Exhibit 10.11
GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of February 18,
2003, is made by ENTERTAINMENT TECHNOLOGY CORPORATION, a Pennsylvania
corporation, and ETC DELAWARE, INC., a Delaware corporation (collectively, the
"Guarantors"), in favor of H.F. LENFEST (the "Lender").
W I T N E S S E T H :
WHEREAS, Environmental Tectonics Corporation (the "Borrower")
and the Lender are parties to a Note and Warrant Purchase Agreement, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time, the "Purchase Agreement");
WHEREAS, the Purchase Agreement provides that, as a condition
precedent to the making of a loan thereunder by the Lender to the Borrower (the
"Loan"), the Guarantors must execute a guaranty in favor of the Lender;
WHEREAS, the Guarantors will derive substantial benefits from
the Purchase Agreement and the
Loan;
WHEREAS, pursuant to the terms of a Credit Agreement (the
"Credit Agreement") dated the date hereof between the Borrower and PNC Bank,
National Association ("PNC"), PNC is extending credit facilities to the
Borrower;
WHEREAS, it is a condition precedent to the obligation of PNC
to extend the credit facilities to the Borrower under the Credit Agreement, that
the Lender enter into a subordination agreement (the "Subordination Agreement")
with PNC, pursuant to which Lender agrees to subordinate the obligations of the
Guarantors to Lender hereunder to the obligations of the Guarantors to PNC,
pursuant to the terms of the Guaranty by Guarantors in favor of PNC (the "PNC
Guaranty"); and
WHEREAS, the rights granted to Lender herein shall be subject
to the terms and conditions of the Subordination Agreement.
NOW, THEREFORE, in consideration of the premises and to induce
the Lender to provide the Loan, the Guarantors, intending to be legally bound,
hereby agree with the Lender as follows:
1. Defined Terms. Unless otherwise defined herein, terms, which
are defined in the Purchase Agreement and used herein, are so used as so
defined. As used herein, "Obligations" shall mean the unpaid principal of (which
such term shall include any payments of principal Lender is compelled to
surrender or disgorge) and interest on (including, without limitation, interest
accruing after the maturity of the Loan and interest accruing after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
the Loan, and all other obligations and liabilities of the Borrower to the
Lender whether direct or indirect, absolute or contingent, liquidated or
unliquidated, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Purchase Agreement, the
Note, the other Transaction Documents and any other document made, delivered or
given in connection therewith or herewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel to the
Lender that are required to be paid by the Borrower pursuant to the terms of the
Purchase Agreement or any other Transaction Document) or otherwise. Capitalized
terms which are not defined herein have the meaning given to such terms in the
Purchase Agreement.
2. Guaranty. This is a Guaranty of payment and not of
collectability. The Guarantors hereby jointly and severally, unconditionally and
irrevocably guarantee to the Lender, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations. The Guarantors further agree to
pay any and all reasonable expenses (including, without limitation, all
reasonable fees and disbursements of counsel), which may be paid or incurred by
the Lender in enforcing, or obtaining advice of counsel in respect of, any of
its rights under this Guaranty. This Guaranty shall remain in full force and
effect until the Obligations are paid in full and the Credit Commitment is
terminated, notwithstanding that from time to time prior thereto the Borrower
may be free from any Obligations.
The Guarantors agree that whenever, at any time or from time
to time, either shall make any payment to the Lender on account of its liability
hereunder, it will notify the Lender in writing that such payment is made under
this Guaranty for such purpose. No payment or payments made by the Borrower or
any other Person or received or collected by the Lender from the Borrower or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application, at any time or from time to time, in reduction of
or in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of the Guarantors hereunder which liability
shall, notwithstanding any such payment or payments, remain in full force and
effect until the Obligations are paid in full and the Credit Commitment is
terminated.
3. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Lender is hereby irrevocably authorized
at any time and from time to time, without notice to the Guarantors, any such
notice being hereby waived by the Guarantors, to set off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), and any other credits, indebtedness or claims, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Lender to or for the credit or the account of the
Guarantors, in such amounts as the Lender may elect, on account of the
liabilities of the Guarantors hereunder and claims of every nature and
description of the Lender against the Guarantors, whether arising hereunder,
under the Purchase Agreement, the Note, or otherwise, as the Lender may elect,
whether or not the Lender has made any demand for payment and although such
liabilities and claims may be contingent or unmatured. The Lender shall notify
the Guarantors promptly of any such set-off made by it and the application made
by it of the proceeds thereof, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Lender under this paragraph are in addition to other rights and remedies
(including, without limitation, other rights of set-off), which the Lender may
have.
