Document:

Prepared and filed by St Ives Financial

November
  ___, 2006

Environmental Tectonics Corporation 

125 James Way 

Southampton, PA 18966

Re: $5,000,000 Committed Line of Credit for Letters of Credit 

Dear Duane:

We
  are pleased to inform you that PNC Bank, National Association (the “Bank”),
  has re-approved your request for a
  committed line of credit to Environmental Tectonics Corporation (the “Borrower”)
  for the issuance of letters of credit.
  This letter agreement amends, restates and replaces (but does not constitute
  a novation of) the existing Credit Agreement dated as of February 18, 2003 between
  the Bank and the Borrower (as heretofore amended, the “Existing Loan Agreement”).

1.
  Facility and Use of Proceeds.
  This is a committed line of credit under which the Borrower may request and
  the Bank, subject to the terms and conditions of this letter, will issue standby
  letters of credit (individually, a “Letter
  of Credit” and collectively the
  “Letters of Credit”)
  having expiration dates not later than
  one year after the Expiration Date (as hereinafter defined) in an aggregate
  face amount at any time outstanding not to exceed $5,000,000 (the “Line
  of Credit”). The
  existing Letters of Credit heretofore issued by the Bank and listed on Schedule
  I hereto shall constitute Letters of Credit for all purposes hereunder. The
  “Expiration Date” means
  June 30, 2007, or such later date as may be designated by the Bank by written
  notice to the Borrower.

The
  availability under the Line of Credit shall be reduced by the face amount of
  each Letter of Credit issued and outstanding (whether or not drawn). The Letters
  of Credit shall be governed by the terms of this letter and by a reimbursement
  agreement, in form and content satisfactory to the Bank, executed by the Borrower
  in favor of the Bank (the “Reimbursement Agreement”).
  Each request for the issuance of a
  Letter of Credit must be accompanied by the Borrower’s execution of an
  application on the Bank’s standard forms (each, an “Application”),
  together with all supporting documentation.
  Each Letter of Credit will be issued in the Bank’s sole discretion and
  in a form acceptable to the Bank. The Borrower shall pay to the Bank fees on
  the face amount of each Letter of Credit for the period from and excluding the
  date of issuance of same to and including the date of expiration or termination,
  equal to the average daily face amount of each outstanding Letter of Credit
  multiplied by 1.00% per annum, such fees to be calculated on the basis of a
  360-day year for the actual number of days elapsed and to be payable quarterly
  in arrears on the first day of each fiscal quarter and on the Expiration Date,
  provided that in no event shall such fees for any Letter of Credit be less than
  the standard minimum amount charged for letters of credit issued by the Bank
  from time to time for its customers, together with such other customary issuance
  fees, commissions and expenses therefor as shall be required by the Bank. This
  letter is not a pre-advice for the issuance of a letter of credit and is not
  irrevocable.

Environmental Tectonics Corporation

November
  ___, 2006

Page 2

2.
  Loan Documents.
  This letter (the “Letter Agreement”),
  the Reimbursement Agreement and the
  other agreements and documents executed and/or delivered pursuant hereto, as
  each may be amended, modified, extended or renewed from time to time, will constitute
  the “Loan Documents.” Capitalized
  terms not defined herein shall have the meaning ascribed to them in the Loan
  Documents.

3.
  Security.
  The Borrower must cause to be executed and delivered to the Bank, in form and
  content satisfactory to the Bank as security for the Line of Credit, a restated
  limited guaranty and suretyship agreement, under which H. F. Lenfest (the “Guarantor”)
  will unconditionally guarantee the
  due and punctual payment of all indebtedness owed to the Bank by the Borrower
  under the Line of Credit (the “Limited Guaranty”).

4. Covenants. Unless compliance is waived in writing by the Bank, until payment in full of all of the obligations of the Borrower in respect of the Letters of Credit and termination of the commitment for the Line of Credit:

(a) The Borrower will promptly submit to the Bank such information as the Bank may reasonably request relating to the Borrower’s affairs (including but not limited to annual Financial Statements (as hereinafter defined) and tax returns for the Borrower and/or any security for the Line of Credit.

(b) The Borrower will not make or permit any change in its form of organization or any material change in the nature of its business as carried on as of the date of this Letter Agreement.

(c) The Borrower will notify the Bank in writing of the occurrence of any Event of Default or an act or condition which, with the passage of time, the giving of notice or both might become an Event of Default.

(d) The Borrower will comply with the financial and other covenants included in Exhibit “A” hereto.

5. Representations and Warranties. To induce the Bank to extend the Line of Credit and upon the issuance of any Letter of Credit under the Line of Credit, the Borrower represents and warrants as follows:

(a) The Borrower’s latest Financial Statements provided to the Bank are true, complete and accurate in all material respects and fairly present the financial condition, assets and liabilities, whether accrued, absolute, contingent or otherwise, and the results of the Borrower’s operations for the period specified therein. The Borrower’s Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied from period to period subject, in the case of interim statements, to normal year-end adjustments. Since the date of the latest Financial Statements provided to the Bank, the Borrower has not suffered any damage, destruction or loss which has materially adversely affected its business, assets, operations, financial condition or results of operations.

2

Environmental Tectonics Corporation

November
  ___, 2006

Page 3

(b) There are no actions, suits, proceedings or governmental investigations pending or, to the knowledge of the Borrower, threatened against the Borrower which could result in a material adverse change in its business, assets, operations, financial condition or results of operations and there is no basis known to the Borrower or its officers, directors or shareholders for any such action, suit, proceedings or investigation.

