EXHIBIT 10.32
AMENDED AND RESTATED OPEN-END MORTGAGE AND SECURITY
AGREEMENT
(This Mortgage Secures Future Advances)
     THIS AMENDED AND RESTATED OPEN-END MORTGAGE AND SECURITY AGREEMENT (this
“Mortgage”) is made as of the 24th day of April, 2009, by ENVIRONMENTAL
TECTONICS CORPORATION, a Pennsylvania corporation with an address at 125 James
Way, Southampton, Pennsylvania 18966 (“Mortgagor”), in favor of H.F. LENFEST, an
individual with an address at c/o The Lenfest Group, 300 Barr Harbor Drive,
Suite 460, West Conshohocken, Pennsylvania 19428 (“Mortgagee”).
     WHEREAS, Mortgagor is the owner of a certain tract or parcel of land
described in Exhibit A attached hereto and made a part hereof, together with the
improvements now or hereafter erected thereon;
     WHEREAS, Mortgagee executed that certain Senior Subordinated Convertible
Note dated as of February 18, 2003 (the “2003 Note”) in favor of Mortgagee in
the original principal amount of Ten Million Dollars ($10,000,000) (the “2003
Loan”), which 2003 Note was secured, in part, by that certain Open-End Mortgage
and Security Agreement made by Mortgagor in favor of Mortgagee dated
February 18, 2003 and recorded in the Office of the Recorder of Deeds in and for
Bucks County, Pennsylvania, on February 23, 2003 in Book 3148, page 1444 (the
“2003 Mortgage”);
     WHEREAS, pursuant to the terms of that certain Secured Promissory Note
dated February 20, 2009 (the “2009 Bridge Note”), Mortgagee extended to
Mortgagor an additional loan in the original principal amount of Two Million
Dollars ($2,000,000) (the “Bridge Loan”);
     WHEREAS, pursuant to the terms of that certain Secured Credit Facility and
Warrant Purchase Agreement, dated as of the date hereof, between Mortgagor and
Mortgagee (the “Credit Facility Agreement”), Mortgagor has agreed to extend to
Mortgagee a loan in the aggregate principal amount of up to Seven Million Five
Hundred Thousand Dollars ($7,500,000) (including the principal amount of the
2009 Bridge Note) (the “Credit Facility”), which Credit Facility is intended to
be secured by this Mortgage;
     WHEREAS, pursuant to the terms and subject to the conditions of the Credit
Facility Agreement, Mortgagee has agreed to personally guarantee the repayment
by Mortgagor of the maximum principal amount of up to Twenty Million Dollars
($20,000,000) (the “Personal Guaranty”) as may be payable by Mortgagor to PNC
Bank, National Association (“Senior Lender”) in, and pursuant to the terms of, a
Letter Agreement relating to a $20,000,000 committed line of credit to be
entered into by and between Mortgagor and Senior Lender (the “Senior Credit
Agreement”), in accordance with the terms of that certain letter agreement by
and between Mortgagor and Senior Lender dated the date hereof; and

 

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     WHEREAS, Mortgagor and Mortgagee desire to amend and restate in its
entirety the 2003 Mortgage in order to secure all of the obligations of
Mortgagor to Mortgagee under the Credit Facility Agreement.
     NOW, THEREFORE, for the purpose of securing the payment and performance of
the following obligations (collectively called the “Obligations”):
     (A) Any amounts due under the 2003 Note, the 2009 Bridge Note, all notes
now or hereafter executed by Mortgagor to memorialize an advance under the
Credit Facility or pursuant to the terms of the Credit Facility Agreement and
all sums paid by Mortgagee under the Personal Guaranty (including any interest
accruing thereon before or after maturity, or after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to Mortgagor, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), and any amendments,
extensions, renewals or increases and all reasonable costs and expenses of
Mortgagee incurred in the documentation, negotiation, modification, enforcement,
collection or otherwise in connection with any of the foregoing, including
reasonable attorneys’ fees and expenses; and
     (B) Any sums advanced by Mortgagee or which may otherwise become due
pursuant to the provisions of the Credit Facility Agreement, the Personal
Guaranty, the 2003 Note, the 2009 Bridge Note or this Mortgage or pursuant to
any other document or instrument at any time delivered to Mortgagee to evidence
or secure any of the Obligations or which otherwise relate to any of the
Obligations (as the same may be amended, supplemented or replaced from time to
time, the “Loan Documents”).
     Mortgagor, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, does hereby give, grant,
bargain, sell, convey, assign, transfer, mortgage, hypothecate, pledge, set over
and confirm unto Mortgagee and does agree that Mortgagee shall have a security
interest in the following described property, all accessions and additions
thereto, all substitutions therefor and replacements and proceeds thereof, and
all reversions and remainders of such property now owned or held or hereafter
acquired (the “Property”), to wit:
          (a) All of Mortgagor’s estate in the premises described in Exhibit A,
together with all of the easements, rights of way, privileges, liberties,
hereditaments, gores, streets, alleys, passages, ways, waters, watercourses,
rights and appurtenances thereunto belonging or appertaining, and all of
Mortgagor’s estate, right, title, interest, claim and demand therein and in the
public streets and ways adjacent thereto, either in law or in equity (the
“Land”);
          (b) All the buildings, structures and improvements of every kind and
description now or hereafter erected or placed on the Land, and all facilities,
fixtures, machinery, apparatus, appliances, installations, machinery and
equipment, including all building materials to be incorporated into such
buildings, all electrical equipment necessary for the operation of such
buildings and heating, air conditioning and plumbing equipment now or hereafter
attached to, located in or used in connection with those buildings, structures
or other improvements (the “Improvements”);