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4. No Subrogation. Notwithstanding any payment or payments made
by the Guarantors hereunder, or any set-off or application of funds of the
Guarantors by the Lender, the Guarantors shall not be entitled to be subrogated
to any of the rights of the Lender against the Borrower or against any
collateral security or guaranty or right of offset held by the Lender for the
payment of the Obligations, nor shall the Guarantors seek any reimbursement or
indemnification from the Borrower in respect of payments made by the Guarantors
hereunder, until all amounts owing to the Lender by the Borrower on account of
the Obligations are paid in full and the Credit Commitment is terminated. If any
amount shall be paid to the Guarantors on account of such subrogation or other
rights at any time when all of the Obligations shall not have been paid in full,
such amount shall be held by the Guarantors in trust for the Lender segregated
from other assets of the Guarantors, and shall forthwith upon receipt by the
Guarantors, be turned over to the Lender in the exact form received by the
Guarantors (duly indorsed by the Guarantors to the Lender, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Lender may determine.
5. No Marshalling. Lender has no obligation to marshal any assets
in favor of either Guarantor, or against or in payment of (i) the Note, or (ii)
any other obligation owed to Lender by Borrower or either Guarantor.
6. Waivers; Amendments, etc. with respect to the Obligations.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against each Guarantor, and without notice to or
further assent by each Guarantor, any demand for payment of any of the
Obligations made by the Lender may be rescinded by the Lender, and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guaranty therefor or
right of offset with respect thereto may from time to time, in whole or in part,
be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Lender, and the Purchase Agreement, the Note, the
other Transaction Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Lender may deem advisable from time to time, and any
collateral security, guaranty or right of offset at any time held by the Lender
for the payment of the Obligations may, be sold, exchanged, waived, surrendered
or released. The Lender shall not have any obligation to protect, secure,
perfect or insure any lien at any time held by it as security for the
Obligations or for this Guaranty or any property subject thereto.
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7. Guaranty Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Lender upon this Guaranty
or acceptance of this Guaranty; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Guaranty; and all dealings between the Borrower or the Guarantors, on
the one hand, and the Lender, on the other, shall likewise be conclusively
presumed to have been had or consummated in reliance upon this Guaranty. Each
Guarantor waives notice of acceptance of this Guaranty, notice of extensions of
credit to the Borrower from time to time, notice of default, diligence,
presentment, notice of dishonor, protest and demand for payment. This Guaranty
is and shall be construed as a continuing, absolute and unconditional Guaranty
of payment without regard to (a) the validity or enforceability of the Purchase
Agreement, the Note, any of the other Transaction Documents, any of the
Obligations or any collateral security therefor or guaranty or right of offset
with respect thereto at any time or from time to time held by or for the benefit
of the Lender, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Borrower against the Lender, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of the Borrower or the Guarantors) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Obligations, or of the Guarantors under this
Guaranty, in bankruptcy or in any other instance. This Guaranty is intended to
be a surety of each Guarantor on behalf of Lender. When the Lender is pursuing
its rights and remedies hereunder against the Guarantors, the Lender may, but
shall be under no obligation to, pursue such rights and remedies as it may have
against the Borrower or any other Person or against any collateral security or
guaranty for the Obligations or any right of offset with respect thereto, and
any failure by the Lender to pursue such other rights or remedies or to collect
any payments from the Borrower or any such other Person or to realize upon such
collateral security or guaranty or to exercise any such right of offset, or any
release of the Borrower or any such other Person or of any such collateral
security, Guaranty or right of offset, shall not relieve the Guarantors of any
joint and several liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Lender against the Guarantors.
8. Reinstatement. This Guaranty shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations is rescinded or must otherwise be restored or
returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Borrower or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for the
Borrower or any substantial part of its property, or for any other reason, all
as though such payments had not been made.
9. Payments. Each Guarantor hereby agrees that the Obligations
will be paid to the order of the Lender without set-off or counterclaim in
Dollars in immediately available funds at the office of the Lender set forth in
Section 14 hereof.
