or by one or
more of Borrower's other Subsidiaries.

          1.29. "TANGIBLE NET WORTH" shall refer to the total stockholders'
equity of Borrower and its consolidated subsidiaries less all of the following:
treasury stock; intangible assets of any kind, including, without limitation,
goodwill, patents and trademarks; and deferred expenses (exclusive of prepaid
real property taxes and insurance premiums), to be determined in accordance with
generally accepted accounting principles.

          1.30. "TERM LOANS" means the loans made pursuant to Section 2.1 hereof
and evidenced by the Term Notes.

          1.31. "TERM NOTE A" means the Term Note in substantially the form of
Exhibit A hereto; "TERM NOTE B" means the Term Note in substantially the form of
Exhibit B hereto; and "TERM NOTES" means Term Note A and Term Note B,
collectively.

          1.32. "YIELD MAINTENANCE FEE" means, in respect of any prepayment of
the Fixed Rate Tranche, whether by acceleration or otherwise, the current rate
on the date of prepayment for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a maturity date
closest to the end of the Fixed Rate Term, shall be subtracted from the Cost of
Funds component of the Fixed Rate. If the result is zero or a negative number,
there shall be no Yield Maintenance Fee. If the result is a positive number,
then the resulting percentage shall be multiplied by the amount of the principal
balance being prepaid. The resulting amount shall be divided by 360 and
multiplied by the number of days remaining in the Fixed Rate Term. Said amount
shall be reduced to present value calculated by using the number of days
remaining in the Fixed Rate Term and using the above-referenced United States
Treasury security rate. The resulting amount shall be the Yield Maintenance Fee
due to Bank upon prepayment of the Fixed Rate Tranche.

     2. TERM LOAN FACILITY

          2.1. TERM LOANS. Subject to the terms and conditions of this
Agreement, on the date hereof the Bank shall lend and the Borrower shall borrow
the principal amount of $1,000,000. The Term Loans shall be evidenced by the
Term Notes, each in the original principal amount of $500,000.

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                                  Page 7 of 31                    EXHIBIT 4.1(B)

          2.2. RATES AND PAYMENT OF INTEREST.

               (i) The principal amount outstanding from time to time under Term
Note A shall bear interest at the LIBOR Based Rate from the date hereof until
paid in full.

               (ii) The principal amount outstanding from time to time under
Term Note B shall bear interest at the LIBOR Based Rate from the date hereof
until paid in full except during the Fixed Rate Term, during which the principal
amount outstanding from time to time under Term Note B shall bear interest at
the Fixed Rate. (That is, the interest rate on the principal amount outstanding
from time to time under Term Loan B shall be at the LIBOR Based Rate before and
after the Fixed Rate Term.)

               (iii) All interest accrued on the Term Loan (including both Term
Notes and including interest on the LIBOR Tranche and on the Fixed Rate Tranche)
shall be payable on the first day of each month after the date hereof.

               (iv) All interest shall be computed on the basis of a year of 360
days and charged for each day on which principal is outstanding at the close of
business of such day, including any days for which the payment of principal is
extended by reason of Sundays and holidays.

          2.3. LIBOR BASED RATE ELECTIONS. Borrower shall give Bank two (2)
Business Days notice prior to electing a LIBOR Base Rate and corresponding LIBOR
Period for any portion of the LIBOR Tranche. If Borrower does not elect a new
LIBOR Period at least two Business Days prior to the expiration of any LIBOR
Period, the interest rate for the LIBOR Tranche may be set by the Bank at the
LIBOR Based Rate for a 1 month LIBOR Period. Not more than one LIBOR Period may
be in effect at one time.

          2.4. PAYMENT OF PRINCIPAL. The principal of the Term Loans shall be
payable in twenty-eight substantially equal, consecutive quarterly installments,
commencing May 1, 1999 and continuing on the first day of each August, November,
February and May thereafter as follows: twenty-seven installments in the amount
of $35,714.28 each and a twenty-eighth and final installment due February 1,
2006 in the amount of $35,714.44, at which time all outstanding principal and
accrued interest shall be paid in full. All payments of principal shall be
applied first to the payment of principal outstanding under Term Note A and
then, after payment in full of Term Note A, to the payment of principal
outstanding under Term Note B.

          2.5. VOLUNTARY PREPAYMENT OF PRINCIPAL.

               (i) Prepayment of the Libor Rate Tranche can be made in whole
(but not in part) at any time at the end of a LIBOR Period.

               (ii) Prepayment of the Fixed Rate Tranche can be made in whole or
in part only at the end of the Fixed Rate Term.

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                                  Page 8 of 31                    EXHIBIT 4.1(B)

               (iii) All prepayments of principal shall be applied first to
payment of the principal outstanding under Term Note A and then, after payment
in full of Term Note A, to payment of the principal outstanding under Term Note
B.

          2.6. PAYMENTS GENERALLY. All payments shall be made in lawful money of
the United States and in immediately available funds.

     3. REPRESENTATIONS AND WARRANTIES OF BORROWER.

          3.1. Borrower makes the following representations and warranties to
Bank on the date hereof:

               (i) Borrower has full power and authority to enter into this
Agreement, to borrow hereunder, to execute and deliver any related notes,
assignments, mortgages, security agreements, guarantees or other agreements and
documents executed by Borrower in connection with the Obligations (collectively,
the "Borrower Documents"), and to take all other action required of it under
this Agreement, all of which has been duly authorized by all proper and
necessary corporate action, no shareholder action being required.

               (ii) To the best of Borrower's knowledge, there are no actions,
suits or proceedings pending or threatened which, if adversely determined, would
materially adversely affect the property, assets, financial condition or
business of Borrower, except as set forth on Schedule 3.1 annexed hereto.

               (iii) This Agreement constitutes, and all Borrower Documents when
executed and delivered will constitute, legal, valid and binding obligations of
Borrower enforceable in accordance with their respective terms, except to the
extent that enforcement of any such obligations of Borrower may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws of general
application affecting the rights and remedies of creditors generally.

               (iv) To the best of Borrower's knowledge, Borrower is not in
violation of any terms of (i) any charter, by-law, mortgage, indenture,
indebtedness or other instrument or agreement, or (ii) any order, writ,
judgment, injunction, decree or demand, or (iii) any statute, rule or
regulation, which violation may materially adversely affect the financial
condition or properties of Borrower; and the execution and delivery of this
Agreement and the Borrower Documents, and the performance thereof is and will be
in compliance with each and all of the foregoing terms and will not result in
any such violation or result in the creation of any mortgage, lien, charge or
encumbrance upon any of the properties or assets of Borrower (except in favor of
the Bank), and there is no such term which shall or may forseeably materially
adversely affect the financial condition, assets, business or operations of
Borrower and its consolidated subsidiaries taken as a whole.

               (v) Borrower has furnished the Bank consolidated financial
statements of Borrower and its subsidiaries audited by PricewaterhouseCoopers,
LLP as of December 31, 1997.

<PAGE>   9
                                  Page 9 of 31                    EXHIBIT 4.1(B)

          3.2. Borrower makes the following representations and warranties to
Bank which shall be deemed to be continuing representations and warranties so
long as any of the Obligations remain unpaid:

               (i) Borrower is duly organized, validly existing and in good
standing under the laws of Delaware, the jurisdiction in which it was
incorporated.

               (ii) Borrower has the requisite corporate powers to transact the
business in which it is engaged and is duly licensed or qualified and in good
standing in each jurisdiction in which failure to be so licensed or qualified
would materially adversely affect its business or operations.

               (iii) Borrower has and will continue to have good and marketable
title to all of its assets (subject to Permitted Encumbrances).

               (iv) To the best of Borrower's knowledge, no consent, approval or
authorization of, or registration, declaration or filing with, any governmental
body or authority or other person or entity is required in connection with the
valid execution, delivery or performance of this Agreement or any of the
Borrower Documents (other than the approval of the appropriate New York State
agency required for the Linked Deposit Program, which approval has been
obtained).

               (v) Borrower has, to the best of its knowledge, duly filed and
will continue to file all tax returns (or appropriate extensions therefor)
required to be filed in any jurisdiction, if any, including, without limitation,
all federal income tax returns, and has duly paid all taxes shown as being due
thereon and all other taxes, assessments and governmental charges on Borrower's
assets and incomes which are due and payable, excluding any tax, assessment or
charge which Borrower is contesting in good faith and by appropriate
proceedings.

     4. AFFIRMATIVE COVENANTS. During the term of this Agreement and so long as
any of the Obligations shall remain unpaid, Borrower:

          4.1. Will duly and punctually pay principal of and interest on the
Obligations when due.

          4.2. Will have, at the end of each of its fiscal quarters, Net Working
Capital of not less than $5,000,000.00.

          4.3. Will have, at the end of each of its fiscal quarters, a Tangible
Net Worth of not less than $5,000,000.00.

          4.4. Will have, at the end of each of its fiscal quarters, a ratio of
its Liabilities to Tangible Net Worth of not more than 1.5 to 1.0.

          4.5. Will have, for the twelve (12) month period ending on the last
day of any of its fiscal quarters, a Debt Service Coverage Ratio of not less
than 1.0 to 1.0.

<PAGE>   10
                                 Page 10 of 31                    EXHIBIT 4.1(B)

          4.6. Will furnish to Bank: (i) within forty-five (45) days after the
end of each of its fiscal quarters other than year end, an internally prepared
consolidated and consolidating balance sheet, operating statement and statement
of changes in shareholders' equity (if such changes result from other than
income) of Borrower at and as of the end of such quarter, together with copies
of Borrower's SEC Form 10-Q SB or equivalent filing; (ii) within one hundred
twenty (120) days after the end of each of its fiscal years: a copy of SEC Form
10-K SB or equivalent filing, and consolidated and consolidating financial
statements of Borrower as of the end of each such year audited by
PricewaterhouseCoopers, LLP or any other independent certified public
accountants reasonably satisfactory to Bank; (iii) together with each quarterly
financial statement a certificate of the Chairman or Treasurer of Borrower
certifying, to his best knowledge and belief, that (a) no Event of Default under
the terms of this Agreement has occurred, and (b) no event which would
constitute an Event of Default under this Agreement but for the requirement that
notice be given or time elapse, or both, has occurred or, if any such event has
occurred or then exists, stating the nature thereof and the steps being taken by
Borrower to cure same; and (iv) as soon as they are available, copies of all
proxy statements, annual reports made available to its security holders and
annual reports filed by Borrower with the Securities and Exchange Commission.

