Exhibit 10.5
Pledge Agreement
(Bank Deposits)
[PNCBANK LOGO]
THIS PLEDGE AGREEMENT, dated as of this 18th day of February, 2003, is
made by ENVIRONMENTAL TECTONICS CORPORATION (the "Pledgor"), with an address at
000 Xxxxx Xxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, in favor of PNC BANK, NATIONAL
ASSOCIATION (the "Secured Party"), with an address at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 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, and to all other direct or indirect
subsidiaries of The PNC Financial Services Group, Inc., all of the Pledgor's
right, title and interest in and to the accounts, deposits, deposit accounts,
and certificates of deposit, whether negotiable or nonnegotiable, and all
security entitlements of the Pledgor with respect thereto, whether now owned or
hereafter acquired, including those entries on the records of the issuing or
depository institution, and any and all renewals, substitutions, replacements
and proceeds thereof and all income, interest and other distributions thereon
maintained in the name of the Pledgor by the issuing institution (collectively,
the "Collateral"), as more fully described on Exhibit A attached hereto and made
a part 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 or to any other direct or indirect subsidiary of
The PNC Financial Services Group, Inc., of any kind or nature, present or future
(including any interest accruing thereon after maturity, or after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to the Pledgor, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect (including those acquired by assignment or
participation), absolute or contingent, joint or several, due or to become due,
now existing or hereafter arising, whether or not (i) evidenced by any note,
guaranty or other instrument, (ii) arising under any agreement, instrument or
document, (iii) for the payment of money, (iv) arising by reason of an extension
of credit, opening of a letter of credit, loan, equipment lease or guarantee,
(v) under any interest or currency swap, future, option or other interest rate
protection or similar agreement, (vi) under or by reason of any foreign currency
transaction, forward, option or other similar transaction providing for the
purchase of one currency in exchange for the sale of another currency, or in any
other manner, or (vii) arising out of overdrafts on deposit or other accounts or
out of electronic funds transfers (whether by wire transfer or through automated
clearing houses or otherwise) or out of the return unpaid of, or other failure
of the Secured Party to receive final payment for, any check, item, instrument,
payment order or other deposit or credit to a deposit or other account, or out
of the Secured Party's non-receipt of or inability to collect funds or otherwise
not being made whole in connection with depository or other similar
arrangements; and any amendments, extensions, renewals and increases of or to
any of the foregoing, and all costs and expenses of the Secured Party incurred
in the documentation, negotiation, modification, enforcement, collection and
otherwise in connection with any of the foregoing, including reasonable
attorneys' fees and expenses (hereinafter referred to collectively as the
"Obligations").
3. Representations and Warranties. The Pledgor represents and warrants
to the Secured Party 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) demand by the Secured Party under any of the
Obligations that have a demand feature, (iv) the failure by the Pledgor to
perform any of its obligations hereunder, (v) 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,
or (vi) the failure of the Secured Party to have a perfected first priority
security interest in the Collateral, (vii) any restriction is imposed on the
pledge or transfer of any of the Collateral after the date of this Agreement
without the Secured Party's prior written consent, then the Secured Party is
authorized in its discretion to declare any or all of the Obligations to be
immediately due and payable without demand or notice, which are expressly
waived, and may exercise any one or more of the rights and remedies granted
pursuant to this Pledge Agreement or given to a secured party under the Uniform
Commercial Code of the applicable state, as it may be amended from time to time,
or otherwise at law or in equity, including without limitation the right to sell
or otherwise dispose of any or all of the Collateral at public or private sale,
with or without advertisement thereof, upon such terms and conditions as it may
deem advisable and at such prices as it may deem best.
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 or, if the Pledgor is not borrowing from the Secured Party or providing
a guaranty of the Borrower's Obligations, the Borrower will be liable therefor
to the Secured Party; provided, however, that nothing contained herein will
obligate the Secured Party to proceed against the Pledgor, the Borrower 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.
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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 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 or the Borrower 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.
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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 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 or under any Control 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 State 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
STATE WHERE THE SECURED PARTY'S OFFICE INDICATED ABOVE IS LOCATED, 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. Authorization to Obtain Credit Reports. By signing below, each
Pledgor who is an individual provides written authorization to the Secured Party
or its designee (and any assignee or potential assignee hereof) to obtain the
Pledgor's personal credit profile from one or more national credit bureaus. Such
authorization shall extend to obtaining a credit profile in considering this
Pledge Agreement and subsequently for the purposes of update, renewal or
extension of such credit or additional credit and for reviewing or collecting
the resulting account.
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17. 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.
WITNESS the due execution hereof as a document under seal, as of the date first
written above.
ATTEST: ENVIRONMENTAL TECTONICS
CORPORATION
/s/ Xxx X. Xxxxx By: /s/ Xxxxx Xxxxxx
------------------------------------ ---------------------------------
(SEAL)
Print Name: Xxx X. Xxxxx Print Name: Xxxxx Xxxxxx
------------------------- -------------------------
Title: Corporate Secretary Title: C.F.O.
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EXHIBIT A
TO PLEDGE AGREEMENT
Depository Institution Account and Number
---------------------- ------------------
PNC Bank, National Association Checking/8606082879
PNC Bank, National Association Money Market/8606082887