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          (c) All rents, issues and profits arising or issuing from the Land and
the Improvements (the “Rents”) including the Rents arising or issuing from all
leases and subleases now or hereafter entered into covering all or any part of
the Land and Improvements (the “Leases”), all of which Leases and Rents are
hereby assigned to Mortgagee by Mortgagor. The foregoing assignment shall
include all cash or securities deposited under Leases to secure performance of
lessees of their obligations thereunder, whether such cash or securities are to
be held until the expiration of the terms of such leases or applied to one or
more installments of rent coming due prior to the expiration of such terms. The
foregoing assignment extends to Rents arising both before and after the
commencement by or against Mortgagor of any case or proceeding under any Federal
or State bankruptcy, insolvency or similar law, and is intended as an absolute
assignment and not merely the granting of a security interest. Mortgagor,
however, shall have a license to collect, retain and use the Rents so long as no
Event of Default shall have occurred and be continuing or shall exist. Mortgagor
will execute and deliver to Mortgagee, on demand, such additional assignments
and instruments as Mortgagee may require to implement, confirm, maintain and
continue the assignment of Rents hereunder;
          (d) All proceeds of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims;
          (e) And without limiting any of the other provisions of this Mortgage,
Mortgagor, as debtor, expressly grants unto Mortgagee, as secured party, a
security interest in all those portions of the Property which may be subject to
the Uniform Commercial Code provisions applicable to secured transactions under
the laws of the state in which the Property is located (the “UCC”), and
Mortgagor will execute and deliver to Mortgagee on demand such financing
statements and other instruments as Mortgagee may require in order to perfect
and maintain such security interest under the UCC on the aforesaid collateral.
     To have and to hold the same unto Mortgagee, its successors and assigns,
forever, under and subject to the terms of the Senior Credit Agreement and
related documents (collectively, the “Senior Credit Documents”). All of the
duties and obligations of Mortgagor and the rights and remedies of Mortgagee
hereunder are under and subject in all respects to performance of the duties and
obligations of Mortgagor to Senior Lender and to the rights and remedies of
Senior Lender under the Senior Credit Documents. The failure by Mortgagor to
perform or comply with any of the provisions of this Mortgage shall not be an
Event of Default hereunder if such failure arises solely from Mortgagor’s
performance or compliance with comparable obligations under the Senior Credit
Documents and performance or compliance with both the Senior Credit Documents
and this Mortgage is impossible.
     Provided, however, that if Mortgagor shall pay to Mortgagee the
Obligations, and if Mortgagor shall keep and perform each of its other
covenants, conditions and agreements set forth herein and in the other Loan
Documents, then, upon the termination of all obligations, duties and commitments
of Mortgagor under the Obligations and this Mortgage, and subject to the
provisions of the paragraph entitled “Survival; Successors and Assigns”, the
estate hereby granted and conveyed shall become null and void.
     This Mortgage is an “Open-End Mortgage” as set forth in 42 Pa. C.S.A. §8143
and secures obligations up to a maximum principal amount of Thirty-Seven Million
Five Hundred