          4.7. Will promptly pay or cause to be paid all of its taxes,
assessments and other governmental charges prior to the date on which penalties
are attached thereto, establish adequate reserves for the payment of taxes and
assessments and make all required withholding and other tax deposits; provided,
however, that nothing herein contained shall be interpreted to require the
payment of any tax, assessment or charge so long as it is being contested in
good faith by Borrower.

          4.8. Will keep (i) all of its property so insurable insured at all
times with responsible insurance carriers against fire, theft and other hazards
in such manner and to the extent that like properties are usually insured by
others operating properties of a similar character in the same general locality;
(ii) adequately insured at all times with responsible insurance carriers against
liability on account of damages to person or property and under all applicable
workers' compensation laws; and will promptly deliver to Bank, upon request,
certificates of insurance of any of those insurance policies required to be
carried by Borrower pursuant hereto.

          4.9. Will promptly inform Bank of the commencement of any action,
suit, counterclaim or proceeding against Borrower (i) involving a claim in
excess of $100,000.00, unless such claim is fully covered by insurance (with
deductibility of not more than $25,000.00); (ii) involving a claim which results
in the aggregate of all claims then outstanding and not fully insured to exceed
$100,000.00; (iii) which would materially adversely affect the business of
Borrower; or (iv) which questions the validity of this Agreement or the Term
Notes or any action taken or to be taken pursuant to any of the foregoing.

          4.10. Will maintain its corporate existence in good standing and
remain or become duly qualified or licensed and in good standing as a foreign
corporation in

<PAGE>   11

                                 Page 11 of 31                    EXHIBIT 4.1(B)

each jurisdiction in which failure to do so would have a material adverse impact
on its business or operations.

          4.11. Will promptly notify Bank in writing of (i) any material
adjustment or assessment by any taxing authority as soon as Borrower has
knowledge thereof, except for adjustments or assessments in an amount not
exceeding $100,000.00 being contested by Borrower in good faith, and the results
of any audit done by government officials of any of Borrower's tax returns after
its completion; (ii) the occurrence of any event or the existence of a condition
which constitutes, or which but for a requirement of lapse of time or notice, or
both, would constitute, an Event of Default as defined in this Agreement; or
(iii) any default by Borrower in the performance of any terms or conditions
contained in any mortgage, indenture or instrument relating to borrowed money or
the lease of real or personal property to which Borrower is a party which either
materially adversely affects the financial condition or business of Borrower and
its consolidated subsidiaries taken as a whole or which exceeds $100,000.00 in
outstanding principal amount.

          4.12. Will permit any Bank employees or agents designated by Bank at
such times as Bank may reasonably request to visit and inspect any of the
properties, corporate books and financial records of Borrower and to make
extracts from and copies of such books and financial records, except as such
visitation, inspection and the making of extracts and copies may be limited by
government restrictions, the contractual or other restrictions of Borrower's
customers, or the Company's procedures established to protect its confidential
proprietary information (other than its financial information).

          4.13. Will maintain its principal accounts with Bank or its successor
and cause Bank to be the major bank of account of Borrower.

          4.14. Will use the proceeds of the Term Loans as follows:
(i) refinance the Existing Debt, (ii) purchase equipment to be used in
Borrower's business, and (iii) for proper corporate working capital or
acquisition purposes of Borrower.

          4.15. Will grant a first priority, perfected security interest in all
equipment purchased with proceeds of the Term Loans and shall have taken all
steps necessary for such perfection at the later of: (i) the time that Borrower
shall take possession of such equipment; or (ii) within ten days after the
consummation of this Agreement.

     5. NEGATIVE COVENANTS. During the term of this Agreement and so long as any
of the Obligations shall remain unpaid, Borrower, without the prior written
consent of Bank, which consent shall not be unreasonably withheld, will not:

          5.1. Create, incur, assume or suffer to exist any liability for
borrowed money except for (i) liabilities to Bank; (ii) indebtedness
subordinated to any and all indebtedness of Borrower to Bank; and (iii) other
liabilities for money borrowings and purchase money indebtedness incurred in the
acquisition of additions to fixed assets not exceeding an aggregate principal
amount at any one time outstanding of $1,000,000.00.

<PAGE>   12
                                 Page 12 of 31                    EXHIBIT 4.1(B)

          5.2. Merge or consolidate with or into any other corporation; acquire
all or substantially all of the capital stock or assets of any other firm or
corporation; convey, lease or sell all or any substantial portion of its
property, assets or business (excluding sales of inventory in the ordinary
course of business) to any other person, firm or corporation; sell and lease
back any of its property assets; or amend its Certificate of Incorporation for
the purpose of altering its capital structure. Borrower may, however, without
violating the foregoing, permit one or more corporations to consolidate with or
merge into it or acquire all or substantially all of the capital stock or assets
of another corporation if Borrower is the surviving, resulting or transferee
corporation, as the case may be, and immediately after such merger,
consolidation or acquisition the Borrower has a Tangible Net Worth at least
equal to that of Borrower immediately prior to such merger, consolidation or
acquisition.

          5.3. Enter, as Lessee, into any leases or assume any leases, of real
property or personal property except (i) renewals of Borrower's existing leases;
(ii) replacement leases for property similar to that currently being leased by
Borrower; (iii) additional leases not covered by clause (iv) of this subsection
which, in the aggregate, have lease payments not exceeding $100,000.00 per year;
and (v) leases that are capitalized.

          5.4. Loan or otherwise advance funds to any person, firm or
corporation or become a guarantor, surety or otherwise become liable for the
debts or other obligations of any other person, firm or corporation exceeding,
in the aggregate, $50,000.00; provided, however, that this section shall have no
application to:

               (i) loans or advances to or guaranties of the debts or other
obligations of a Consolidated Subsidiary or employee stock ownership plan of
Borrower;

               (ii) the endorsement of negotiable instruments for the payments
of money deposited in the Borrower's bank account for collection in the ordinary
course of business;

               (iii) trade credit extended in the ordinary course of the
Borrower's business;

               (iv) advances made in the usual course of business to officers
and employees of the Borrower for: (1) travel and other out-of-pocket expenses
incurred by them on behalf of the Borrower in connection with such business, or
(2) other general purposes not exceeding $100,000.00 in the aggregate; and

               (v) investments in money market deposit accounts, prime
commercial paper and certificates of deposit in United States banks (having
assets in excess of $50,000,000.00), obligations of the United States Government
or any agency thereof and obligations guaranteed by the United States
Government.

          5.5. Mortgage, pledge or otherwise encumber any of its assets, except
for (i) liens granted to Bank; and (ii) "purchase money security interests" as
defined in Section 9.107 of the New York Uniform Commercial Code.

<PAGE>   13
                                 Page 13 of 31                    EXHIBIT 4.1(B)

     6. EVENTS OF DEFAULT.

          6.1. The occurrence of any one or more of the following events shall
constitute an Event of Default:

               (i) Failure by the Borrower to pay when due any installment of
principal of or interest on any of the Obligations and continuation of such
failure for fifteen (15) days after written notice by the Bank to the Borrower
of such failure.

               (ii) The making of a general assignment by Borrower for the
benefit of creditors, or the institution by Borrower of any type of bankruptcy,
reorganization or insolvency proceeding under any state or federal law or of any
formal or informal proceeding for the dissolution or liquidation of, settlement
of all creditors' claims against, or winding-up of affairs of, Borrower without
the prior written consent of Bank.

               (iii) The appointment of a receiver or trustee for Borrower or
for all or a substantial part of the assets of Borrower; or the institution
against Borrower of any type of bankruptcy; reorganization or insolvency
proceeding under any state or federal law or any proceeding for the liquidation
or the winding-up of the affairs of Borrower, and the failure to have such
appointment vacated, or such proceeding dismissed, within thirty (30) days.

               (iv) If the subject matter of any certificate, statement,
representation, warranty or audit heretofore or hereafter furnished by or on
behalf of Borrower (including, without limitation, the representations and
warranties contained herein) shall prove to be untrue or misleading as of the
date made in any material respect in relation to the assets, business, income or
financial condition of Borrower and its consolidated subsidiaries taken as a
whole or to have omitted any substantial contingent or unliquidated liability or
claim against Borrower; or, if on the date of the execution of this Agreement or
on the date any Obligation is incurred hereafter, there shall have been any
materially adverse change in any of the facts disclosed by any such certificate,
statement, representation, warranty or audit in relation to the assets,
business, income or financial condition of Borrower and its consolidated
subsidiaries taken as a whole and such change is not remedied within thirty (30)
days after notice thereof from Bank to Borrower.

               (v) Default by Borrower in the performance of any term or
condition of this Agreement not otherwise specifically referred to in this
Section 6, which default is not cured within fifteen (15) days after written
notice thereof from Bank to Borrower.

               (vi) Default by Borrower in the payment of or the performance of
the terms of any other indebtedness whether now existing or hereafter arising to
any party other than Bank for borrowed money except where such indebtedness is
being contested by Borrower in good faith or the amount of such indebtedness
does not exceed $100,000.00 in the aggregate.

<PAGE>   14
                                 Page 14 of 31                    EXHIBIT 4.1(B)

               (vii) If any judgment or judgments in excess of $50,000.00 (other
than any judgment for which Borrower is fully insured with deductibility of not
more than $25,000.00) against Borrower remains unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of forty-five (45) days.

