Document:

ex10_2.htm

Exhibit 10.2

 

	Export Import Security Agreement	

 

THIS EXPORT IMPORT SECURITY AGREEMENT (this “Agreement”), dated as of December 19, 2012, is made by ENVIRONMENTAL TECTONICS CORPORATION (“Borrower” and together with any other entity joined hereto in such capacity, each a “Grantor” and, collectively, the “Grantors”), each with an address at 125 James Way, Southampton, PA 18966, in favor of PNC BANK, NATIONAL ASSOCIATION (the “Bank”), with an address at 1000 Westlakes Drive, Suite 200, Berwyn, PA 19312.

 

Recitals

 

Pursuant to the Export Import Loan Agreement, dated as of even date herewith, between the Borrower and the Bank (as amended, supplemented or modified from time to time, the “Loan Agreement”; capitalized terms used in this Agreement without definition shall have the meaning given in the Loan Agreement), the Bank has made extensions of credit to the Borrower (collectively, the “Loans”).

 

Under the terms hereof, the Bank desires to obtain and the Grantors desire to grant the Bank security for all of the Obligations (as hereinafter defined).

 

NOW, THEREFORE, the Grantors and the Bank, intending to be legally bound, hereby agree as follows:

 

1.             Definitions.

 

(a)           “Collateral” shall include all personal property of each Grantor, including the following, all whether now owned or hereafter acquired or arising and wherever located:  (i) accounts (including health-care-insurance receivables and credit card receivables); (ii) securities entitlements, securities accounts, commodity accounts, commodity contracts and investment property; (iii) deposit accounts; (iv) instruments (including promissory notes); (v) documents (including warehouse receipts); (vi) chattel paper (including electronic chattel paper and tangible chattel paper); (vii) inventory, including raw materials, work in process, or materials used or consumed in any Grantor’s business, items held for sale or lease or furnished or to be furnished under contracts of service, sale or lease, goods that are returned, reclaimed or repossessed; (viii) goods of every nature, including stock-in-trade, goods on consignment, standing timber that is to be cut and removed under a conveyance or contract for sale, the unborn young of animals, crops grown, growing, or to be grown, manufactured homes, computer programs embedded in such goods and farm products; (ix) equipment, including machinery, vehicles and furniture; (x) fixtures; (xi) agricultural liens; (xii) as-extracted collateral; (xiii) commercial tort claims, if any, described on Exhibit “A” hereto; (xiv) letter of credit rights; (xv) general intangibles, of every kind and description, including payment intangibles, software, computer information, source codes, object codes, records and data, all existing and future customer lists, choses in action, claims (including claims for indemnification or breach of warranty), books, records, patents and patent applications, copyrights, trademarks, tradenames, tradestyles, trademark applications, goodwill, blueprints, drawings, designs and plans, trade secrets, contracts, licenses, license agreements, formulae, tax and any other types of refunds, returned and unearned insurance premiums, rights and claims under insurance policies; (xvi) all supporting obligations of all of the foregoing property; (xvii) all property of each Grantor now or hereafter in the Bank’s possession or in transit to or from, or under the custody or control of, the Bank or any affiliate thereof; (xviii) all cash and cash equivalents thereof; and (xix) all cash and noncash proceeds (including insurance proceeds) of all of the foregoing property, all products thereof and all additions and accessions thereto, substitutions therefor and replacements thereof; provided, however, that the collateral consisting of equity interests in a Grantor’s Subsidiaries shall be as set forth in, and subject to the limitations of, the Pledge Agreement.  The Collateral shall also include any and all other tangible or intangible property that is described as being part of the Collateral pursuant to one or more Riders to Export Import Security Agreement that may be attached hereto or delivered in connection herewith, including the Rider to Export Import Security Agreement - Copyrights, the Rider to Export Import Security Agreement - Patents, and the Rider to Export Import Security Agreement - Trademarks.

 

  

  

  

 

(b)           “Obligations” shall include the Loans, the Notes, and all other loans, advances, debts, liabilities, obligations, covenants and duties owing by any Grantor to the Bank or to any other direct or indirect subsidiary of The PNC Financial Services Group, Inc., 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 any Grantor, 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, whether or not (i) evidenced by any note, guaranty or other instrument, (ii) arising under any agreement, instrument or document, (iii) for the payment of money, (iv) arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, (v) under any interest or currency swap, future, option or other interest rate protection or similar agreement, (vi) under or by reason of any foreign currency transaction, forward, option or other similar transaction providing for the purchase of one currency in exchange for the sale of another currency, or in any other manner, (vii) arising out of overdrafts on deposit or other accounts or out of electronic funds transfers (whether by wire transfer or through automated clearing houses or otherwise) or out of the return unpaid of, or other failure of the Bank to receive final payment for, any check, item, instrument, payment order or other deposit or credit to a deposit or other account, or out of the Bank’s non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository or other similar arrangements; and any amendments, extensions, renewals and increases of or to any of the foregoing, and all costs and expenses of the Bank incurred in the documentation, negotiation, modification, enforcement, collection and otherwise in connection with any of the foregoing, including reasonable attorneys’ fees and expenses.

