8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported) August 24, 2004

Environmental Tectonics Corporation

(Exact Name of Registrant as Specified in Charter)

Pennsylvania	1-10655	23-1714256
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

County Line Industrial Park, Southampton, Pennsylvania	18966
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (215) 355-9100

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

          Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

          Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

          Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))

          Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Item 1.01. Entry into a Material Definitive Agreement.

          On August 24, 2004, Environmental Tectonics Corporation (“ETC”) entered into an Amendment to its Credit Agreement with PNC Bank, National Association (“PNC Bank”), dated as of February 18, 2003 (the “PNC Credit Amendment Agreement”). Pursuant to the PNC Credit Agreement Amendment, PNC Bank waived certain Events of Default under the Credit Agreement between ETC and PNC Bank and, in connection therewith, PNC Bank reduced the amount of financing available to ETC to $5,000,000, subject to the terms and conditions of the PNC Credit Agreement Amendment. Also, H.F. Lenfest executed a Limited Guaranty Agreement guaranteeing certain obligations of ETC to PNC Bank and, in connection therewith, ETC issued a Stock Purchase Warrant to H.F. Lenfest pursuant to which Mr. Lenfest is entitled to purchase up to 200,000 shares of ETC common stock at an exercise price equal to the lesser of $4.00 per share or 2/3 of the average daily high and low closing price of ETC’s common stock during the 25 day trading period immediately preceding the date of exercise. Copies of these documents are attached as Exhibits 4.1, 10.1, 10.2 and 10.3.

 

Item 9.01. Entry into a Material Definitive Agreement.

(c) Exhibits.

     The following exhibits are filed herewith:

4.1	Stock Purchase Warrant, dated September 7, 2004, issued by ETC in favor of H.F. Lenfest.
10.1	Amendment to Credit Agreement, dated as of August 24, 2004, between ETC and PNC Bank, National Association.
10.2	Second Amended and Restated Revolving Credit Note, dated August 24, 2004, issued by ETC in favor of PNC Bank, National Association.
10.3	Limited Guaranty Agreement, dated as of August 24, 2004 of H.F. Lenfest in favor of PNC Bank, National Association.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENVIRONMENTAL TECTONICS CORPORATION
	Registrant
Date: September 8, 2004	By	/s/	Duane D. Deaner
			Duane D. Deaner
			Chief Financial Officer

EXHIBIT INDEX

     The following exhibits are filed herewith:

4.1	Stock Purchase Warrant, dated September 7, 2004, issued by ETC in favor of H.F. Lenfest.
10.1	Amendment to Credit Agreement, dated as of August 24, 2004, between ETC and PNC Bank, National Association.
10.2	Second Amended and Restated Revolving Credit Note, dated August 24, 2004, issued by ETC in favor of PNC Bank, National Association.
10.3	Limited Guaranty Agreement, dated as of August 24, 2004 of H.F. Lenfest in favor of PNC Bank, National Association.

EX-4

                                                                     Exhibit 4.1

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXCEPT AS OTHERWISE SET FORTH HEREIN, NEITHER THIS WARRANT NOR ANY OF SUCH
SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR PURSUANT TO AN
EXEMPTION THEREFROM.

SEPTEMBER 7, 2004                                            WARRANT TO PURCHASE
                                                          SHARES OF COMMON STOCK

                       ENVIRONMENTAL TECTONICS CORPORATION
                             STOCK PURCHASE WARRANT

         THIS CERTIFIES THAT, for value received, H. F. Lenfest, or his
registered assigns (each, a "HOLDER"), is entitled to purchase from
Environmental Tectonics Corporation, a Pennsylvania corporation (the "COMPANY"),
at any time or from time to time during the period specified in Section 1
hereof, Two Hundred Thousand (200,000) fully paid and nonassessable shares of
the Company's common stock, par value $0.05 per share (the "COMMON STOCK"), at
an exercise price equal to the lesser of (i) $4.00 per share or (ii) 66 2/3
percent of the Market Price (as hereinafter defined), subject to adjustment as
provided herein (the "EXERCISE PRICE"). The term "WARRANT SHARES," as used
herein, refers to the shares of Common Stock purchasable hereunder. This Warrant
has been issued pursuant to the terms of an agreement, dated as of September 7,
2004, by and between the Company and H. F. Lenfest. The term "WARRANTS" means
this Warrant and any warrants issued as a result of the transfer, exchange or
replacement of such warrants.