               (viii) The occurrence of any Event of Default, which, under the
terms of any of the Borrower Documents or any other loan agreement, note,
indenture, mortgage, security agreement or other agreement evidencing or
securing indebtedness of Borrower to any party other than Bank, creates in Bank
or such other party a right to require immediate payment in full of any of the
Obligations or other indebtedness; provided, however, that this section shall
not apply to defaults under the terms of any loan agreement, note, indenture,
mortgage, security agreement or other agreement evidencing or securing
indebtedness of Borrower to such other party where such default is being
contested by Borrower in good faith or the related indebtedness does not exceed
$100,000.00 in the aggregate.

               6.2. Upon the occurrence of any of the Events of Default
enumerated in Section 6.1 hereof and, except with respect to an Event of Default
under subsection (i) of Section 6.1, the continuation of such Event of Default
for a period of fifteen (15) days after receipt of notice of such Event of
Default by Borrower from Bank, all obligations of Bank under this Agreement may
be immediately terminated, and all Obligations not otherwise then due and
payable or payable on demand shall immediately become due and payable, at the
option of Bank. Further, Borrower agrees that it will promptly furnish Bank with
such security as Bank may request and will execute such agreements or documents
deemed necessary by Bank to accomplish same upon the occurrence of an Event of
Default (and, except with respect to an Event of Default under subsection 5.1,
the continuation of such Event of Default for a period of fifteen (15) days
after receipt of notice of such Event of Default by Borrower from Bank) and,
concurrently, a judgment or judgments in excess of $100,000.00 (other than any
judgment for which Borrower is fully insured with deductibility of not more than
$25,000.00) against Borrower remains unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of fifteen (15) days. Borrower agrees that
the foregoing rights and remedies herein expressly specified are cumulative and
not exclusive of any rights or remedies which Bank may or would otherwise have
at law or by any instrument evidencing terms of deposit of any funds or by an
assignment or transfer of collateral or by any other instrument signed or
assented to by Borrower. If by reason of an Event of Default Bank elects to
declare the Term Loans to be immediately due and payable, then any Yield
Maintenance Fee with respect to the Fixed Rate Tranche shall become due and
payable in the same manner as though Borrower had exercised such right of
prepayment.

     7. EXPENSES. Borrower shall reimburse Bank promptly for all reasonable
out-of-pocket costs and expenses, including reasonable counsel fees and
disbursements, incurred by Bank in connection with (a) the preparation and
execution of this Agreement, and (b) if Borrower is in default of any of its
obligations hereunder or an Event of Default has occurred and is continuing, the
enforcement of any provision of this Agreement or any of the Borrower Documents.

<PAGE>   15
                                 Page 15 of 31                    EXHIBIT 4.1(B)

     8. Miscellaneous.

          8.1. This Agreement: cannot be amended, supplemented, modified or
terminated orally (or by any course of conduct or usage of trade) and may be
amended only by an agreement in writing duly executed by authorized officers of
the parties hereto.

          8.2. No course of dealing and no failure on the part of Bank to
exercise, and no delay by Bank in exercising, any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by Bank of
any right or power hereunder preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies herein
expressed are cumulative and not exclusive of any other right or remedy which
Bank may have.

          8.3. Any notice or demand to be given hereunder or any notice or
demand under any of the Borrower Documents that does not specify a method of
notice shall be duly given if personally delivered or mailed by registered or
certified mail as follows to each of the parties below and shall be effective on
the date of personal delivery or three Business Days after mailing:

           To Bank at:               Fleet National Bank
                                     10 Fountain Plaza
                                     Buffalo, New York 14202
                                     ATTN:  Gerald A.  Lee
                                               Vice President

           To Borrower at:           Servotronics, Inc.
                                     1110 Maple Road
                                     Elma, New York  14059
                                     ATTN:  Lee D.  Burns
                                            Treasurer

          8.4. This Agreement and the acts and obligations of the parties
hereunder shall be construed and interpreted in accordance with the laws of the
State of New York, without regard to principles of conflict of laws.

          8.5. If there is any conflict between the terms of this Agreement and
the terms of any of the Term Notes or other Borrower Documents, the terms of
this Agreement shall be deemed to govern and control.

          8.6. The Existing Loan Agreement is hereby amended and restated in its
entirety by the substitution and replacement thereof by this Second Amended and
Restated Term Loan Agreement.

          8.7. Bank shall have the unrestricted right at any time and from time
to time, and without the consent of or notice to Borrower, to grant to one or
more banks or other financial institutions (each, "Participant") participating
interests in Bank's obligations to lend hereunder and/or any or all of the loans
held by Bank hereunder. In

<PAGE>   16
                                 Page 16 of 31                    EXHIBIT 4.1(B)

the event of any such grant by Bank of a participating interest to a
Participant, whether or not upon notice to Borrower, Bank shall remain
responsible for the performance of its obligations hereunder and under the Term
Notes and related documents and Borrower shall continue to deal solely and
directly with Bank in connection with Bank's rights and obligations hereunder.

          8.8. Borrower hereby grants to Bank, a lien, security interest and
right of setoff as security for all liabilities and obligations to Bank, whether
now existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of Fleet
Financial Group, Inc., or in transit to any of them. Upon the occurrence and
continuing existence of any Event of Default (which shall not have been cured
within any applicable grace period), Bank may set off the same or any part
thereof and apply the same to any liability or obligation of Borrower under this
Agreement or either of the Term Notes even though unmatured and regardless of
the adequacy of any other collateral securing any such obligation. ANY AND ALL
RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES ANY SUCH OBLIGATION, PRIOR TO EXERCISING ITS
RIGHTS OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

          8.9. All agreements between Borrower and Bank are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to Bank for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under applicable law. As used herein, the term "applicable law" shall mean the
law in effect as of the date hereof provided, however that in the event there is
a change in the law which results in a higher permissible rate of interest, then
this Agreement and the Term Notes shall be governed by such new law as of its
effective date. In this regard, it is expressly agreed that it is the intent of
Borrower and Bank in the execution, delivery and acceptance of this Agreement
and the Term Notes to contract in strict compliance with the laws of the State
of New York from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof, at the time performance of such
provision shall be due, shall involve transcending the limit of such validity
prescribed by applicable law then the obligation to be fulfilled shall
automatically be reduced to the limits of such validity, and if under or from
circumstances whatsoever Bank should ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced
hereby and not to the payment of interest. This provision shall control every
other provision of all agreements between Borrower and Bank.

          8.10. Upon receipt of an affidavit of an officer of Bank as to the
loss, theft, destruction or mutilation of this Agreement, either of the Term
Notes or other Borrower Document, which states, among other things that Bank has
sole ownership of such Term Note or, as applicable, the rights under this
Agreement or other Borrower

<PAGE>   17
                                 Page 17 of 31                    EXHIBIT 4.1(B)

Document, which contains an indemnification against claims and associated
expenses of persons making claims with respect to such lost documents, in form
and substance reasonably acceptable to Borrower, and by which Bank agrees to
surrender (without demand for duplicate payment), as applicable, such Term Note,
this Agreement or other Borrower Document upon any recovery thereof, Borrower
will issue, in lieu thereof, a replacement Term Note, Agreement or other
Borrower Document, such replacement Term Note to be in the same principal amount
hereof and otherwise of like tenor.

          8.11. All dates hereunder, including dates upon which interest or
principal payments are due, which would otherwise fall on a day that is not a
Business Day shall be deemed adjusted so that the date will be deemed to be the
first following day that is a Business Day.

          8.12. Borrower (a) expressly waives any presentment, demand for
payment, notice of dishonor, protest, notice of nonpayment or protest, all other
forms of notice whatsoever except notice required as a prerequisite to default
under the Loan Agreement, and diligence in collection of the Term Notes; (b)
consents that Bank may, from time to time and without notice or demand, extend,
renew or postpone any or all payments and/or release any other person liable for
payment of the Term Notes, without in any way modifying, altering, releasing,
affecting or limiting Borrower's liability; and (c) agrees that Bank, in order
to enforce payment of the Term Notes, shall not be required first to institute
any suit or to exhaust any of its remedies against any other person liable for
payment hereof.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officer, all as of the day and year first above
written.

FLEET NATIONAL BANK                                           SERVOTRONICS, INC.

By: /S/GERALD A. LEE                             By: /S/LEE D. BURNS, TREASURER
   --------------------------------------            ---------------------------
    Gerald A. Lee, Vice President                    Lee D. Burns, Treasurer

<PAGE>   18
                                 Page 18 of 31                    EXHIBIT 4.1(B)

STATE OF NEW YORK         )
                          ss.:
COUNTY OF ERIE            )

         On this 26th day of February, 1999, before me personally appeared
GERALD A. LEE, to me known, who, being by me duly sworn, did depose and say that
he resides at 68 Thistle Avenue, Town of Tonawanda, New York; that he is a Vice
President of Fleet National Bank, the corporation described in and which
executed the above instrument; that the foregoing instrument was executed by
order of the Board of Directors of said corporation; and that he signed his name
thereto by like order.

                                            /S/Pandora W. Mangold
                                      ---------------------------------
                                                Notary Public

                                              PANDORA W. MANGOLD
                                       Notary Public, State of New York
                                           Qualified in Erie County
                                      Commission Expires March 30, 2000

STATE OF NEW YORK         )
                          ss.:
COUNTY OF ERIE            )

         On the 26th day of February, 1999, before me personally came LEE D.
BURNS, to me known, who, being by me duly sworn, did depose and say that he
resides at 72 Brandel Avenue, Lancaster, New York; that he is the Treasurer of
Servotronics, Inc., the corporation described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation, and that (s)he signed his
name thereto by like order.