(c) The Borrower has filed all returns and reports that are required to be filed by it in connection with any federal, state or local tax, duty or charge levied, assessed or imposed upon the Borrower or its property, including unemployment, social security and similar taxes and all of such taxes have been either paid or adequate reserve or other provision has been made therefor.

(d) The Borrower is duly organized, validly existing and in good standing under the laws of the state of its incorporation or organization and has the power and authority to own and operate its assets and to conduct its business as now or proposed to be carried on, and is duly qualified, licensed and in good standing to do business in all jurisdictions where its ownership of property or the nature of its business requires such qualification or licensing.

(e) The Borrower has full power and authority to enter into the transactions provided for in this Letter Agreement and has been duly authorized to do so by all necessary and appropriate action and when executed and delivered by the Borrower, this Letter Agreement and the other Loan Documents will constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms.

(f)
  There does not exist any default or violation by the Borrower of or under any
  of the terms, conditions or obligations of: (i) its organizational documents;
  (ii) any indenture, mortgage, deed of trust, franchise, permit, contract, agreement,
  or other instrument to which it is a party or by which it is bound; or (iii)
  any law, regulation, ruling, order, injunction, decree, condition or other requirement
  applicable to or imposed upon the Borrower by any law or by any governmental
  authority, court or agency.

6.
  Expenses.
  The Borrower shall reimburse the Bank for the Bank’s expenses (including
  the reasonable fees and expenses of the Bank’s outside and in-house counsel)
  in documenting and closing this transaction, in connection with any amendments,
  modifications or renewals of the Line of Credit, and in connection with the
  collection of all of the Borrower’s Obligations to the Bank, including
  but not limited to enforcement actions relating to the Loan.

7. Depository. The Borrower will establish and maintain at the Bank the Borrower’s primary depository account.

3

Environmental Tectonics Corporation 

November
  __, 2006 

Page 4

8. Additional Provisions. Before the issuance of any additional Letter of Credit, the Borrower shall execute and deliver to the Bank, an Application for each Letter of Credit, the Reimbursement Agreement, a subordination and intercreditor agreement from the Guarantor in form and content satisfactory to the Bank and the other required Loan Documents and such other instruments and documents as the Bank may reasonably request, such as certified resolutions, incumbency certificates or other evidence of authority. The Bank will not be obligated to issue any additional Letter of Credit under the Line of Credit if any Event of Default or event which with the passage of time, provision of notice or both would constitute an Event of Default shall have occurred and be continuing. Upon satisfaction of the foregoing
conditions for the issuance of an additional Letter of Credit, all of the Security Documents (as such term is defined in the Existing Loan Agreement), except for the Limited Guaranty, shall be terminated and of no further force and effect, and the Bank will return to the Borrower any Collateral (as such term is defined in the Existing Loan Agreement) in its possession and take such further action as is necessary to confirm or terminate of record the release of the liens, assignments and security interests heretofore created or granted by such Security Documents.

Prior to execution of the final Loan Documents, the Bank may terminate this Letter Agreement if a material adverse change occurs with respect to the Borrower, the Guarantor, or any other person or entity connected in any way with the Loan, or if the Borrower fails to comply with any of the terms and conditions of this Letter Agreement, or if the Bank reasonably determines that any of the conditions cannot be met.

This
  Letter Agreement is governed by the laws of the Commonwealth of Pennsylvania.
  No modification, amendment or waiver of any of the terms of this Letter Agreement,
  nor any consent to any departure by the Borrower therefrom, will be effective
  unless made in a writing signed by the party to be charged, and then such waiver
  or consent shall be effective only in the specific instance and for the purpose
  for which given. When accepted, this Letter Agreement and the other Loan Documents
  will constitute the entire agreement between the Bank and the Borrower concerning
  the Line of Credit, and shall replace all prior understandings, statements,
  negotiations and written materials relating to the Line of Credit or the Letters
  of Credit, including but not limited to the Existing Loan Agreement.

The Bank will not be responsible for any damages, consequential, incidental, special, punitive or otherwise, that may be incurred or alleged by any person or entity, including the Borrower and the Guarantor, as a result of this Letter Agreement, the other Loan Documents, the transactions contemplated hereby or thereby, or the use of the Letters of Credit.

THE BORROWER AND THE BANK IRREVOCABLY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE ARISING OUT OF THIS LETTER AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED IN ANY OF SUCH DOCUMENTS AND ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

If and when a loan closing occurs, this Letter Agreement (as the same may be amended from time to time) shall survive the closing and will serve as our loan agreement throughout the term of the Loan.

To accept these terms, please sign the enclosed copy of this Letter Agreement as set forth below and the Loan Documents and return them to the Bank within thirty (30) days from the date of this Letter Agreement, or this Letter Agreement may be terminated at the Bank’s option without liability or further obligation of the Bank.

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Environmental Tectonics Corporation 

November
  __, 2006 

Page 5

Thank you for giving PNC Bank this opportunity to work with your business. We look forward to other ways in which we may be of service to your business or to you personally.

Very truly yours,

PNC BANK, NATIONAL ASSOCIATION

 

  	

By:
 	

 
 	

 
 
	

 
 	

 	

 
 
	

Title:
 	

 
 	

 
 
	

 
 	

 	

 
 

 

5

Environmental Tectonics Corporation 

November
  __, 2006 

Page 6

ACCEPTANCE

With the intent to be legally bound hereby, the above terms and conditions are hereby agreed to and accepted as of this _______ day of November, 2006.