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Thousand Dollars ($37,500,000), plus accrued and unpaid interest outstanding at
any time under the Loan Documents, including advances for the payment of taxes
and municipal assessments, maintenance charges, insurance premiums, costs
incurred for the protection of the Property or the lien of this Mortgage,
expenses incurred by Mortgagee by reason of default by Mortgagor under this
Mortgage and advances for construction, alteration or renovation on the Property
or for any other purpose, together with all other sums due hereunder or secured
hereby. All notices to be given to Mortgagee pursuant to 42 Pa. C.S.A. §8143
shall be given as set forth in Section 18.
     1. Representations and Warranties. Mortgagor represents and warrants to
Mortgagee that Mortgagor has good and marketable title to an estate in fee
simple absolute in the Land and Improvements and has all right, title and
interest in all other property constituting a part of the Property, in each case
free and clear of all liens and encumbrances, except as may otherwise be set
forth on an Exhibit B hereto. This Mortgage is a valid and enforceable lien on
the Property (except as set forth on Exhibit B). Mortgagor shall preserve such
title as it warrants herein and the validity and priority of the lien hereof and
shall forever warrant and defend the same to Mortgagee against the claims of all
persons claiming by, through or under Mortgagor.
     2. Affirmative Covenants. Until all of the Obligations shall have been
fully paid, satisfied and discharged Mortgagor shall:
          (a) Payment and Performance of Obligations. Pay or cause to be paid
and perform all Obligations when due as provided in the Loan Documents.
          (b) Legal Requirements. Promptly comply with and conform in all
material respects to all present and future laws, statutes, codes, ordinances,
orders and regulations and all covenants, restrictions and conditions which may
be applicable to Mortgagor or to any of the Property (the “Legal Requirements”).
          (c) Impositions. Before interest or penalties are due thereon and
otherwise when due, Mortgagor shall pay all taxes of every kind and nature, all
charges for any easement or agreement maintained for the benefit of any of the
Property, all general and special assessments (including any condominium or
planned unit development assessments, if any), levies, permits, inspection and
license fees, all water and sewer rents and charges, and all other charges and
liens, whether of a like or different nature, imposed upon or assessed against
Mortgagor or any of the Property (the “Impositions”) unless the amount thereof
is being contested in good faith by Mortgagor by appropriate proceedings with
adequate reserves made for the payment thereof. Within thirty (30) days after
the payment of any Imposition if requested by Mortgagee, Mortgagor shall deliver
to Mortgagee evidence acceptable to Mortgagee of such payment. Mortgagor’s
obligations to pay the Impositions shall survive Mortgagee’s taking title to the
Property through foreclosure, deed-in-lieu or otherwise.
          (d) Maintenance of Security. Use, and permit others to use, the
Property only for its present use or such other uses as permitted by applicable
Legal Requirements and approved in writing by Mortgagee. Mortgagor shall keep
the Property in good condition and order and in a rentable and tenantable state
of repair and will make or cause to be made, as and when necessary, all repairs,
renewals, and replacements, structural and nonstructural, exterior

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and interior, foreseen and unforeseen, ordinary and extraordinary, provided,
however, that no structural repairs, renewals or replacements in excess of
$100,000 shall be made without Mortgagee’s prior written consent, not to be
unreasonably withheld, conditioned or delayed. Mortgagor shall not remove,
demolish or alter any material portion of the Property or any of the Property in
a manner that materially adversely affects the same, nor commit or suffer waste
with respect thereto, nor permit the Property to become deserted or abandoned.
Mortgagor covenants and agrees not to take or permit any action with respect to
the Property which will in any manner materially impair the security of this
Mortgage.
     3. Leases. Except as permitted by the Loan Documents, Mortgagor shall not
(a) execute an assignment or pledge of the Rents or the Leases other than in
favor of Mortgagee; (b) accept any prepayment of an installment of any Rents
more than 30 days prior to the due date of such installment; or (c) enter into
or amend any of the terms of any of the Leases without Mortgagee’s prior written
consent, not to be unreasonably withheld, conditioned or delayed. Any or all
leases or subleases of all or any part of the Property shall be subject in all
respects to Mortgagee’s prior written consent, not to be unreasonably withheld,
conditioned or delayed, shall be subordinated to this Mortgage and to
Mortgagee’s rights and, together with any and all rents, issues or profits
relating thereto, shall be assigned at the time of execution to Mortgagee as
additional collateral security for the Obligations, all in such form, substance
and detail as is satisfactory to Mortgagee in its reasonable discretion.
     4. Due on Sale Clause. Mortgagor shall not sell, convey or otherwise
transfer any interest in the Property (whether voluntarily or by operation of
law), or agree to do so, without Mortgagee’s prior written consent, including
(a) any sale, conveyance, assignment, or other transfer of (including
installment land sale contracts), or the grant of a security interest in, all or
any part of the legal or equitable title to the Property, except as otherwise
permitted hereunder; or (b) any lease of all or any portion of the Property. Any
default under this Section shall cause an immediate acceleration of the
Obligations without any demand by Mortgagee.
     5. Insurance. Mortgagor shall keep the Improvements continuously insured,
in an amount not less than the cost to replace the Improvements or an amount not
less than eighty percent (80%) of the full insurable value of the Property,
whichever is greater, against loss or damage by fire, with extended coverage and
against other hazards as Mortgagee may from time to time require. With respect
to any property under construction or reconstruction, Mortgagor shall maintain
builder’s risk insurance. Mortgagor shall also maintain comprehensive general
public liability insurance, in an amount of not less than One Million Dollars
($1,000,000) per occurrence and Two Million Dollars ($2,000,000) general
aggregate per location, which includes contractual liability insurance for
Mortgagor’s obligations under the Leases, and worker’s compensation insurance.
All property and builder’s risk insurance shall include protection for
continuation of income for a period of twelve (12) months, in the event of any
damage caused by the perils referred to above. All policies, including policies
for any amounts carried in excess of the required minimum and policies not
specifically required by Mortgagee, shall be with an insurance company or
companies satisfactory to Mortgagee, shall be in form satisfactory to Mortgagee,
shall meet all coinsurance requirements of Mortgagee, shall be maintained in
full force and effect, with premiums satisfied as collateral security for
payment of the Obligations, shall be endorsed with a standard mortgagee clause
in favor of Mortgagee and shall provide for at least thirty (30) days notice of
cancellation to Mortgagee. Such insurance