                                            /S/Pandora W. Mangold
                                      ---------------------------------
                                                Notary Public

                                              PANDORA W. MANGOLD
                                       Notary Public, State of New York
                                           Qualified in Erie County
                                      Commission Expires March 30, 2000

<PAGE>   19
                                 Page 19 of 31                    EXHIBIT 4.1(B)

                                    Exhibit A

                                   TERM NOTE A

$500,000.00                                                    Buffalo, New York
                                                               February 26, 1999

         FOR VALUE RECEIVED, Servotronics, Inc. (the "Borrower") promises to pay
to the order of Fleet National Bank (the "Bank"), at its office located at 10
Fountain Plaza, Buffalo, New York 14202, or at such other place or places as may
be designated by the holder of this Note, the principal sum of FIVE HUNDRED
THOUSAND AND 00/100 DOLLARS ($500,000.00), with interest thereon, until the
principal sum is fully paid, at the rates and at the times provided in the
Second Amended and Restated Term Loan Agreement between the Borrower and the
Bank dated as of February 26, 1999 (the "Loan Agreement").

         All terms defined in the Loan Agreement are incorporated herein by
reference and used herein with the same meanings.

         This Term Note is the Term Note A described in the Loan Agreement and
is delivered pursuant to and is subject to all of the terms and conditions of,
and entitled to all the benefits of, the Loan Agreement which apply to Term Note
A, including without limitation the events of default set forth in Section 6
therein, the exculpatory clauses in respect of the usury law set forth in
Section 8.10 therein, the set-off provisions of Section 8.8 therein, or the lost
document provision of Section 8.10 therein. The terms of the Loan Agreement
shall apply in the event of an inconsistency between the terms of the Loan
Agreement and this Term Note.

         This Term Note may be prepaid in whole or in part only as provided in
the Loan Agreement. Any payment or prepayment hereunder shall be applied first
to unpaid costs of collection and late charges, if any, then to accrued and
unpaid interest and the balance, if any, to principal.

         After maturity or acceleration, this Term Note shall bear interest at
the Default Interest Rate set forth in the Loan Agreement until paid in full.

         Borrower shall pay a late charge of five percent (5%) of any required
payment of principal or interest on this Term Note which is not received by Bank
within ten (10) days of when such payment is due. The parties agree that this
charge is a fair and reasonable charge for the late payment and shall not be
deemed a penalty.

         Borrower authorizes Bank, from time to time, to debit any account that
Borrower may have with Bank, for any payment of principal or interest hereunder
past due for ten (10) days for the amount of such payment of principal or
interest. Exercise of this right shall be optional with Bank and the provisions
of this paragraph shall not be construed

<PAGE>   20
                                 Page 20 of 31                    Exhibit 4.1(B)

as releasing Borrower from the obligation to make payments of principal or
interest according to the terms hereof.

         In the event that this Term Note should be found not to be a negotiable
instrument, the parties hereto acknowledge and agree that Article 3 of the
Uniform Commercial Code, as now or hereafter in effect in the State of New York,
nevertheless sets forth the respective contracts, warranties, rights and
obligations of Bank and of Borrower and any other person liable for payment
hereof, except to the extent that there can be no holder in due course hereof.

         Borrower hereby (a) expressly waives any valuation and appraisement,
presentment, demand for payment, notice of dishonor, protest, notice of
nonpayment or protest, all other forms of notice whatsoever except notice
required as a prerequisite to default under the provisions of the Loan
Agreement, and diligence in collection; (b) consents that Bank may, from time to
time and without notice or demand, (i) extend, rearrange, renew or postpone any
or all payments and/or (ii) release, exchange, add to or substitute all or any
part of any collateral for this Term Note; and (c) agree that Bank, in order to
enforce payment of this Term Note shall not be required first to institute any
suit or to exhaust any of its remedies against Borrower.

         In the event that this Term Note is collected by legal action, or
otherwise with the advice of attorneys at law, Borrower hereby agrees to pay all
costs of collection including reasonable attorneys' fees and expenses, whether
of outside counsel or the Bank's in-house counsel, whether or not suit is
brought, and whether incurred in connection with legal advice, collection,
trial, appeal, bankruptcy or other creditors' proceedings.

         Bank may accept partial payments or payments marked "payment in full"
or "in satisfaction" or words to similar effect at any time. Acceptance of such
payments shall not affect or vary the duty of Borrower to pay all obligations
when due hereunder, and shall not affect or impair the right of Bank to pursue
all remedies available to it hereunder, or under any of the other agreements
securing or guaranteeing payment hereof.

         The remedies of Bank shall be cumulative and concurrent, and may be
pursued singularly, successively or together, at the sole discretion of Bank,
and may be exercised as often as occasion therefor shall arise. No act of
omission or commission of Bank, including specifically any failure to exercise
or forbearance in the exercise of any right, remedy or recourse, shall be deemed
to be a waiver or release of the same, such waiver or release to be effected
only through a written document executed by Bank and then only to the extent
specifically recited therein. A waiver or release with reference to any one
event shall not be construed as continuing or as constituting a course of
dealing, nor shall it be construed as a bar to, or as a waiver or release of,
any subsequent right, remedy or recourse as to a subsequent event.

         BORROWER BY EXECUTING THIS TERM NOTE, WAIVES ITS RIGHT TO A TRIAL BY
JURY IN ANY ACTION, WHETHER ARISING IN CONTRACT OR TORT, BY

<PAGE>   21
                                 Page 21 of 31                    EXHIBIT 4.1(B)

STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS TERM NOTE OR TO ANY CREDIT
AGREEMENT OR LOAN DOCUMENT. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION AND VENUE OF THE COURTS OF THE STATE OF NEW YORK AND
OF ANY FEDERAL COURT, IN EITHER CASE LOCATED IN ERIE COUNTY IN CONNECTION WITH
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS TERM NOTE. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR BANK'S EXTENDING CREDIT TO BORROWER AND
NO WAIVER OF LIMITATION OF BANK'S RIGHTS UNDER THIS PARAGRAPH SHALL BE EFFECTIVE
UNLESS IN WRITING AND MANUALLY SIGNED ON BANK'S BEHALF.

         Borrower acknowledges that the above paragraph has been expressly
bargained for by Bank as part of the loan evidenced hereby and that, but for
Borrower's agreement, Bank would not have extended the loan for the term and
with the interest rate provided herein.

         Bank may at any time pledge all or any portion of its rights under this
Note to any of the twelve (12) Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement
thereof shall release Bank from its obligations under this Note.

         Bank shall have the unrestricted right at any time and from time to
time, and without the consent of or notice to Borrower, to grant to one or more
banks or other financial institutions (each, "Participant") participating
interests in Bank's obligations to lend hereunder and/or any or all of the loans
held by Bank hereunder. In the event of any such grant by Bank of a
participating interest to a Participant, whether or not upon notice to Borrower,
Bank shall remain responsible for the performance of its obligations hereunder
and Borrower shall continue to deal solely and directly with Bank in connection
with Bank's rights and obligations hereunder.

         All dates hereunder, including dates upon which interest or principal
payments are due, which would otherwise fall on a day that is not a Business Day
shall be deemed adjusted so that the date will be deemed to be the first
following day that is a Business Day.

         IN WITNESS WHEREOF, Borrower has executed this Term Note on the day and
year first above written.

                                      SERVOTRONICS, INC.

                                      By: LEE D. BURNS, TREASURER
                                          -----------------------
                                          Lee D. Burns, Treasurer

<PAGE>   22
                                 Page 22 of 31                    EXHIBIT 4.1(B)

                                    Exhibit B

                                   TERM NOTE B
                        (Fixed Rate or LIBOR Based Rate)

$500,000.00                                                    Buffalo, New York
                                                               February 26, 1999

         FOR VALUE RECEIVED, Servotronics, Inc. (the "Borrower") promises to pay
to the order of Fleet National Bank (the "Bank"), at its office located at 10
Fountain Plaza, Buffalo, New York 14202, or at such other place or places as may
be designated by the holder of this Note, the principal sum of FIVE HUNDRED
THOUSAND AND 00/100 DOLLARS ($500,000.00), with interest thereon, until the
principal sum is fully paid, at the rates and at the times provided in the
Second Amended and Restated Term Loan Agreement between the Borrower and the
Bank dated as of February 26, 1999 (the "Loan Agreement").

         All terms defined in the Loan Agreement are incorporated herein by
reference and used herein with the same meanings.

         This Term Note is the Term Note B described in the Loan Agreement and
is delivered pursuant to and is subject to all of the terms and conditions of,
and entitled to all the benefits of, the Loan Agreement which apply to Term Note
B, including without limitation the events of default set forth in Section 6
therein, the exculpatory clauses in respect of the usury law set forth in
Section 8.10 therein, the set-off provisions of Section 8.8 therein, or the lost
document provision of Section 8.10 therein. The terms of the Loan Agreement
shall apply in the event of an inconsistency between the terms of the Loan
Agreement and this Term Note.

         This Term Note may be prepaid in whole or in part only as provided in
the Loan Agreement. Any payment or prepayment hereunder shall be applied first
to unpaid costs of collection and late charges, if any, then to accrued and
unpaid interest and the balance, if any, to principal.

         After maturity or acceleration, this Term Note shall bear interest at
the Default Interest Rate set forth in the Loan Agreement until paid in full.

         Borrower shall pay a late charge of five percent (5%) of any required
payment of principal or interest on this Term Note which is not received by Bank
within ten (10) days of when such payment is due. The parties agree that this
charge is a fair and reasonable charge for the late payment and shall not be
deemed a penalty.

         Borrower authorizes Bank, from time to time, to debit any account that
Borrower may have with Bank, for any payment of principal or interest hereunder
past due for ten (10) days for the amount of such payment of principal or
interest. Exercise of this right shall be optional with Bank and the provisions
of this paragraph shall not be construed

<PAGE>   23
                                 Page 23 of 31                    EXHIBIT 4.1(B)

as releasing Borrower from the obligation to make payments of principal or
interest according to the terms hereof.

