EXHIBIT 10.1
AMENDMENT TO LOAN DOCUMENTS
This AMENDMENT TO LOAN DOCUMENTS (this "Amendment") is made as of the
18th day of October, 2004, between ENVIRONMENTAL TECTONICS CORPORATION (the
"Borrower") and PNC BANK, NATIONAL ASSOCIATION (the "Bank").
BACKGROUND
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A. The Bank and the Borrower are parties to a Credit Agreement dated as
of February 18, 2003 (as heretofore amended or modified, the "Credit
Agreement"), pursuant to which the Bank agreed to make Revolving Credit Loans
and issue Letters of Credit to and on behalf of the Borrower.
B. The Bank and the Borrower are also parties to a Reimbursement and
Security Agreement dated as of February 18, 2003 (as heretofore amended or
modified, the "Reimbursement Agreement"), pursuant to which the Bank has issued
the Bond Letter of Credit.
C. The Borrower and the Bank have agreed to amend the Credit Agreement
and the Reimbursement Agreement in certain respects subject to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the legality and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
AGREEMENT
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1. Terms. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is hereby
amended as follows effective as of the date hereof:
(a) Section 2.1(f) of the Credit Agreement is hereby amended
and related to read in full as follows:
"(f) The Borrower shall at all times maintain deposits in the
Cash Collateral Account in an amount equal to or greater than
Two Million Five Hundred Thousand Dollars ($2,500,000). In
addition, the Borrower shall deliver to the Bank for deposit
in the Cash Collateral Account promptly following receipt by
Borrower of the payment of all or a portion of an invoice in
the approximate amount of $5,700,000 in respect of the sale of
a centrifuge to Malaysia an additional amount equal to the
payment required to be made on April 1, 2005 in respect of
principal and interest (the "Bond Payment Amount") on the
Bonds. The Borrower hereby pledges to the Bank, and grants a
security interest to the Bank in, the Cash Collateral Account
as security for the Obligations. The Bank will invest such
cash collateral in such short-term money-market investments as
to which the Bank and the Borrower mutually agree and the net
return on such investments shall be credited to the Cash
Collateral Account and constitute additional cash collateral.
So long as no additional Default or Event of Default occurs,
the Bank shall release from the Cash Collateral Account an
amount equal to the Bond Payment Amount at such time as the
Borrower is obligated to make the April 1, 2005 payment of
principal and interest on the Bonds. Following the occurrence
of a Default or Event of Default the Borrower may not withdraw
amounts credited to the Cash Collateral Account except upon
payment and performance in full of all Obligations, expiration
or surrender of all Letters of Credit and the Bond Letter of
Credit and termination of this Agreement."
(b) Section 6.1(c) of the Credit Agreement is hereby amended
and restated to read in full as follows:
"(c) Maintenance of Tangible Net Worth. Permit Consolidated
Tangible Net Worth (i) on the last day of each of the Fiscal
Quarters ending November 26, 2004 and February 25, 2005 to be
less than $14,500,000 or (ii) on the last day of any Fiscal
Quarter ending after February 25, 2005 to be less than the
Borrower's actual Consolidated Tangible Net Worth on February
25, 2005.
3. Amendment to Reimbursement Agreement. Section 2.02(b) of the
Reimbursement Agreement is hereby amended effective as of the date hereof by
deleting the reference to "2.00%" and substituting therefor "2.50%."
4. Amendments to Loan Documents. All references to the Credit Agreement
and the Reimbursement Agreement in any of the Loan Documents shall be deemed to
refer to the Credit Agreement and the Reimbursement Agreement, as amended by
this Amendment.
5. Ratification; Acknowledgment. Except as the provisions thereof have
been expressly amended or waived by this Amendment, the Credit Agreement and the
Reimbursement Agreement, and the other Loan Documents shall continue to be, and
shall remain, unaltered and in full force and effect in accordance with their
terms. The Borrower hereby affirms all the provisions of the Loan Documents, as
amended or modified by this Amendment.
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6. Representations and Warranties.
(a) The Borrower hereby certifies that (i) the representations
and warranties of the Borrower in the Credit Agreement and the Reimbursement
Agreement are true and correct in all material respects as of the date hereof,
as if made on the date hereof and (ii) no Event of Default and no event which
could become an Event of Default with the passage of time or the giving of
notice, or both, under the Credit Agreement or the other Loan Documents exists
on the date hereof.
(b) The Borrower further represents that it has all the
requisite power and authority to enter into and to perform its obligations under
this Amendment, and that the execution, delivery and performance of this
Amendment have been duly authorized by all requisite action and will not violate
or constitute a default under any provision of any applicable law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect or of the Articles of Incorporation or by-laws of the
Borrower, or of any indenture, note, loan or credit agreement, license or any
other agreement, lease or instrument to which the Borrower is a party or by
which the Borrower or any of its properties are bound.