 

(c)           “UCC” means the Uniform Commercial Code, as adopted and enacted and as in effect from time to time in the Commonwealth of Pennsylvania.  Terms used herein which are defined in the UCC and not otherwise defined herein shall have the respective meanings ascribed to such terms in the UCC.  To the extent the definition of any category or type of collateral is modified by any amendment, modification or revision to the UCC, such modified definition will apply automatically as of the date of such amendment, modification or revision.

 

  

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2.             Grant of Security Interest.  To secure the Obligations, each Grantor, as debtor, hereby assigns and grants to the Bank, as secured party, a continuing lien on and security interest in the Collateral.

 

3.             Change in Name or Locations.  Each Grantor hereby agrees that if the location of the Collateral changes from the locations listed on Exhibit “A” hereto and made part hereof, or if any Grantor changes its name, its type of organization, its state of organization (if such Grantor is a registered organization), its chief executive office (if such Grantor is a general partnership or non-registered organization) or establishes a name in which it may do business that is not listed as a tradename on Exhibit “A” hereto, the Grantors will immediately notify the Bank in writing of the additions or changes.

 

4.            Representations and Warranties.  Each Grantor represents, warrants and covenants to the Bank that:  (a) all information, including its type of organization, jurisdiction of organization and chief executive office are as set forth on Exhibit “A” hereto and are true and correct on the date hereof;  (b) the Grantors have good, marketable and indefeasible title to the Collateral, have not made any prior sale, pledge, encumbrance, assignment or other disposition of any of the Collateral, and the Collateral is free from all encumbrances and rights of setoff of any kind except, in each case, the lien in favor of the Bank created by this Agreement and Permitted Liens (as defined in the Loan Agreement);  (c) except as herein provided, no Grantor will hereafter without the Bank’s prior written consent sell, pledge, encumber, assign or otherwise dispose of any of the Collateral (except for sales of inventory and collections of accounts in such Grantor’s ordinary course of business) or permit any right of setoff, lien or security interest to exist thereon except liens to the Bank and Permitted Liens;  (d) the Grantors will defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein; (e) each account and general intangible, if included in the definition of Collateral, is genuine and enforceable in accordance with its terms (subject to allowances for doubtful accounts) and the Grantors will defend the same against all claims, demands, setoffs and counterclaims at any time asserted; and (f) at the time any account or general intangible becomes subject to this Agreement, such account or general intangible will be a good and valid account representing a bona fide sale of goods or services by a Grantor and such goods will have been shipped to the respective account debtors or the services will have been performed for the respective account debtors.

 

5.            Grantors’ Covenants.  Each Grantor covenants that it shall:

 

(a)           from time to time and at all reasonable times allow the Bank, by or through any of its officers, agents, attorneys, or accountants, to examine or inspect the Collateral, and obtain valuations and audits of the Collateral, at the Grantors’ expense, wherever located.  Each Grantor shall do, obtain, make, execute and deliver all such additional and further acts, things, deeds, assurances and instruments as the Bank may require to vest in and assure to the Bank its rights hereunder and in or to the Collateral, and the proceeds thereof, including waivers from landlords, warehousemen and mortgagees.  Each Grantor agrees that the Bank has the right to notify (on invoices or otherwise) account debtors and other obligors or payors on any Collateral of (i) its assignment to the Bank, and (ii) that all payments thereon should be made directly to the Bank, and that the Bank has full power and authority to collect, compromise, endorse, sell or otherwise deal with the Collateral in its own name or that of any Grantor at any time upon an Event of Default;

 

  

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(b)           keep the Collateral in good order and repair at all times, ordinary wear and tear excepted, and immediately notify the Bank of any event causing a material loss or decline in value of the Collateral, whether or not covered by insurance, and the amount of such loss or depreciation;

 

(c)           only use or permit the Collateral to be used in accordance with all applicable federal, state, county and municipal laws and regulations; and

 

(d)           have and maintain insurance at all times with respect to all Collateral against risks of fire (including so-called extended coverage), theft, sprinkler leakage, and other risks (including risk of flood if any Collateral is maintained at a location in a flood hazard zone) as the Bank may require, in such form, in such amount, for such period and written by such companies as may be satisfactory to the Bank in its sole discretion.  Each such casualty insurance policy shall contain a standard Lender’s Loss Payable Clause issued in favor of the Bank under which all losses thereunder shall be paid to the Bank as the Bank’s interests may appear.  Such policies shall expressly provide that the requisite insurance cannot be altered or canceled without at least thirty (30) days prior written notice to the Bank and shall insure the Bank notwithstanding the act or neglect of any Grantor.  Upon the Bank’s demand, each Grantor shall furnish the Bank with duplicate original policies of insurance or such other evidence of insurance as the Bank may require.  In the event of failure to provide insurance as herein provided, the Bank may, at its option, obtain such insurance and the Grantors shall pay to the Bank, on demand, the cost thereof.  Proceeds of insurance may be applied by the Bank to reduce the Obligations or to repair or replace Collateral, all in the Bank’s reasonable discretion.

 

6.            Negative Pledge;  No Transfer.  No Grantor will sell or offer to sell or otherwise transfer or grant or allow the imposition of a lien or security interest upon the Collateral (except for Permitted Liens and sales of inventory and collections of accounts in the Grantors’ ordinary course of business), allow any third party to gain control of all or any part of the Collateral, nor use any portion thereof in any manner inconsistent with this Agreement or with the terms and conditions of any policy of insurance thereon.

