Document:

exv10w2

 

Exhibit 10.2

			
	 	 	 
	Committed Line Of Credit Note
	 	
	 	 	 
	$15,000,000	 	July 31, 2007

FOR VALUE RECEIVED, ENVIRONMENTAL TECTONICS CORPORATION (the “Borrower”), with an address at 125
James Way, Southampton, PA 18966, promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION
(the “Bank”), in lawful money of the United States of America in immediately available funds at its
offices located at 1000 Westlakes Drive, Suite 200, Berwyn, PA 19312 or at such other location as
the Bank may designate from time to time, the principal sum of FIFTEEN MILLION DOLLARS
($15,000,000) (the “Facility”) or such lesser amount as may be advanced to or for the benefit of
the Borrower hereunder, together with interest accruing on the outstanding principal balance from
the date hereof, all as provided below.

1. Advances. The Borrower may request advances, repay and request additional
advances hereunder until the Expiration Date, subject to the terms and conditions of this Note and
the Loan Documents (as hereinafter defined). The “Expiration Date” shall mean June 30, 2009, or
such later date as may be designated by the Bank by written notice from the Bank to the Borrower.
The Borrower acknowledges and agrees that in no event will the Bank be under any obligation to
extend or renew the Facility or this Note beyond the Expiration Date. The Borrower may request
advances hereunder upon giving oral or written notice to the Bank by 11:00 a.m. (Philadelphia,
Pennsylvania time) (a) on the day of the proposed advance, in the case of advances to bear interest
under the Base Rate Option (as hereinafter defined) and (b) three (3) Business Days prior to the
proposed advance, in the case of advances to bear interest under the LIBOR Option (as hereinafter
defined), followed promptly thereafter by the Borrower’s written confirmation to the Bank of any
oral notice. The aggregate unpaid principal amount of advances under this Note shall not exceed
the face amount of this Note.

2. Rate of Interest. Each advance outstanding under this Note will bear interest
at a rate or rates per annum as may be selected by the Borrower from the interest rate options set
forth below (each, an “Option”):

     (i) Base Rate Option. A rate of interest per annum which is at all times equal to (A)
the Prime Rate minus (B) one hundred (100) basis points (1.00%) (“Base Rate”). For
purposes hereof, the term “Prime Rate” shall mean the rate publicly announced by the Bank from time
to time as its prime rate. The Prime Rate is determined from time to time by the Bank as a means
of pricing some loans to its borrowers. The Prime Rate is not tied to any external rate of
interest or index, and does not necessarily reflect the lowest rate of interest actually charged by
the Bank to any particular class or category of customers. If and when the Prime Rate changes, the
rate of interest with respect to any advance to which the Base Rate Option applies will change
automatically without notice to the Borrower, effective on the date of any such change. There are
no required minimum interest periods for advances bearing interest under the Base Rate Option.

     (ii) LIBOR Option. A rate per annum equal to (A) LIBOR plus (B) ninety (90)
basis points (.90%), for the applicable LIBOR Interest Period.

For purposes hereof, the following terms shall have the following meanings:

 

 

“Business Day” shall mean any day other than a Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required by law to be closed for business in
Philadelphia, Pennsylvania.

“LIBOR” shall mean, with respect to any advance to which the LIBOR Option applies for the
applicable LIBOR Interest Period, the interest rate per annum determined by the Bank by
dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/16th of 1%)
(i) the rate of interest determined by the Bank in accordance with its usual procedures
(which determination shall be conclusive absent manifest error) to be the eurodollar rate
two (2) Business Days prior to the first day of such LIBOR Interest Period for an amount
comparable to such advance and having a borrowing date and a maturity comparable to such
LIBOR Interest Period by (ii) a number equal to 1.00 minus the LIBOR Reserve Percentage.