 

	
         
 	
         
 	

BORROWER:
 

          ENVIRONMENTAL TECTONICS CORPORATION

      
	
          
 	
         
 	
        By: 
 	

  
 
	
         
 	
         
 	
         
 	

 
	
         
 	
         
 	
         
 	

(SEAL)
 
	
         
 	
         
 	

Print Name:
 	
         

      
	
         
 	
         
 	

 
 	
        

 
	
         
 	
         
 	
        Title:
 	

 
 
	
         
 	
         
 	
         
 	

 
					

            

 

6

EXHIBIT A 

TO LETTER AGREEMENT 

DATED
  NOVEMBER __, 2006

A. FINANCIAL REPORTING COVENANTS:

(1) The Borrower will deliver to the Bank:

(a) Financial Statements for its fiscal year, within 90 days after fiscal year end, audited and certified without qualification by a certified public accountant acceptable to the Bank.

(b) Financial Statements for each of the first three fiscal quarters, within 60 days after the quarter end, together with year-to-date and comparative figures for the corresponding periods of the prior year, certified as true and correct by its chief financial officer.

(c) With each delivery of Financial Statements, a certificate of the Borrower’s chief financial officer as to the Borrower’s compliance with the financial covenants set forth below, if any, for the period then ended and whether any Event of Default exists, and, if so, the nature thereof and the corrective measures the Borrower proposes to take. This certificate shall set forth all detailed calculations necessary to demonstrate such compliance.

(2)
  With each delivery of Financial Statements pursuant to clause (b) above, the
  Borrower will deliver to the Bank updated financial projections for the current
  fiscal year in a form reasonably satisfactory to the Bank.

“Financial Statements” means the consolidated balance sheet and statements of income and cash flows prepared in accordance with generally accepted accounting principles in effect from time to time (“GAAP”) applied on a consistent basis (subject in the case of interim statements to normal year-end adjustments).

B. FINANCIAL COVENANTS:

(i) The Borrower will maintain as of the end of each fiscal quarter ending on or after May 26, 2006 a minimum Consolidated Tangible Net Worth of $9,000,000.

“Consolidated Tangible Net Worth” means as of any date of determination, (a) the aggregate amount of all assets of the Borrower and its subsidiaries on a consolidated basis at such date as may be properly classified as such in accordance with GAAP, excluding such other assets as are properly classified as intangible assets under GAAP, minus (b) the aggregate amount of all liabilities (including any portion of any Subordinated Debt constituting original issue discount in respect of the issuance by the Borrower of warrants) of the Borrower and its subsidiaries and minority interests in the Borrower or any of its subsidiaries on a consolidated basis at such date, as may be properly classified as such in accordance with GAAP.

 

“Subordinated Debt” means indebtedness that has been subordinated to the Borrower’s indebtedness to the Bank pursuant to a subordination agreement in form and content satisfactory to the Bank.

C. NEGATIVE COVENANT:

(1) The Borrower will not liquidate, or dissolve, or merge or consolidate with any person, firm, corporation or other entity, or sell, lease, transfer or otherwise dispose of all or substantially all of its property or assets, whether now owned or hereafter acquired.

SCHEDULE I

Existing Letters of Credit

 

  	
        Number

      	
         

      	
        Amount

      	
         

      	
        Expiration
          Date

      	
         

      
	
        

      	 	
        

      	
        

      	 	
        

      	 
	
        18103309

      	
         

      	
        $
          

      	
        13,732.94

      	
         

      	
        11-30-06

      	
         

      
	
        18103773

      	
         

      	
         

      	
        24,000.00

      	
         

      	
        3-30-07

      	
         

      
	
        258078

      	
         

      	
         

      	
        500,000.00

      	
         

      	
        11-30-07

      	
         

      
	
        260691

      	
         

      	
         

      	
        21,341.75

      	
         

      	
        6-30-07

      	
         

      
	
        18101978

      	
         

      	
         

      	
        195,000.00

      	
         

      	
        3-26-07

      	
         

      
	
        18101979

      	
         

      	
         

      	
        585,000.00

      	
         

      	
        3-26-07

      	
         

      
	
        18103889

      	
         

      	
         

      	
        599,550.00

      	
         

      	
        8-31-07

      	
         

      
	
        18103494

      	
         

      	
         

      	
        15,131.00

      	
         

      	
        6-30-08

      	
         

      
	
        258206

      	
         

      	
         

      	
        282,272.10

      	
         

      	
        2-15-07

      	
         

      
	
        259738

      	
         

      	
         

      	
        43,190.00

      	
         

      	
        5-15-07

      	
         

      
	
        262405

      	
         

      	
         

      	
        37,991.70

      	
         

      	
        5-9-07

      	
         

      
	
        263283

      	
         

      	
         

      	
        161,000.00

      	
         

      	
        1-31-07

      	
         

      
	
        18100463

      	
         

      	
         

      	
        6,220.00

      	
         

      	
        12-31-06

      	
         

      
	
        18102384

      	
         

      	
         

      	
        710,526.32

      	
         

      	
        12-31-07

      	
         

      
	
        18103099

      	
         

      	
         

      	
        20,672.19

      	
         

      	
        3-14-07Prepared and filed by St Ives Financial

	
        Reimbursement
          Agreement for Letters of Credit

      	
        

           
 