 

7.            Covenants for Accounts.

 

(a)           Each Grantor will, on the Bank’s demand, make notations on its books and records showing the Bank’s security interest and make available to the Bank shipping and delivery receipts evidencing the shipment of the goods that gave rise to an account, completion certificates or other proof of the satisfactory performance of services that gave rise to an account, a copy of the invoice for each account and copies of any written contract or order from which an account arose.  Each Grantor shall promptly notify the Bank if an account becomes evidenced or secured by an instrument or chattel paper and upon the Bank’s request, will promptly deliver any such instrument or chattel paper to the Bank, including any letter of credit delivered to a Grantor to support a shipment of inventory by a Grantor.

 

(b)           Each Grantor will promptly advise the Bank whenever an account debtor refuses to retain or returns any goods from the sale of which an account in excess of $500,000 arose and will comply with any instructions that the Bank may give regarding the sale or other disposition of such returns.  From time to time with such frequency as the Bank may request, each Grantor will report to the Bank all credits in excess of $500,000 given to account debtors on all accounts.

 

  

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(c)           Each Grantor will immediately notify the Bank if any account arises out of contracts with the United States or any department, agency or instrumentality thereof that, in the aggregate with other amounts payable to such Grantor under such contract, exceeds $500,000, and will execute any instruments and take any steps required by the Bank so that all monies due and to become due under such contract shall be assigned to the Bank and notice of the assignment given to and acknowledged by the appropriate government agency or authority under the Federal Assignment of Claims Act; provided that the Bank shall not exercise its remedies under such assignments except pursuant to Section 10.

 

(d)           At any time after the occurrence of an Event of Default, and without notice to any Grantor, the Bank may direct any persons who are indebted to a Grantor on any Collateral consisting of accounts or general intangibles to make payment directly to the Bank of the amounts due.  The Bank is authorized to collect, compromise, endorse and sell any such Collateral in its own name or in any Grantor’s name and to give receipts to such account debtors for any such payments and the account debtors will be protected in making such payments to the Bank.  Upon the Bank’s written request, each Grantor will establish with the Bank and maintain a lockbox account (“Lockbox”) with the Bank and a depository account(s) (“Cash Collateral Account”) with the Bank subject to the provisions of this subparagraph and such other related agreements as the Bank may require, and each Grantor shall notify its account debtors to remit payments directly to the Lockbox.  Thereafter, funds collected in the Lockbox shall be transferred to the Cash Collateral Account, and funds in the Cash Collateral Account shall be applied by the Bank, daily, to reduce the outstanding Obligations.

 

8.            Further Assurances.  By its signature hereon, each Grantor hereby irrevocably authorizes the Bank to execute (on behalf of such Grantor) and file against such Grantor one or more financing, continuation or amendment statements pursuant to the UCC in form satisfactory to the Bank, and the Grantors will pay the cost of preparing and filing the same in all jurisdictions in which such filing is deemed by the Bank to be necessary or desirable in order to perfect, preserve and protect its security interests.  If required by the Bank, each Grantor will execute all documentation necessary for the Bank to obtain and maintain perfection of its security interests in the Collateral.  At the Bank’s request, each Grantor will execute, in form satisfactory to the Bank, a Rider to Export Import Security Agreement - Copyrights (if any Collateral consists of registered or unregistered copyrights), a Rider to Export Import Security Agreement - Patents (if any Collateral consists of patents or patent applications), a Rider to Export Import Security Agreement - Trademarks (if any Collateral consists of trademarks, tradenames, tradestyles or trademark applications).  If any Collateral consists of letter of credit rights, electronic chattel paper, deposit accounts or supporting obligations not maintained with the Bank or one of its affiliates, or any securities entitlement, securities account, commodities account, commodities contract or other investment property, then at the Bank’s request the applicable Grantor will execute, and will cause the depository institution or securities intermediary upon whose books and records the ownership interest of such Grantor in such Collateral appears, to execute such Pledge Agreements, Notification and Control Agreements or other agreements as the Bank deems necessary in order to perfect, prioritize and protect its security interest in such Collateral, in each case in a form satisfactory to the Bank.

 

  

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9.            Events of Default.  Each Grantor shall, at the Bank’s option, be in default under this Agreement upon the happening of any of the following events or conditions (each, an “Event of Default”):  (a) any Event of Default (as defined in any of the Loan Documents or other documents or instruments relating to the Obligations); (b) any default under any of the Loan Documents or instruments relating to the Obligations that does not have a defined set of “Events of Default” and the lapse of any notice or cure period provided therein with respect to such default; (c) the failure by any Grantor to perform any of its obligations under this Agreement, which failure is not cured within thirty (30) days after its occurrence; (d) any written warranty, representation or statement in connection with this Agreement when made or furnished to the Bank by or on behalf of any Grantor shall be false, incorrect or incomplete in any material respect; (e) an uninsured material loss, theft, damage, or destruction to any of the Collateral, (f) the entry of a final, non-appealable judgment or judgments, that individually or in the aggregate exceed $100,000, against any Grantor and the failure of such Grantor to discharge the judgment within thirty (30) days of the entry thereof, (g) the entry of any lien (other than a Permitted Lien) against the Collateral, (h) the making of any levy, seizure or attachment of or on the Collateral; (i) the failure of the Bank to have a perfected first priority security interest in the Collateral (subject to Permitted Liens); or (j) any evidence received by the Bank that any Grantor has directly or indirectly been engaged in any type of activity which, in the Bank’s discretion, would reasonably be expected to result in the forfeiture of any property of any Grantor to any governmental entity, federal, state or local.

