Document:

Prepared and filed by St Ives Financial

RESTATED SUBORDINATION AND INTERCREDITOR AGREEMENT

This
  Restated Subordination and Intercreditor Agreement (this “Agreement”)
  is dated as of November ________, 2006 among PNC
  BANK, NATIONAL ASSOCIATION (the “Bank”),
  SUBORDINATED LENDER
  (as defined below), and ENVIRONMENTAL
  TECTONICS CORPORATION, a Pennsylvania
  corporation (“Company”).

BACKGROUND

As
  an inducement for Bank to continue to provide a secured credit facility in favor
  of Company, Subordinated Lender has agreed to enter into this Agreement to provide
  for the subordination of (i) the Subordinated Indebtedness (as defined below)
  and (ii) the Liens (as defined below) in the assets of Company granted to Subordinated
  Lender to the prior payment of Senior Indebtedness (as defined below) and to
  any Liens granted to Bank. This Agreement restates and replaces (but does not
  constitute a novation of) the existing Subordination and Intercreditor Agreement
  among Bank, Subordinated Lender and Company dated as of February 18, 2003.

AGREEMENTS

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

1.1 General Terms. For purposes of this Agreement, the following terms shall have the following meanings:

“Bank” shall have the meaning set forth in the introductory paragraph of this Agreement and any successor, assign or other provider of the Senior Indebtedness.

“Collateral” shall mean all of the property and interests in property, tangible or intangible, real or personal, now owned or hereafter acquired by Company or the Guarantor in or upon which Bank and/or Subordinated Lender at any time has a Lien, and including, without limitation, all proceeds and products of such property and interests in property and any guaranty by the Guarantor.

“Company” shall mean Company and its successors and assigns.

“Creditor Agreements” shall mean, collectively, the Senior Lending Agreements and the Subordinated Lending Agreements.

“Creditors” shall mean, collectively, Bank and Subordinated Lender and their respective successors and assigns.

“Default” shall have the meaning given to the term “Default” set forth in the Loan Agreement.

“Distribution” shall mean any payment in cash or any other property (other than securities of the Company into which the Subordinated Indebtedness is convertible pursuant to the terms of the Subordinated Note), or security for any such Distribution.

“Event
  of Default” shall have the meaning
  given to the term “Event of Default” in any of the Senior Lending
  Agreements.

“Insolvency
  Event” shall have the meaning
  set forth in Section 2.2(c) hereof.

“Lien”
  shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit
  arrangement, security interest, encumbrance (including, but not limited to,
  easements, rights of way and the like), lien (statutory or other), security
  agreement or transfer intended as security including, without limitation, any
  conditional sale or other title retention agreement, the interest of a lessor
  under a capital lease or any financing lease having substantially the same economic
  effect as any of the foregoing.

“Loan
  Agreement” shall mean the Letter
  Agreement, dated as of the date; hereof, between Company and Bank, as the same
  may be amended, supplemented, modified or restated from time to time.

“Note Purchase Agreement” shall mean the Convertible Note and Warrant Purchase Agreement dated as of February 18, 2003 between Company and Subordinated Lender, as the same has and may be amended, supplemented, modified or restated from time to time.

“Person” shall mean an individual, a partnership, a corporation (including a business trust), a joint stock company, a trust, an unincorporated association, a joint venture, a limited liability company, a limited liability partnership or other entity, or a government or any agency, instrumentality or political subdivision thereof.

“Secured Lender Remedies” shall mean any action which results in the sale, foreclosure, realization upon, or a liquidation of any of the Collateral including, without limitation, the exercise or any of the rights or remedies of a “secured party” under Article 9 of the Uniform Commercial Code, such as, without limitation, the notification of account debtors.

“Senior
  Indebtedness” shall mean all obligations
  of any kind owed by Company or the Guarantor to Bank from time to time under
  or pursuant to any of the Senior Lending Agreements including, without limitation,
  all principal, interest accruing thereon, charges, expenses, fees and other
  sums (including all interest, charges, expenses, fees and other sums accruing
  after commencement of any case, proceeding or other action relating to the bankruptcy,
  insolvency or reorganization of Company) chargeable to Company or Guarantor
  by Bank, and reimbursement, indemnity or other obligations due and payable to
  Bank. Senior Indebtedness shall continue to constitute Senior Indebtedness,
  notwithstanding the fact that such Senior Indebtedness or any claim for such
  Senior Indebtedness is subordinated, avoided or disallowed under the federal
  Bankruptcy Code or other applicable law. Senior Indebtedness shall also include
  any indebtedness of Company incurred in connection with a refinancing of the
  Senior Indebtedness under the Senior Lending Agreements if the terms and conditions
  of the agreements, documents and instruments related to such refinancing, taken
  as a whole, are not materially more onerous to Subordinated Lender than those
  set forth in the Senior Lending Agreements, as in effect on the date hereof.
  The principal portion of the Senior Indebtedness and the principal amount subject
  to this Agreement shall in no event exceed $10,000,000.

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 “Subordinated Lender” shall mean H.F. Lenfest and any other Person(s) at any time or in any manner acquiring any right or interest in any of the Subordinated Indebtedness.

“Senior Lending Agreements” shall mean collectively the Loan Agreement and the Loan Documents together with any other agreements, documents and instruments at any time evidencing, securing or related to the senior Indebtedness, each as from time to time in effect.

“Subordinated Indebtedness” shall mean all principal, interest and other amounts payable or chargeable in connection with the Subordinated Note.

“Subordinated Lending Agreements” shall mean, collectively, the Note Purchase Agreement, the Subordinated Note and all promissory notes, guaranties, agreements, documents and instruments now or at any time hereafter executed and/or delivered by Company, Guarantor or any other person to, with or in favor of Subordinated Lender in connection therewith or related thereto (other than the warrants issued simultaneously with the Subordinated Note and the documents and agreements executed in connection therewith or related thereto), as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

“Subordinated Note” shall mean collectively the convertible promissory note issued by Company to Subordinated Lender in the original aggregate principal amount of $10,000,000 dated February 18, 2003 issued pursuant to the Note Purchase Agreement, together with any extensions thereof, or modifications or amendments thereto or replacements and substitutions therefor.

1.2 Other Terms. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement.

1.3
  Certain Matters of Construction.
  The terms “herein”, “hereof and “hereunder” and other
  words of similar import refer to this Agreement as a whole and not to any particular
  section, paragraph or subdivision. Any pronoun used shall be deemed to cover
  all genders. Wherever appropriate in the context, terms used herein in the singular
  also include the plural and vice versa. All references to statutes
  and related regulations shall include any amendments of the same and any successor
  statutes and regulations. Except as expressly set forth herein, all references
  to any instruments or agreements, including, without limitation, references
  to any of the Creditor Agreements shall include any and all modifications or
  amendments thereto and any and all extensions or renewals thereof.

2.
  Covenants.
  Company and Subordinated Lender hereby covenant that until the Senior Indebtedness
  shall have been paid in full and satisfied in cash and the Loan Agreement shall
  have been terminated, all in accordance with the terms of the Loan Agreement,
  each will comply with such of the following provisions as are applicable to
  it:

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2.1
  Transfers.
  Subordinated Lender covenants to cause any transferee from it of any Subordinated
  Indebtedness, prior to acquiring such interest, to execute and deliver a counterpart
  of this Agreement to Bank.