THIS
  REIMBURSEMENT AGREEMENT FOR LETTERS OF CREDIT
  (this “Agreement”)
  is made as of this _____ day of November, 2006, by ENVIRONMENTAL
  TECTONICS CORPORATION (the “Obligor”),
  with an address at 125 James Way, Southampton, PA 18966 in favor of PNC
  BANK, NATIONAL ASSOCIATION (the “Bank”),
  with an address at 500 First Avenue, Third Floor, Pittsburgh, PA 15219. This
  Agreement replaces and restates certain provisions of the existing Credit Agreement
  between the Obligor and the Bank dated as of February 18, 2003 (as heretofore
  amended, the “Existing Loan Agreement”).
  From time to time by submitting an application in a form approved by the Bank
  (an “Application”),
  the Obligor or any of its subsidiaries or affiliates has requested or may hereafter
  request the Bank to issue one or more letters of credit (each, a “Credit”)
  (including the Credits listed on Schedule I hereto (the “Existing
  Credits”) heretofore issued under
  the Existing Loan Agreement. The Bank may issue any such Credit, but the Bank
  shall have no obligation to do so unless otherwise agreed in writing. The Obligor
  agrees that the following terms and conditions shall apply to any Credit including
  the Existing Credits:

1.
  Definitions and Interpretation.
  (a) In addition to terms defined elsewhere in this Agreement: “Bank
  Affiliate” means any direct or
  indirect subsidiary of The PNC Financial Services Group, Inc.; “Base
  Rate” means a fluctuating rate
  per annum equal to the greater of (i) the interest rate per annum announced
  from time to time by the Bank as its then prime rate, which rate may not be
  the lowest rate then being charged commercial borrowers by the Bank; or (ii)
  the rate applicable to federal funds transactions, as reasonably determined
  by the Bank, plus .50%;
  “Business Day”
  means any day other than a Saturday, Sunday or other day on which banks in Pittsburgh,
  Pennsylvania, or any other city of which the Bank may give the Obligor notice
  from time to time, are authorized or required by law to close; “Dollar
  Equivalent” means, with respect
  to an amount in any currency other than U.S. dollars, as of any date, the amount
  of U.S. dollars into which such amount in such currency may be converted at
  the spot rate at which U.S. dollars are offered by the Bank in Pittsburgh for
  such currency at approximately 11:00 a.m., Prevailing Time, on such date, plus
  all actual costs of settlement, including amounts incurred by the Bank to comply
  with currency exchange requirements of any Governmental Authority; “Governmental
  Authority” means any de
  facto or de
  jure domestic or foreign government,
  court, tribunal, agency, or other purported authority; “ISP98”
  means the International Standby Practices 1998, and any subsequent official
  revision thereof; “Prevailing Time” means the prevailing time in Pittsburgh,
  Pennsylvania (or any other city of which the Bank may have given the Obligor
  notice) on the date in question; “Taxes”
  means all taxes, fees, duties, levies, imposts, deductions, changes or withholdings
  of any kind (other than taxes on the Bank’s net income); and “UCP”
  means the Uniform Customs and Practice for Documentary Credits (1993 Revision),
  International Chamber of Commerce Publication No. 500, and any subsequent official
  revision thereof.

(b)
  If this Agreement is signed by more than one Obligor, each shall be deemed to
  make to the Bank all the representations, warranties and covenants contained
  herein, and each shall be jointly and severally liable hereunder. Any reference
  herein to this Agreement, an Application, a Credit, or any other instrument,
  agreement or document related hereto or thereto shall be deemed to refer to
  all amendments, modifications, extensions and renewals hereof and thereof. Determinations
  made by the Bank pursuant to the terms hereof shall be conclusive absent manifest
  error.

2. Payments. (a) The Obligor will pay to the Bank the amount to be paid by the Bank with respect to each draft or other payment demand made under a Credit no later than 10 a.m., Prevailing Time, on the date such payment is to be made by the Bank, or such earlier time as the Bank may reasonably require. If a Credit calls for the delivery by the Bank of an item other than money, the Obligor shall deliver or cause to be delivered such item to the Bank at such time, in advance of the time the Bank is to deliver such item, as the Bank may reasonably require.

(b) The Obligor agrees to be primarily liable for payment to the Bank with respect to any Credit issued by the Bank at the request of any subsidiary or affiliate of the Obligor. The Obligor authorizes the Bank to accept Applications from the Obligor’s subsidiaries and affiliates.

(c)
  The Obligor will pay to the Bank upon receipt of the Bank’s invoice therefor
  (i) interest on all amounts payable to the Bank hereunder from the date due
  to the date of payment, at the Base Rate plus
  3.75%; provided that in no event shall
  the Obligor pay interest in excess of the maximum rate permitted by applicable
  law; (ii) the Bank’s fees as separately agreed to by the Obligor and the
  Bank, as well as the customary commissions and other charges regularly charged
  by the Bank for letters of credit; and (iii) all charges and expenses paid or
  incurred by the Bank or any of its correspondents in connection with this Agreement
  or any Credit, including all reasonable legal fees and expenses, whether of
  internal or external counsel to the Bank. All periodic interest, fees and commissions
  shall be calculated on the basis of the actual days elapsed in a 360 day year,
  and interest shall continue to accrue at the applicable rate set forth herein
  whether or not a default
  exists or a judgment has been entered.