 

10.           Remedies.  Upon the occurrence of any such Event of Default and at any time thereafter, the Bank may declare all Obligations secured hereby immediately due and payable and shall have, in addition to any remedies provided herein or by any applicable law or in equity, all the remedies of a secured party under the UCC.  The Bank’s remedies include, but are not limited to, the right to (a) peaceably by its own means or with judicial assistance enter the Grantors’ premises and take possession of the Collateral without prior notice to any Grantor or the opportunity for a hearing, (b) render the Collateral unusable, (c) dispose of the Collateral on any Grantor’s premises, (d) require the Grantors to assemble the Collateral and make it available to the Bank at a place designated by the Bank, (e) notify the United States Postal Service to send each Grantor’s mail to the Bank and (f) exercise its rights under all assignments made under the Federal Assignment of Claims Act.  Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Bank will give the Grantors reasonable notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made.  The requirements of commercially reasonable notice shall be met if such notice is sent to the Borrower at least ten (10) days before the time of the intended sale or disposition.  Expenses of retaking, holding, preparing for disposition, disposing or the like shall include the Bank’s reasonable attorneys’ fees and legal expenses, incurred or expended by the Bank to enforce any payment due it under this Agreement either as against any Grantor, or in the prosecution or defense of any action, or concerning any matter growing out of or connection with the subject matter of this Agreement and the Collateral pledged hereunder.  Each Grantor waives all relief from all appraisement or exemption laws now in force or hereafter enacted.

 

11.           Power of Attorney.  Each Grantor does hereby make, constitute and appoint any officer or agent of the Bank as such Grantor’s true and lawful attorney-in-fact, with power to (a) endorse the name of such Grantor or any of such Grantor’s officers or agents upon any notes, checks, drafts, money orders, or other instruments of payment or Collateral that may come into the Bank’s possession in full or part payment of any Obligations; (b) sue for, compromise, settle and release all claims and disputes with respect to, the Collateral; and (c) sign, for such Grantor, such documentation required by the UCC, or supplemental intellectual property security agreements; granting to such Grantor’s said attorney full power to do any and all things necessary to be done in and about the premises as fully and effectually as such Grantor might or could do.  Each Grantor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof.  This power of attorney is coupled with an interest, and is irrevocable.

 

  

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12.           Payment of Expenses.  At its option, the Bank may discharge taxes, liens, security interests or such other encumbrances as may attach to the Collateral, may pay for required insurance on the Collateral and may pay for the maintenance, appraisal or reappraisal, and preservation of the Collateral, as determined by the Bank to be necessary.  Each Grantor will reimburse the Bank on demand for any payment so made or any expense incurred by the Bank pursuant to the foregoing authorization, and the Collateral also will secure any advances or payments so made or expenses so incurred by the Bank.

 

13.           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 parties 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 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.

 

14.           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.

 

15.           Illegality.  If any provision contained in this Agreement 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 Agreement.

 

16.           Changes in Writing.  No modification, amendment or waiver of, or consent to any departure by any Grantor 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.  No notice to or demand on any Grantor will entitle such Grantor or any other Grantor to any other or further notice or demand in the same, similar or other circumstance.

 

17.           Entire Agreement.  This Agreement (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 parties with respect to the subject matter hereof.

 

  

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18.           Counterparts.  This Agreement may be signed in any number of counterpart copies and by the parties hereto on separate counterparts, but all such copies shall constitute one and the same instrument.  Delivery of an executed counterpart of signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart.  Any party so executing this Agreement by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.

 

19.           Successors and Assigns.  This Agreement will be binding upon and inure to the benefit of each Grantor and the Bank and their respective heirs, executors, administrators, successors and assigns; provided, however, that no Grantor may assign this Agreement in whole or in part without the Bank’s prior written consent and the Bank at any time may assign this Agreement in whole or in part.

 

20.           Interpretation.  In this Agreement, unless the Bank and the Grantors otherwise agree in writing, the singular includes the plural and the plural the singular; words importing any gender include the other genders; 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”; references to articles, sections (or subdivisions of sections) or exhibits are to those of this Agreement; and references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement.  Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.  Unless otherwise specified in this Agreement, all accounting terms shall be interpreted and all accounting determinations shall be made in accordance with GAAP.  If this Agreement is executed by more than one Grantor, the obligations of such persons or entities will be joint and several.

 

21.           Indemnity.  Each Grantor agrees to indemnify each of the Bank, each legal entity, if any, who controls the Bank and each of their respective directors, officers and employees (the “Indemnified Parties”) and to defend and hold each Indemnified Party harmless from and against any and all claims, damages, losses, liabilities and expenses (including all fees and charges of internal or external counsel with whom any Indemnified Party may consult and all expenses of litigation and preparation therefor) which any Indemnified Party may incur or which may be asserted against any Indemnified Party by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of any Grantor), in connection with or arising out of or relating to the matters referred to in this Agreement or the Obligations, whether (a) arising from or incurred in connection with any breach of a representation, warranty or covenant by any Grantor, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental authority; provided, however, that the foregoing indemnity agreement shall not apply to any claims, damages, losses, liabilities and expenses solely attributable to an Indemnified Party’s gross negligence or willful misconduct.  The indemnity agreement contained in this Section shall survive the termination of this Agreement, payment of the Obligations and assignment of any rights hereunder.  Each Grantor may participate at its expense in the defense of any such claim.