2.2
  Subordination Provisions.
  To induce Bank to enter into the Loan Agreement, notwithstanding any other provision
  of the Subordinated Indebtedness to the contrary but subject to subsection 2.2(a),
  any Distribution with respect to the Subordinated Indebtedness is and shall
  be expressly junior and subordinated in right of payment to all amounts due
  and owing upon all Senior Indebtedness outstanding from time to time until such
  time as the Senior Indebtedness has been paid in full in cash and the Loan Agreement
  has been terminated.

(a)
  Payments.
  Company shall not make a Distribution on the Subordinated Indebtedness until
  such time as the Senior Indebtedness shall have been paid in full in cash and
  the Loan Agreement shall have been terminated; provided,
  however,
  so long as no Default or Event of Default shall have occurred and be continuing
  under the Senior Lending Agreements, Company may pay, and Subordinated Lender
  may receive, regularly scheduled payments of interest on, and principal at the
  stated (but not any accelerated) maturity of, the Subordinated Indebtedness
  as set forth on the date hereof in the Note Purchase Agreement and the Subordinated
  Note.

Following
  the occurrence of an Event of Default under the Senior Lending Agreements and
  receipt by Subordinated Lender of written notice of such Event of Default from
  Bank (such notice, the “Default
  Notice”), Company shall not make
  a Distribution on the Subordinated Indebtedness and Subordinated Lender shall
  not be entitled to receive any such Distribution in respect of the Subordinated
  Indebtedness; provided,
  however,
  that notwithstanding the foregoing restriction, Company may pay, and Subordinated
  Lender shall be entitled to receive, any then due and payable (on a non-accelerated
  basis) interest payment with respect to the Subordinated Indebtedness on the
  earlier to occur of (x) the date on which all such Events of Default specified
  in the Default Notice shall have been cured or waived, or (y) in the case of
  an Event of Default other than with respect to the payment when due of any Senior
  Indebtedness, the expiration of a period of 180 days from delivery of the Default
  Notice. Nothing herein shall limit the accrual of deferred interest or default
  interest in accordance with the terms of the Subordinated Lending Agreements.

(b)
  Limitation on Acceleration.
  During any period described in Section 2.2 (a) hereof in which a Distribution
  is not permitted to be made on Subordinated Indebtedness, Subordinated Lender
  shall not be entitled to accelerate the maturity of the Subordinated Indebtedness,
  exercise any Secured Lender Remedies or commence any other action or proceeding
  to recover any amounts due or to become due with respect to Subordinated Indebtedness,
  provided,
  however,
  the foregoing limitation on acceleration or exercise of any remedies shall not
  be applicable following (x) the occurrence of an Insolvency Event or (y) following
  the maturity or acceleration of the Senior Indebtedness.

(c)
  Prior Payment of Senior Indebtedness
  in Bankruptcy, etc. In the event of
  any insolvency or bankruptcy proceedings relative to Company or Company’s
  property, or any receivership, liquidation, reorganization or other similar
  proceedings in connection therewith, or, in the event of any proceedings for
  voluntary liquidation, dissolution or other winding up of Company or distribution
  or marshalling of Company’s assets or any composition with creditors of
  Company, whether or not involving insolvency or bankruptcy, or if Company shall
  cease its operations, call a meeting of its creditors or no longer do business
  as a going concern (each individually or collectively, an “Insolvency Event”),
  then all Senior Indebtedness shall be paid in full and satisfied in cash and
  the Loan Agreement terminated before any Distribution shall be made on account
  of any Subordinated Indebtedness. Any such Distribution resulting from an Insolvency
  Event which would, but for the provisions hereof, be payable or deliverable
  in respect of the Subordinated Indebtedness, shall be paid or delivered directly
  to Bank until amounts owing upon Senior Indebtedness shall have been paid in
  full in cash and the Loan Agreement terminated provided that any such Distribution
  to Bank to which Subordinated Lender would be entitled except for the provisions
  of this Agreement shall, as between Company and Subordinated Lender, not be
  deemed to be a Distribution by Company to or on account of the Subordinated
  Indebtedness.

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(d) Acceleration. In the event of all Senior Indebtedness becoming due and payable, whether by acceleration, maturity or otherwise, no Distribution shall thereafter be made on account of the Subordinated Indebtedness until all Senior Indebtedness shall be paid in full in cash and the Loan Agreement shall have been terminated.

(e)
  Power of Attorney.
  Subordinated Lender shall have the right to participate in any bankruptcy or
  insolvency proceedings, subject to the terms and conditions of this Section
  2.2(e). To enable Bank to assert and enforce its rights hereunder upon the happening
  of any Insolvency Event and until all amounts owing upon Senior Indebtedness
  shall have been paid in full in cash and the Loan Agreement terminated, Bank
  or any person whom it may designate is hereby irrevocably appointed attorney
  in fact for Subordinated Lender with full power to act in the place and stead
  of Subordinated Lender solely for such purpose, including the right to make,
  present, file and vote such proofs of claim against Company on account of all
  or any part of the Subordinated Indebtedness as Bank may deem advisable and
  to receive and collect any and all distributions or other payments in respect
  of the Subordinated Indebtedness made thereon and to apply the same on account
  of the Senior Indebtedness. In the event that Bank or its designee fails to
  file a proof of claim with respect to the Subordinated Indebtedness in any bankruptcy
  proceeding relative to Company prior to the date which is ten (10) days prior
  to any claims bar date in such proceeding, Subordinated Lender may file such
  proofs of claim with respect to the Subordinated Indebtedness. Subordinated
  Lender will execute and deliver to Bank such instruments as may be required
  by Bank to enforce any and all Subordinated Indebtedness, to effectuate the
  aforesaid power of attorney and to effect collection of any and all distributions
  or other payments in respect of the Subordinated Indebtedness which may be made
  at any time after the occurrence of an Insolvency Event, on account thereof,
  and Subordinated Lender hereby irrevocably appoints Bank as the lawful attorney
  and agent of Subordinated Lender to execute financing statements on behalf of
  Subordinated Lender and hereby further authorizes Bank to file such financing
  statements in any appropriate public office.

(f)
  Knowledge; Delivery of Default Notice.
  Subordinated Lender shall not at any time be charged with knowledge of any Event
  of Default under the Senior Lending Agreements or on such account be prohibited
  from receiving or retaining any payment of monies or from taking any action
  regarding acceleration or the exercise of remedies, unless and until Subordinated
  Lender shall have received the Default Notice; provided,
  however,
  any “default” or “event of default” under the Subordinated
  Note and/or Subordinated Lending Agreements shall automatically constitute an
  Event of Default under the Senior Lending Agreements so that payments received
  by Subordinated Lender following any such occurrence shall not be retained irrespective
  of the lack of receipt by Subordinated Lender of a Default Notice, unless
  the Event of Default is waived by such Holder of Subordinated Indebtedness or
  satisfied or cured by Company.

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Each Default Notice shall be deemed to be properly given by Bank or other holder of Senior Indebtedness to Subordinated Lender if such Default Notice is delivered in accordance with Section 4.10 hereof.

(g) Payments Held in Trust. Should any Distribution or the proceeds thereof, in respect of the Subordinated Indebtedness, be collected or received by Subordinated Lender or any Affiliate (as such term is defined in Rule 405 of Regulation C adopted by the Securities and Exchange Commission pursuant to the Securities Act of 1933) of Subordinated Lender at a time when Subordinated Lender is not permitted to receive any such Distribution or proceeds thereof pursuant to the terms hereof, then Subordinated Lender will forthwith deliver, or cause to be delivered, the same to Bank in precisely the form held by Subordinated Lender (except for any necessary endorsement) and until so delivered, the same shall be held in trust by Subordinated Lender, or any such Affiliate, as the property of Bank and shall not
be commingled with other property of Subordinated Lender or any such Affiliate.