(d) All amounts payable hereunder by the Obligor shall be paid to the Bank at its address set forth above or at such other place as the Bank may give notice from time to time, in immediately available funds in the currency specified by the Bank, without set off, defense, recoupment, deduction, cross-claim or counterclaim of any kind; and free and clear of, and without deduction for, any present or future Taxes. If the Bank or the Obligor pays any Taxes, whether or not correctly or legally assessed, the amounts payable hereunder shall be increased so that, after the payment of such Taxes, the Bank shall have received an amount equal to the sum the Bank would have received had no such Taxes been paid. If any amount payable hereunder is denominated in a currency other than U.S. dollars, the Obligor shall make payment in such currency or, at the Bank’s option, shall pay the
Dollar Equivalent thereof. To effect any payment due hereunder, the Bank may debit any account that the Obligor may have with the Bank or any Bank Affiliate.

3.
  Nature of Obligations.
  (a) The Obligor’s obligations to the Bank under this Agreement
  are absolute, unconditional and irrevocable, and shall be paid and performed
  in accordance with the terms hereof irrespective of any act, omission, event
  or condition, including, without limitation (i) the form of, any lack of power
  or authority of any signer of, or the lack of validity, sufficiency, accuracy,
  enforceability or genuineness of (or any defect in or forgery of any signature
  or endorsement on) any draft, demand, document, certificate or instrument presented
  in connection with any Credit, or any fraud or alleged fraud in connection with
  any Credit or any obligation underlying any Credit, in each case, even if the
  Bank or any of its correspondents have been notified thereof; (ii) any claim
  of breach of warranty that might be made by the Obligor or the Bank against
  any beneficiary of a Credit, or the existence of any claim, set off, recoupment,
  counterclaim, cross-claim, defense, or other right that the Obligor may at any
  time have against any beneficiary, any successor beneficiary, any transferee
  or assignee of the proceeds of a Credit, the Bank or any correspondent or agent
  of the Bank, or any other person, however arising; (iii) any acts or omissions
  by, or the solvency of, any beneficiary of any Credit, or any other person having
  a role in any transaction or obligation relating to a Credit; (iv) any failure
  by the Bank to issue any Credit in the form requested by the Obligor, unless
  the Bank receives written notice from
  the Obligor of such failure within three Business Days after the Bank shall
  have furnished the Obligor (by facsimile transmission or otherwise) a copy of
  such Credit and such error is material; and (v) any action or omission (including
  failure or compulsion to honor a presentation under any Credit) by the Bank
  or any of its correspondents in connection with a Credit, draft or other demand
  for payment, document, or any property relating to a Credit, and resulting from
  any censorship, law, regulation, order, control, restriction, or the like, rightfully
  or wrongly exercised by any Governmental Authority, or from any other cause
  beyond the reasonable control of the Bank or any of its correspondents, or for
  any loss or damage to the Obligor or to anyone else, or to any property of the
  Obligor or anyone else, resulting from any such action or omission.

(b) The Bank is authorized to honor any presentation under a Credit without regard to, and without any duty on the Bank’s part to inquire into, any transaction or obligation underlying such Credit, or any disputes or controversies between the Obligor and any beneficiary of a Credit, or any other person, notwithstanding that the Bank may have assisted the Obligor in the preparation of the wording of any Credit or documents required to be presented thereunder or that the Bank may be aware of any underlying transaction or obligation or be familiar with any of the parties thereto.

- 2 -

(c)
  The Obligor agrees that any action or omission by the Bank or any of its correspondents
  in connection with any Credit or presentation thereunder shall be binding on
  the Obligor and shall not result in any liability of the Bank or any of its
  correspondents to the Obligor in the absence of the gross negligence or willful
  misconduct of the Bank. Without limiting the generality of the foregoing, the
  Bank and each of its correspondents (i) may rely on any oral or other communication
  believed in good faith by the Bank or such correspondent to have been authorized
  or given by or on behalf of the Obligor; (ii) may honor any presentation if
  the documents presented appear on their face substantially to comply with the
  terms and conditions of the relevant Credit; (iii) may honor a previously dishonored
  presentation under a Credit, whether such dishonor was pursuant to a court order,
  to settle or compromise any claim of wrongful dishonor, or otherwise, and shall
  be entitled to reimbursement to the same extent as if such presentation had
  initially been honored, together with any interest paid by the Bank; (iv) may
  honor any drawing that is payable upon presentation of a statement advising
  negotiation or payment, upon receipt of such statement (even if such statement
  indicates that a draft or other document is being separately delivered), and
  shall not be liable for any failure of any such draft or other document to arrive,
  or to conform in any way with the relevant Credit; and (v) may pay any paying
  or negotiating bank claiming that it rightfully honored under the laws or practices
  of the place where such bank is located. In no event shall the Bank be liable
  to the Obligor for any indirect, consequential, incidental, punitive, exemplary
  or special damages or expenses (including without limitation attorneys’
  fees), or for any damages resulting from any change in the value of any property
  relating to a Credit.

(d)
  If the Obligor or any other person seeks to delay or enjoin the honor by the
  Bank of a presentation under a Credit, the Bank shall have no obligation to
  delay or refuse to honor the presentation until validly so ordered by a court
  of competent jurisdiction.