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shall also name Mortgagee as an additional insured under the comprehensive
general public liability policy and Mortgagor shall also deliver to Mortgagee a
copy of the replacement cost coverage endorsement. If the Property is located in
an area which has been identified by any governmental agency, authority or body
as a flood hazard area or the like, then Mortgagor shall maintain a flood
insurance policy covering the Improvements in an amount not less than the
appraised value of the Property or the maximum limit of coverage available under
the federal program, whichever amount is less.
     6. Rights of Mortgagee to Insurance Proceeds. In the event of loss,
Mortgagee shall have the exclusive right to adjust, collect and compromise all
Material Insurance Claims (as defined below), and Mortgagor shall not adjust,
collect or compromise any Material Insurance Claims under said policies without
Mortgagee’s prior written consent, not to be unreasonably withheld, conditioned
or delayed. Each insurer is hereby authorized and directed to make payment under
said policies, including return of unearned premiums, directly to Mortgagee
instead of to Mortgagor and Mortgagee jointly, and Mortgagor appoints Mortgagee
as Mortgagor’s attorney-in-fact to endorse any draft therefor. All Material
Insurance Claims proceeds may, at Mortgagee’s sole option, be applied to all or
any part of the Obligations and in any order (notwithstanding that such
Obligations may not then otherwise be due and payable) or to the repair and
restoration of any of the Property under such terms and conditions as Mortgagee
may reasonably impose; provided, however, that so long as no Event of Default
has occurred and is continuing, such proceeds shall be applied to the repair and
restoration of the Property. All other insurance claim proceeds must be applied
to the repair and restoration of the Property under terms and conditions
satisfactory to Mortgagee. For purposes of this paragraph 6, the term “Material
Insurance Claim” means any insurance claim in excess of $500,000.
     7. Installments for Insurance, Taxes and Other Charges. Upon Mortgagee’s
request at any time following the occurrence and during the continuance of an
Event of Default, Mortgagor shall pay to Mortgagee monthly, an amount equal to
one-twelfth (1/12) of the annual premiums for the insurance policies referred to
hereinabove and the annual Impositions and any other item which at any time may
be or become a lien upon the Property (the “Escrow Charges”). The amounts so
paid shall be used in payment of the Escrow Charges so long as no Event of
Default shall have occurred and is continuing. No amount so paid to Mortgagee
shall be deemed to be trust funds, nor shall any sums paid bear interest.
Mortgagee shall have no obligation to pay any insurance premium or Imposition if
at any time the funds being held by Mortgagee for such premium or Imposition are
insufficient to make such payments. If, at any time, the funds being held by
Mortgagee for any insurance premium or Imposition are exhausted, or if Mortgagee
determines, in its reasonable discretion, that such funds will be insufficient
to pay in full any insurance premium or Imposition when due, Mortgagor shall
promptly pay to Mortgagee, upon demand, an amount which Mortgagee shall estimate
as sufficient to make up the deficiency. Upon the occurrence and during the
continuance of an Event of Default, Mortgagee shall have the right, at its
election, to apply any amount so held against the Obligations due and payable in
such order as Mortgagee may deem fit, and Mortgagor hereby grants to Mortgagee a
lien upon and security interest in such amounts for such purpose.
     8. Condemnation. Mortgagor, immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation or taking by eminent domain
of any of the Property, shall notify Mortgagee of the pendency of such
proceedings. Mortgagee may