         In the event that this Term Note should be found not to be a negotiable
instrument, the parties hereto acknowledge and agree that Article 3 of the
Uniform Commercial Code, as now or hereafter in effect in the State of New York,
nevertheless sets forth the respective contracts, warranties, rights and
obligations of Bank and of Borrower and any other person liable for payment
hereof, except to the extent that there can be no holder in due course hereof.

         Borrower hereby (a) expressly waives any valuation and appraisement,
presentment, demand for payment, notice of dishonor, protest, notice of
nonpayment or protest, all other forms of notice whatsoever except notice
required as a prerequisite to default under the provisions of the Loan
Agreement, and diligence in collection; (b) consents that Bank may, from time to
time and without notice or demand, (i) extend, rearrange, renew or postpone any
or all payments and/or (ii) release, exchange, add to or substitute all or any
part of any collateral for this Term Note; and (c) agree that Bank, in order to
enforce payment of this Term Note shall not be required first to institute any
suit or to exhaust any of its remedies against Borrower.

         In the event that this Term Note is collected by legal action, or
otherwise with the advice of attorneys at law, Borrower hereby agrees to pay all
costs of collection including reasonable attorneys' fees and expenses, whether
of outside counsel or the Bank's in-house counsel, whether or not suit is
brought, and whether incurred in connection with legal advice, collection,
trial, appeal, bankruptcy or other creditors' proceedings.

         Bank may accept partial payments or payments marked "payment in full"
or "in satisfaction" or words to similar effect at any time. Acceptance of such
payments shall not affect or vary the duty of Borrower to pay all obligations
when due hereunder, and shall not affect or impair the right of Bank to pursue
all remedies available to it hereunder, or under any of the other agreements
securing or guaranteeing payment hereof.

         The remedies of Bank shall be cumulative and concurrent, and may be
pursued singularly, successively or together, at the sole discretion of Bank,
and may be exercised as often as occasion therefor shall arise. No act of
omission or commission of Bank, including specifically any failure to exercise
or forbearance in the exercise of any right, remedy or recourse, shall be deemed
to be a waiver or release of the same, such waiver or release to be effected
only through a written document executed by Bank and then only to the extent
specifically recited therein. A waiver or release with reference to any one
event shall not be construed as continuing or as constituting a course of
dealing, nor shall it be construed as a bar to, or as a waiver or release of,
any subsequent right, remedy or recourse as to a subsequent event.

         BORROWER BY EXECUTING THIS TERM NOTE, WAIVES ITS RIGHT TO A TRIAL BY
JURY IN ANY ACTION, WHETHER ARISING IN CONTRACT OR TORT, BY

<PAGE>   24
                                 Page 24 of 31                    EXHIBIT 4.1(B)

STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS TERM NOTE OR TO ANY CREDIT
AGREEMENT OR LOAN DOCUMENT. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION AND VENUE OF THE COURTS OF THE STATE OF NEW YORK AND
OF ANY FEDERAL COURT, IN EITHER CASE LOCATED IN ERIE COUNTY IN CONNECTION WITH
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS TERM NOTE. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR BANK'S EXTENDING CREDIT TO BORROWER AND
NO WAIVER OF LIMITATION OF BANK'S RIGHTS UNDER THIS PARAGRAPH SHALL BE EFFECTIVE
UNLESS IN WRITING AND MANUALLY SIGNED ON BANK'S BEHALF.

         Borrower acknowledges that the above paragraph has been expressly
bargained for by Bank as part of the loan evidenced hereby and that, but for
Borrower's agreement, Bank would not have extended the loan for the term and
with the interest rate provided herein.

         Bank may at any time pledge all or any portion of its rights under this
Note to any of the twelve (12) Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement
thereof shall release Bank from its obligations under this Note.

         Bank shall have the unrestricted right at any time and from time to
time, and without the consent of or notice to Borrower, to grant to one or more
banks or other financial institutions (each, "Participant") participating
interests in Bank's obligations to lend hereunder and/or any or all of the loans
held by Bank hereunder. In the event of any such grant by Bank of a
participating interest to a Participant, whether or not upon notice to Borrower,
Bank shall remain responsible for the performance of its obligations hereunder
and Borrower shall continue to deal solely and directly with Bank in connection
with Bank's rights and obligations hereunder.

         All dates hereunder, including dates upon which interest or principal
payments are due, which would otherwise fall on a day that is not a Business Day
shall be deemed adjusted so that the date will be deemed to be the first
following day that is a Business Day.

         IN WITNESS WHEREOF, Borrower has executed this Term Note on the day and
year first above written.

                                      SERVOTRONICS, INC.

                                      By: LEE D. BURNS, TREASURER
                                          -----------------------
                                          Lee D. Burns, Treasurer

<PAGE>   25
                                 Page 25 of 31                    EXHIBIT 4.1(B)

                               SECURITY AGREEMENT

                              (Goods And Equipment)

          THIS AGREEMENT is made between FLEET NATIONAL BANK ("Bank") and
SERVOTRONICS, INC. ("Grantor") with an address of 1110 MAPLE STREET, P.O. BOX
300, ELMA, NEW YORK 14059

     1. DEFINITIONS. Unless otherwise indicated in this Agreement, all terms
shall have the same meanings as given to them in the Uniform Commercial Code as
amended from time to time in the State of New York.

     (a) "Debtor" means: (CHOOSE AND COMPLETE ONE OF THE FOLLOWING CHOICES FOR
                         SECTION a)

          X    Grantor; or
         ___   _____________________________________________ with an address of:

               _________________________________________________________________

     (b) "Collateral" means: (CHOOSE AND COMPLETE ONE OF THE FOLLOWING CHOICES
                              FOR SECTION b)

         ___    all assets and property, including without limitation all goods,
                tangible property, machinery, equipment, furniture, fixtures,
                vehicles, parts, leasehold improvements, and any intellectual
                property used or useful in connection therewith (including among
                others operating systems, patents, licenses, trade secrets,
                know-how, franchises, and proprietary and other rights in data,
                engineering, technical plans, drawings, information methods,
                systems, processes, inventions, formulas, applications,
                software, programs, manuals, and technology, and all rights and
                interests in any of them), of any kind or nature in which the
                Grantor has an interest now or in the future, and which are now
                existing or hereafter created or acquired, together with all
                additions, replacements, accessions, and proceeds in any form
                thereof, including without limitation any items described in the
                Schedule attached to this Security Agreement.

         X      the equipment and items described in the Schedule attached to
        ___     this Security Agreement which is made a part hereof together
                with all additions, replacements, accessions, and proceeds in
                any form thereof.

     (c) "Liabilities" means all [Rider 1(c)] Among others, the Liabilities
         include all sums expended by the Bank for protection of its interests
         such as payments made for taxes and insurance and expenses of
         collection.

     2. SECURITY INTEREST. The Grantor hereby grants to the Bank a security
interest in the Collateral to secure the payment and performance of the
Liabilities. This security interest is specifically intend to be a continuing
interest and shall cover Collateral in which the Grantor acquires an interest
after the date of this Agreement [Rider 2] as well as Collateral in which
Grantor now has an interest. This security interest shall continue until
terminated as described in this Agreement. The Bank shall have the right to
apply the Collateral and any proceeds therefrom to all or any part of the
Liabilities as and in the order the Bank may elect, whether such Liabilities are
otherwise secured and whether due or not.

     3. LOCATIONS OF GRANTOR AND COLLATERAL. The principal office of the Grantor
is at the address shown in the preamble to this Agreement. All locations at
which the Collateral will be kept or at which the Grantor does business are
indicated on the Schedule attached to and made a part of this Agreement. The
Grantor will not change the locations at which any of the Collateral kept [Rider
3] will notify the Bank immediately of any new or changed locations at which any
of the Collateral is kept or the Grantor does business, and of any change in the
name of the Grantor.

     The Collateral will remain personal property and will not be affixed to
real estate without the prior consent of the Bank. If any of the Collateral is
or will be a fixture, Grantor will provide legal descriptions and the names of
record owners of the premises to which the Collateral will be affixed sufficient
for perfection of the security interests of the Bank. The Grantor will provide
disclaimers of interest and removal agreements, in form satisfactory to the
Bank, signed by all parties other than Grantor having an interest in premises at
which any Collateral is located.

     4. FIRST LIEN. Except for the security interest granted hereby, and any
other interest to which the Bank has consented in writing, Grantor is the owner
of the Collateral free from all liens, encumbrances, and security interests.
Grantor will not sell or transfer the Collateral or any interest therein,
(including, without limitation, a security interest) without the prior written
consent of the Bank. Grantor will defend the same against the claims and demands
of all persons, and will cause the immediate removal and termination of any
levy, execution, judgment or other lien, or similar claim of third persons to
the Collateral.

<PAGE>   26
                                 Page 26 of 31                    EXHIBIT 4.1(B)

     5. PERFECTION OF SECURITY INTEREST. Grantor will execute and deliver to
Bank such financing statements, security agreements, assignments, and other
papers, as Bank may at any time or from time to time reasonably request. If the
Collateral is a motor vehicle required to be titled under applicable law,
Grantor warrants that Bank's security interest will be recorded on the title
certificates covering the Collateral and will deliver such certificates or other
evidence of ownership to Bank as the Bank requests. Grantor hereby appoints Bank
as its attorney in fact to execute and deliver notices of lien, financing
statements, and any other documents, notices, and agreements necessary for the
perfection of the Bank's security interests in the Collateral. Grantor agrees to
pay the costs of filing or perfection of the Bank's security interests, searches
of the public records, and releases or assignments of the Bank's interests.

     6. MAINTENANCE. Grantor will keep the Collateral in good order and repair
except for normal wear and tear in the ordinary course of business. Grantor will
not use the same in violation of law or any policy of insurance thereon. Bank,
or its nominee, may inspect the Collateral at any reasonable time, wherever
located.