         This Warrant is subject to the following terms, provisions, and
conditions:

         1. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from
time to time beginning on the date of issuance (the "ISSUE DATE") and ending at
5:00 p.m., Philadelphia, Pennsylvania time on the sixth (6th) anniversary of the
Issue Date (the "EXERCISE PERIOD").

         2. EXERCISE OF WARRANT. Subject to the provisions hereof, including,
without limitation, the limitations contained in Section 7 hereof, this Warrant
may be exercised by the holder hereof, in whole or in part (which such amount
shall be not less than 25,000 Warrant Shares, or a whole multiple of 5,000 in
excess thereof; provided that, the foregoing shall not apply if the remaining
Warrant Shares issuable hereunder are less than such minimum amount), by the
surrender of this Warrant, together with a completed exercise agreement in the
form attached hereto (the "EXERCISE AGREEMENT"), to the Company during normal
business hours on any business day at the Company's principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the holder hereof), and upon payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company of the
Exercise Price for the Warrant Shares specified in the Exercise Agreement. The






Warrant Shares so purchased shall be deemed to be issued to the holder hereof or
such holder's designee, as the record owner of such shares, as of the close of
business on the date on which this Warrant shall have been surrendered, the
completed Exercise Agreement shall have been delivered and payment shall have
been made for such shares as set forth above. Certificates for the Warrant
Shares so purchased, representing the aggregate number of shares specified in
the Exercise Agreement, shall be delivered to the holder hereof within fifteen
(15) business days after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, as soon as practicable after the date of exercise,
deliver to the holder a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised.

         3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:

            (a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon issuance
in accordance with the terms of this Warrant, be validly issued, fully paid, and
nonassessable and free from all taxes, liens, and charges with respect to the
issue thereof.

            (b) RESERVATION OF SHARES. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise in full of this Warrant.

            (c) LISTING. The Company shall secure the listing of the Warrant
Shares upon each securities exchange or automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all Warrant Shares.

            (d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment
of its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
directly or indirectly, by operation of law or otherwise, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed by
it hereunder, but will at all times in good faith assist in the carrying out of
all the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant.

            (e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company or its assets.

                                       2



         4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Section 4. In the event that any adjustment of the
Exercise Price as required herein results in a fraction of a cent, such Exercise
Price shall be rounded off to the nearest cent.

            (a) SALE OF SECURITIES BELOW CURRENT EXERCISE PRICE. Except as
otherwise provided in Sections 4(b) and 4(d), if at any time the Company shall
issue or, pursuant to the provisions hereof, be deemed to have issued (other
than as set forth in Section 4(a)(vi) hereof) any shares of Common Stock,
Convertible Securities (as hereinafter defined), Rights (as hereinafter defined)
or Related Rights (as hereinafter defined) (collectively, "SECURITIES") without
consideration or for a consideration per share less than the Exercise Price in
effect immediately prior to the issuance of such Securities, then the Exercise
Price in effect immediately prior to each such issuance shall forthwith be
reduced to the lowest per share price paid for a share of Common Stock (or
deemed paid for a share of Common Stock in the case of Rights, Convertible
Securities or Related Rights, as determined below). For the purpose of this
Section 4(a), the following definitions, procedures and exceptions shall be
applicable:

                (i) RIGHTS. In the case of the issuance of options, warrants or
         other rights to purchase or otherwise acquire shares of Common Stock,
         whether or not at the time exercisable (collectively, "RIGHTS"), the
         total number of shares of Common Stock issuable upon exercise of such
         Rights shall be deemed to have been issued at the time such Rights are
         issued, for a consideration equal to the sum of the consideration, if
         any, received by the Company upon the issuance of such Rights and the
         minimum purchase or exercise price payable upon the exercise of such
         Rights for the Common Stock to be issued upon the exercise thereof; and
         the consideration per share shall be determined by dividing (i) the
         aggregate consideration so received by and payable to the Company, by
         (ii) the number of shares of Common Stock issuable upon exercise of
         such Rights.