(h)
  Subrogation.
  Subject to the prior payment in full in cash of the Senior Indebtedness and
  the termination of the Loan Agreement, to the extent that Bank has received
  any Distribution on the Senior Indebtedness which, but for this Agreement, would
  have been applied to the Subordinated Indebtedness, the rights of Subordinated
  Lender shall be subrogated to the then or thereafter rights of Bank including,
  without limitation, the right to receive any Distribution made on the Senior
  Indebtedness (as if the Senior Indebtedness had not been paid in full or the
  Loan Agreement terminated) until the principal of, interest on and other charges
  due under the Subordinated Indebtedness shall be paid in full; and, for the
  purposes of such subrogation, no Distribution to Bank to which the Subordinated
  Lender would be entitled except for the provisions of this Agreement shall,
  as between Company, its creditors (other than Bank) and Subordinated Lender,
  be deemed to be a Distribution by Company to or on account of Senior Indebtedness,
  it being understood that the provisions hereof are and are intended solely for
  the purpose of defining the relative rights of the Subordinated Lender on the
  one hand, and Bank on the other hand.

(i) Scope of Subordination. The provisions of this Agreement are solely to define the relative rights of Subordinated Lender and Bank. Nothing in this Agreement shall impair, as between Company and Subordinated Lender the unconditional and absolute obligation of Company to punctually pay the principal, interest and any other amounts and obligations owing under the Subordinated Note and Subordinated Lending Agreements in accordance with the terms thereof, subject to the rights of Bank under this Agreement.

(j)
  Relationship.
  The parties acknowledge that certain rights and remedies are provided to Subordinated
  Lender in the Subordinated Lending Agreements (the “Subordinated
  Rights”) and certain rights and
  remedies are provided to Bank in the Senior Lending Agreements (the “Bank
  Rights”). Those rights may include,
  among other things: (i) the right, after an Event of Default, to direct account
  debtors to make payments directly to such Creditor; (ii) the requirement to
  deliver original instruments and other possessory collateral into the possession
  of a Creditor; (iii) the requirement to assemble and make available collateral
  to a Creditor; and (iv) the requirement to execute and deliver such further
  documents and instruments as a Creditor may deem necessary to obtain, preserve
  and enforce the benefits of its Creditor Agreements. In addition, the Company
  has certain obligations to Subordinated Lender in the Subordinated Lending Agreements
  (the “Company Subordinated Lender
  Obligations”) and the Company
  has certain obligations to the Bank in the Senior Lending Agreements (the “Company
  Bank Obligations”). The parties
  agree that, (a) in the event of a conflict between the Subordinated Lender Rights
  and the Bank Rights, the Bank Rights shall be superior to the Subordinated Lender
  Rights, and (b) that in the event of a conflict between the Company Subordinated
  Lender Obligations and the Company Bank Obligations, the Company Bank Obligations
  will be superior to the Company Subordinated Lender Obligations. The Company
  shall in good faith determine the correct Creditor to make deliveries to, comply
  with instructions from and otherwise satisfy the obligations owing to, based
  on the provisions of this Section 2.2(j); provided, however, if it is determined
  that the obligations were satisfied with respect to the wrong Creditor, the
  Creditors shall make such adjustments as between themselves as to satisfy the
  purposes of this Agreement. To the extent that it is impossible or impracticable
  for the Company to satisfy conflicting obligations with respect to the Subordinated
  Rights and the Bank Rights, or with respect to the Company Subordinated Lender
  Obligations and the Company Bank Obligations it shall not be in default under
  the Creditor Agreements if it satisfies the relevant obligations with respect
  to only one Creditor otherwise in accordance with this Section 2.2(j).

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3. Security.

3.1 Acknowledgment of Lien. Each Creditor hereby agrees and acknowledges that the other Creditor has been granted a Lien or otherwise has rights in or upon all or a portion of the Collateral.

3.2
  Priority.
  Notwithstanding the order or time of attachment, or the order, time or manner
  of perfection, or the order or time of filing or recordation of any document
  or instrument, or other method of perfecting a Lien in favor of each Creditor
  in any Collateral and notwithstanding any conflicting terms or conditions which
  may be contained in any of the Creditor Agreements, the Liens upon and rights
  in the Collateral of Bank have and shall have priority over the Liens upon and
  rights in the Collateral of Subordinated Lender and such Liens and rights of
  Subordinated Lender are and shall be, in all respects, subject and subordinate
  to the Liens and rights of Bank therein to the full extent of the Senior Indebtedness
  outstanding from time to time. Subordinated Lender shall not take any action
  to foreclose or realize upon any Collateral until such time as the Senior Indebtedness
  shall have been paid in full in cash and the Loan Agreement irrevocably terminated;
  provided
  however,
  Subordinated Lender may join in any foreclosure proceeding of the Collateral
  commenced by the Bank to the extent the joinder in such legal proceeding is
  necessary to prevent the waiver or lapse of Subordinated Lender’s rights
  with respect to such Collateral, but subject at all times to the Bank’s
  rights hereunder to determine the disposition of such Collateral in accordance
  with the terms hereof.

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3.3 No Alteration of Priority. The lien priorities provided in Section 3.2 hereof shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement or refinancing of any Senior Indebtedness or the Subordinated Indebtedness, nor by any action or inaction which Creditor may take or fail to take in respect of the Collateral.

3.4 Perfection. Each Creditor shall be solely responsible for perfecting and maintaining the perfection of its Lien in and to each item constituting the Collateral in which such Creditor has been granted a Lien or any rights. The foregoing provisions of this Agreement are intended solely to govern the respective lien priorities as between Creditors and shall not impose on Bank any obligations in respect of the disposition of proceeds of foreclosure on any Collateral which would conflict with prior perfected claims therein in favor of any other Person. Subordinated Lender agrees that it will not contest the validity, perfection, priority or enforceability of the Liens of Bank in the Collateral and that as between Bank and such Subordinated Lender, the terms of this Agreement shall govern even if
part or all of the Senior Indebtedness or the Liens of Bank securing payment and performance thereof are avoided, disallowed, set aside or otherwise invalidated in any judicial proceeding or otherwise.

3.5
  Management of Collateral.
  Until all amounts owing upon Senior Indebtedness shall have been paid in full
  in cash and the Loan Agreement terminated, Bank shall have the exclusive right
  to manage, perform and enforce the terms of the Senior Lending Agreements with
  respect to the Collateral and to exercise and enforce all privileges and rights
  thereunder according to its discretion and exercise of its business judgment,
  including, without limitation, the exclusive right to enforce or settle insurance
  claims, take or retake control or possession of the Collateral and to hold,
  prepare for sale, process, sell, lease, dispose of, or liquidate the Collateral,
  subject to the requirement that the net proceeds of such sale or other disposition
  are applied to the Senior Indebtedness and/or the Subordinated Indebtedness
  as required under Section 3.6. In connection therewith, Subordinated Lender
  waives any and all rights to affect the method or challenge the appropriateness
  of any action by Bank.

