Pledge Agreement (Bank Deposits)
Exhibit 1.3
| Pledge Agreement (Bank Deposits) |
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THIS PLEDGE AGREEMENT, dated as of this 16th day of November, 2009, is made by
ENVIRONMENTAL TECTONICS CORPORATION (the “Pledgor”), with an address at 000 Xxxxx Xxx,
Xxxxxxxxxxx, XX 00000, in favor of PNC BANK, NATIONAL ASSOCIATION (the “Secured Party”), with an
address at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000.
1. Pledge. In order to induce the Secured Party to extend the Obligations (as defined
below), the Pledgor hereby grants a security interest in and pledges to the Secured Party all of
the Pledgor’s right, title and interest in and to the deposit account established at the Secured
Party, as more fully described on Exhibit A attached hereto and made a part hereof (the “Account”)
and any and all replacements and proceeds thereof and all income, interest and other distributions
thereon maintained in the name of the Pledgor by the Secured Party (collectively, the
“Collateral”). The Pledgor shall make additional cash deposits to the Account from time to time so
that the Collateral has a fair market value of $5,422,405 no later than nine (9) months after the
date hereof.
The Pledgor agrees that (i) the Secured Party shall have the sole and exclusive right of
withdrawal of the Collateral, (ii) the Pledgor shall have no right of withdrawal of the
Collateral, and (iii) the Secured Party may make appropriate notations in its books and records
(electronic or otherwise) to effectuate the foregoing.
2. Obligations Secured. The Collateral secures payment of all loans, advances, debts,
liabilities, obligations, covenants and duties owing from the Pledgor to the Secured Party, of any
kind or nature, present or future (including any interest accruing thereon after maturity, or after
the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding relating to the Pledgor, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or indirect (including those acquired by
assignment or participation), absolute or contingent, joint or several, due or to become due, now
existing or hereafter arising, under the line of credit established under that Letter Agreement
between the Pledgor and the Secured Party dated as of the date hereof (as hereafter amended,
modified or supplemented, the “Credit Agreement”), the Reimbursement Agreement for Letters of
Credit from the Pledgor in favor of the Secured Party dated as of the date hereof (as hereafter
amended, modified or supplemented, the “Reimbursement Agreement”), the Letters of Credit (as such
term is defined in the Credit Agreement) heretofore or hereafter issued pursuant thereto; and any
amendments, extensions, renewals and increases of or to any of the foregoing, and all costs and
expenses of the Secured Party incurred in the documentation, negotiation, modification,
enforcement, collection and otherwise in connection with any of the foregoing, including reasonable
attorneys’ fees and expenses (hereinafter referred to collectively as the “Obligations”).
3. Representations and Warranties. The Pledgor represents and warrants to the
Secured Party that (a) no prior lien or encumbrance exists on the Collateral, and the Pledgor will
not grant or suffer to exist any such lien or encumbrance in the future, other than in favor of the
Secured Party, and (b) the Pledgor is the legal owner of the Collateral and has the right to pledge
and grant a security interest in the Collateral without the consent of any other party other than
the issuing institution, which the Pledgor has caused or will cause to execute the Acknowledgment
in substantially the form attached hereto.
4. Default.
4.1. If any of the following occur (each an “Event of Default”): (i) any Event of Default (as
defined in any of the Obligations), (ii) any default under any of the Obligations that does not
have a defined set of “Events of Default” and the lapse of any notice or cure period provided in
such Obligations with respect to such default, (iii) the failure by the Pledgor to perform any of
its obligations hereunder, (iv) the falsity, inaccuracy or material breach by the Pledgor of any
written warranty, representation or statement made or furnished to the Secured Party by or on
behalf of the Pledgor, (v) the failure of the Secured Party to have a perfected first priority
security interest in the Collateral, or (vi) any restriction is imposed on the pledge or transfer
of any of the Collateral after the date of this Agreement without the Secured Party’s prior written
consent, then the Secured
Party is authorized in its discretion to declare any or all of the Obligations to be immediately
due and payable without demand or notice, which are expressly waived, and may exercise any one or
more of the rights and remedies granted pursuant to this Pledge Agreement or given to a secured
party under the Uniform Commercial Code of the applicable state, as it may be amended from time to
time, or otherwise at law or in equity, including without limitation the right to sell or
otherwise dispose of any or all of the Collateral at public or private sale, with or without
advertisement thereof, upon such terms and conditions as it may deem advisable and at such prices
as it may deem best.
4.2. The Secured Party is authorized to draw the funds represented by the Collateral, in whole
or in part, and to do all acts necessary to draw such funds, to apply to all Obligations secured
hereby, whether declared immediately due and payable or otherwise, and the officers of the issuing
institution are authorized and directed to pay the same to the Secured Party on demand.