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10. Power to Confess Judgment. The following paragraph sets forth
a warrant of authority for any attorney to confess judgment against the
undersigned Guarantors. In granting this warrant of attorney to confess judgment
against the undersigned Guarantors, the undersigned Guarantors, following
consultation with separate counsel for the undersigned Guarantors and with
knowledge of the legal effect hereof, hereby knowingly, intentionally,
voluntarily and unconditionally waive any and all rights the undersigned
Guarantors have or may have to prior notice and an opportunity for hearing under
the respective constitutions and laws of the United States of America, the
Commonwealth of Pennsylvania, the State of Delaware, or elsewhere. Each
Guarantor hereby empowers any attorney of any court of record, after the
occurrence of any Event of Default hereunder, to appear for each Guarantor and,
with or without complaint filed, confess judgment, or a series of judgments,
against each Guarantor in favor of the Lender for the amount of the Obligations
and an attorneys' commission of the greater of three percent (3%) of such
principal and interest or $5,000 added as a reasonable attorneys' fee (but in no
event shall such attorney's fee exceed those fees actually and reasonably
incurred notwithstanding the amount confessed) and for doing so this Guaranty or
a copy verified by affidavit shall be a sufficient warrant. Each Guarantor
hereby forever waives and releases all procedural 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 with respect to
such judgment or judgments.
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 Lender shall elect until such time as the Lender shall have
received payment in full of the Obligations and costs.
11. Severability. Any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12. Paragraph Headings. The paragraph headings used in this
Guaranty are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
13. No Waiver; Cumulative Remedies. The Lender shall not by any
act (except by a written instrument pursuant to paragraph 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Lender of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Lender would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
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14. Waivers and Amendments; Successors and Assigns; Additional
Guarantors; Governing Law. None of the terms or provisions of this Guaranty may
be waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Guarantors and the Lender. This Guaranty shall be
binding upon the successors and assigns of the Guarantors and shall inure to the
benefit of the Lender and its successors and assigns. If at any time subsequent
to the date hereof any new Subsidiary of the Borrower becomes a party to this
Guaranty (an "Additional Guarantor") as provided in Section 4.1(c)(iii) of the
Purchase Agreement by executing a joinder hereto, the obligations of such
Additional Guarantor and any other Guarantor hereunder shall be joint and
several and all references herein to the Guarantors shall include such
Additional Guarantor. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA.
15. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three days after being
deposited in the mail, postage prepaid, or, in the case of facsimile notice,
when sent during normal business hours with electronic confirmation or otherwise
when received, addressed as set forth below for the Lender and as set forth on
the signature page hereto for each Guarantor:
Lender: The Lenfest Group
1332 Enterprise Drive
West Chester, PA 19380
Attention: H.F. Lenfest
Thomas K. Pasch, Esquire
Telecopy: (610) 918-8442
16. Submission to Jurisdiction; Waivers.
(a) Each Guarantor hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Guaranty or the other Transaction
Documents, or for recognition and enforcement of any judgment in respect thereof
to the non-exclusive general jurisdiction of the courts of the Commonwealth of
Pennsylvania, the courts of the United States of America for the Eastern
District of Pennsylvania, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives to the extent permitted by applicable law any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agree not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to it at its
address set forth on the signature page hereto or at such other address of which
the Lender shall have been notified;
(iv) waives and hereby acknowledges that it is estopped
from raising any objection based on forum non conveniens, any claim that any of
the above-referenced courts lack proper venue or any objection that any of such
courts lack personal jurisdiction over it so as to prohibit such courts from
adjudicating any issues raised in a complaint filed with such courts against
such Guarantor concerning this Guaranty or the other Transaction Documents;
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(v) acknowledges and agree that the choice of forum
contained in this paragraph 15 shall not be deemed to preclude the enforcement
of any judgment obtained in any forum or the taking of any action under this
Guaranty or any other Transaction Documents to enforce the same in any
appropriate jurisdiction;
(vi) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or consequential
damages; and
(vii) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction.
(b) Each Guarantor hereby unconditionally waives trial by jury in
any legal action or proceeding relating to this Guaranty or any other
Transaction Document and for any mandatory counterclaim therein, including
without limitation any action or proceeding referred to in paragraph (a) above.
Each Guarantor acknowledges that it has read and understood
all the provisions of this Guaranty, including the waiver of jury trial and
confession of judgment, and has been advised by counsel as necessary or
appropriate.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty
to be duly executed and delivered as of the date first above written.
ENVIRONMENTAL TECTONICS CORPORATION
By: /s/ Duane Deaner
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Name: Duane Deaner
Title: Secretary
Address: c/o Environmental Tectonics Corporation
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125 James Way
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Southampton, PA 18966
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ETC DELAWARE, INC.
By: /s/ Duane Deaner
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Name: Duane Deaner
Title: Treasurer
Address: c/o Environmental Tectonics Corporation
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125 James Way
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Southampton, PA 18966
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