“LIBOR Interest Period” shall mean, as to any advance to which the LIBOR Option applies, the
period of one (1), two (2), three (3) or six (6) months as selected by the Borrower in its
notice of borrowing or notice of conversion, as the case may be, commencing on the date of
disbursement of an advance (or the date of conversion of an advance to the LIBOR Option, as
the case may be) and each successive period selected by the Borrower thereafter;
provided that, (i) if a LIBOR Interest Period would end on a day which is
not a Business Day, it shall end on the next succeeding Business Day unless such day falls
in the next succeeding calendar month in which case the LIBOR Interest Period shall end on
the next preceding Business Day, (ii) the Borrower may not select a LIBOR Interest Period
that would end on a day after the Expiration Date, and (iii) any LIBOR Interest Period that
begins on the last Business Day of a calendar month (or a day for which there is no
numerically corresponding day in the last calendar month of such LIBOR Interest Period)
shall end on the last Business Day of the last calendar month of such LIBOR Interest Period.

“LIBOR Reserve Percentage” shall mean the maximum effective percentage in effect on such day
as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, without limitation, supplemental, marginal
and emergency reserve requirements) with respect to eurocurrency funding (currently referred
to as “Eurocurrency liabilities”).

LIBOR shall be adjusted with respect to any advance to which the LIBOR Option applies on and as of
the effective date of any change in the LIBOR Reserve Percentage. The Bank shall give prompt
notice to the Borrower of LIBOR as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.

If the Bank determines (which determination shall be final and conclusive) that, by reason of
circumstances affecting the eurodollar market generally, deposits in dollars (in the applicable
amounts) are not being offered to banks in the eurodollar market for the selected term, or adequate
means do not exist for ascertaining LIBOR, then the Bank shall give notice thereof to the Borrower.
Thereafter, until the Bank notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, (a) the availability of the LIBOR Option shall be suspended, and (b)
the interest rate for all advances then bearing interest under the LIBOR Option shall be converted
at the expiration of the then current LIBOR Interest Period(s) to the Base Rate.

In addition, if, after the date of this Note, the Bank shall determine (which determination shall
be final and conclusive) that any enactment, promulgation or adoption of or any change in any
applicable law, rule or regulation, or any change in the interpretation or administration thereof
by a governmental authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or directive (whether
or not having the force of law)

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of any such authority, central bank or comparable agency shall make it unlawful or impossible for
the Bank to make or maintain or fund loans based on LIBOR, the Bank shall notify the Borrower.
Upon receipt of such notice, until the Bank notifies the Borrower that the circumstances giving
rise to such determination no longer apply, (a) the availability of the LIBOR Option shall be
suspended, and (b) the interest rate on all advances then bearing interest under the LIBOR Option
shall be converted to the Base Rate either (i) on the last day of the then current LIBOR Interest
Period(s) if the Bank may lawfully continue to maintain advances based on LIBOR to such day, or
(ii) immediately if the Bank may not lawfully continue to maintain advances based on LIBOR.

The foregoing notwithstanding, it is understood that the Borrower may select different Options to
apply simultaneously to different portions of the advances and may select up to three (3) different
interest periods to apply simultaneously to different portions of the advances bearing interest
under the LIBOR Option. Interest hereunder will be calculated based on the actual number of days
that principal is outstanding over a year of 360 days. In no event will the rate of interest
hereunder exceed the maximum rate allowed by law.

3. Interest Rate Election. Subject to the terms and conditions of this Note, at
the end of each interest period applicable to any advance, the Borrower may renew the Option
applicable to such advance or convert such advance to a different Option; provided
that, during any period in which any Event of Default (as hereinafter defined) has occurred
and is continuing, any advances bearing interest under the LIBOR Option shall, at the Bank’s sole
discretion, be converted at the end of the applicable LIBOR Interest Period to the Base Rate and
the LIBOR Option will not be available to Borrower with respect to any new advances (or with
respect to the conversion or renewal of any existing advances) until such Event of Default has been
cured by the Borrower or waived by the Bank. The Borrower shall notify the Bank of each election
of an Option, each conversion from one Option to another, the amount of the advances then
outstanding to be allocated to each Option and where relevant the interest periods therefor. In
the case of converting to the LIBOR Option, such notice shall be given at least three (3) Business
Days prior to the commencement of any LIBOR Interest Period. If no interest period is specified in
any such notice for which the resulting advance is to bear interest under the LIBOR Option, the
Borrower shall be deemed to have selected a LIBOR Interest Period of one month’s duration. If no
notice of election, conversion or renewal is timely received by the Bank with respect to any
advance, the Borrower shall be deemed to have elected the Base Rate Option. Any such election
shall be promptly confirmed in writing by such method as the Bank may require.