4.3. The net proceeds arising from the disposition of the Collateral after deducting expenses
incurred by the Secured Party will be applied to the Obligations in the order determined by the
Secured Party. If any excess remains after the discharge of all of the Obligations, the same will
be paid to the Pledgor. If after exhausting all of the Collateral there is a deficiency, the
Pledgor will be liable therefor to the Secured Party; provided, however, that nothing
contained herein will obligate the Secured Party to proceed against the Pledgor or any other party
obligated under the Obligations or against any other collateral for the Obligations prior to
proceeding against the Collateral.
4.4. If any demand is made at any time upon the Secured Party for the repayment or recovery of
any amount received by it in payment or on account of any of the Obligations and if the Secured
Party repays all or any part of such amount by reason of any judgment, decree or order of any court
or administrative body or by reason of any settlement or compromise of any such demand, the Pledgor
will be and remain liable for the amounts so repaid or recovered to the same extent as if such
amount had never been originally received by the Secured Party. The provisions of this section
will be and remain effective notwithstanding the release of any of the Collateral by the Secured
Party in reliance upon such payment (in which case the Pledgor’s liability will be limited to an
amount equal to the fair market value of the Collateral determined as of the date such Collateral
was released) and any such release will be without prejudice to the Secured Party’s rights
hereunder and will be deemed to have been conditioned upon such payment having become final and
irrevocable. This Section shall survive the termination of this Pledge Agreement.
5. Interest and Premiums. All interest and premiums declared or paid on the Collateral
shall be the property of the Pledgor but shall remain as Collateral, subject to the restrictions
contained in this Agreement, unless released by the Secured Party, in its discretion, following a
request from Pledgor. At any time after the occurrence of an Event of Default, the Secured Party
shall be entitled to apply all interest and premiums declared or paid on the Collateral in
accordance with the provisions of Section 4 above.
6. Further Assurances. By its signature hereon, the Pledgor hereby irrevocably
authorizes the Secured Party, at any time and from time to time, to execute (on behalf of the
Pledgor), file and record against the Pledgor any notice, financing statement, continuation
statement, amendment statement, instrument, document or agreement under the Uniform Commercial Code
that the Secured Party may consider necessary or desirable to create, preserve, continue, perfect
or validate any security interest granted hereunder or to enable the Secured Party to exercise or
enforce its rights hereunder with respect to such security interest. Without limiting the
generality of the foregoing, the Pledgor hereby irrevocably appoints the Secured Party as the
Pledgor’s attorney-in-fact to do all acts and things in the Pledgor’s name that the Secured Party
may deem necessary or desirable. This power of attorney is coupled with an interest with full power
of substitution and is irrevocable. The Pledgor hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof.
7. Notices. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder (“Notices”) must be in writing and will be effective
upon receipt. Notices may be given in any manner to which the parties may separately agree,
including electronic mail. Without limiting the foregoing, first-class mail, facsimile transmission
and commercial courier service are hereby agreed to as acceptable methods for giving Notices.
Regardless of the manner in which provided, Notices may be sent to a party’s address as set
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forth above or to such other address as either the Pledgor or the Secured Party may give to the
other for such purpose in accordance with this section.
8. Preservation of Rights, (a) No delay or omission on the Secured Party’s part to
exercise any right or power arising hereunder will impair any such right or power or be considered
a waiver of any such right or power, nor will the Secured Party’s action or inaction impair any
such right or power. The Secured Party’s rights and remedies hereunder are cumulative and not
exclusive of any other rights or remedies which the Secured Party may have under other agreements,
at law or in equity.
(b) The Secured Party may, at any time and from time to time, without notice to or the consent
of the Pledgor unless otherwise expressly required pursuant to the terms of the Obligations, and
without impairing or releasing, discharging or modifying the Pledgor’s liabilities hereunder, (i)
change the manner, place, time or terms of payment or performance of or interest rates on, or other
terms relating to, any of the Obligations; (ii) renew, substitute, modify, amend or alter, or grant
consents or waivers relating to any of the Obligations, any other pledge or security agreements, or
any security for any Obligations; (iii) apply any and all payments by whomever paid or however
realized including any proceeds of any collateral, to any Obligations of the Pledgor in such order,
manner and amount as the Secured Party may determine in its sole discretion; (iv) deal with any
other person with respect to any Obligations in such manner as the Secured Party deems appropriate
in its sole discretion; (v) substitute, exchange or release any security or guaranty; or (vi) take
such actions and exercise such remedies hereunder as provided herein. The Pledgor hereby waives (a)
presentment, demand, protest, notice of dishonor and notice of non-payment and all other notices to
which the Pledgor might otherwise be entitled, and (b) all defenses based on suretyship or
impairment of collateral.
9. Illegality. In case any one or more of the provisions contained in this Pledge
Agreement should be invalid, illegal or unenforceable in any respect, it shall not affect or impair
the validity, legality and enforceability of the remaining provisions in this Pledge Agreement.