 

  

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22.           Governing Law and Jurisdiction.  This Agreement has been delivered to and accepted by the Bank and will be deemed to be made in the Commonwealth of Pennsylvania.  This Agreement will be interpreted and the rights and liabilities of the parties hereto determined in accordance with the laws of the Commonwealth of Pennsylvania, except that the laws of the State where any Collateral is located (if not the Commonwealth of Pennsylvania) shall govern the creation, perfection and foreclosure of the liens created hereunder on such property or any interest therein.  Each Grantor 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 Agreement will prevent the Bank from bringing any action, enforcing any award or judgment or exercising any rights against any Grantor individually, against any security or against any property of any Grantor within any other county, state or other foreign or domestic jurisdiction.  The Bank and each Grantor agree that the venue provided above is the most convenient forum for both the Bank and the Grantors.  Each Grantor waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Agreement.

 

23.           WAIVER OF JURY TRIAL.  EACH OF THE GRANTORS AND THE BANK IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS.  EACH GRANTOR AND THE BANK ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

 

Each Grantor acknowledges that it has read and understood all the provisions of this Agreement, including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.

 

[Signature Page to Follow]

 

  

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WITNESS the due execution hereof as a document under seal, as of the date first written above.

 

	
ATTEST:

	 	
ENVIRONMENTAL TECTONICS CORPORATION

	 
	  	 	  	 	 
	 	 	
By:

	 	 
	
Name:

	 	
Name:

	 	 
	  	 	
Title:

	 	 
	  	 	  	 	 
	  	 	
PNC BANK, NATIONAL ASSOCIATION

	 
	  	 	  	 	 
	  	 	
By:

	 	 
	  	 	
Name:

	 	 
	  	 	
Title:

	 	 

  

  

  

 

EXHIBIT “A”

 

TO SECURITY AGREEMENT

 

1.             Grantor’s form of organization (i.e., corporation, partnership, limited liability company): Corporation.

 

2.             Grantor’s State of organization, if a registered organization (i.e., corporation, limited partnership or limited liability company): Pennsylvania

 

3.             Grantor’s principal residence, if a natural person or general partnership: Not applicable

 

4.             Address of Grantor’s chief executive office, including the county: 125 James Way, Southampton, PA 18966

 

5.             Grantor’s EIN: 23-1714256

 

6.             Grantor’s organizational ID# (if any exists): 111590

 

7.             Address for books and records, if different: 125 James Way, Southampton, PA 18966

 

8.             Addresses of other Collateral locations, including counties, for the past five (5) years:

 

	
 

	
Premises:

	
2100 North Alafaya Trail, Suite 900, Orlando, FL 32826 (Orlando office)

	
  

	
Landlord:

	
Alafaya Corporate Center, LC, 20 North Orange Avenue, Suite 605, Orlando, FL 32801

 

	
  

	
Premises:

	
1125 Industrial Highway, Southampton, Pennsylvania 18966-4008

	
  

	
Landlord:

	
Ruskel Company, Inc. (a PA corporation), 1125 Industrial Highway, Southampton, Pennsylvania 18966-4008

 

9.             Name and address of landlord or owner if location is not owned by the Grantor:

 

	
  

	
See above.

 

10.          Other names or tradenames now or formerly used by the Grantor:

 

	
  

	
ETC

 

	
  

	
Environmental Technology Corporation

 

See also the trademarks disclosed on the Rider to Security Agreement - Trademarks attached to this Agreement.

 

11.           List of all existing Commercial Tort Claims (by case title with court and brief description of claim):

 

	
  

	
None.ex10_3.htm

Exhibit 10.3

 

Export Import Pledge Agreement

 

 

THIS EXPORT IMPORT PLEDGE AGREEMENT, dated as of December 19, 2012, is made by ENVIRONMENTAL TECTONICS CORPORATION (the “Pledgor”), a Pennsylvania corporation with an address at 125 James Way, Southampton, PA 18966, in favor of PNC BANK, NATIONAL ASSOCIATION (the “Secured Party”), with an address at 1000 Westlakes Drive, Suite 200, Berwyn, PA 19312 (as amended, modified or supplemented from time to time, the “Pledge Agreement”).

 

1.            Pledge.  In order to induce the Secured Party to extend the Obligations (as defined below), the Pledgor hereby grants a security interest in and pledges to the Secured Party, all of the Pledgor’s right, title and interest in and to the investment property and other assets described in Exhibit A attached hereto and made a part hereof, and all security entitlements of the Pledgor with respect thereto, whether now owned or hereafter acquired, together with all additions, substitutions, replacements and proceeds thereof and all income, interest, dividends and other distributions thereon (collectively, the “Collateral”); provided, however, that the Collateral shall not include more than sixty-five percent (65%) of the issued and outstanding voting equity interests of any Person not organized under the laws of the United States of America, any State thereof or the District of Columbia (a “Foreign Subsidiary”).  This Pledge Agreement is entered into in connection with that certain Export Import Loan Agreement between the Secured Party and the Pledgor dated as of the date hereof (as amended, modified or supplemented from time to time, the “Loan Agreement”).  The Pledgor hereby authorizes the transfer of possession of all certificates, instruments, documents and other evidence of the Collateral to the Secured Party.