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participate in any such proceedings and Mortgagor shall deliver to Mortgagee all
instruments requested by it to permit such participation. Any award or
compensation for property taken or for damage to property not taken in excess of
$500,000, whether as a result of such proceedings or in lieu thereof, is hereby
assigned to and shall be received and collected directly by Mortgagee, and any
award or compensation shall be applied, at Mortgagee’s option, to any part of
the Obligations and in any order (notwithstanding that any of such Obligations
may not then be due and payable) or to the repair and restoration of any of the
Property under such terms and conditions as Mortgagee may reasonably impose
provided, however, that so long as no Event of Default has occurred and is
continuing, such proceeds shall be applied to the repair and restoration of the
Property.
     9. Environmental Matters. (a) For purposes of this Section 9, the term
“Environmental Laws” shall mean all federal, state and local laws, regulations
and orders, whether now or in the future enacted or issued, pertaining to the
protection of land, water, air, health, safety or the environment. The term
“Regulated Substances” shall mean all substances regulated by Environmental
Laws, or which are known or considered to be harmful to the health or safety of
persons, or the presence of which may require investigation, notification or
remediation under the Environmental Laws. The term “Contamination” shall mean
the discharge, release, emission, disposal or escape of any Regulated Substances
into the environment other than as permitted under applicable Environmental
Laws.
          (b) Mortgagor represents and warrants except as provided in the Loan
Documents or otherwise disclosed to Lender in writing (i) that no Contamination
is present at, on or under the Property and that no Contamination is being or,
to the best of Mortgagor’s knowledge, has been emitted onto any surrounding
property other than as permitted under applicable Environmental Laws; (ii) all
operations and activities on the Property have been and are being conducted in
accordance with all Environmental Laws, and Mortgagor has all permits and
licenses required under the Environmental Laws; (iii) no underground or
aboveground storage tanks are or have been located on or under the Property; and
(iv) no legal or administrative proceeding is pending or, to the best of
Mortgagor’s knowledge, threatened relating to any environmental condition,
operation or activity on the Property regulated under any applicable
Environmental Laws, or any violation or alleged violation of Environmental Laws.
These representations and warranties shall be true as of the date hereof, and
shall be deemed to be continuing representations and warranties which must
remain true, correct and accurate during the entire duration of the term of this
Mortgage.
          (c) Mortgagor shall ensure, at its sole cost and expense, that the
Property and the conduct of all operations and activities thereon comply and
continue to comply with all Environmental Laws. Mortgagor shall notify Mortgagee
promptly and in reasonable detail in the event that Mortgagor becomes aware of
any violation of any Environmental Laws, the presence or release of any
Contamination with respect to the Property, or any governmental or third party
claims under applicable Environmental Laws relating to the environmental
condition of the Property or the conduct of operations or activities thereon.
Mortgagor also agrees not to permit or allow the presence of Regulated
Substances on any part of the Property, except (i) to the extent such Regulated
Substances are used without violating any Environmental Laws; and (ii) those
Regulated Substances which are naturally occurring on the Property. Mortgagor
agrees not to cause, allow or permit the presence of any Contamination on the
Property except

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to the extent such Contamination is in compliance with all applicable
Environmental Laws.
          (d) Mortgagee shall not be liable for, and Mortgagor shall indemnify,
defend and hold Mortgagee and all of its officers, directors, employees and
agents, and all of their respective successors and assigns harmless from and
against all losses, costs, liabilities, damages, fines, claims, penalties and
expenses (including reasonable attorneys’, consultants’ and contractors’ fees,
costs incurred in the investigation, defense and settlement of claims, as well
as costs incurred in connection with the investigation, remediation or
monitoring of any Regulated Substances or Contamination) that Mortgagee may
suffer or incur (including as holder of the Mortgage, as mortgagee in possession
or as successor in interest to Mortgagor as owner of the Property by virtue of a
foreclosure or acceptance of a deed in lieu of foreclosure) as a result of or in
connection with (i) any Environmental Laws (including the assertion that any
lien existing or arising pursuant to any Environmental Laws takes priority over
the lien of the Mortgage); (ii) the breach in any material respect of any
representation, warranty, covenant or undertaking by Mortgagor in this
Section 9; (iii) the presence on or the migration of any Contamination or
Regulated Substances on, under or through the Property; or (iv) any litigation
or claim by the government or by any third party in connection with the
environmental condition of the Property or the presence or migration of any
Regulated Substances or Contamination on, under, to or from the Property;
provided, however, that Mortgagor shall not be liable under this Section (d) for
any damages caused by Mortgagee’s gross negligence or willful misconduct.
          (e) Upon Mortgagee’s request, Mortgagor shall execute and deliver an
Environmental Indemnity Agreement satisfactory in form and substance to
Mortgagee, to more fully reflect Mortgagor’s representations, warranties,
covenants and indemnities with respect to the Environmental Laws.
     10. Inspection of Property. Mortgagee shall have the right to enter the
Property upon reasonable prior notice at any reasonable hour for the purpose of
inspecting the order, condition and repair of the buildings and improvements
erected thereon, as well as the conduct of operations and activities on the
Property. Mortgagee may enter the Property (and cause Mortgagee’s employees,
agents and consultants to enter the Property), upon reasonable prior written
notice to Mortgagor, to conduct any and all environmental testing deemed
appropriate by Mortgagee in his reasonable discretion. The environmental testing
shall be accomplished by whatever means Mortgagee may deem appropriate,
including the taking of soil samples and the installation of ground water
monitoring wells or other intrusive environmental tests. Mortgagor shall provide
Mortgagee (and Mortgagee’s employees, agents and consultants) reasonable rights
of access to the Property as well as such information about the Property and the
past or present conduct of operations and activities thereon as Mortgagee shall
reasonably request.
     11. Events of Default. The occurrence of any one or more of the following
events shall constitute an “Event of Default” hereunder: (a) any Event of
Default (as defined in the Credit Facility Agreement); (b) the failure by
Mortgagor to perform any of its other obligations under this Mortgage or under
any Environmental Indemnity Agreement executed and delivered pursuant to Section
9(e) for a period of fifteen (15) days or more after written notice thereof is
delivered to Mortgagor; (c) falsity, inaccuracy or material breach by Mortgagor
of any written warranty, representation or statement made herein by Mortgagor;
(d) any lien against or the