10. Changes in Writing. No modification, amendment or waiver of, or consent to any
departure by the Pledgor from, any provision of this Pledge Agreement will be effective unless made
in a writing signed by the Secured Party, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice to or demand on the Pledgor
in any case will entitle the Pledgor to any other or further notice or demand in the same, similar
or other circumstance.
11. Entire Agreement. This Pledge Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, between the Pledgor and the Secured Party with respect to
the subject matter hereof.
12. Successors and Assigns. This Pledge Agreement will be binding upon and inure to
the benefit of the Pledgor and the Secured Party and their respective heirs, executors,
administrators, successors and assigns; provided, however, that the Pledgor may not assign
this Pledge Agreement in whole or in part without the Secured Party’s prior written consent and the
Secured Party at any time may assign this Pledge Agreement in whole or in part.
13. Interpretation. In this Pledge Agreement, unless the Secured Party and the Pledgor
otherwise agree in writing, the singular includes the plural and the plural the singular;
references to statutes are to be construed as including all statutory provisions consolidating,
amending or replacing the statute referred to; the word “or” shall be deemed to include “and/or”,
the words “including”, “includes” and “include” shall be deemed to be followed by the words
“without limitation”; and references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications to such instruments, but only
to the extent such amendments and other modifications are not prohibited by the terms of this
Pledge Agreement. Section headings in this Pledge Agreement are included for convenience of
reference only and shall not constitute a part of this Pledge Agreement for any other purpose. If
this Pledge Agreement is executed by more than one party as Pledgor, the obligations of such
persons or entities will be joint and several.
14. Indemnity. The Pledgor agrees to indemnify each of the Secured Party, each legal
entity, if any, who controls, is controlled by or is under common control with the Secured Party,
and each of their respective
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directors, officers and employees (the “Indemnified Parties”), and to hold each Indemnified Party
harmless from and against, any and all claims, damages, losses, liabilities and expenses (including
all fees and charges of internal or external counsel with whom any Indemnified Party may consult
and all expenses of litigation or preparation therefor) which any Indemnified Party may incur, or
which may be asserted against any Indemnified Party by any person, entity or governmental authority
(including any person or entity claiming derivatively on behalf of the Pledgor), in connection with
or arising out of or relating to the matters referred to in this Pledge Agreement, whether (a)
arising from or incurred in connection with any breach of a representation, warranty or covenant by
the Pledgor, or (b) arising out of or resulting from any suit, action, claim, proceeding or
governmental investigation, pending or threatened, whether based on statute, regulation or order,
or tort, or contract or otherwise, before any court or governmental authority; provided,
however, that the foregoing indemnity agreement shall not apply to claims, damages, losses,
liabilities and expenses solely attributable to an Indemnified Party’s gross negligence or willful
misconduct. The indemnity agreement contained in this Section shall survive the termination of this
Pledge Agreement. The Pledgor may participate at its expense in the defense of any such action or
claim.
15. Governing Law and Jurisdiction. This Pledge Agreement has been delivered to and
accepted by the Secured Party and will be deemed to be made in the Commonwealth of Pennsylvania
where the Secured Party’s office indicated above is located. This Pledge Agreement will be
interpreted and the rights and liabilities of the Pledgor and the Secured Party determined in
accordance with the laws of the Commonwealth of Pennsylvania, excluding its conflict of laws rules.
The Pledgor hereby irrevocably consents to the exclusive jurisdiction of any state or federal
court in the county or judicial district where the Secured Party’s office indicated above is
located; provided that nothing contained in this Pledge Agreement will prevent the Secured Party
from bringing any action, enforcing any award or judgment or exercising any rights against the
Pledgor individually, against any security or against any property of the Pledgor within any other
county, state or other foreign or domestic jurisdiction. The Pledgor acknowledges and agrees that
the venue provided above is the most convenient forum for both the Secured Party and the Pledgor.
The Pledgor waives any objection to venue and any objection based on a more convenient forum in any
action instituted under this Pledge Agreement.
16. WAIVER OF JURY TRIAL. THE PLEDGOR IRREVOCABLY WAIVES ANY AND ALL RIGHT THE
PLEDGOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO
THIS PLEDGE AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS PLEDGE AGREEMENT OR ANY
TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE PLEDGOR ACKNOWLEDGES THAT THE FOREGOING
WAIVER IS KNOWING AND VOLUNTARY.
The Pledgor acknowledges that it has read and understood all the provisions of this Pledge
Agreement, including the waiver of jury trial, and has been advised by counsel as necessary or
appropriate.
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WITNESS the due execution hereof as a document under seal, as of the date first written above.
| ENVIRONMENTAL TECTONICS CORPORATION | ||||||
| By: | /s/ Xxxxx X. Xxxxxx | |||||
| Print Name: Xxxxx X. Xxxxxx | (SEAL) | |||||
| Title: C.F.O. | ||||||
Pledge Agreement
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EXHIBIT A
TO PLEDGE AGREEMENT
TO PLEDGE AGREEMENT
Account No. 31700343665 at PNC Bank, National Association.
A-1