3.6
  Sale of Collateral.
  Notwithstanding anything to the contrary contained in any of the Creditor Agreements
  until all amounts owing upon Senior Indebtedness shall have been paid in full
  in cash and the Loan Agreement terminated, only Bank shall have the right to
  restrict or permit, or approve or disapprove, the sale, transfer or other disposition
  of Collateral in which Bank has a Lien or any rights. Subordinated Lender will,
  promptly upon the request of Bank, release or otherwise terminate its Liens
  on the Collateral upon which it has a Lien, to the extent such Collateral is
  sold or otherwise disposed of either by Bank, its agents, or Company with the
  consent of Bank, and the net proceeds of such sale or other disposition are
  applied to the Senior Indebtedness and/or the Subordinated Indebtedness, and
  Subordinated Lender will promptly deliver such release documents as Bank may
  require in connection therewith. Bank shall have the sole discretion as to whether
  to apply the net proceeds of such sales or other dispositions to the Senior
  Indebtedness and/or the Subordinated Indebtedness.

In the event that Bank conducts a foreclosure proceeding with respect to any Collateral, Subordinated Lender may bid to purchase such Collateral, but such ability to bid shall not impose any additional obligations on Bank or limit the discretion of Bank with respect to the disposition of the Collateral.

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3.7
  Secured Lender Remedies.
  Subject to Section 2.2(b) hereof, in no event shall Subordinated Lender exercise
  any Secured Lender Remedies until such time as the Senior Indebtedness shall
  have been paid in full in cash and the Senior Lending Agreements terminated;
  nor shall Subordinated Lender join in the filing of any petition in bankruptcy,
  solicit any other person to, or act to cause the commencement of, any case involving
  Company under any state or federal bankruptcy or insolvency laws or seek the
  appointment of a receiver for the affairs or property of Company until such
  time as the Senior Indebtedness shall have been paid in full in cash and the
  Senior Lending Agreements shall have been irrevocably terminated; provided however,
  Subordinated Lender may join in any foreclosure proceeding of the Collateral
  commenced by Bank to the extent the joinder in such legal proceeding is necessary
  to prevent the waiver or lapse of Subordinated Lender’s rights with respect
  to such Collateral, but subject at all times to Bank’s rights hereunder
  to determine the disposition of such Collateral in accordance with the terms
  hereof. In the event Subordinated Lender shall receive any payment or distribution
  of any kind representing proceeds of any Collateral before the Senior Indebtedness
  shall have been paid in full in cash and the Senior Lending Agreements terminated,
  such sums shall be held in trust by Subordinated Lender for the benefit and
  on account of Bank and such amounts shall be paid to Bank for application to
  the then unpaid obligations under the Senior Lending Agreements.

3.8 Section 9-611 Notice and Waiver of Marshaling. Subordinated Lender and Bank acknowledge that this Agreement shall constitute notice of their respective interests in the Collateral as provided by Section 9-611 of the Pennsylvania Uniform Commercial Code and each hereby waives any right to compel any marshaling of any of the Collateral.

3.9
  Perfection of Certificates.
  The Bank shall hold that portion of the Collateral, if any, on which it has
  a Lien and as to which perfection of the security interest in the Collateral
  requires possession (the “Possessed
  Collateral”) on behalf of Subordinated
  Lender (and subject to the senior lien of Bank) solely for the
  purpose of perfecting and keeping perfected
  the security interest granted to Subordinated Lender. In connection therewith,
  Bank shall take such actions as are reasonably requested by Subordinated Lender
  to perfect and maintain the priority of the Liens of Subordinated Lender in
  the Possessed Collateral, provided such requests do not impair the prior Liens
  of Bank in the Possessed Collateral or violate the requirements of the Senior
  Lending Agreements. The duties and responsibilities of Bank to the Holders of
  the Subordinated Indebtedness with respect to the Possessed Collateral shall
  be limited solely to those set forth in this Section 3.9. In no event shall
  Bank be liable for its actions with respect to the Possessed Collateral except
  for gross negligence or willful misconduct. Upon payment in full in cash of
  the Senior Indebtedness and termination of the Loan Agreement, Bank shall deliver
  possession of the Possessed Collateral to Subordinated Lender or as otherwise
  ordered by a court and shall take all actions reasonably necessary and at the
  expense of Subordinated Lender to transfer the Possessed Collateral to Subordinated
  Lender.

4. Miscellaneous.

4.1 Provisions of Subordinated Note. From and after the date hereof, Company and the Subordinated Lender shall cause each Subordinated Note to contain a provision to the following effect:

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“This
  Note is subject to the Restated Subordination and Intercreditor Agreement, dated
  as of November ____, 2006, among the Maker, the Payee and PNC Bank, National
  Association, under which this Note and the Maker’s obligations hereunder
  are subordinated in the manner set forth therein to the prior payment of certain
  obligations to the holders of Senior Indebtedness as defined therein.”

Proof of compliance with the foregoing shall be promptly given to Bank.

4.2 Additional Agreements. In the event that the Senior Indebtedness is refinanced in full, Subordinated Lender agrees, subject to the last two sentences of the definition of Senior Indebtedness, at the request of such refinancing party to enter into a subordination and intercreditor agreement on terms substantially similar to this Agreement.

4.3 Survival of Rights. The right of Bank to enforce the provisions of this Agreement shall not be prejudiced or impaired by any act or omitted act of Company or Bank including forbearance, waiver, consent, compromise, amendment, extension, renewal, or taking or release of security in respect of any Senior Indebtedness or noncompliance by Company with such provisions, regardless of the actual or imputed knowledge of Bank.

4.4
  Bankruptcy Financing Issues.
  This Agreement shall continue in full force and effect after the filing of any
  petition (“Petition”)
  by or against Company under the United States Bankruptcy Code (the “Code”)
  and all converted or succeeding cases in respect thereof. All references herein
  to Company shall be deemed to apply to Company as debtor-in-possession and to
  a trustee for Company. If Company shall become subject to a proceeding under
  the Code, and if Bank shall desire to permit the use of cash collateral or to
  provide post-Petition financing from Bank to Company under the Code, Subordinated
  Lender agrees as follows: (1) adequate notice to Subordinated Lender shall be
  deemed to have been provided for such consent or post-Petition financing if
  Subordinated Lender receives notice thereof three (3) Business Days (or such
  shorter notice as is given to Bank) prior to the earlier of (a) any hearing
  on a request to approve such post-Petition financing or (b) the date of entry
  of an order approving same and (2) no objection will be raised by Subordinated
  Lender to any such use of cash collateral or such post-Petition financing from
  Bank.

4.5
  Insurance Proceeds.
  Proceeds of the Collateral include insurance proceeds, and therefore, notwithstanding
  the terms set forth in the Senior Lending Agreements or Subordinated Lender
  Agreements, the priorities set forth in Section 3.2 govern the ultimate disposition
  of casualty insurance proceeds. Bank, as the holder of a senior security interest
  on the Collateral on which it has a Lien, shall have the sole and exclusive
  right, as against Subordinated Lender, to adjust settlement of insurance claims
  in the event of any covered loss, theft or destruction of such Collateral. All
  proceeds of such insurance shall inure to Bank, to the extent of Bank’s
  claims for Senior Indebtedness, and Subordinated Lender shall cooperate (if
  necessary) in a reasonable manner in effecting the payment of insurance proceeds
  to Bank. In the event Bank, in its sole discretion or pursuant to agreement
  with Company, permits Company to utilize the proceeds of insurance to replace
  Collateral, the consent of Bank thereto shall be deemed to include the consent
  of Subordinated Lender.

10

4.6 Receipt of Agreements. Company hereby acknowledges that it has delivered to Bank a correct and complete copy of the Subordinated Lending Agreements as in effect on the date hereof. Subordinated Lender, solely for the purposes of this Agreement, hereby acknowledges receipt of a correct and complete copy of each of the Senior Lending Agreements as in effect on the date hereof.