     7. TAXES. Grantor will pay promptly, when due, all taxes and assessments
upon the Collateral or its use or operation, or upon this Agreement. [Rider 7]

     8. INSURANCE. Grantor at all times will keep the Collateral insured in such
amounts, with such insurance companies chosen by Grantor, and against such
risks, all as are satisfactory to the Bank. In any event and without specific
request by Bank, Grantor will insure the Collateral against FIRE, including
so-called extended coverage, theft and, in the case of any motor vehicle,
collision. All insurance policies shall name the Bank as loss payee, to include
a Lender Loss Payable Clause, and shall provide for losses covered thereby to be
payable to Bank and Grantor as their respective interests may appear. The
endorsements on any insurance policy shall be in a form satisfactory to the Bank
and all policies of insurance shall provide for not less than ten (10) days'
prior notice of cancellation to the Bank. Grantor will deliver certificates and
policies evidencing required insurance to the Bank upon its request and in any
event at least annually. After any Event of Default hereunder, the Bank may, but
need not (i) cancel, in accordance with applicable law, any insurance contract
covering the Collateral or its ownership or operation, (ii) demand and receive
any return premiums, unearned premium refunds and dividends payable in respect
thereof (the Grantor hereby irrevocably designating, constituting and appointing
the Bank as its true and lawful agent so to do), and (iii) apply any and all
sums received by the Bank as a result of such cancellation, after deducting
therefrom any and all expenses incident thereto, toward payment of the
Liabilities. Grantor will notify insurer and Bank in the event of any loss,
damage or other casualty affecting the Collateral. Grantor hereby assigns to
Bank, any and all monies which may become due and payable under any policy
insuring the Collateral, directs any such insurance company to make payments
directly to Bank, and authorizes Bank to apply such monies in payment on account
of the Liabilities, whether or not due, and to remit any surplus to Grantor.
Grantor hereby irrevocably appoints Bank as its attorney in fact, with full
power of substitution, to (i) make and adjust claims, (ii) receive all proceeds
and payments, including the return of unearned premiums, (iii) execute proofs of
claim, (iv) endorse drafts and other instruments for die payment of money, (v)
execute releases, (vi) negotiate settlements, (vii) cancel any insurance
referred to in this contract, and (viii) do all other things necessary and
required to effect a settlement under or to realize the benefits of any
insurance policy.

     9. PROTECTION OF BANK'S INTEREST. Seven or more days after the day the Bank
mails the Grantor notice, upon failure of the grantor to (i) remove liens or
interests prohibited by Section 4 of this Agreement, (ii) comply with
obligations to maintain Collateral pursuant to Section 6 of this Agreement (iii)
pay taxes or assessments as required by Section 7 of this Agreement, or (iv)
provide evidence satisfactory to the Bank of insurance as required by Section 8
of this Agreement, the Bank in its discretion may discharge any such liens or
interests, repair or take other reasonable steps to protect the value of
Collateral, pay taxes or assessments, and obtain insurance coverage on the
Collateral. Bank also may pay any costs of perfection, searches, releases, or
assignments pursuant to Section 5 of this Agreement. Grantor agrees to reimburse
Bank on demand for any and all expenditures so made, and until paid the amount
thereof also shall he part of the Liabilities secured by the Collateral. Bank
shall have no obligation to Grantor or Debtor to make any such expenditures I
shall the making thereof relieve any default hereunder.

     10. DEFAULT. The following events or conditions shall be an "Event of
Default" under this Agreement: (a) any default with respect to any of the
Liabilities, (b) any failure to comply with any [Rider 10] Agreement, [Rider
10A] loss, theft, material damage or destruction of the Collateral, or (e)
material or reasonably projected material decline in the value a of the
Collateral. These Events of Default are not intended to affect in any way any
Liability payable on demand and shall not prejudice the Bank's rights to demand
payment of any such Liabilities at any time.

     11. REMEDIES. Upon the occurrence of an Event of Default, the Bank may
declare all of the Liabilities to be immediately due and payable and Bank shall
have the rights and remedies of a secured party under the Uniform Commercial
Code of the State of New York as amended from time to time in any jurisdiction
where enforcement of this Agreement is sought in addition to all other rights
and remedies at law or in equity. Among other remedies, the Bank may take
immediate possession of the Collateral and for that purpose Bank may, so far as
Grantor can give authority therefor, enter upon any premises on which the
Collateral or any part thereof may be situated and secure or remove the same
therefrom. Upon request of the Bank, Grantor will assemble and make the
Collateral available to the Bank at a reasonable place and time designated by
the Bank. Grantor's failure to take possession of any Collateral at any time and
place reasonably specified by the Bank in writing to the Grantor shall
constitute an abandonment of such property. Grantor and Debtor agree that notice
of the time and place of public sale of any of the Collateral or of the time
after which any private sale thereof is to be made or of other disposition of
the Collateral shall he deemed reasonable notice seven days after such notice is
deposited in the mail or otherwise delivered to Grantor and Debtor at the
addresses shown in the preamble and section I of this Agreement respectively.

<PAGE>   27
                                 Page 27 of 31                    EXHIBIT 4.1(B)

                  The rights of the Bank are cumulative, and the Bank may
enforce its rights under this Agreement irrespective of any other collateral,
guaranty, right, or remedy it may have. The exercise of all or a part of its
rights or remedies hereunder shall not prevent the Bank from exercising at the
same or any other time any other right or remedy with respect to the
Liabilities. The Grantor authorizes the Bank in its sole discretion to direct
the order or manner of the disposition of the Collateral.

     From the proceeds realized from the Collateral the Bank shall be entitled
to retain all sums secured hereby as well as its reasonable expenses of
collection including without limitation those of retaking, holding,
safeguarding, accounting for , preparing for sale, selling, and reasonable
attorneys' fees and legal expenses. If the proceeds realized form the Collateral
are not sufficient to defray said expenses and to satisfy the balance due on the
Liabilities, the Grantor shall remain liable for such expenses and Debtor shall
remain liable for such expenses and any deficiency with respect to the
Liabilities. Any payments or proceeds from realization on the Collateral may be
applied to the Liabilities in whatever order or manner the Bank elects.
     Rider 12

12. ADDITIONAL SECURITY/SETOFF. Borrower and any Guarantor hereby grant to Bank,
a lien, security interest and right of setoff as security for all liabilities
and obligations to Bank, whether now or existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under control
of Fleet Financial Group, Inc., or in transit to any of them. [Rider 12] Bank
may set off the same or any part thereof and apply the same to any liability or
obligation of Borrower and any Guarantor even though unmatured and regardless of
the adequacy of any other collateral securing the Loan. ANY AND ALL RIGHTS TO
REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY
GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. The rights
of the Bank under this Agreement are in addition to, and not exclusive of, any
other rights it may have with respect to such deposits, sums, securities, or
other property under other agreements or applicable principles of law. Tile Bank
shall have no duty to take steps to preserve rights against prior parties as to
such securities or other property.

     13. CONTINUING AGREEMENT/TERMINATION. This is a continuing Agreement, and
no notice of the creation or existence of' the Liabilities, renewal, extension
or modification thereof need be given to Grantor. This security interest shall
[Rider 13].

     14. NO WAIVER. Grantor agrees that no representation, promise or agreement
made by the Bank or by any officer or employee of the Bank at, prior or
subsequent to the execution and delivery of this Agreement shall modify, alter,
limit or otherwise abridge the rights and remedies of the Bank hereunder unless
agreed by the Bank in writing. None of the rights and remedies of the Bank
hereunder shall be modified, altered, limited or otherwise abridged or waived by
any representation, promise or agreement hereafter made or by any course of
conduct hereafter pursued by the Bank. [Rider 14] No delay or omission on the
part of Bank in exercising any right hereunder shall operate as a waiver of such
right or of any other right under this Agreement, and waiver of any right shall
not be deemed waiver of any other right unless expressly agreed by the Bank in
writing.

     15. JOINT AND SEVERAL LIABILITY. If there are more than one Grantor
hereunder, their representations, warranties, liabilities and obligations
hereunder shall be joint and several.

     16. LAWS/WAIVER OF JURY TRIAL. The validity, construction and performance
of this Agreement shall be governed by the laws of' the State of New York.
Grantor consents to jurisdiction and service of process, which may be effected
by certified mail, in the courts of the State of New York and in the courts of
the United States \having jurisdiction hereof. BORROWER AND BANK MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THE NOTE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION
HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR BANK TO ACCEPT THE NOTE AND MAKE THE LOAN.

     17. PARTIES IN INTEREST. All terms and provisions of this Agreement shall
inure to the benefit of and be binding upon and be enforceable by the respective
heirs, executors, legal representatives, successors, and assigns of the parties
hereto.

     18. SEVERABILITY. Any partial invalidity of' the provisions of' this
Agreement shall not invalidate the remaining portions hereof or thereof.

     19. MISCELLANEOUS. Grantor hereby expressly waives demand, presentment,
protest and notice of dishonor on any and all of the Liabilities.

<PAGE>   28
                                 Page 28 of 31                    EXHIBIT 4.1(B)

Grantor:                                  Grantor:   SERVOTRONICS, INC.

By:                                       By:
                                              /S/LEE D. BURNS
   ------------------------                  ---------------------------
Title:                                    Title:TREASURER
      ---------------------                  ---------------------------

Date:                                     Date:2-26-99
      ---------------------                  ---------------------------

     I/We acknowledge receipt of a copy of this Security Agreement and agree
with the terms thereof insofar as it is applicable to me/us.