4.
  Set Off and Security.
  As collateral security for the due payment and performance of the Obligor’s
  obligations to the Bank hereunder and otherwise, whether such obligations are
  absolute or contingent and exist now or arise after the date hereof, the Obligor
  grants to the Bank a contractual possessory security interest in, an unqualified
  right to possession and disposition of, and a contractual right of set off against,
  in each case, to the fullest extent permitted by law (a) all property relating
  to any Credit, and all drafts, payment demands, transport documents, warehouse
  receipts, documents of title, policies or certificates of insurance and other
  documents relating to any Credit; (b) property in the possession of, on deposit
  with, or in transit to, the Bank or any Bank Affiliate, now or hereafter, regardless
  of how obtained or held (whether in a general
  or special account or deposit, jointly or with someone else, in safekeeping,
  or otherwise); and (c) the proceeds, (including insurance proceeds) of each
  of the above (collectively, the “Collateral”). The Bank’s
  rights with respect to the Collateral may be exercised without demand on or
  notice to the Obligor. The Bank shall be deemed to have exercised its right
  of set off immediately upon the occurrence of an Event of Default hereunder
  without any action of the Bank, although the Bank may enter such setoff on its
  books and records at a later time. The Obligor agrees from time to time to deliver
  to the Bank, on demand, such further agreements and instruments, and such additional
  security, as the Bank may require to secure, or further secure, the Obligor’s
  obligations hereunder.

5.
  Representations, Warranties,
  Covenants. The Obligor represents,
  warrants, and covenants that (a) if not a natural person, the Obligor is duly
  organized, validly existing and in good standing under the laws of the jurisdiction
  of its organization and duly qualified to do business in those jurisdictions
  in which its ownership of property or the nature of its business activities
  makes such qualification necessary; (b) the Obligor has the requisite power
  and authority to execute and deliver this Agreement and to perform its obligations
  hereunder; and all such action has been duly authorized by all necessary proceedings
  on the Obligor’s part, and neither now nor hereafter shall contravene or
  result in a breach of any organizational document of the Obligor, any agreement,
  document, or instrument binding on the Obligor or its property, or any law,
  treaty, regulation, or order of any Governmental Authority, or require any notice,
  filing, or other action to or by any Governmental Authority; (c) all financial
  statements and other information received from the Obligor by the Bank prior
  to the date hereof fairly and accurately present its financial condition in
  accordance with generally accepted accounting principles, and no material adverse
  change has occurred in the Obligor’s financial condition or business operations
  since the date thereof; (d) there are no actions, suits, proceedings or governmental
  investigations pending or, to the knowledge of the Obligor, threatened against
  the Obligor which could result in a material adverse change in its financial
  condition or business operations; (e) the Obligor will promptly submit to the
  Bank such information relating to the Obligor’s affairs (including but
  not limited to annual financial statements) as the Bank may reasonably request;
  and (f) the Obligor and each transaction and obligation underlying each Credit
  are and small remain in compliance with all laws, treaties, rules, and regulations
  of any Governmental Authority, including, without limitation, foreign exchange
  control, Untitled States foreign assets control, and currency reporting laws
  and regulations, now or hereafter applicable.

- 3 -

6.
  Events of Default.
  The occurrence of any of the following
  is an “Event of Default” hereunder:
  (a) the Obligor’s failure to pay when due any obligation to the Bank or
  any Bank Affiliate under this Agreement or otherwise; (b) the Obligor’s
  failure to perform or observe any other term or covenant of this Agreement;
  (c) any representation or warranty contained in this Agreement or in any document
  given now or hereafter by the Obligor in connection herewith is materially false,
  erroneous, or misleading; (d) the occurrence of any event of default or default
  and the lapse of any notice or cure period under any other debt, liability or
  obligation of the Obligor to the Bank or any Bank Affiliate; (e) the failure
  to pay or perform any material obligation to any other person if such failure
  may cause any such obligation to be due or performable immediately; (f) any
  levy, garnishment, attachment, or similar proceeding is instituted against the
  Obligor’s property in possession of, on deposit with, or in transit to,
  the Bank; (g) the Obligor’s dissolution or termination, or the institution
  by or against the Obligor or any of its property of any proceeding relating
  to bankruptcy, receivership, insolvency, reorganization, liquidation, conservatorship,
  foreclosure, execution, attachment, garnishment, levy, assignment for the benefit
  of creditors, relief of debtors, or similar proceeding (and, in the case of
  any such proceeding instituted against the Obligor, such proceeding is not dismissed
  or stayed within 30 days of the commencement thereof); (h) the entry of a material
  final judgment against the Obligor and the failure of the Obligor to discharge
  the judgment within 10 days of the final entry thereof; (i) any material adverse
  change in the Obligor’s business, assets, operations, financial condition
  or results of operations; (j) the death, incarceration, indictment, or legal
  incompetency of an individual Obligor or, if the Obligor is a partnership or
  limited liability company, the death, incarceration, indictment, or legal incompetency
  of any individual general partner or member; (k) the occurrence of any of the
  above events with respect to any person which has now or hereafter guarantied
  or provided any collateral for any of the Obligor’s obligations hereunder;
  or (1) any guarantee, or any document, instrument or agreement purporting to
  provide the Bank security for the Obligor’s obligations hereunder shall
  be challenged, repudiated, or unenforceable for any reason.