4. Advance Procedures. A request for advance made by telephone must be promptly
confirmed in writing by such method as the Bank may require. The Borrower authorizes the Bank to
accept telephonic requests for advances, and the Bank shall be entitled to rely upon the authority
of any person providing such instructions. The Borrower hereby indemnifies and holds the Bank
harmless from and against any and all damages, losses, liabilities, costs and expenses (including
reasonable attorneys’ fees and expenses) which may arise or be created by the acceptance of such
telephone requests or making such advances. The Bank will enter on its books and records, which
entry when made will be presumed correct, the date and amount of each advance, the interest rate
and interest period applicable thereto, as well as the date and amount of each payment.

5. Payment Terms. The Borrower shall pay accrued interest on the unpaid principal
balance of this Note in arrears: (a) for the portion of advances bearing interest under the Base
Rate Option, on the first day of each month during the term hereof, (b) for the portion of advances
bearing interest under the LIBOR Option, on the last day of the respective LIBOR Interest Period
for such advance, (c) if any LIBOR Interest Period is longer than three (3) months, then also on
the three (3) month anniversary of such interest period and every three (3) months thereafter, and
(d) for all advances, at maturity, whether by acceleration of this Note or otherwise, and after
maturity, on demand until paid in full. All outstanding principal and accrued interest hereunder
shall be due and payable in full on the Expiration Date.

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If any payment under this Note shall become due on a Saturday, Sunday or public holiday under the
laws of the State where the Bank’s office indicated above is located, such payment shall be made on
the next succeeding Business Day and such extension of time shall be included in computing interest
in connection with such payment. The Borrower hereby authorizes the Bank to charge the Borrower’s
deposit account at the Bank for any payment when due hereunder. Payments received will be applied
to charges, fees and expenses (including attorneys’ fees), accrued interest and principal in any
order the Bank may choose, in its sole discretion.

6. Late Payments; Default Rate. If the Borrower fails to make any payment of
principal, interest or other amount coming due pursuant to the provisions of this Note within
fifteen (15) calendar days of the date due and payable, the Borrower also shall pay to the Bank a
late charge equal to the lesser of five percent (5%) of the amount of such payment or $100.00 (the
“Late Charge”). Such fifteen (15) day period shall not be construed in any way to extend the due
date of any such payment. Upon maturity, whether by acceleration, demand or otherwise, and at the
Bank’s option upon the occurrence of any Event of Default (as hereinafter defined) and during the
continuance thereof, each advance outstanding under this Note shall bear interest at a rate per
annum (based on the actual number of days that principal is outstanding over a year of 360 days)
which shall be three percentage points (3%) in excess of the interest rate in effect from time to
time under this Note but not more than the maximum rate allowed by law (the “Default Rate”). The
Default Rate shall continue to apply whether or not judgment shall be entered on this Note. Both
the Late Charge and the Default Rate are imposed as liquidated damages for the purposes of
defraying the Bank’s expenses incident to the handling of delinquent payments, but are in addition
to, and not in lieu of, the Bank’s exercise of any rights and remedies hereunder, under the other
Loan Documents or under applicable law, and any fees and expenses of any agents or attorneys which
the Bank may employ. In addition, the Default Rate reflects the increased credit risk to the Bank
of carrying a loan that is in default. The Borrower agrees that the Late Charge and Default Rate
are reasonable forecasts of just compensation for anticipated and actual harm incurred by the Bank,
and that the actual harm incurred by the Bank cannot be estimated with certainty and without
difficulty.

7. Prepayment. The Borrower shall have the right to prepay any advance
hereunder at any time and from time to time, in whole or in part; subject, however, to payment of
any break funding indemnification amounts owing pursuant to paragraph 8 below.