4.7 No Amendment of Subordinated Lending Agreements. So long as the Loan Agreement remains in effect, neither Company nor any Holder of Subordinated Indebtedness shall, without the prior written consent of Bank, (i) enter into any amendment to or modification of any Subordinated Lending Agreements which relates to or affects the principal amount, interest rate, or payment terms of Company thereunder (other than any extension of maturity or postponement of payment or accrual and payment of deferred interest on the Subordinated Note), or (ii) enter into any amendment to or modification of any Subordinated Lending Agreements which causes any other material covenant or agreement of Company thereunder to be more restrictive than the terms of the Senior Lending Agreements.

4.8 Amendments to Senior Lending Agreements. Nothing contained in this Agreement, or in any other agreement or instrument binding upon any of the parties hereto, shall in any manner limit or restrict the ability of Bank from increasing or changing the terms of the loans under the Senior Lending Agreements, or to otherwise waive, amend or modify the terms and conditions of the Senior Lending Agreements, in such manner as Bank and Company shall mutually determine. Subordinated Lender hereby consents to any and all such waivers, amendments, modifications and compromises, and any other renewals, extensions, indulgences, releases of collateral or other accommodations granted by Bank to Company from time to time, and agrees that none of such actions shall in any manner affect or impair the subordination
established by this Agreement in respect of the Subordinated Indebtedness.

4.9 Notice of Default and Certain Events. Bank and Subordinated Lender shall undertake in good faith to notify the other of the occurrence of any of the following as applicable:

(a) the obtaining of actual knowledge of the occurrence of any default under the Subordinated Note;

(b) the acceleration of any Senior Indebtedness by Bank or of any Subordinated Indebtedness by Subordinated Lender;

(c) the granting by Bank of any waiver of any Event of Default under the Loan Agreement or the granting by Subordinated Lender of any waiver of any “default” or “event of default” under the Subordinated Lending Agreements;

(d) the payment in full by Company (whether as a result of refinancing or otherwise) of all Senior Indebtedness; or

(e) the sale or liquidation of, or realization upon, the Collateral other than collection of Receivables in the ordinary course of business.

11

The failure of any party to give such notice shall not affect the subordination of the Subordinated Indebtedness or the relative Lien priorities as provided in this Agreement.

4.10 Notices. Any notice or other communication required or permitted pursuant to this Agreement shall be deemed given (a) when personally delivered to any officer of the party to whom it is addressed, (b) on the earlier of actual receipt thereof or three (3) days following posting thereof by certified or registered mail, postage prepaid, (c) upon actual receipt thereof when sent by a recognized overnight delivery service or (d) upon actual receipt thereof when sent by telecopier to the number set forth below with electronic confirmation of receipt, in each case addressed to each party at its address or telecopier number set forth below or at such other address or telecopier number as has been furnished in writing by a party to the other by like notice:

 

  	
         

      	
        If
          to Agent:

      	
        PNC
          Bank, National Association

          1000 Westlakes Drive, Suite 200 

          Berwyn, Pennsylvania 19312 

          Attention:     John
          DiNapoli 

          Telephone:   (610) 725-5760
          

          Facsimile:     (610)
          725-5799

      
	
         

      	
         

      	
         

      
	
         

      	
        with
          a copy to:

      	
        Ballard
          Spahr Andrews & Ingersoll, LLP

          1735 Market Street, 51st Floor
          

          Philadelphia, PA 19103 

          Attention:     Carl
          H. Fridy, Esquire 

          Telephone:   (215) 864-8726
          

          Facsimile:     (215)
          864-8999

      
	
         

      	
         

      	
         

      
	
         

      	
        If
          to Subordinated Lender:

      	
        H.F.
          Lenfest

          300 Barr Harbor Drive

          Suite 460

          West Conshohocken, PA 19428 

          Telephone:   (610) 940-0910
          

          Facsimile:     (610)
          940-0602

      
	
         

      	
         

      	
         

      
	
         

      	
        with
          a copy to:

      	
        Tie
          Lenfest Group

          300 Barr Harbor Drive

          Suite 460

          West Conshohocken, PA 19428

          Attention:     Thomas
          K. Pasch, Esquire

          Telephone:   (610) 940-0910

          Facsimile:     (610)
          940-0602

      

 

12

	

 
 	

 
 	

 
 
	

 
 	

If to Company:
 	
        Environmental
          Tectonics Corporation

          125 James Way

          Southampton, PA 18966

          Attention:      Duane
          Deaner

          Telephone:    (215) 355-9100

          Facsimile:      (215)
          357-4000

      
	

 
 	

 
 	

 
 
	

 
 	

with a copy to:
 	
        Klehr,
          Harrison, Harvey, Branzburg & Ellers LLP

          260 S. Broad Street

          Philadelphia, PA 19102

          Attention:     William
          Matthews, Esquire

          Telephone:    (215) 569-4281

          Facsimile:      (215)
          568-6603

      

4.11 Books and Records. Subordinated Lender shall furnish Bank, upon request from time to time, a statement of the account between Subordinated Lender and Company.

4.12
  Binding Effect; Other.
  This Agreement shall be a continuing agreement, shall be binding upon and shall
  inure to the benefit of the parties hereto from time to time and their respective
  successors and assigns, shall be irrevocable and shall remain in full force
  and effect until the Senior Indebtedness shall have been paid in full in cash
  and the Loan Agreement shall have been terminated, but shall continue to be
  effective, or be reinstated, as the case may be, if at any time payment, or
  any part thereof, of any amount paid by or on behalf of Company with regard
  to the Senior Indebtedness is rescinded or must otherwise be restored or returned
  upon the insolvency, bankruptcy, dissolution, liquidation or reorganization
  of Company, or upon or as a result of the appointment of a receiver, intervenor
  or conservator of, or trustee, custodian, or similar officer, for Company or
  any substantial part of its property, or otherwise, all as though such payments
  had not been made. No action which Bank or Company may take or refrain from
  taking with respect to the Senior Indebtedness, including any amendments thereto,
  shall affect the provisions of this Agreement or the obligations of Subordinated
  Lender hereunder. Any waiver or amendment hereunder must be evidenced by a signed
  writing of the party to be bound thereby, and shall only be effective in the
  specific instance. This Agreement shall be governed by and construed in accordance
  with the laws of the Commonwealth of Pennsylvania. The headings in this Agreement
  are for convenience of reference only, and shall not alter or otherwise affect
  the meaning hereof.

5. Representations and Warranties.

(a) Subordinated Lender represents and warrants to Bank that Subordinated Lender is the holder of the Subordinated Indebtedness and Liens which secure or will secure the Subordinated Indebtedness. Subordinated Lender agrees that it shall not assign or transfer any of the Subordinated Indebtedness or Liens without (i) prior notice being given to Bank and (ii) such assignment or transfer being made expressly subject to the terms of this Agreement. Subordinated Lender agrees upon Bank’s request to execute and file an amendment to any financing statement or mortgage, trust deed or other encumbrance now on file which covers Collateral to the effect that the same is subject to the terms of this Agreement, are agrees to so mark any extension of such financing statements, or any financing statement or mortgage, trust deed or other encumbrance filed by Subordinated Lender on
Collateral in the future. Subordinated Lender further warrants to Bank that it has full right, power and authority to enter into this Agreement and, to the extent Subordinated Lender is an agent or trustee for other parties, that this Agreement shall fully bind all such other parties.