7.
  Remedies.
  Upon the occurrence of any Event of
  Default (a) the amount of each Credit, together with any additional amounts
  payable hereunder, shall, at the Bank’s option, become due and payable
  immediately without demand upon or notice to the Obligor; (b) the Bank may exercise
  from time to time any of the rights and remedies available to the Bank under
  this Agreement, under any other documents now or in the future evidencing or
  securing obligations of the Obligor to the Bank, or under applicable law, and
  all such remedies shall be cumulative and not exclusive; and (c) upon request
  of the Bank, the Obligor shall promptly deliver to the Bank in immediately available
  funds, as collateral for any and all obligations of the Obligor to the Bank,
  an amount equal to 105% of the maximum aggregate amount then or at any time
  thereafter available to be drawn under all outstanding Credits, and the Obligor
  hereby pledges to the Bank and grants to the Bank a security interest in all
  such funds as security for such obligations, acknowledges that the Bank shall
  at all times have control of such funds and shall be authorized to give entitlement
  orders (as defined in the UCC) with respect to such funds, without further consent
  of the Obligor or any other person, and agrees promptly to do all further things
  that the Bank may deem necessary in order to grant and perfect the Bank’s
  security interest in such funds. The Obligor waives presentment, protest, dishonor,
  notice of dishonor, demand, notice of protest, notice of non-payment, and notice
  of acceptance of this Agreement, and any other notice or demand of any kind
  from the Bank.

8. Subrogation. The Bank, at its option, shall be subrogated to the Obligor’s rights against any person who may be liable to the Obligor on any transaction or obligation underlying any Credit, to the rights of any holder in due course or person with similar status against the Obligor, and to the rights of any beneficiary or any successor or assignee of any beneficiary.

9.
  Indemnification.
  The Obligor agrees to indemnify the
  Bank and each Bank Affiliate and each of their respective officers, directors,
  shareholders, employees and agents (each, an “Indemnified Party”)
  and to hold each Indemnified Party harmless from and against any and all claims,
  liabilities, losses, damages, Taxes, penalties, interest, judgments, costs and
  expenses (including reasonable legal fees and costs, whether of internal or
  external counsel to the Bank and all expenses of litigation or preparation therefor),
  which may be incurred by or awarded against any Indemnified Party, and which
  arise out of or in connection with (a) any Credit, this Agreement, or 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 arise
  our of or relates to this Agreement
  or any Credit (and irrespective of who may be the prevailing party); (b) any
  payment or action taken in connection with any Credit, including, without limitation,
  any action or proceeding seeking to restrain any drawing under a Credit or to
  compel or restrain any payment or any other action under a Credit or this Agreement
  (and irrespective of who may be the prevailing party); (c) the enforcement of
  this Agreement or the collection or sale of any property or collateral; and
  (d) any act or omission of any Governmental Authority or other cause beyond
  the Bank’s reasonable control; except, in each case, to the extent such
  claim, liability, loss, damage, Tax, penalty, interest, judgment, cost or expense
  is found by a final judgment of a court of competent jurisdiction to have resulted
  from the Bank’s gross negligence or willful misconduct.

- 4 -

10.
  Miscellaneous.
  All notices, demands, requests, consents,
  approvals and other communications required or permitted hereunder (“Notices”)
  must be in writing and will be effective upon receipt. Notices may be given
  in any manner to which the parties may separately agree, including electronic
  mail. Without limiting the foregoing: (i) first class mail, facsimile transmission
  and commercial courier service are hereby agreed to as acceptable methods for
  giving Notices and (ii) Applications may be submitted electronically via, and
  in accordance with the terms and conditions of, the PINACLE Network System (or
  such other network system offered by the Bank), if Obligor is an authorized
  user of such system or by such other electronic means acceptable to the Bank.
  Regardless of the manner in which provided, Notices may be sent to a party’s
  address as set forth above or to such other address as any party may give to
  the other for such purpose in accordance with this section. The Bank may rely,
  and shall be protected in acting or refraining from acting, upon any Notice
  or Application believed by the Bank to be genuine and to have been given by
  the proper party or parties. No delay or omission on the Bank’s part to
  exercise any right or power arising hereunder will impair any such right or
  power or be considered to be a waiver of any such right or power, nor will the
  Bank’s action or inaction impair any such right or power. No modification,
  amendment or waiver of, or consent to any departure by the Obligor from, any
  provision of this Agreement, will be effective unless made in a writing signed
  by the Bank, and then such waiver or consent shall be effective only in the
  specific instance and for the purpose for which given. If any provision of this
  Agreement is found to be invalid by
  a court, all the other provisions of
  the Agreement will remain in full force and effect. If this Agreement is executed
  by more than one Obligor, each Obligor waives any and all defenses to payment
  and performance hereunder based upon principles of suretyship, impairment of
  collateral, or otherwise and, without limiting the generality of the foregoing,
  each Obligor consents to: any change in the time, manner, or place of payment
  of or in any other term of all or any of the obligations of any other Obligor
  hereunder or otherwise, and any exchange or release of any property or collateral,
  or the release or other amendment, extension, renewal, waiver of, or consent
  to departure from, the terms hereof or of any guaranty or security agreement
  or any other agreement related hereto. This Agreement will be binding upon and
  inure to the benefit of the Obligor and the Bank and their respective heirs,
  executors, administrators, successors and assigns; provided,
  however, that the Obligor may not assign
  this Agreement in whole or in part without the Bank’s prior written consent
  and the Bank may at any time assign this Agreement in whole or in part. The
  Obligor hereby authorizes the Bank, from time to time without notice to the
  Obligor, to record telephonic and other electronic communications of the Obligor
  and provide any information pertaining to the financial condition, business
  operations or creditworthiness of the Obligor to or at the direction of any
  Governmental Authority to any of the Bank’s correspondents, and any Bank
  Affiliate, and to any of its or their directors, officers, employees, auditors
  and professional advisors, to any person which in the ordinary course of its
  business makes credit reference inquiries, to any person which may succeed to
  or participate in all or part of the Bank’s interest hereunder, and as
  may be necessary or advisable for the preservation of the Bank’s rights
  hereunder. This is a continuing Agreement and shall remain in full force and
  effect until no obligations of the Obligor and no Credit exist hereunder; provided,
  however, that termination of this Agreement shall not release the Obligor from
  any payment or performance that is subsequently rescinded or recouped, and the
  obligation to make any such payment or performance shall continue until paid
  or performed as if no such payment or performance ever occurred. Provisions
  concerning payment, indemnification, increased costs, Taxes, immunity, and jurisdiction
  shall survive the termination of this Agreement.