8. Yield Protection; Break Funding Indemnification. The Borrower shall pay to
the Bank on written demand therefor, together with the written evidence of the justification
therefor, all direct costs incurred, losses suffered or payments made by Bank by reason of any
change in law or regulation or its interpretation imposing any reserve, deposit, allocation of
capital, or similar requirement (including without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) on the Bank, its holding company or any of their
respective assets. In addition, the Borrower agrees to indemnify the Bank against any liabilities,
losses or expenses (including, without limitation, loss of margin, any loss or expense sustained or
incurred in liquidating or employing deposits from third parties, and any loss or expense incurred
in connection with funds acquired to effect, fund or maintain any advance (or any part thereof)
bearing interest under the LIBOR Option which the Bank sustains or incurs as a consequence of
either (i) the Borrower’s failure to make a payment on the due date thereof, (ii) the Borrower’s
revocation (expressly, by later inconsistent notices or otherwise) in whole or in part of any
notice given to Bank to request, convert, renew or prepay any advance bearing interest under the
LIBOR Option, or (iii) the Borrower’s payment or prepayment (whether voluntary, after acceleration
of the maturity of this Note or otherwise) or conversion of any advance bearing interest under the
LIBOR Option on a day other than the last day of the applicable LIBOR Interest Period. A notice as
to any amounts payable pursuant to this paragraph given to the Borrower by the Bank shall, in the
absence of manifest error, be conclusive and shall be payable upon demand. The Borrower’s
indemnification obligations hereunder shall survive the payment in full of the advances and all
other amounts payable hereunder.

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9. Other Loan Documents. This Note is issued in connection with a letter
agreement or loan agreement between the Borrower and the Bank, dated on or before the date hereof,
and the other agreements and documents executed and/or delivered in connection therewith or
referred to therein, the terms of which are incorporated herein by reference (as amended, modified
or renewed from time to time, collectively the “Loan Documents”), and is secured by the property
(if any) described in the Loan Documents and by such other collateral as previously may have been
or may in the future be granted to the Bank to secure this Note.

10. Events of Default. The occurrence of any of the following events will be
deemed to be an “Event of Default” under this Note: (i) the nonpayment of any principal, interest
or other indebtedness under this Note when due; (ii) the occurrence of any event of default or any
default and the lapse of any notice or cure period, or any Obligor’s failure to observe or perform
any covenant or other agreement, under or contained in any Loan Document or any other document now
or in the future evidencing or securing any debt, liability or obligation of any Obligor to the
Bank; (iii) the filing by or against any Obligor of any proceeding in bankruptcy, receivership,
insolvency, reorganization, liquidation, conservatorship or similar proceeding (and, in the case of
any such proceeding instituted against any Obligor, such proceeding is not dismissed or stayed
within 30 days of the commencement thereof, provided that the Bank shall not be obligated to
advance additional funds hereunder during such period); (iv) any assignment by any Obligor for the
benefit of creditors, or any levy, garnishment, attachment or similar proceeding is instituted
against any property of any Obligor held by or deposited with the Bank; (v) a default with respect
to any other indebtedness of any Obligor for borrowed money, if the effect of such default is to
cause or permit the acceleration of such debt; (vi) the commencement of any foreclosure or
forfeiture proceeding, execution or attachment against any collateral securing the obligations of
any Obligor to the Bank; (vii) the entry of a final judgment against any Obligor and the failure of
such Obligor to discharge the judgment within ten (10) days of the entry thereof; (viii) any
material adverse change in any Obligor’s business, assets, operations, financial condition or
results of operations; (ix) any Obligor ceases doing business as a going concern; (x) any
representation or warranty made by any Obligor to the Bank in any Loan Document or any other
documents now or in the future evidencing or securing the obligations of any Obligor to the Bank,
is false, erroneous or misleading in any material respect; (xi) the revocation or attempted
revocation, in whole or in part, of any guarantee by any Obligor; or (xii) the death,
incarceration, indictment or legal incompetency of any individual Obligor or, if any Obligor is a
partnership or limited liability company, the death, incarceration, indictment or legal
incompetency of any individual general partner or member. As used herein, the term “Obligor” means
any Borrower and any guarantor of, or any pledgor, mortgagor or other person or entity providing
collateral support for, the Borrower’s obligations to the Bank existing on the date of this Note or
arising in the future.

Upon the occurrence of an Event of Default: (a) the Bank shall be under no further obligation to
make advances hereunder; (b) if an Event of Default specified in clause (iii) or (iv) above shall
occur, the outstanding principal balance and accrued interest hereunder together with any
additional amounts payable hereunder shall be immediately due and payable without demand or notice
of any kind; (c) if any other Event of Default shall occur, the outstanding principal balance and
accrued interest hereunder together with any additional amounts payable hereunder, at the Bank’s
option and without demand or notice of any kind, may be accelerated and become immediately due and
payable; (d) at the Bank’s option, this Note will bear interest at the Default Rate from the date
of the occurrence of the Event of Default; and (e) the Bank may exercise from time to time any of
the rights and remedies available under the Loan Documents or under applicable law.