13

(b)
  Bank represents and warrants to Subordinated Lender that Bank is the holder
  of the Senior Indebtedness and Liens which secure or will secure the Senior
  Indebtedness. Bank agrees that it shall not assign or transfer any of the Senior
  Indebtedness or Liens without (i) prior notice being given to Subordinated Lender
  and (ii) such assignment or transfer being made expressly subject to the terms
  and provisions of this Agreement. Bank further warrants to Subordinated Lender
  that it has full right, power and authority to enter into this Agreement and,
  to the extent Bank is an agent or trustee for other parties, that this Agreement
  shall fully bind all such other parties.

6.
  Proceedings.
  ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST SUBORDINATED LENDER, COMPANY OR
  BANK WITH RESPECT TO THIS AGREEMENT OR ANY RELATED AGREEMENT MAY BE BROUGHT
  IN ANY COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA,
  UNITED STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH
  PARTY THERTO ACCEPTS FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES,
  GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
  COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY
  IN CONNECTION WITH THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
  SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY
  PARTY HERETO TO BRING PROCEEDINGS AGAINST ANY OTHER PARTY IN ANY COURTS OF ANY
  OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY PARTY HERETO AGAINST ANY
  OTHER PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY
  ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT,
  SHALL BE BROUGHT ONLY IN A COURT LOCATED IN THE COUNTY OF PHILADELPHIA, COMMONWEALTH
  OF PENNSYLVANIA; PROVIDED THAT NOTWITHSTANDING THE FOREGOING, IF IN ANY JUDICIAL
  PROCEEDING BY OR AGAINST ANY PARTY HERETO THAT IS BROUGHT IN ANY OTHER COURT
  SUCH COURT DETERMINES THAT ANY PARTY HERETO IS AN INDISPENSABLE PARTY, ANY SUCH
  PARTY SHALL BE ENTITLED TO JOIN OR INCLUDE ANY OTHER PARTY HERETO IN SUCH PROCEEDINGS
  IN SUCH OTHER COURT. EACH PARTY HERETO WAIVES ANY OBJECTION TO JURISDICTION
  AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND SHALL NOT ASSERT ANY DEFENSE
  BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS.

14

7.
  Waiver Of Jury Trial.
  EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
  CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR
  ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
  HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
  OF ANY CREDITOR OR COMPANY WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
  DOCUMENTS OR AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH,
  OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING
  OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE
  AND EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION
  OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY, AND THAT ANY
  OF THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
  COURT AS WRITTEN EVIDENCE OF THEIR CONSENT TO THE WAIVER OF THEIR RIGHT TO TRIAL
  BY JURY.

8. Company Acknowledgement. Company agrees that (i) nothing contained in this Agreement shall be deemed to amend, modify, supercede or otherwise alter the terms of the respective agreements between Company and each Creditor and (ii) this Agreement is solely for the benefit of the Creditors and shall not give Company, its successors or assigns or any other person any rights vis-à-vis any Creditor.

9.
  Counterparts; Facsimile.
  This Agreement may be executed by the parties hereto in one or more counterparts,
  each of which shall be deemed an original and all of which when taken together
  shall constitute one and the same agreement. Any signature delivered by a party
  by facsimile transmission shall be deemed to be an original signature hereto.

[SIGNATURE PAGES FOLLOW]

15

(SIGNATURE
  PAGE TO RESTATED SUBORDINATION AND

  INTERCREDITOR AGREEMENT)

IN
  WITNESS WHEREOF, the undersigned have entered into this Agreement as of November
  ____, 2006.

 

	

 
 	

 
 	

PNC BANK, NATIONAL ASSOCIATION
 
	

  
 	

 
 	

By: 
 	

  
 
	

 
 	

 
 	

 
 	

 
	

 
 	

 
 	

 
 	

Name:
 Title:
 
	

 
 	

 
 	

 
 	

 
 
	

 
 	

 
 	

 	

 
	

 
 	

 
 	

 
 	

        H.
          F. Lenfest

      
	

 
 	

 
 	

 
 	

 
 
	

 
 	

 
 	

ENVIRONMENTAL TECTONICS CORPORATION
 
	

  
 	

 
 	

By: 
 	

  
 
	

 
 	

 
 	

 
 	

 
	

 
 	

 
 	

 
 	

Name:
 Title:
 

16

ACKNOWLEDGMENT
  AND AGREEMENT

Each of the undersigned hereby acknowledges the provisions of the foregoing Subordination Agreement (the “Agreement”) and confirms and agrees that its obligations under the Subordinated Lending Agreements, including any guaranty in favor of Subordinated Lender (as defined in the Agreement), are subject to the terms and conditions set forth in the Agreement, as amended from time to time.

 

	

 
 	

 
 	

ENTERTAINMENT TECHNOLOGY CORPORATION
 
	

  
 	

 
 	

        By 

      	

  
 
	

 
 	

 
 	

 
 	

 
	

 
 	

 
 	

Name:
 Title:
 
	

 
 	

 
 	

 ETC DELAWARE, INC.
 
	

  
 	

 
 	

        By 

      	

  
 
	

 
 	

 
 	

 
 	

 
	

 
 	

 
 	

Name:
 Title:
 

17Prepared and Filed by St Ives Financial

	

Restated Limited Guaranty Agreement
 	

 
 

THIS
  RESTATED LIMITED GUARANTY AGREEMENT (this
  “Guaranty”) is made and entered into as of this ______ day
  of November, 2006, by H.F. LENFEST,
  an individual (the “Guarantor”),
  with an address at 300 Barr Harbor
  Drive, Suite 460, West Conshohocken, PA 19428, in consideration of the extension
  of credit by PNC BANK, NATIONAL ASSOCIATION
  (the “Bank”),
  with an address at 1000 Westlakes Drive,
  Suite 200, Berwyn, PA 19312, to ENVIRONMENTAL
  TECTONICS CORPORATION (the “Borrower”),
  and other good and valuable consideration,
  the receipt and sufficiency of which are hereby acknowledged. This Guaranty
  restates and replaces (but does not constitute a novation of) the existing Limited
  Guaranty Agreement from the Guarantor to the Bank dated as of August 24, 2004.

1.
  Guaranty of Obligations.
  The Guarantor hereby unconditionally
  guarantees, as a primary obligor, and becomes surety for, the prompt payment
  and performance of all loans, advances, debts, liabilities, reimbursement and
  other obligations, covenants and duties owing by the Borrower to the Bank of
  any kind or nature, present or future (including any interest accruing thereon
  after maturity, or after the filing of any petition in bankruptcy, or the commencement
  of any insolvency, reorganization or like proceeding relating to the Borrower,
  whether or not a claim for post-filing or post-petition interest is allowed
  in such proceeding), whether direct or indirect (including those acquired by
  assignment or participation), absolute or contingent, joint or several, due
  or to become due, now existing or hereafter arising under the letter of credit
  facility established under that certain Letter Agreement between the Borrower
  and the Bank dated as of November ___, 2006, as hereafter amended, modified
  or supplemental, the “Credit Agreement”),
  the Reimbursement Agreement for Letters
  of Credit from the Borrower in favor of the Bank dated as of November ___, 2006
  (as hereafter amended, modified or supplemented, the “Reimbursement
  Agreement” and the Letters of
  Credit (as defined in the Credit Agreement) heretofore or hereafter issue pursuant
  thereto, and any amendments, extensions, renewals and increases of or to the
  foregoing, and all costs and expenses of the Bank incurred in the enforcement,
  collection and otherwise in connection with the foregoing, including reasonable
  attorneys’ fees and expenses (hereinafter referred to collectively as the
  “Obligations”); provided,
  however, that the Guarantor’s liability hereunder shall not exceed
  $5,000,000 in principal amount of the Obligations (consisting of the face amount
  of all then outstanding Letters of Credit and any reimbursement obligations
  with respect thereto or otherwise due at such time, as calculated on the date
  of acceleration or demand by the Bank), plus all interest thereon and all costs
  and expenses arising from the Obligations (the “Guaranteed Amount”).