 

2.            Obligations Secured.  The Collateral secures payment of all loans, advances, debts, liabilities, obligations, covenants and duties owing by the Pledgor to the Secured Party or to any other direct or indirect subsidiary of The PNC Financial Services Group, Inc., 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 Pledgor, 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, whether or not (i) evidenced by any note, guaranty or other instrument, (ii) arising under any agreement, instrument or document, (iii) for the payment of money, (iv) arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, (v) under any interest or currency swap, future, option or other interest rate protection or similar agreement, (vi) under or by reason of any foreign currency transaction, forward, option or other similar transaction providing for the purchase of one currency in exchange for the sale of another currency, or in any other manner, or (vii) arising out of overdrafts on deposit or other accounts or out of electronic funds transfers (whether by wire transfer or through automated clearing houses or otherwise) or out of the return unpaid of, or other failure of the Secured Party to receive final payment for, any check, item, instrument, payment order or other deposit or credit to a deposit or other account, or out of the Secured Party’s non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository or other similar arrangements; and any amendments, extensions, renewals and increases of or to any of the foregoing, and all costs and expenses of the Secured Party incurred in the documentation, negotiation, modification, enforcement, collection and otherwise in connection with any of the foregoing, including reasonable attorneys’ fees and expenses (hereinafter referred to collectively as the “Obligations”).

 

  

  

  

 

3.             Representations and Warranties.  The Pledgor represents and warrants to the Secured Party as follows:

 

3.1.           There are no restrictions on the pledge or transfer of any of the Collateral, other than restrictions referenced on the face of any certificates evidencing the Collateral.

 

3.2.           The Pledgor is the legal owner of the Collateral, which is registered in the name of the Pledgor.

 

3.3.           The Collateral is free and clear of any security interests, pledges, liens, encumbrances, charges, agreements, claims or other arrangements or restrictions of any kind, except as referenced in Section 3.1 above and Permitted Liens (as defined in the Loan Agreement); and the Pledgor will not incur, create, assume or permit to exist any pledge, security interest, lien, charge or other encumbrance of any nature whatsoever on any of the Collateral or assign, pledge or otherwise encumber any right to receive income from the Collateral, other than in favor of the Secured Party or a Permitted Lien.

 

3.4.           The Pledgor has the right to transfer the Collateral free of any encumbrances and the Pledgor will defend the Pledgor’s title to the Collateral against the claims of all persons, and any registration with, or consent or approval of, or other action by, any federal, state or other governmental authority or regulatory body which was or is necessary for the validity of the pledge of and grant of the security interest in the Collateral has been obtained (other than, with regard to the pledge of investment property in a Foreign Subsidiary, governmental authorities or regulatory bodies of such Foreign Subsidiaries’ jurisdiction of organization).

 

3.5.           The pledge of and grant of the security interest in the Collateral is effective to vest in the Secured Party a valid and perfected first priority security interest, superior to the rights of any other person, in and to the Collateral as set forth herein.

 

4.            Covenants.

 

4.1.           If all or part of the Collateral constitutes “margin stock” within the meaning of Regulation U of the Federal Reserve Board, the Pledgor agrees to execute and deliver Form U-l to the Secured Party and, unless otherwise agreed in writing between the Pledgor and the Secured Party, no part of the proceeds of the Obligations may be used to purchase or carry margin stock

 

4.2.           Pledgor shall, from time to time upon the request of the Secured Party, execute and deliver to the Secured Party all documentation necessary for the Secured Party to obtain and maintain perfection of its security interests in the Collateral.

 

  

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5.             Default.

 

5.1.           If any of the following occur (each an “Event of Default”):  (i) any Event of Default (as defined in any of the Obligations), (ii) any default under any of the Obligations that does not have a defined set of “Events of Default” and the lapse of any notice or cure period provided in such Obligations with respect to such default, (iii) unsatisfied demand by the Secured Party under any of the Obligations that have a demand feature, (iv) the failure by the Pledgor to perform any of its obligations hereunder, (v) any written warranty, representation or statement made or furnished to the Secured Party by or on behalf of the Pledgor in connection with this Pledge Agreement shall be false, incorrect or incomplete in any material respect when made, (vi) the failure of the Secured Party to have a perfected first priority security interest in the Collateral, unless such failure results solely from any action or omission by the Secured Party or (vii) any restriction is imposed on the pledge or transfer of any of the Collateral after the date of this Agreement without the Secured Party’s prior written consent, then the Secured Party is authorized in its discretion to declare any or all of the Obligations to be immediately due and payable without demand or notice, which are expressly waived, and may exercise any one or more of the rights and remedies granted pursuant to this Pledge Agreement or given to a secured party under the Uniform Commercial Code of the applicable state, as it may be amended from time to time, or otherwise at law or in equity, including without limitation the right to sell or otherwise dispose of any or all of the Collateral at public or private sale, with or without advertisement thereof, upon such terms and conditions as it may deem advisable and at such prices as it may deem best.  The Secured Party shall notify the Pledgor promptly of any acceleration of the Obligations pursuant to this Section 5.1, provided that the failure to give such notice shall not affect the validity of such acceleration.