Debtor:

By:
   ------------------------

Title:
      ---------------------

Date:
     ----------------------

WARNING: IT IS A CRIMINAL OFFENSE IN NEW
YORK STATE FOR A DEBTOR TO KNOWINGLY
SELL OR OTHERWISE DISPOSE OF COLLATERAL
IN CONTRAVENTION OF THE TERMS OF A
SECURITY AGREEMENT

              SCHEDULE A TO GOODS AND EQUIPMENT SECURITY AGREEMENT

I. This Security Agreement applies to the following specific items of
Collateral:

                             Two Fadal CNC machining centers VNIC 4020
                                Tooling

                             One Hardinge CNC Lathe Conquest T42SP
                                Tooling

                             One Hansvedt Wire EDM machine
                                Tooling

                             One Bridgeport EZ Path CNC milling machine

                             One Hardinge Precision Tool Room Lathe

II. All of the locations at which the Collateral is located or the Grantor
maintains a place of business are listed below. If any of the Collateral is a
fixture, the record owner of the location at which the Collateral is kept is
indicated.

Address                          County                          Record Owner

1110 Maple Street                Erie                            Grantor
Elma, NY 14059

<PAGE>   29
                                 Page 29 of 31                    EXHIBIT 4.1(B)

                          RIDERS TO SECURITY AGREEMENT
                                     BETWEEN
                               FLEET NATIONAL BANK
                                       AND
                               SERVOTRONICS, INC.

Rider              1(c): Liabilities of Grantor upon the Term Notes ("Term
                   Notes") as defined in Section 1.31 of the Term Loan Agreement
                   between Grantor and Bank dated February 26, 1999 ("Loan
                   Agreement").

Rider 2:           to the extent provided under Section 4.15 of the Loan
                   Agreement

Rider 3:           except upon the notification given in the next sentence.
                   Grantor

Rider 7:           other than a tax or assessment which Grantor is contesting in
                   good faith.

Rider 8:           Bank will indemnify Grantor for any loss sustained by Grantor
                   by reason of Bank's cancellation of insurance on collateral
                   without Grantor's specific consent or, at Bank's option,
                   will offset its indemnification liability to Grantor under
                   this sentence against Liabilities of Grantor and pay to
                   Grantor any excess of its indemnification liability to
                   Grantor over Grantor's Liabilities. The power of attorney
                   granted under the following sentence with respect to clause
                   (vii) does not constitute a consent by Grantor under the
                   preceding sentence and does not avoid Bank's indemnification
                   liability under the preceding sentence.

Rider 10:          material term of this

Rider 10 A: (c) material

Rider 12:          Upon the occurrence and continuing existence of any Event of
                   Default (which shall not have been cured within any
                   applicable grace period),

Rider 13:          terminate upon payment in full of all Liabilities.

Rider 14:          unless agreed by the Bank in writing.

<PAGE>   30
                                 Page 30 of 31                    EXHIBIT 4.1(B)

<TABLE>
<CAPTION>
                          UNIFORM COMMERCIAL CODE -- FINANCING STATEMENT -- FORM UCC-1

<S>                                                 <C>                                       <C>
This FINANCING STATEMENT is presented to a Filing       No. of Additional
Officer for filing pursuant to the Uniform              Sheets Presented:                     3.  |_|  The Debtor is a transmitting
Commercial Code.                                                                              utility.
------------------------------------------------------------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):     2. Secured Party(ies) Name(s) and         4. For Filing Officer: Date, Time, No.
                                                    Address(es)                               Filing Office
Servotronics, Inc.
1110 Maple Road                                          Fleet National Bank
Elma, New York  14059                                    10 Fountain Plaza
                                                         Buffalo, New York 14202

------------------------------------------------------------------------------------------------------------------------------------
5. This Financing Statement covers the following    6. Assignee(s) of Secured Party and       7. |_|The described crops are growing
types                                               Address(es)                                     or to be grown on:*
     (or items) of property:                                                                     |_|The described goods are or are
                                                                                                    to be affixed to:*
The equipment and items described in Schedule A                                                  |_|The lumber to be cut or minerals
annexed hereto, together with all additions,                                                        or the like (including oil and
replacements, accessions and proceeds in any form                                                   gas is on:*
thereof.                                                                                           *(Describe Real Estate Below)

|_| Products of the Collateral are also covered.

------------------------------------------------------------------------------------------------------------------------------------
8. Describe Real Estate Here:                        |_|     This statement is to be indexed  9. Name of a Record Owner
                                                        in the Real Estate Records:

------------------------------------------------------------------------------------------------------------------------------------

No. & Street                Town or City                 County           Section         Block          Lot

------------------------------------------------------------------------------------------------------------------------------------
10.   This statement is filed without the debtor's signature to perfect a security interest in collateral
      (check appropriate box)
       |_|  under a security agreement signed by debtor authorizing secured party to file this statement, or
       |_|  which is proceeds of the original collateral described above in which a security interest was perfected, or
       |_|  acquired after a change of name, identity or corporate structure of the debtor, or
       |_|  as to which the filing has lapsed, or already subject to a security interest in another jurisdiction:
            |_|when the collateral was brought into the state, or |_| when the debtor's location was changed to this state.

SERVOTRONICS, INC.                                                     FLEET NATIONAL BANK

By _____________________________________________                       By__________________________________________________
         Signature(s) of Debtor(s)                                              Signature(s) of Secured Party(ies)

</TABLE>

                                STATE OF NEW YORK

<PAGE>   31
                                 Page 31 of 31                    EXHIBIT 4.1(B)

                                   SCHEDULE A
                                       TO
                            UCC-1 FINANCING STATEMENT

                      SERVOTRONICS, INC. AS (THE "DEBTOR")
                                       and
                    FLEET NATIONAL BANK (THE "SECURED PARTY")

         ITEM 5.  FURTHER DESCRIPTION OF COLLATERAL:

                             Two Fadal CNC machining centers VNIC 4020
                                Tooling

                             One Hardinge CNC Lathe Conquest T42SP
                                Tooling

                             One Hansvedt Wire EDM machine
                                Tooling

                             One Bridgeport EZ Path CNC milling machine

                             One Hardinge Precision Tool Room Lathe<PAGE>   1
                                                                  EXHIBIT 4.1(C)
                                 FIRST AMENDMENT
                                       TO
                           SECOND AMENDED AND RESTATED
                               TERM LOAN AGREEMENT

         This First Amendment ("First Amendment"), dated as of December 17, 1999
is made by and between SERVOTRONICS, INC. ("Borrower"), a Delaware corporation
having its principal office at 1110 Maple Street, P.O. Box 300, Elma, New York
14059 and FLEET NATIONAL BANK, a national banking association and successor to
Fleet Bank, with an office at Fleet Bank Building, Ten Fountain Plaza, Buffalo,
New York 14202 ("Bank").

                            STATEMENT OF THE PREMISES

         Borrower and Bank have previously entered into a Second Amended and
Restated Term Loan Agreement dated February 26, 1999 (as amended from time to
time, the "Loan Agreement"). Borrower and Bank have agreed to amend certain
financial covenants in the Loan Agreement and make certain other changes, all
upon the terms and conditions set forth herein.

                           STATEMENT OF CONSIDERATION

         Accordingly, in consideration of the premises and under the authority
of Section 5-1103 of the New York General Obligations Law, Borrower and Bank
agree as follows:

                                    AGREEMENT

         1. AMENDMENT. Effective upon the satisfaction of all conditions
specified in Section 3 hereof, the Loan Agreement is hereby amended as follows:

                  A. The following subsection (vi) is hereby added at the end of
Section 3.2 of the Loan Agreement:

                  (vi) Borrower has reviewed the "Year 2000 Risk" (that is the
risk that computer applications used by Borrower and/or it suppliers, vendors
and customers may be unable to recognize and perform without error
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999) and represents that, to the best of its knowledge after such
review, it is taking such action as may be necessary to ensure that the Year
2000 Risk will not materially adversely affect its business operations and/or
financial condition. Notwithstanding the provisions of this Section, the
Borrower gives no representation with respect to suppliers, vendors or customers
not controlled by the Borrower except that it has made a reasonable effort to
obtain assurances as to Year 2000 Risk from entities with whom the Borrower has
material business relationships, and the Borrower has received from such
entities no reports advising of a Year 2000 Risk materially adversely affecting
the Borrower's business operations and/or financial condition.

                  B. Sections 4.2, 4.3, 4.4 and 4.5 of the Loan Agreement are
hereby amended and restated in their entirety to read as follows:

<PAGE>   2
                                                                  EXHIBIT 4.1(c)
                                  Page 2 of 7

                  4.2 Will maintain, (i) as of December 31, 1999, Net Working
Capital of not less than $7,500,000 and (ii) as at the end of each fiscal
quarter thereafter, Net Working Capital of not less than $7,500,000, increasing
each fiscal year, commencing December 31, 2000, by two percent (2%) of the
amount used on the previous December 31 for purposes of testing this covenant
(e.g. for the quarters ending March 31, 2000, June 30, 2000 and September 30,
2000, not less than $7,500,000; for the quarter ending December 31, 2000, not
less than $7,650,000; for the quarters ending March 31, 2001, June 30, 2001 and
September 30, 2001, not less than $7,650,000; for the quarter ending December
31, 2001, not less than $7,803,000, etc.). If the effect of any change in GAAP
would cause a violation of the covenant set forth in this Section 4.2 on any
testing date during the term of this Agreement and such covenant would not be
violated if such change in GAAP were disregarded in making the calculations set
forth in this Section, then such covenant shall not be deemed violated as of the
applicable testing date.

                  4.3 Will maintain, (i) as of December 31, 1999, a Tangible Net
Worth of not less than $9,000,000 and (ii) as of the end of each fiscal quarter
thereafter, Tangible Net Worth of not less than $9,000,000, increasing each
fiscal year, commencing December 31, 2000, by two percent (2%) of the amount
used on the previous December 31 for purposes of testing this covenant (e.g. for
the quarters ending March 31, 2000, June 30, 2000 and September 30, 2000, not
less than $9,000,000; for the quarter ending December 31, 2000, not less than
$9,180,000; for the quarters ending March 31, 2001, June 30, 2001 and September
30, 2001, not less than $9,180,000; for the quarter ending December 31, 2001,
not less than $9,363,600, etc.). If the effect of any change in GAAP would cause
a violation of the covenant set forth in this Section 4.3 on any testing date
during the term of this Agreement and such covenant would not be violated if
such change in GAAP were disregarded in making the calculations set forth in
this Section, then such covenant shall not be deemed violated as of the
applicable testing date.