If the Borrower defaults under any such Obligations, the Guarantor will pay the Guaranteed Amount to the Bank. Until the Obligations are indefeasibly paid in full, the Guaranteed Amount shall not be reduced in any manner, whatsoever by any amounts which the Bank may realize before or after maturity of the Obligations, by acceleration or otherwise, as a result of payments made by or on behalf of the Borrower or by or on behalf of any other person or entity other than the Guarantor primarily or secondarily liable for the Obligations or any part thereof, or otherwise credited to the Borrower or such person or entity, or as a result of the exercise of the Bank’s rights with respect to any collateral for the Obligations or any part thereof. Payments made to the Bank by the Guarantor (other than, directly or indirectly, from collateral or other persons or entities liable for any
portion of the Obligations) after maturity of the Obligations, by acceleration or otherwise, shall reduce the Guaranteed Amount.

2.
  Nature of Guaranty; Waivers.
  This is a guaranty of payment and not of collection and the Bank shall not be
  required, as a condition of the Guarantor’s liability, to make any demand
  upon or to pursue any of its rights against the Borrower, or to pursue any rights
  which may be available to it with respect to any other person who may be liable
  for the payment of the Obligations.

This
  is an absolute, unconditional, irrevocable and continuing guaranty and will
  remain in full force and effect until all of the Obligations have been indefeasibly
  paid in full, and the Bank has terminated this Guaranty. This Guaranty will
  remain in full force and effect even if there is no principal balance or other
  amounts outstanding under the Obligations at a particular time or from time
  to time. This Guaranty will not be affected by any surrender, exchange, acceptance,
  compromise or release by the Bank of any other party, or any other guaranty
  or any security held by it for any of the Obligations, by any failure of the
  Bank to take any steps to perfect or maintain its lien or security interest
  in or to preserve its rights to any security or other collateral for any of
  the Obligations or any guaranty, or by any irregularity, unenforceability or
  invalidity of any of the Obligations or any part thereof or any security or
  other guaranty thereof. The Guarantor’s obligations hereunder shall not
  be affected, modified or impaired by any counterclaim, set-off, recoupment,
  deduction or defense based upon any claim the Guarantor may have (directly or
  indirectly) against the Borrower or the Bank, except payment or performance
  of the Obligations.

Notice of acceptance of this Guaranty, notice of extensions of credit to the Borrower from time to time, notice of default, diligence, presentment, notice of dishonor, protest, demand for payment, and any defense based upon the Bank’s failure to comply with the notice requirements under Sections 9-611 and 9-612 of the Uniform Commercial Code as in effect from time to time are hereby waives. The Guarantor waives all defenses based on suretyship or impairment of collateral.

The Bank at any time and from time to time, without notice to or the consent of the Guarantor, and without impairing or releasing, discharging or modifying the Guarantor’s liabilities hereunder, may (a) change the manner, place, time or terms of payment or performance of or interest rates on, or other terms relating to, any of the Obligations; (b) renew, substitute, modify, amend or alter, or grant consents or waivers relating to any of the Obligations, any other guaranties, or any security for any Obligations or guaranties; (c) apply any and all payments by whomever paid or however realized including any proceeds of any collateral, to any Obligations of the Borrower in such order, manner and amount as the Bank may determine in its sole discretion; (d) settle, compromise or deal with any other person, including the Borrower or the Guarantor, with respect to any Obligations
in such manner as the Bank deems appropriate in its sole discretion; (e) substitute, exchange or release any security or guaranty; or (f) take such actions and exercise such remedies hereunder as provided herein. Notwithstanding the foregoing, by its acknowledgment of this Guaranty, the Bank agrees that, except as otherwise required by the terms of the Credit Agreement or any of the Security Documents (as defined in the Credit Agreement), so long as this Guaranty remains in effect it will not release (except as required by law or as directed by any decree or order of any court or administrative body or in connection with a substitution therefor having reasonably equivalent value) any substantial or material portion of the Collateral (as defined in the Credit Agreement) held by it without the prior written consent of the Guarantor.

3.
  Repayments or Recovery from the Bank.
  If any demand is made at any time upon the Bank for the repayment or recovery
  of any amount received by it in payment or on account of any of the Obligations
  and if the Bank repays all or any part of such amount by reason of any judgment,
  decree or order of any court or administrative body or by reason of any settlement
  or compromise of any such demand, the Guarantor will be and remain liable hereunder
  for the amount so repaid or recovered to the same extent as if such amount had
  never been received originally by the Bank. The provisions of this section will
  be and remain effective notwithstanding any contrary action which may have been
  taken by the Guarantor in reliance upon such payment, and any such contrary
  action so taken will be without prejudice to the Bank’s rights hereunder
  and will be deemed to have been conditioned upon such payment having become
  final and irrevocable.

2

4.
  Financial Statements.
  Unless compliance is waived in writing by the Bank or until all of the Obligations
  have been paid in full, the Guarantor will promptly submit to the Bank such
  information relating to the Guarantor’s affairs (including, but not limited
  to, annual investment statements and tax returns for the Guarantor) or any security
  for the Guaranty at any time provided by the Guarantor as the Bank may reasonably
  request.

5.
  Enforceability of Obligations.
  No modification, limitation or discharge of the Obligations arising out of or
  by virtue of any bankruptcy, reorganization or similar proceeding for relief
  of debtors under federal or state law will affect, modify, limit or discharge
  the Guarantor’s liability in any manner whatsoever and this Guaranty will
  remain and continue in full force and effect and will be enforceable against
  the Guarantor to the same extent and with the same force and effect as if any
  such proceeding had not been instituted. The Guarantor waives all rights and
  benefits which might accrue to it by reason of any such proceeding and will
  be liable to the full extent hereunder, irrespective of any modification, limitation
  or discharge of the liability of the Borrower that may result from any such
  proceeding.

6.
  Events of Default.
  The occurrence of any of the following shall be an “Event of Default”:
  (i) any Event of Default (as defined in the Credit Agreement); (ii) the Guarantor’s
  failure to perform any of its obligations hereunder; (iii) the falsity, inaccuracy
  or material breach by the Guarantor of any written warranty, representation
  or statement made or furnished to the Bank by or on behalf of the Guarantor;
  (iv) the termination or attempted termination of this Guaranty; (v) the Guarantor
  shall commence any case, proceeding or other action (A) under any existing or
  future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
  insolvency or relief of debtors, seeking to have an order for relief entered
  with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
  seeking arrangement, adjustment, winding-up, liquidation, composition or other
  relief with respect to it or its debts, or (B) seeking appointment of a receiver,
  trustee, custodian or other similar official for it or for all or any substantial
  part of its assets, or the Guarantor shall make a general assignment for the
  benefit of its creditors; or (vi) there shall be commenced against the Guarantor
  any case, proceeding or other action of a nature referred to in clause (v) above
  which (A) results in the entry of an order for relief or any such adjudication
  or appointment or (B) remains undismissed, undischarged or unbonded for a period
  of 60 days. Upon the occurrence of any Event of Default, (a) the Guarantor shall
  pay to the Bank the amount of the Obligations; or (b) on demand of the Bank,
  the Guarantor shall immediately deposit with the Bank, in U.S. dollars, all
  amounts due or to become due under the Obligations, and the Bank may at any
  time use such funds to repay the Obligations; or (c) the Bank in its discretion
  may exercise with respect to any collateral any one or more of the rights and
  remedies provided a secured party under the applicable version of the Uniform
  Commercial Code; or (d) the Bank in its discretion may exercise from time to
  time any other rights and remedies available to it at law, in equity or otherwise.

