Exhibit 10.1
PROMISSORY NOTE

$1,000,000   June 28, 2007
Philadelphia, PA

     FOR VALUE RECEIVED, Environmental Tectonics Corporation, a Pennsylvania
corporation (“Maker”), promises to pay to the order of H. F. Lenfest (“Payee”),
the principal sum of One Million Dollars ($1,000,000), together with interest on
the unpaid principal balance of this promissory note (this “Note”), on the terms
and conditions described below. Maker is executing and delivering this Note to
Payee to evidence a loan made by Payee to Maker in the principal amount hereof.
     NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Payee and Maker hereby agree as follows:
     1. Interest. Interest shall accrue on the unpaid principal balance
outstanding hereunder at the fixed annual rate of 6%, on the basis of a 360-day
year, for the number of actual days elapsed during which principal is
outstanding from the date of this Note until all principal and accrued interest
is paid in full.
     2. Payments. The entire unpaid principal balance of the Note together with
all accrued and unpaid interest thereon shall be due and payable in full on the
earlier to occur of the following: (a) June 28, 2008; (b) Maker obtaining a loan
from one or more commercial lenders in the principal amount of at least Ten
Million Dollars ($10,000,000.00); and (c) Payee purchasing additional shares of
preferred stock of the Company in an amount equal to at least One Million
Dollars ($1,000,000).
     3. Prepayments. This Note may be prepaid at any time and from time to time,
in whole or in part, without premium or penalty.
     4. Events of Default. Each of the following shall constitute an “Event of
Default”:
          (a) Failure by Maker to pay the principal of or accrued interest on
this Note when due pursuant to Section 2.
          (b) Any representation or warranty made by Maker in any document or in
any certificate, financial or other statement furnished at any time under or in
connection with this Note shall be false or misleading in any material respect.

 

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          (c) The commencement by Maker of a voluntary case under the Federal
Bankruptcy Code, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency, reorganization,
rehabilitation or other similar law.
          (d) The entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of Maker in an involuntary case under
the Federal Bankruptcy Code, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
ordering the winding-up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days.
     5. Remedies.
          (a) Upon the occurrence of an Event of Default specified in
Section 4(a), Payee may, by written notice to Maker, declare this Note to be due
and payable, whereupon the principal amount of this Note, together with unpaid
accrued interest thereon and all other amounts payable hereunder (“Debt”), shall
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, anything contained
herein or in the documents evidencing the same to the contrary notwithstanding.
          (b) Upon the occurrence of an Event of Default specified in
Section 4(b) and 4(c), the Debt shall automatically and immediately become due
and payable, in all cases without any action on the part of Payee.
     6. Authorization to File Financing Statements. Maker hereby irrevocably
authorizes Payee at any time and from time to time to file in any Uniform
Commercial Code jurisdiction any initial financing statement and amendments
thereto consistent with the terms of this Note.
     7. Waivers. Maker waives presentment for payment, demand, notice of
dishonor, protest, and notice of protest with regard to this Note.
     8. Collection Costs. Upon any breach or default of Maker’s obligations
hereunder, Maker shall pay to Payee such amounts as shall have been reasonably
incurred by Payee as the costs and expenses of collection, including reasonable
attorney’s fees. Any payments made pursuant to this Note shall be applied first
to costs and expenses of collection, then to accrued interest and thereafter to
reduction in principal.
     9. Notices. Any notice called for hereunder shall be deemed properly given
if (i) sent by certified mail, return receipt requested, (ii) personally
delivered, (iii) dispatched by any form of private or governmental express mail
or delivery service providing receipted delivery, or (iv) sent by facsimile, to
the following addresses or to such other addresses as either party may designate
by notice in accordance with this Section:
If to Maker:
Environmental Tectonics Corporation
125 James Way
Southampton, PA 18966
Attn: Chief Financial Officer

 

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If to Payee:
H.F. Lenfest
300 Barr Harbor Drive
Suite 460
West Conshohocken, PA 19428
     10. Construction. This Note shall be construed and enforced in accordance
with the domestic, internal law, but not the law of conflict of laws, of the
Commonwealth of Pennsylvania.
     11. Severability. Any provisions contained in this Note which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdictions hall not invalidate or render
unenforceable such provisions in any other jurisdiction.
     12. Right of Set-off. Upon the occurrence of an Event of Default, Payee
shall have the right, in addition to all other rights and remedies available to
it, to set off against the unpaid balance of this Note any debt owing to Maker
by Payee.
     13. No Marshaling, Etc., Required. If an Event of Default shall have
occurred and be continuing, Payee shall not be required to marshal any present
or future security for, or guarantees of, Maker’s obligations hereunder or to
resort to any such security or guarantee in any particular order and Maker
waives, to the fullest extent that it lawfully can, (a) any right it might have
to require Payee to pursue any particular remedy before proceeding against it,
and (b) any right to the benefit of, or to direct the application of the
proceeds of any Collateral until Maker’s obligations hereunder have been paid in
full
     14. Waivers. Maker and all endorsers and guarantors of, and sureties for,
this Note waive presentment for payment, demand, notice of dishonor, protest,
and notice of protest with regard to the Note, all errors, defects and
imperfections in any proceedings instituted by Payee under the terms of this
Note, and all benefit that might accrue to Maker by virtue of any present or
future laws exempting any property, real or personal, or any part of the
proceeds arising from any sale of any such property, from attachment, levy or
sale under execution, or providing for any stay of execution, exemption from
civil process, or extension of time for payment; and Maker agrees that any real
estate that may be levied upon pursuant to a judgment obtained by virtue hereof,
on any writ of execution issued hereon, may be sold upon any such writ in whole
or in part in any order desired by Payee.
     15. Unconditional Liability. Maker and all endorsers, sureties and
guarantors hereby jointly and severally waive all notices in connection with the
delivery, acceptance, performance, default, or enforcement of the payment of
this Note, and they agree that the liability of each of

 

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them shall be unconditional, without regard to the liability of any other party,
and shall not be affected in any manner by any indulgence, extension of time,
renewal, waiver or modification granted or consented to by Payee, and consent to
any and all extensions of time, renewals, waivers, or modifications that may be
granted by Payee with respect to the payment or other provisions of this Note,
and to the release of any part of any collateral, with or without substitution,
and agree that additional makers, endorsers, guarantors, or sureties may become
parties hereto without notice to them or affecting their liability hereunder.

 

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     IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused
this Note to be duly executed and delivered as of the day and year first above
written.

            ENVIRONMENTAL TECTONICS CORPORATION
      By:           Name:   Duane D. Deaner       Title:   Chief Financial
Officer     

 

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TRANSACTIONS ON NOTE

                                      Amount of     Outstanding       Amount of
Loan     Principal Paid     Principal Balance   Date   Made This Date     This
Date     This Date   June 28, 2007   $ 1,000,000     $ —     $ 1,000,000