                  4.4 Will maintain, at the end of each of its fiscal quarters
for the four quarters then ended, a ratio of its Liabilities to Tangible Net
Worth of not more than 1.5 to 1.0.

                  4.5 Will have a Debt Service Coverage Ratio of not less than
1.0 to 1.0, for the four quarters then ended, as of the end of each fiscal
quarter.

                  C. The following new Section 4.16 is added to the Loan
Agreement immediately following Section 4.15:

                  4.16 Borrower will be Year 2000 Compliant by January 1, 2000.
For purposes of this Section, "Year 2000 Compliant" means, with regard to
Borrower and/or its suppliers, vendors and customers (subject, however, to the
last sentence of Section 3.2(vi)), that all software, embedded microchips, and
other processing capabilities utilized by, and material to the business
operations or financial condition of, such entity are able to interpret and
manipulate data on and involving all calendar dates correctly and without
causing any abnormal ending scenario, including in relation to dates on and
after January 1, 2000.

                  D. The following language is hereby added at the end of
Section 8.7 of the Credit Agreement as part of such Section:

                  Bank may furnish any information concerning Borrower in its
possession from time to time to prospective Participants, provided that, if any
information is provided which is not publicly available (it being understood
that "publicly available" shall include non-confidential filings made by the
Company with the Securities and Exchange Commission which shall have become
available to the public and shall exclude information which has become publicly
available in violation of the provisions of this Section) Bank shall require any
such prospective Participant to agree in writing (a true copy of which shall be
furnished to Borrower) to maintain the confidentiality of all such information
which is not publicly available and the Borrower shall be identified in that
written agreement as a beneficiary of that agreement with the right to enforce
it.

<PAGE>   3
                                                                  EXHIBIT 4.1(c)
                                  Page 3 of 7

         2. REPRESENTATIONS AND WARRANTIES. Borrower makes the following
representations and warranties to Bank which shall be deemed to be continuing
representations and warranties so long as any obligations, including
indebtedness of Borrower to Bank arising under the Loan Agreement or any note
delivered pursuant thereto remain unpaid:

                  A. AUTHORIZATION. Borrower has full power and authority to
borrow hereunder and to execute, deliver and perform this First Amendment and
any documents delivered in connection with it and all other related documents
and transactions, all of which have been duly authorized by all proper and
necessary corporate action. The execution and delivery of this First Amendment
by Borrower will not violate the provisions of, or cause a default under,
Borrower's Certificate of Incorporation or By-Laws or any agreement to which the
Borrower is a party or by which it or its assets are bound.

                  B. BINDING EFFECT. This First Amendment has been duly executed
and delivered by Borrower and constitutes the legal, valid and binding
obligation of Borrower enforceable in accordance with its terms.

                  C. CONSENTS; GOVERNMENTAL APPROVALS. No consent, approval or
authorization of, or registration, declaration or filing with, any governmental
body or authority or any other party is required in connection with the valid
execution, delivery or performance of this First Amendment or any other document
executed and delivered therewith or in connection with any other transactions
contemplated hereby.

                  D. NO EVENTS OF DEFAULT. There is, on the date hereof, no
event or condition which constitutes an Event of Default under any of the Loan
Documents or which, with notice and/or the passage of time, would constitute an
Event of Default.

                  E. NO MATERIAL MISSTATEMENTS. Neither this First Amendment nor
any document delivered to Bank by or on behalf of Borrower to induce Bank to
enter into this First Amendment contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein or
therein not misleading in light of the circumstances in which they were made.

         3. CONDITIONS OF EFFECTIVENESS. This First Amendment shall become
effective when and only when Bank shall have received counterparts of this First
Amendment executed by Borrower and Bank and the following conditions shall have
been fulfilled:

                  A. DOCUMENTS. All instruments, certificates and agreements to
be furnished to the Bank hereunder shall be of such form and content as the Bank
shall reasonably require, and the Borrower shall furnish such consents,
authorizations and other instruments and agreements as the Bank may reasonably
deem necessary to effectuate the intent of this First Amendment.

                  B. OPINION OF COUNSEL. Counsel to Borrower shall have
delivered to the Bank an opinion in form and substance satisfactory to the Bank.

<PAGE>   4
                                                                  EXHIBIT 4.1(c)
                                  Page 4 of 7

                  C. AUTHORIZATION. The Borrower shall have taken appropriate
corporate action to authorize, and the Borrower's Board of Directors shall have
adopted resolutions authorizing the execution and delivery of this First
Amendment and the taking of all action called for by this First Amendment, and
the Borrower shall have furnished to Bank certified copies of all such corporate
action and Board resolutions and such other certified corporate documents as the
Bank may request.

                  D. COSTS AND EXPENSES. Borrower shall have complied with
Section 5 of this First Amendment.

                  E. ACKNOWLEDGMENT. G. N. Metals Products, Inc., The Ontario
Knife Company and Queen Cutlery Company, Inc. shall each have delivered to Bank
an Acknowledgment in form and substance satisfactory to Bank and such additional
documents as Bank or its counsel may reasonably require and all documents,
instruments and other legal matters in connection with this First Amendment
shall be satisfactory in form and substance to Bank and its counsel.

         4. REFERENCE TO AND EFFECT ON LOAN DOCUMENTS.

                  A. Upon the effectiveness hereof, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like
import, and each reference in the Loan Documents to the Loan Agreement shall
mean and be a reference to the Loan Agreement as amended by this First
Amendment.

                  B. The Loan Agreement, as amended by this First Amendment,
represents the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof. This First Amendment supersedes all
prior negotiations and any course of dealing between the parties with respect to
the subject matter hereof. This First Amendment shall be binding upon Borrower
and its successors and assigns, and shall inure to the benefit of, and be
enforceable by, Bank and each of its successors and assigns. The Loan Agreement,
as amended hereby, is in full force and effect and, as so amended, is hereby
ratified and reaffirmed in its entirety. The Borrower acknowledges and agrees
that the Loan Agreement (as amended by this First Amendment) and each other
Borrower Document, as defined in the Loan Agreement, to which Borrower is a
party is in full force and effect, that its obligations thereunder and under
this First Amendment are its legal valid and binding obligations enforceable
against it in accordance with the terms thereof and hereof, and it has no
defense, whether legal or equitable, setoff or counterclaim to the payment and
performance of such obligations.

                  C. The execution, delivery and effectiveness of this First
Amendment shall not operate as a waiver of any right, power or remedy of Bank
under the Loan Agreement, nor constitute a waiver of any provision of the Loan
Agreement.

         5. COSTS AND EXPENSES. Borrower agrees to pay on demand all costs and
expenses of Bank in connection with the preparation, negotiation,
administration, execution and delivery of this First Amendment and the other
documents related hereto, including the reasonable fees, charges and
disbursements of counsel for Bank.
<PAGE>   5
                                                                  EXHIBIT 4.1(c)
                                  Page 5 of 7

         6. GOVERNING LAW. Pursuant to Section 5-1401 of the New York General
Obligations Law, the laws of the State of New York shall govern the validity,
construction, enforcement and interpretation of this First Amendment in whole
without regard to any rules of conflicts-of-laws that would require the
application of the laws of any jurisdiction other than the State of New York.

         7. HEADINGS. Section headings in this First Amendment are included
herein for convenience of reference only and shall not limit or otherwise affect
the meanings of this First Amendment or be used to construe its provisions.

         8. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall constitute one and the same First Amendment, regardless of
whether or not the execution by all parties shall appear on any single
counterpart. Delivery of an executed counterpart of a signature page to this
First Amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this First Amendment.

<PAGE>   6
                                                                  EXHIBIT 4.1(c)
                                  Page 6 of 7

         IN WITNESS WHEREOF, the parties hereto have each caused a counterpart
of this First Amendment to be executed by their respective representatives
thereunto duly authorized, as of the date first above written.

                               SERVOTRONICS, INC.

                                     By: /S/LEE D. BURNS, TREASURER
                                         ----------------------------
                                         Lee D. Burns
                                         Treasurer and Chief Financial
                                          Officer

                                     FLEET NATIONAL BANK

                                     By: /S/GERALD A. LEE
                                         --------------------
                                         Gerald A. Lee
                                         Vice President

STATE OF NEW YORK         )
                          :  SS.:
COUNTY OF ERIE            )

         On the 17th day of December in the year 1999 before me personally came
Lee D. Burns to me known, who, being by me duly sworn, did depose and say that
he resides in Lancaster, New York; that he is the Treasurer and Chief Financial
Officer of Servotronics, Inc., the corporation described in and which executed
the above instrument; and that he signed his name thereto by order of the board
of directors of said corporation.

                                              /S/Pandora W. Mangold
                                    --------------------------------------------
                                                   Notary Public

                                                 PANDORA W. MANGOLD
                                           Notary Public, State of New York
                                               Qualified in Erie County
                                          Commission Expires March 30, 2000

<PAGE>   7
                                                                  EXHIBIT 4.1(c)
                                  Page 7 of 7

STATE OF NEW YORK         )
                          :  SS.:
COUNTY OF ERIE            )

         On this 17th day of December, 1999 before me personally came Gerald A.
Lee to me known, who, being by me duly sworn, did depose and say that he resides
in Tonawanda, New York; that he is a Vice President of Fleet National Bank, the
banking association described in and which executed the above instrument; and
that he signed his name thereto by order of the board of directors of said
association.

                                            /S/Martha M. Anderson
                                     ----------------------------------
                                                Notary Public

                                              MARTHA M. ANDERSON
                                       Notary Public, State of New York
                                                No.02PO4930661
                                           Qualified in Erie County
                                       Certificate Filed in Erie County
                                      Commission Expires April 18, 2000

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