7.
  Right of Setoff.
  In addition to all liens upon and rights of setoff against the Guarantor’s
  money, securities or other property given to the Bank by law, the Bank shall
  have, with respect to the Guarantor’s obligations to the Bank under this
  Guaranty and to the extent permitted by law, a contractual possessory security
  interest in and a contractual right of setoff against, and the Guarantor hereby
  grants Bank a security interest in, and hereby assigns, conveys, delivers, pledges
  and transfers to the Bank all of the Guarantor’s right, title and interest
  in and to, all of the Guarantor’s deposits, moneys, securities and other
  property now or hereafter in the possession of or on deposit with, or in transit
  to, the Bank or any other direct or indirect subsidiary of The PNC Financial
  Services Group, Inc., whether held in a general or special account or deposit,
  whether held jointly with someone else, or whether held for safekeeping or otherwise,
  excluding, however, all IRA, Keogh, and trust accounts. Every such security
  interest and right of setoff may be exercised without demand upon or notice
  to the Guarantor. Every such right of setoff shall be deemed to have been exercised
  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.

3

8. Collateral. This Guaranty is secured by the property described in any collateral security documents which the Guarantor may in the future grant to the Bank to secure any Obligations of the Guarantor to the Bank.

9.
  Costs.
  To the extent that the Bank incurs
  any costs or expenses in protecting or enforcing its rights under the Obligations
  or this Guaranty, including reasonable attorneys’ fees and the costs and
  expenses of litigation, such costs and expenses will be due on demand, will
  be included in the Obligations and will bear interest from the incurring or
  payment thereof at the default interest rate provided under the Credit Agreement.

10. Postponement of Subrogation. Until the Obligations and all other obligations of the Borrower to the Bank are indefeasibly paid in full, expire, are terminated and are not subject to any right of revocation or rescission, the Guarantor postpones and subordinates in favor of the Bank or its designee (and any assignee or potential assignee) any and all rights which the Guarantor may have to (a) assert any claim whatsoever against the Borrower based on subrogation, exoneration, reimbursement, or indemnity or any right of recourse to security for the Obligations with respect to payments made hereunder, and (b) any realization on any property of the Borrower, including participation in any marshalling of the Borrower’s assets.

11.
  Notices.
  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 Bank and the Guarantor
  may separately agree, including electronic mail. Without limiting the foregoing,
  first-class mail, facsimile transmission and commercial courier service are
  hereby agreed to as acceptable methods for giving Notices. Regardless of the
  manner in which provided, Notices may be sent to addresses for the Bank and
  the Guarantor as set forth above or to such other address as either may give
  to the other for such purpose in accordance with this section.

12. Preservation of Rights. 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 a waiver of any such right or power, nor will the Bank’s action or inaction impair any such right or power. The Bank’s rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Bank may have under other agreements, at law or in equity. The Bank may proceed in any order against the Borrower, the Guarantor or any other obligor of, or collateral securing, the Obligations.

13. Illegality. If any provision contained in this Guaranty should be invalid, illegal or unenforceable in any respect, it shall not affect or impair the validity, legality and enforceability of the remaining provisions of this Guaranty.

14.
  Changes in Writing.
  No modification, amendment or waiver
  of, or consent to any departure by the Guarantor from, any provision of this
  Guaranty 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. No notice to or
  demand on the Guarantor will entitle the Guarantor to any other or further notice
  or demand in the same, similar or other circumstance.

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15.
  Entire Agreement.
  This Guaranty (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
  the Guarantor and the Bank with respect to the subject matter hereof; provided,
  however, that this Guaranty is in addition to, and not in substitution for,
  any other guarantees from the Guarantor to the Bank.

16.
  Successors and Assigns.
  This Guaranty will be binding upon
  and inure to the benefit of the Guarantor and the Bank and their respective
  heirs, executors, administrators, successors and assigns; provided,
  however,
  that the Guarantor may not assign this Guaranty in whole or in part without
  the Bank’s prior written consent and the Bank at any time may assign this
  Guaranty in whole or in part.

17. Interpretation. In this Guaranty, unless the Bank and the Guarantor otherwise agree in writing, 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 Guaranty. Section headings in this Guaranty are included for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose. If this Guaranty is
executed by more than one party as Guarantor, the obligations of such persons or entities will be joint and several.

18.
  Governing Law and Jurisdiction.
  This Guaranty has been delivered to
  and accepted by the Bank and will be deemed to be made in the State where the
  Bank’s office indicated above is located. THIS
  GUARANTY
  WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE BANK
  AND THE GUARANTOR
  DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE
  WHERE THE BANK’S
  OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT OF LAWS RULES.
  The Guarantor hereby irrevocably consents to the exclusive jurisdiction of any
  state or federal court in the county or judicial district where the Bank’s
  office indicated above is located; provided that nothing contained in this Guaranty
  will prevent the Bank from bringing any action, enforcing any award or judgment
  or exercising any rights against the Guarantor individually, against any security
  or against any property of the Guarantor within any other county, state or other
  foreign or domestic jurisdiction. The Guarantor acknowledges and agrees that
  the venue provided above is the most convenient forum for both the Bank and
  the Guarantor. The Guarantor waives any objection to venue and any objection
  based on a more convenient forum in any action instituted under this Guaranty.

19.
  Equal Credit Opportunity Act.
  If the Guarantor is not an “applicant
  for credit” under Section 202.2(e) of the Equal Credit Opportunity Act
  of 1974 (“ECOA”),
  the Guarantor acknowledges that (i) this Guaranty has been executed to provide
  credit support for the Obligations, and (ii) the Guarantor was not required
  to execute this Guaranty in violation of Section 202.7(d) of ECOA.

20. Authorization to Obtain Credit Reports. By signing below, the Guarantor provides written authorization to the Bank or its designee (and any assignee or potential assignee) to obtain the Guarantor’s personal credit profile from one or more national credit bureaus. Such authorization shall extend to obtaining a credit profile in considering this Guaranty and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account.

21.
  WAIVER
  OF JURY
  TRIAL.
  THE
  GUARANTOR
  IRREVOCABLY WAIVES ANY AND ALL RIGHT THE GUARANTOR
  MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE
  RELATING TO THIS GUARANTY,
  ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS GUARANTY OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
  DOCUMENTS. THE
  GUARANTOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

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The Guarantor acknowledges that it has read and understood all the provisions of this Guaranty, 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.

 

	

WITNESS:

 
 	

 
 	

 
 	

 
 
	

 	

 
 	

 
 	

 
	

Print Name:
 	

  
 	

 
 	

 
 	

H.F. Lenfest
 	

(SEAL)
 
	

 
 	

 	

 
 	

 
 	

 
 	

 
 

 

	

Acknowledged and accepted:
 
 PNC BANK NATIONAL ASSOCIATION
 	

 
 	

 
 	

 
 
	

 
 	

 
 	

 
 	

 
 
	

By:
 	

 
 	

 
 	

 
 	

 
 
	

 
 	

 	

 
 	

 
 	

 
 
	

Title:
 	

 
 	

 
 	

 
 	

 
 
	

 
 	

 	

 
 	

 
 	

 
 

 

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