 

5.2.           (a)           At any bona fide public sale, and to the extent permitted by law, at any private sale, the Secured Party shall be free to purchase all or any part of the Collateral, free of any right or equity of redemption in the Pledgor, which right or equity is hereby waived and released.  Any such sale may be on cash or credit.  The Secured Party shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Collateral for their own account in compliance with Regulation D of the Securities Act of 1933 (the “Act”) or any other applicable exemption available under such Act.  The Secured Party will not be obligated to make any sale if it determines not to do so, regardless of the fact that notice of the sale may have been given.  The Secured Party may adjourn any sale and sell at the time and place to which the sale is adjourned.  If the Collateral is customarily sold on a recognized market or threatens to decline speedily in value, the Secured Party may sell such Collateral at any time without giving prior notice to the Pledgor.  Whenever notice is otherwise required by law to be sent by the Secured Party to the Pledgor of any sale or other disposition of the Collateral, ten (10) days written notice sent to the Pledgor at its address specified above will be reasonable.

 

(b)           The Pledgor recognizes that the Secured Party may be unable to effect or cause to be effected a public sale of the Collateral by reason of certain prohibitions contained in the Act, so that the Secured Party may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated to agree, among other things, to acquire the Collateral for their own account, for investment and without a view to the distribution or resale thereof.  The Pledgor understands that private sales so made may be at prices and on other terms less favorable to the seller than if the Collateral were sold at public sales, and agrees that the Secured Party has no obligation to delay or agree to delay the sale of any of the Collateral for the period of time necessary to permit the issuer of the securities which are part of the Collateral (even if the issuer would agree), to register such securities for sale under the Act.  The Pledgor agrees that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner.

 

  

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5.3.           The net proceeds arising from the disposition of the Collateral after deducting expenses incurred by the Secured Party will be applied to the Obligations in the order determined by the Secured Party.  If any excess remains after the discharge of all of the Obligations, the same will be paid to the Pledgor.  If after exhausting all of the Collateral there is a deficiency, the Pledgor will be liable therefor to the Secured Party; provided, however, that nothing contained herein will obligate the Secured Party to proceed against the Pledgor or any other party obligated under the Obligations or against any other collateral for the Obligations prior to proceeding against the Collateral.

 

5.4.           If any demand is made at any time upon the Secured Party for the repayment or recovery of any amount received by it in payment or on account of any of the Obligations and if the Secured Party 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 Pledgor will be and remain liable for the amounts so repaid or recovered to the same extent as if such amount had never been originally received by the Secured Party.  The provisions of this Section will be and remain effective notwithstanding the release of any of the Collateral by the Secured Party in reliance upon such payment and any such release will be without prejudice to the Secured Party’s rights hereunder and will be deemed to have been conditioned upon such payment having become final and irrevocable.  This Section shall survive the termination of this Pledge Agreement.

 

6.            Voting Rights and Transfer.  Prior to the occurrence of an Event of Default, the Pledgor will have the right to exercise all voting rights with respect to the Collateral.  At any time after the occurrence of an Event of Default, the Secured Party may transfer any or all of the Collateral into its name or that of its nominee and may exercise all voting rights with respect to the Collateral, but no such transfer shall constitute a taking of such Collateral in satisfaction of any or all of the Obligations unless the Secured Party expressly so indicates by written notice to the Pledgor.

 

7.            Dividends, Interest and Premiums.  The Pledgor will have the right to receive all cash dividends, interest and premiums declared and paid on the Collateral prior to the occurrence of any Event of Default.  In the event any additional shares are issued to the Pledgor as a stock dividend or in lieu of interest on any of the Collateral, as a result of any split of any of the Collateral, by reclassification or otherwise, any certificates evidencing any such additional shares will be immediately delivered to the Secured Party and such shares will be subject to this Pledge Agreement and a part of the Collateral to the same extent as the original Collateral.  At any time after the occurrence of an Event of Default, the Secured Party shall be entitled to receive all cash or stock dividends, interest and premiums declared or paid on the Collateral, all of which shall be subject to the Secured Party’s rights under Section 5 above.

 

  

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8.            Further Assurances.  By its signature hereon, the Pledgor hereby irrevocably authorizes the Secured Party, and irrevocably appoints the Secured Party as the Pledgor’s attorney in fact, at any time and from time to time, to execute (on behalf of the Pledgor), file and record against the Pledgor any notice, financing statement, continuation statement, amendment statement, instrument, document or agreement under the Uniform Commercial Code that the Secured Party may consider necessary or desirable to create, preserve, continue, perfect or validate any security interest granted hereunder or to enable the Secured Party to exercise or enforce its rights hereunder with respect to such security interest.  This limited power of attorney is coupled with an interest with full power of substitution and is irrevocable.  The Pledgor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof.

 

9.            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 parties 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 a party’s address as set forth above or to such other address as either the Pledgor or the Secured Party may give to the other for such purpose in accordance with this section.

 

10.           Preservation of Rights.  (a) No delay or omission on the Secured Party’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 Secured Party’s action or inaction impair any such right or power.  The Secured Party’s rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Secured Party may have under other agreements, at law or in equity.