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making of any levy, seizure or attachment of or on the Property not dismissed or
adequately bonded within ninety (90) days; (e) the failure of Mortgagee to have
a mortgage lien on the Property; (f) foreclosure proceedings are instituted
against the Property upon any other lien or claim, whether alleged to be
superior or junior to the lien of this Mortgage which is not dismissed within
ninety (90) days; (g) the failure by Mortgagor to pay any Impositions as
required under Section 2(c), or to maintain in full force and effect any
insurance required under Section 5; or (h) Mortgagor or any other obligor or
guarantor of any of the Obligations, shall at any time deliver or cause to be
delivered to Mortgagee a notice pursuant to 42 Pa. C.S.A. §8143 electing to
limit the indebtedness secured by this Mortgage.
     12. Rights and Remedies of Mortgagee. If an Event of Default occurs,
Mortgagee may, at its option and without demand, notice or delay, do one or more
of the following:
          (a) Mortgagee may declare the entire unpaid principal balance of the
Obligations, together with all interest thereon, to be due and payable
immediately.
          (b) Mortgagee may (i) institute and maintain an action of mortgage
foreclosure against the Property and the interests of Mortgagor therein,
(ii) institute and maintain an action on any instruments evidencing the
Obligations or any portion thereof, and (iii) take such other action at law or
in equity for the enforcement of any of the Loan Documents as the law may allow,
and in each such action Mortgagee shall be entitled to all costs of suit and
attorneys fees.
          (c) Mortgagee may, in his sole and absolute discretion: (i) collect
any or all of the Rents, including any Rents past due and unpaid, (ii) perform
any obligation or exercise any right or remedy of Mortgagor under any Lease, or
(iii) enforce any obligation of any tenant of any of the Property. Mortgagee may
exercise any right under this subsection (c), whether or not Mortgagee shall
have entered into possession of any of the Property, and nothing herein
contained shall be construed as constituting Mortgagee a “mortgagee in
possession”, unless Mortgagee shall have entered into and shall continue to be
in actual possession of the Property. Mortgagor hereby authorizes and directs
each and every present and future tenant of any of the Property to pay all Rents
directly to Mortgagee and to perform all other obligations of that tenant for
the direct benefit of Mortgagee, as if Mortgagee were the landlord under the
Lease with that tenant, immediately upon receipt of a demand by Mortgagee to
make such payment or perform such obligations. Mortgagor hereby waives any
right, claim or demand it may now or hereafter have against any such tenant by
reason of such payment of Rents or performance of obligations to Mortgagee, and
any such payment or performance to Mortgagee shall discharge the obligations of
the tenant to make such payment or performance to Mortgagor.
          (d) Mortgagee shall have the right, in connection with the exercise of
its remedies hereunder, to the appointment of a receiver to take possession and
control of the Property or to collect the Rents, without notice and without
regard to the adequacy of the Property to secure the Obligations. A receiver
while in possession of the Property shall have the right to make repairs and to
make improvements necessary or advisable in its or his opinion to preserve the
Property, or to make and keep it rentable to the best advantage, and Mortgagee
may advance moneys to a receiver for such purposes. Any moneys so expended or
advanced by Mortgagee or by a receiver shall be added to and become a part of
the Obligations secured by

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this Mortgage.
     13. Application of Proceeds. Mortgagee shall apply the proceeds of any
foreclosure sale of, or other disposition or realization upon, or Rents or
profits from, the Property to satisfy the Obligations in such order of
application as Mortgagee shall determine in its exclusive discretion.
     14. Confession of Judgment in Ejectment. At any time after the occurrence
and during the continuance of an Event of Default, without further notice,
regardless of whether Mortgagee has asserted any other right or exercised any
other remedy under this Mortgage or any of the other Loan Documents, he shall be
lawful for any attorney of any court of record as attorney for Mortgagor to
confess judgment in ejectment against Mortgagor and all persons claiming under
Mortgagor for the recovery by Mortgagee of possession of all or any part of the
Property, for which this Mortgage shall be sufficient warrant. If for any reason
after such action shall have commenced the same shall be discontinued and the
possession of the Property shall remain in or be restored to Mortgagor,
Mortgagee shall have the right upon any subsequent default or defaults to bring
one or more amicable action or actions as hereinbefore set forth to recover
possession of all or any part of the Property.
     15. Mortgagee’s Right to Protect Security. Mortgagee is hereby authorized
to do any one or more of the following, irrespective of whether an Event of
Default has occurred: (a) appear in and defend any action or proceeding
purporting to affect the security hereof or Mortgagee’s rights or powers
hereunder if Mortgagor fails to so defend such action or proceeding to the
satisfaction of Mortgagee; (b) purchase such insurance policies covering the
Property as he may elect if Mortgagor fails to maintain the insurance coverage
required hereunder; and (c) take such action as Mortgagee may determine to pay,
perform or comply with any Impositions or Legal Requirements, to cure any Events
of Default and to protect its security in the Property.
     16. Appointment of Mortgagee as Attorney-in-Fact. Mortgagee, or any of his
officers, is hereby irrevocably appointed attorney-in-fact for Mortgagor
(without requiring any of them to act as such), such appointment being coupled
with an interest, to do any or all of the following: (a) collect the Rents after
the occurrence and during the continuance of an Event of Default; (b) settle
for, collect and receive any awards payable under Section 8 from the authorities
making the same; and (c) execute, deliver and file such financing statements and
other instruments as Mortgagee may require in order to perfect and maintain his
security interest under the Uniform Commercial Code on any portion of the
Property.
     17. Certain Waivers. Mortgagor hereby waives and releases all benefit that
might accrue to Mortgagor by virtue of any present or future law exempting the
Property, or any part of the proceeds arising from any sale thereof, from
attachment, levy or sale on execution, or providing for any stay of execution,
exemption from civil process or extension of time for payment or any rights of
marshalling in the event of any sale hereunder of the Property, and, unless
specifically required herein, all notices of Mortgagor’s default or of
Mortgagee’s election to exercise, or Mortgagee’s actual exercise of any option
under this Mortgage or any other Loan Document.