11.
  Waiver of Immunity.
  The Obligor acknowledges that this
  Agreement is entered into, and each Credit will be issued, for commercial purposes
  and, if the Obligor now or hereafter acquires any immunity (sovereign or otherwise)
  from the jurisdiction of any court or from any legal process with respect to
  itself or any of its property, the Obligor hereby irrevocably waives such immunity.

- 5 -

12.
  Jurisdiction.
  The Obligor hereby irrevocably consents
  to the exclusive jurisdiction of any state or federal court for the county or
  judicial district in the State of Pennsylvania where the Bank’s office
  set forth above is located; provided that nothing contained in this Agreement
  will prevent the Bank from bringing any action, enforcing any award or judgment,
  or exercising any right against the Obligor individually, against any security,
  or against any property of the Obligor within any other county, state or other
  foreign or domestic jurisdiction. The Obligor agrees that the venue provided
  above is the most convenient forum for the Bank and the Obligor. The Obligor
  waives any objection to venue and any objection based on a more convenient forum
  in any action under this Agreement.

13.
  WAIVER OF JURY TRIAL.
  THE OBLIGOR IRREVOCABLY WAIVES ALL
  RIGHTS THE OBLIGOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
  CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY CREDIT, ANY DOCUMENTS EXECUTED
  IN CONNECTION WITH THIS AGREEMENT OR ANY CREDIT, OR ANY OBLIGATION OR TRANSACTION
  UNDERLYING ANY OF THE FOREGOING. THE OBLIGOR ACKNOWLEDGES THAT THIS WAIVER IS
  KNOWING AND VOLUNTARY.

14.
  Governing Law.
  This Agreement and each Credit shall
  be interpreted, construed, and enforced according to (a) the laws of the Commonwealth
  of Pennsylvania, including, without limitation, the Uniform Commercial Code
  (“UCC;” with the definitions of Article 5 of the UCC controlling
  over any conflicting definitions in other UCC Articles); and (b) the UCP or
  the ISP, as set forth in each Credit, which are, as applicable, incorporated
  herein by reference and which shall control (to the extent not prohibited by
  the law referred to in (a)) in the event of any inconsistent provisions of such
  law. In the event that a body of law other than that set forth above is applicable
  to a Credit, the Obligor shall be obligated to pay and reimburse the Bank for
  any payment made under such Credit if such payment is, in the Bank’s judgment,
  justified under either the law governing this Agreement or the law governing
  such Credit.

 

	
         
 	
         
 	

ENVIRONMENTAL TECTONICS CORPORATION
 
	
          
 	
         
 	
        

          By: 

      	

  
 
	
         
 	
         
 	
         
 	

 
	
         
 	
         
 	

Print Name:
 	
         
 
	
         
 	
         
 	

 
 	
        

 
	
         
 	
         
 	

Title:
 	

 
 
	
         
 	
         
 	

 
 	

 
						

            

 

- 6 -

SCHEDULE I

Existing Letters of Credit

 

  	
        Number

      	
         

      	
        Amount

      	
         

      	
        Expiration
          Date

      
	
        

      	 	
        

      	
        

      	 	
        

      
	
        18103309

      	
         

      	
        $

      	
        13,732.94

      	
         

      	
        11-30-06

      
	
        18103773

      	
         

      	
         

      	
        24,000.00

      	
         

      	
        3-30-07

      
	
        258078

      	
         

      	
         

      	
        500,000.00

      	
         

      	
        11-30-07

      
	
        260691

      	
         

      	
         

      	
        21,341.75

      	
         

      	
        6-30-07

      
	
        18101978

      	
         

      	
         

      	
        195,000.00

      	
         

      	
        3-26-07

      
	
        18101979

      	
         

      	
         

      	
        585,000.00

      	
         

      	
        3-26-07

      
	
        18103889

      	
         

      	
         

      	
        599,550.00

      	
         

      	
        8-31-07

      
	
        18103494

      	
         

      	
         

      	
        15,131.00

      	
         

      	
        6-30-08

      
	
        258206

      	
         

      	
         

      	
        282,272.10

      	
         

      	
        2-15-07

      
	
        259738

      	
         

      	
         

      	
        43,190.00

      	
         

      	
        5-15-07

      
	
        262405

      	
         

      	
         

      	
        37,991.70

      	
         

      	
        5-9-07

      
	
        263283

      	
         

      	
         

      	
        161,000.00

      	
         

      	
        1-31-07

      
	
        18100463

      	
         

      	
         

      	
        6,220.00

      	
         

      	
        12-31-06

      
	
        18102384

      	
         

      	
         

      	
        710,526.32

      	
         

      	
        12-31-07

      
	
        18103099

      	
         

      	
         

      	
        20,672.19

      	
         

      	
        3-14-07

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]