 

(b)           The Secured Party may, at any time and from time to time, without notice to or the consent of the Pledgor unless otherwise expressly required pursuant to the terms of the Obligations, and without impairing or releasing, discharging or modifying the Pledgor’s liabilities hereunder, (i) 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; (ii) renew, substitute, modify, amend or alter, or grant consents or waivers relating to any of the Obligations, any other pledge or security agreements, or any security for any Obligations; (iii) apply any and all payments by whomever paid or however realized including any proceeds of any collateral, to any Obligations in such order, manner and amount as the Secured Party may determine in its sole discretion; (iv) deal with any other person with respect to any Obligations in such manner as the Secured Party deems appropriate in its sole discretion; (v) substitute, exchange or release any security or guaranty; or (vi) take such actions and exercise such remedies hereunder as provided herein.  The Pledgor hereby waives (a) presentment, demand, protest, notice of dishonor and notice of non-payment and all other notices to which the Pledgor might otherwise be entitled, and (b) all defenses based on suretyship or impairment of collateral.

 

11.           Illegality.  In case any one or more of the provisions contained in this Pledge Agreement should be invalid, illegal or unenforceable in any respect, it shall not affect or impair the validity, legality and enforceability of the remaining provisions in this Pledge Agreement.

 

  

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12.           Changes in Writing.  No modification, amendment or waiver of, or consent to any departure by the Pledgor from, any provision of this Pledge Agreement will be effective unless made in a writing signed by the Secured Party, 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 Pledgor in any case will entitle the Pledgor to any other or further notice or demand in the same, similar or other circumstance.

 

13.           Entire Agreement.  This Pledge Agreement (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 Pledgor and the Secured Party with respect to the subject matter hereof.

 

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

 

15.           Interpretation.  In this Pledge Agreement, unless the Secured Party and the Pledgor 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 agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Pledge Agreement.  Section headings in this Pledge Agreement are included for convenience of reference only and shall not constitute a part of this Pledge Agreement for any other purpose.  If this Pledge Agreement is executed by more than one party as Pledgor, the obligations of such persons or entities will be joint and several.

 

16.           Indemnity.  The Pledgor agrees to indemnify each of the Secured Party, each legal entity, if any, who controls, is controlled by or is under common control with the Secured Party, and each of their respective directors, officers and employees (the “Indemnified Parties”), and to hold each Indemnified Party harmless from and against, any and all claims, damages, losses, liabilities and expenses (including all fees and charges of internal or external counsel with whom any Indemnified Party may consult and all expenses of litigation or preparation therefor) which any Indemnified Party may incur, or which may be asserted against any Indemnified Party by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of the Pledgor), in connection with or arising out of or relating to the matters referred to in this Pledge Agreement, whether (a) arising from or incurred in connection with any breach of a representation, warranty or covenant by the Pledgor, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental authority; provided, however, that the foregoing indemnity agreement shall not apply to claims, damages, losses, liabilities and expenses solely attributable to an Indemnified Party’s gross negligence or willful misconduct.  The indemnity agreement contained in this Section shall survive the termination of this Pledge Agreement.  The Pledgor may participate at its expense in the defense of any such action or claim.

 

  

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17.           Governing Law and Jurisdiction.  This Pledge Agreement has been delivered to and accepted by the Secured Party and will be deemed to be made in the Commonwealth of Pennsylvania This Pledge Agreement will be interpreted and the rights and liabilities of the Pledgor and the Secured Party determined in accordance with the laws of the Commonwealth of Pennsylvania, excluding its conflict of laws rules.  The Pledgor hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the county or judicial district where the Secured Party’s office indicated above is located; provided that nothing contained in this Pledge Agreement will prevent the Secured Party from bringing any action, enforcing any award or judgment or exercising any rights against the Pledgor individually, against any security or against any property of the Pledgor within any other county, state or other foreign or domestic jurisdiction.  The Pledgor acknowledges and agrees that the venue provided above is the most convenient forum for both the Secured Party and the Pledgor.  The Pledgor waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Pledge Agreement.

 

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

 

The Pledgor acknowledges that it has read and understood all the provisions of this Pledge Agreement, including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.

 

  

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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.

 

	
ATTEST:

	ENVIRONMENTAL TECTONICS CORPORATION
	  	 	 	  	 
	
 

	 	By:	 	 
	
Name:

	Name:	 	 
	  	 	Title:	 	 

  

  

  

 

EXHIBIT A TO PLEDGE AGREEMENT

 

	
Issuer

	
Description 

of Securities 

Owned

	
Issuer’s 

Jurisdiction

	
Percentage of 

Outstanding 

Interests 

Owned

	
Percentage of 

Outstanding 

Interests 

Pledged

	
Cert. Number

	
ETC-PZL Aerospace Industries

	
Limited Liability Company Interests

	
Poland

	
95%

	
65%

	
uncertificated

	 	 	 	 	 	 
	
Environmental Tectonics Corporation (Europe) Limited

	
99 Ordinary Shares

	
Great Britain

	
99%

	
65%

	
004

	 	 	 	 	 	 
	
ETC Delaware, Inc.

	
100 Common Shares

	
Delaware

	
100%

	
100%

	
1

	 	 	 	 	 	 
	
ETC Environmental Tectonics Corporation Information System Bilgi Islem Teknoloji Anonim Şirketi

	
864 shares

	
Turkey

	
48%

	
48%

	
uncertificated

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