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     18. Notices. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder must be in writing and will be
effective upon receipt by Mortgagor or Mortgagee. Such notices and other
communications may be hand-delivered, sent by facsimile transmission with
confirmation of delivery and a copy sent by first-class mail, or sent by
nationally recognized overnight courier service, to a party’s address set forth
above or to such other address as Mortgagor or Mortgagee may give to the other
in writing for such purpose.
     19. Further Acts. Mortgagor will, at the cost of Mortgagor, and without
expense to Mortgagee, do, execute, acknowledge and deliver all further acts,
deeds, conveyances, mortgages, assignments, notices of assignment, transfers and
assurances as Mortgagee shall, from time to time, reasonably require for the
better assuring, conveying, assigning, transferring or confirming unto Mortgagee
the property and rights hereby mortgaged, or which Mortgagor may be or may
hereafter become bound to convey or assign to Mortgagee, or for carrying out the
intent of or facilitating the performance of the terms of this Mortgage or for
filing, registering or recording this Mortgage. Mortgagor grants to Mortgagee an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
under the Note, this Mortgage, the other Loan Documents, at law or in equity,
including, without limitation, the rights and remedies described in this
paragraph.
     20. Changes in the Laws Regarding Taxation. If any law is enacted or
adopted or amended after the date of this Mortgage which deducts the Obligations
from the value of the Property for the purpose of taxation or which imposes a
tax, either directly or indirectly, on Mortgagor or Mortgagee’s interest in the
Property, Mortgagor will pay such tax, with interest and penalties thereon, if
any. If Mortgagee determines that the payment of such tax or interest and
penalties by Mortgagor would be unlawful or taxable to Mortgagee or
unenforceable or provide the basis for a defense of usury, then Mortgagee shall
have the option, by written notice of not less than one hundred twenty
(120) days, to declare the entire Obligations immediately due and payable.
     21. Documentary Stamps. If at any time the United States of America, any
State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
     22. Preservation of Rights. No delay or omission on Mortgagee’s part to
exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power, nor will Mortgagee’s
action or inaction impair any such right or power. Mortgagee’s rights and
remedies hereunder are cumulative and not exclusive of any other rights or
remedies which Mortgagee may have under other agreements, at law or in equity.
Mortgagee may exercise any one or more of its rights and remedies without regard
to the adequacy of its security.
     23. Illegality. In case any one or more of the provisions contained in this
Mortgage should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability

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of the remaining provisions contained herein shall not in any way be affected or
impaired thereby.
     24. Changes in Writing. No modification, amendment or waiver of any
provision of this Mortgage nor consent to any departure by Mortgagor therefrom
will be effective unless made in a writing signed by Mortgagee, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on Mortgagor in any case will
entitle Mortgagor to any other or further notice or demand in the same, similar
or other circumstance.
     25. Entire Agreement. This Mortgage (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
Mortgagor and Mortgagee with respect to the subject matter hereof.
     26. Survival; Successors and Assigns. This Mortgage will be binding upon
and inure to the benefit of Mortgagor and Mortgagee and their respective heirs,
executors, administrators, successors and assigns; provided, however, that
Mortgagor may not assign this Mortgage in whole or in part without Mortgagee’s
prior written consent and Mortgagee at any time may assign this Mortgage in
whole or in part; and provided, further, that the rights and benefits under the
Paragraphs entitled “Environmental Matters”, “Inspection of Property” and
“Indemnity” shall also inure to the benefit of any persons or entities who
acquire title or ownership of the Property from or through Mortgagee or through
action of Mortgagee (including a foreclosure, sheriff’s or judicial sale). The
provisions of Paragraphs entitled “Environmental Matters”, “Inspection of
Property” and “Indemnity” shall survive the termination, satisfaction or release
of this Mortgage, the foreclosure of this Mortgage or the delivery of a deed in
lieu of foreclosure.
     27. Interpretation. In this Mortgage, the singular includes the plural and
the plural the singular; references to statutes are to be construed as including
all statutory provisions consolidating, amending or replacing the statute
referred to; the word “or” shall be deemed to include “and/or”, the words
“including”, “includes” and “include” shall be deemed to be followed by the
words “without limitation” and references to sections or exhibits are to those
of this Mortgage unless otherwise indicated. Section headings in this Mortgage
are included for convenience of reference only and shall not constitute a part
of this Mortgage for any other purpose. If this Mortgage is executed by more
than one party as Mortgagor, the obligations of such persons or entities will be
joint and several.
     28. Indemnity. Mortgagor agrees to indemnify each of Mortgagee, his
affiliated companies, directors, officers and employees and Mortgagee’s holding
company, if any (the “Indemnified Parties”), and to hold each Indemnified Party
harmless from and against any and all claims, damages, losses, liabilities and
expenses (including all reasonable fees and charges of internal or external
counsel with whom any Indemnified Party may consult and all reasonable expenses
of litigation or preparation therefor) which any Indemnified Party may incur or
which may be asserted against any Indemnified Party in connection with or
arising out of the matters referred to in this Mortgage or in the other Loan
Documents by any person, entity or governmental authority (including any person
or entity claiming derivatively on behalf of