(c) The Borrower also further represents that its obligation
to repay the Loans, together with all interest accrued thereon, is absolute and
unconditional, and there exists no right of set off or recoupment, counterclaim
or defense of any nature whatsoever to payment of the Loans.
(d) The Borrower also further represents that there have been
no changes to the Articles of Incorporation, by-laws or other organizational
documents of the Borrower since the most recent date true and correct copies
thereof were delivered to the Bank.
7. Conditions Precedent. The effectiveness of this Amendment is subject
to the fulfillment, to the satisfaction of the Bank and its counsel, of the
following conditions precedent:
(a) The Borrower shall have delivered to the Bank the
following, all of which shall be in form and substance satisfactory to the Bank
and shall be duly completed and executed:
(i) This Amendment, executed by the Borrower and by
Lenfest;
(ii) Such additional documents, certificates and
information as the Bank may require pursuant to the terms
hereof or otherwise reasonably request.
(b) After giving effect to the amendments contained herein,
the representations and warranties set forth in the Credit Agreement and the
Reimbursement Agreement shall be true and correct on and as of the date hereof.
(c) After giving effect to the amendments contained herein, no
Event of Default hereunder, and no event which, with the passage of time or the
giving of notice, or both, would become such an Event of Default shall have
occurred and be continuing as of the date hereof.
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8. No Waiver. Except as expressly provided herein, this Amendment does
not and shall not be deemed to constitute a waiver by the Bank of any Event of
Default, or of any event which with the passage of time or the giving of notice
or both would constitute an Event of Default, nor does it obligate the Bank to
agree to any further modifications to the Credit Agreement or the Reimbursement
Agreement or any other Loan Document or constitute a waiver of any of the Bank's
other rights or remedies.
9. Release and Indemnity. Recognizing and in consideration of the
Bank's agreement to the amendments set forth herein, the Borrower hereby waives
and releases the Bank and its officers, attorneys, agents, and employees from
any liability, suit, damage, claim, loss or expense of any kind or nature
whatsoever and howsoever arising the Borrower ever had or now has against any of
them arising out of or relating to the Bank's acts or omissions with respect to
this Amendment, the Credit Agreement, the Reimbursement Agreement, the other
Loan Documents or any other matters described or referred to herein or therein.
The Borrower further hereby agrees to indemnify and hold the Bank and its
officers, attorneys, agents and employees harmless from any loss, damage,
judgment, liability or expense (including counsel fees) suffered by or rendered
against the Bank on account of anything arising out of this Amendment, the
Credit Agreement, the Reimbursement Agreement, the other Loan Documents or any
other document delivered pursuant thereto up to and including the date hereof;
provided that, the Borrower shall not shall have any obligation hereunder to the
Bank with respect to indemnified liabilities arising from the gross negligence
or willful misconduct of the Bank.
10. Severability. Any provision of this Amendment 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.
11. Miscellaneous.
(a) Expenses. The Borrower agrees to pay all of the Bank's
out-of-pocket fees and expenses incurred in connection the preparation,
negotiation and execution of this Amendment and the other documents executed in
connection.
(b) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
(c) Successor and Assigns. The terms and provisions of this
Amendment shall be binding upon and shall inure to the benefit of the Borrower
and the Bank and their respective successors and assigns.
(d) Counterparts. This Amendment may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which shall constitute one and the same instrument.
(e) Headings. The headings of any paragraph of this Amendment
are for convenience only and shall not be used to interpret any provision
hereof.
(f) Modifications. No modification hereof or any agreement
referred to herein shall be binding or enforceable unless in writing and signed
on behalf of the party against whom enforcement is sought.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
ENVIRONMENTAL TECTONICS CORPORATION
By: /s/ Duane D. Deaner
Name: Duane D. Deaner
Title: Chief Financial Officer
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Jeffrey M. Prickitt
Name: Jeffrey M. Prickitt
Title: Assistant Vice-President
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ACKNOWLEDGMENT AND AGREEMENT
The undersigned acknowledges the provisions of the foregoing Amendment
to Loan Documents (the "Amendment") between Environmental Tectonics Corporation
(the "Borrower") and PNC Bank, National Association (the "Bank") and confirms
and agrees that its obligations under that certain Limited Guaranty Agreement
dated as of August 24, 2004 from the undersigned in favor of the Bank in respect
of certain obligations of the Borrower to the Bank shall otherwise be unimpaired
by the Amendment and are hereby ratified and confirmed in all respects.
/s/ H.F. Lenfest
H.F. Lenfest
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