11. Power to Confess Judgment. The Borrower hereby empowers any attorney of any
court of record, after the occurrence of any Event of Default hereunder, to appear for the Borrower
and, with or without complaint filed, confess judgment, or a series of judgments, against the
Borrower in favor of the Bank or any holder hereof for the entire principal balance of this Note,
all accrued

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interest and all other amounts due hereunder, together with costs of suit and an attorney’s
commission of the greater of 10% of such principal and interest or $1,000 added as a reasonable
attorney’s fee, and for doing so, this Note or a copy verified by affidavit shall be a sufficient
warrant. The Borrower hereby forever waives and releases all errors in said proceedings and all
rights of appeal and all relief from any and all appraisement, stay or exemption laws of any state
now in force or hereafter enacted. Interest on any such judgment shall accrue at the Default Rate.

No single exercise of the foregoing power to confess judgment, or a series of judgments, shall be
deemed to exhaust the power, whether or not any such exercise shall be held by any court to be
invalid, voidable, or void, but the power shall continue undiminished and it may be exercised from
time to time as often as the Bank shall elect until such time as the Bank shall have received
payment in full of the debt, interest and costs. Notwithstanding the attorney’s commission
provided for in the preceding paragraph (which is included in the warrant for purposes of
establishing a sum certain), the amount of attorneys’ fees that the Bank may recover from the
Borrower shall not exceed the actual attorneys’ fees incurred by the Bank.

12. Right of Setoff. In addition to all liens upon and rights of setoff against
the Borrower’s money, securities or other property given to the Bank by law, the Bank shall have,
with respect to the Borrower’s obligations to the Bank under this Note and to the extent permitted
by law, a contractual possessory security interest in and a contractual right of setoff against,
and the Borrower hereby grants the Bank a security interest in, and hereby assigns, conveys,
delivers, pledges and transfers to the Bank, all of the Borrower’s right, title and interest in and
to, all of the Borrower’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 Borrower. 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.

13. Indemnity. The Borrower agrees to indemnify each of the Bank, each legal
entity, if any, who controls, is controlled by or is under common control with the Bank, 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 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 the
Borrower), in connection with or arising out of or relating to the matters referred to in this Note
or in the other Loan Documents or the use of any advance hereunder, whether (a) arising from or
incurred in connection with any breach of a representation, warranty or covenant by the Borrower,
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 Note, payment of any advance hereunder and the assignment of any rights
hereunder. The Borrower may participate at its expense in the defense of any such action or claim.

14. Miscellaneous. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder (“Notices”) must be in writing (except as may be
agreed otherwise above

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with respect to borrowing requests) 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 paragraph. 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. No modification, amendment or waiver of, or consent to any departure by the Borrower
from, any provision of this Note 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. The Borrower agrees to pay on demand, to the extent permitted by law, all costs
and expenses incurred by the Bank in the enforcement of its rights in this Note and in any security
therefor, including without limitation reasonable fees and expenses of the Bank’s counsel. If any
provision of this Note is found to be invalid, illegal or unenforceable in any respect by a court,
all the other provisions of this Note will remain in full force and effect. The Borrower and all
other makers and indorsers of this Note hereby forever waive presentment, protest, notice of
dishonor and notice of non-payment. The Borrower also waives all defenses based on suretyship or
impairment of collateral. If this Note is executed by more than one Borrower, the obligations of
such persons or entities hereunder will be joint and several. This Note shall bind the Borrower
and its heirs, executors, administrators, successors and assigns, and the benefits hereof shall
inure to the benefit of the Bank and its successors and assigns; provided, however,
that the Borrower may not assign this Note in whole or in part without the Bank’s written consent
and the Bank at any time may assign this Note in whole or in part.