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Mortgagor), whether (a) arising from or incurred in connection with any breach
of a representation, warranty or covenant by Mortgagor, or (b) arising out of or
resulting from any suit, action, claim, proceeding or governmental
investigation, pending or threatened, whether based on statute, regulation or
order, or tort, or contract or otherwise, before any court or governmental
authority, which arises out of or relates to this Mortgage, any other Loan
Document, or the use of the proceeds of the Loan; provided, however, that the
foregoing indemnity agreement shall not apply to claims, damages, losses,
liabilities and expenses attributable to an Indemnified Party’s gross negligence
or willful misconduct. The indemnity agreement contained in this Section shall
survive the termination of this Mortgage, payment of any Loan and assignment of
any rights hereunder. Mortgagor may participate at its expense in the defense of
any such action or claim.
     29. Governing Law and Jurisdiction. This Mortgage has been delivered to and
accepted by Mortgagee and will be deemed to be made in the State where
Mortgagee’s office indicated above is located. This Mortgage will be interpreted
and the rights and liabilities of Mortgagor and Mortgagee determined in
accordance with the laws of the State where Mortgagee’s office indicated above
is located, except that the laws of the State where the Property is located (if
different from the State where such office of Mortgagee is located) shall govern
the creation, perfection and foreclosure of the liens created hereunder on the
Property or any interest therein. Mortgagor hereby irrevocably consents to the
exclusive jurisdiction of any state or federal court in the county or judicial
district where Mortgagee’s office indicated above is located; provided that
nothing contained in this Mortgage will prevent Mortgagee from bringing any
action, enforcing any award or judgment or exercising any rights against
Mortgagor individually, against any security or against any property of
Mortgagor within any other county, state or other foreign or domestic
jurisdiction. Mortgagor acknowledges and agrees that the venue provided above is
the most convenient forum for both Mortgagee and Mortgagor. Mortgagor waives any
objection to venue and any objection based on a more convenient forum in any
action instituted under this Mortgage.
     30. WAIVER OF JURY TRIAL. MORTGAGOR IRREVOCABLY WAIVES ANY AND ALL RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE
RELATING TO THIS MORTGAGE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
MORTGAGE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. MORTGAGOR
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
[Signature Page Follows]

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Mortgagor acknowledges that it has read and understood all the provisions of
this Mortgage, including the waiver of jury trial, and has been advised by
counsel as necessary or appropriate.
WITNESS the due execution hereof as a document under seal, as of the date first
written above, with the intent to be legally bound hereby.

                                  ENVIRONMENTAL TECTONICS
CORPORATION
 
                   
ATTEST:
          By:   /s/  Duane D. Deaner    
 
              (SEAL)    
 
                   
 
  Print Name:            Print Name: Duane D. Deaner    
 
 
 
         
 
   
 
  Title: 
 
          Title: CFO

 
   

The principal place of business
and complete post office address
of Mortgagee is:
c/o The Lenfest Group
300 Barr Harbor Drive, Suite 460
West Conshohocken, PA 19428
The address of Mortgagee for
the purposes of 42 Pa.C.S.
§8143(d) is:
c/o The Lenfest Group
300 Barr Harbor Drive, Suite 460
West Conshohocken, PA 19428

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COMMONWEALTH OF PENNSYLVANIA
    )      
 
    )      ss:    
COUNTY OF BUCKS
    )      

     On this, the _________ day of _______________, 2009, before me, a Notary
Public, the undersigned officer, personally appeared
___________________________, who acknowledged himself/herself to be the
______________________________ of Environmental Tectonics Corporation, a
Pennsylvania corporation, and that he/she, in such capacity, being authorized to
do so, executed the foregoing instrument for the purposes therein contained by
signing on behalf of said corporation.
     IN WITNESS WHEREOF, I hereunto set my hand and official seal.

           
 
Notary Public
   

My commission expires:

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