This Note 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 Note will be interpreted and the
rights and liabilities of the Bank and the Borrower 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 Borrower 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 Note will prevent the Bank from bringing any
action, enforcing any award or judgment or exercising any rights against the Borrower individually,
against any security or against any property of the Borrower within any other county, state or
other foreign or domestic jurisdiction. The Borrower acknowledges and agrees that the venue
provided above is the most convenient forum for both the Bank and the Borrower. The Borrower
waives any objection to venue and any objection based on a more convenient forum in any action
instituted under this Note.

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

16. WAIVER OF JURY TRIAL. The Borrower irrevocably waives any and all rights
the Borrower may have to a trial by jury in any action, proceeding or claim of any nature relating
to this Note, any documents executed in connection with this Note or any transaction contemplated
in any of such documents. The Borrower acknowledges that the foregoing waiver is knowing and
voluntary.

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The Borrower acknowledges that it has read and understood all the provisions of this Note,
including the confession of judgment and the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.

WITNESS the due execution hereof as a document under seal, as of the date first written above, with
the intent to be legally bound hereby.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	ENVIRONMENTAL TECTONICS CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	/s/ 	 	 	 	 
	 

	 	 

	 	 
	 	 

(SEAL)
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Print Name:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 
	 	 	 
	 	 

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Disclosure for Confession of Judgment

	 	 	 
	Undersigned:

	 	Environmental Tectonics Corporation
	 

	 	125 James Way
	 

	 	Southampton, PA 18966
	 
	 	 
	Lender:

	 	PNC Bank, National Association
	 

	 	1000 Westlakes Drive, Suite 200
	 

	 	Berwyn, PA 19312

The undersigned has executed, and/or is executing, on or about the date hereof, a Committed Line of
Credit Note in the principal amount of $15,000,000, under which the undersigned is obligated to
repay monies to Lender.

     A. The undersigned acknowledges and agrees that the above documents contain provisions under
which Lender may enter judgment by confession against the undersigned. Being fully aware of its
rights to prior notice and a hearing on the validity of any judgment or other claims that may be
asserted against it by Lender thereunder before judgment is entered, the undersigned hereby freely,
knowingly and intelligently waives these rights and expressly agrees and consents to Lender’s
entering judgment against it by confession pursuant to the terms thereof.

     B. The undersigned also acknowledges and agrees that the above documents contain provisions
under which Lender may, after entry of judgment and without either notice or a hearing, foreclose
upon, attach, levy, take possession of or otherwise seize property of the undersigned in full or
partial payment of the judgment. Being fully aware of its rights after judgment is entered
(including the right to move to open or strike the judgment), the undersigned hereby freely,
knowingly and intelligently waives its rights to notice and a hearing and expressly agrees and
consents to Lender’s taking such actions as may be permitted under applicable state and federal law
without prior notice to the undersigned.

     C. The undersigned certifies that a representative of Lender specifically called the
confession of judgment provisions in the above documents to the attention of the undersigned,
and/or that the undersigned was represented by legal counsel in connection with the above
documents.

     D. The undersigned hereby certifies: that its annual revenues exceed $10,000; that all
references to “the undersigned” above refer to all persons and entities signing below; and that the
undersigned received a copy hereof at the time of signing.

	 	 	 	 	 	 	 
	Dated: July 31, 2007	 	ENVIRONMENTAL TECTONICS CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	(SEAL)	 	 
	 
	 	 	 	 	 	 
	 

	 	Print Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:exv10w3

 

Exhibit 10.3

			
	 	 	 
	Amended and Restated 

Reimbursement Agreement 

for Letters of Credit
	 	

     THIS AMENDED AND RESTATED REIMBURSEMENT AGREEMENT FOR LETTERS OF CREDIT (this
“Agreement”) is made as of this 31st day of July, 2007, by ENVIRONMENTAL TECTONICS
CORPORATION (the “Obligor”), with an address at 125 James Way, Southampton, PA 18966 in favor of
PNC BANK, NATIONAL ASSOCIATION (the “Bank”), with an address at 500 First Avenue, Third Floor,
Pittsburgh, PA 15219. This Agreement amends and restates that certain Reimbursement Agreement for
Letters of Credit between the Obligor and the Bank dated as of November 16, 2006 (as heretofore
amended, the “Existing Reimbursement Agreement”). From time to time by submitting an application
in a form approved by the Bank (an “Application”), the Obligor or any of its subsidiaries or
affiliates has requested or may hereafter request the Bank to issue one or more letters of credit
(each, a “Credit”) (including the Credits listed on Schedule I hereto (the “Existing Credits”)
heretofore issued under the Existing Reimbursement Agreement. The Bank may issue any such Credit,
but the Bank shall have no obligation to do so unless otherwise agreed in writing. The Obligor
agrees that the following terms and conditions shall apply to any Credit including the Existing
Credits:

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

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

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

 

 

such item to the Bank at such time, in advance of the time the Bank is to deliver such item,
as the Bank may reasonably require.

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

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

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

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

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

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

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

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

     5. Representations, Warranties, Covenants. The Obligor represents, warrants, and
covenants that (a) if not a natural person, the Obligor is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization and duly qualified to do
business in those jurisdictions in which its ownership of property or the nature of its business
activities makes such qualification necessary; (b) the Obligor has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations hereunder; and all
such action has been duly authorized by all necessary proceedings on the Obligor’s part, and
neither now nor hereafter shall contravene or result in a breach of any organizational document of
the Obligor, any agreement,

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document, or instrument binding on the Obligor or its property, or any law, treaty,
regulation, or order of any Governmental Authority, or require any notice, filing, or other action
to or by any Governmental Authority; (c) all financial statements and other information received
from the Obligor by the Bank prior to the date hereof fairly and accurately present its financial
condition in accordance with generally accepted accounting principles, and no material adverse
change has occurred in the Obligor’s financial condition or business operations since the date
thereof; (d) there are no actions, suits, proceedings or governmental investigations pending or, to
the knowledge of the Obligor, threatened against the Obligor which could result in a material
adverse change in its financial condition or business operations; (e) the Obligor will promptly
submit to the Bank such information relating to the Obligor’s affairs (including but not limited to
annual financial statements) as the Bank may reasonably request; and (f) the Obligor and each
transaction and obligation underlying each Credit are and shall remain in compliance with all laws,
treaties, rules, and regulations of any Governmental Authority, including, without limitation,
foreign exchange control, United States foreign assets control, and currency reporting laws and
regulations, now or hereafter applicable.

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

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

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

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

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

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and professional advisors, to any person which in the ordinary course of its business makes
credit reference inquiries, to any person which may succeed to or participate in all or part of the
Bank’s interest hereunder, and as may be necessary or advisable for the preservation of the Bank’s
rights hereunder. This is a continuing Agreement and shall remain in full force and effect until
no obligations of the Obligor and no Credit exist hereunder; provided, however, that termination of
this Agreement shall not release the Obligor from any payment or performance that is subsequently
rescinded or recouped, and the obligation to make any such payment or performance shall continue
until paid or performed as if no such payment or performance ever occurred. Provisions concerning
payment, indemnification, increased costs, Taxes, immunity, and jurisdiction shall survive the
termination of this Agreement.

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

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

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

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

	 	 	 	 	 	 	 
	 	 	ENVIRONMENTAL TECTONICS CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Print Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 

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SCHEDULE I

Existing Letters of Credit

	 	 	 	 	 	 	 
	Number	 	Amount	 	Expiration Date
	258078

	 	 	500,000.00	 	 	11-30-07
	 
	260691

	 	 	21,341.75	 	 	6-30-07
	 
	18101978

	 	 	195,000.00	 	 	3-26-08
	 
	18101979

	 	 	585,000.00	 	 	3-26-08
	 
	18103494

	 	 	15,131.00	 	 	6-30-08
	 
	258206

	 	 	325,439.22	 	 	3-28-08
	 
	259738

	 	 	43,190.00	 	 	6-30-08
	 
	262405

	 	 	37,991.70	 	 	11-9-07
	 
	263283

	 	 	161,000.00	 	 	1-31-08
	 
	18102384

	 	 	710,526.32	 	 	12-31-07
	 
	18104125

	 	 	16,044.60	 	 	12-30-07
	 
	18104493

	 	 	614,579.00	 	 	6-30-08
	 
	18104578

	 	 	21,176.10	 	 	3-30-08
	 
	18104640

	 	 	1,256,743.00	 	 	6-30-08
	 
	18105243

	 	 	250,200.00	 	 	2-29-08

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