                (ii) CONVERTIBLE SECURITIES AND RELATED RIGHTS. In the case of
         the issuance of any class or series of stock or any bonds, debentures,
         notes or other securities or obligations convertible into or
         exchangeable for Common Stock, whether or not then convertible or
         exchangeable (collectively, "CONVERTIBLE SECURITIES"), or options,
         warrants or other rights to purchase or otherwise acquire Convertible
         Securities (collectively, "RELATED RIGHTS"), the total number of shares
         of Common Stock issuable upon the conversion or exchange of such
         Convertible Securities or exercise of such Related Rights shall be
         deemed to have been issued at the time such Convertible Securities or
         Related Rights are issued, for a consideration equal to the sum of (A)
         the consideration, if any, received by the Company upon issuance of
         such Convertible Securities or Related Rights (excluding any cash
         received on account of accrued interest or dividends) and (B)(1) in the
         case of Convertible Securities, the minimum additional consideration,
         if any, to be received by the Company upon the conversion or exchange
         of such Convertible Securities or (2) in the case of Related Rights,
         the sum of (x) the minimum purchase or exercise price payable upon the
         exercise of such Related Rights for Convertible Securities and (y) the
         minimum additional consideration, if any, to be received by the Company
         upon the conversion or exchange of the Convertible Securities issued
         upon the exercise of such Related Rights; and the consideration per

                                       3



         share shall be determined by dividing (i) the aggregate consideration
         so received by and payable to the Company, by (ii) the number of shares
         of Common Stock issuable upon conversion or exchange of such
         Convertible Securities or exercise of such Related Rights.

                (iii) CHANGES. On any change in the number of shares of Common
         Stock issuable upon the exercise of Rights or Related Rights or upon
         the conversion or exchange of Convertible Securities or on any change
         in the minimum purchase or exercise price of Rights, Related Rights or
         Convertible Securities, including, but not limited to, a change
         resulting from the anti-dilution provisions of such Rights, Related
         Rights or Convertible Securities, the Exercise Price to the extent in
         any way affected by such Rights, Related Rights or Convertible
         Securities shall forthwith be readjusted to be thereafter the Exercise
         Price that would have been obtained had the adjustment which was made
         upon the issuance of such Rights, Related Rights or Convertible
         Securities been made after giving effect to such change. No further
         adjustment shall be made in respect of such change upon the actual
         issuance of Common Stock or any payment of consideration upon the
         exercise of such Rights or Related Rights or the conversion or exchange
         of such Convertible Securities.

                (iv) EXPIRATION OR CANCELLATION. On the expiration or
         cancellation of any such Rights, Related Rights or Convertible
         Securities, if the Exercise Price shall have been adjusted upon the
         issuance thereof, the Exercise Price shall forthwith be readjusted to
         such Exercise Price as would have been obtained had the adjustment made
         upon the issuance of such Rights, Related Rights or Convertible
         Securities been made upon the basis of the issuance of only the number
         of shares of Common Stock actually issued upon the exercise of such
         Rights or Related Rights or the conversion or exchange of such
         Convertible Securities.

                (v) CASH. In the case of the issuance of such Securities for
         cash, the amount of consideration received by the Company shall be
         deemed to be the amount of cash paid therefor before deducting any
         reasonable discounts, commissions or other expenses paid or incurred by
         the Company for any underwriting or otherwise in connection with the
         issuance and sale thereof. In the case of the issuance of such
         Securities for consideration other than cash, the amount of
         consideration received by the Company shall be determined in good faith
         by the Company's Board of Directors.

                (vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No adjustment
         to the Exercise Price will be made (i) upon the exercise of any
         warrants, options or convertible securities issued and outstanding on
         the Issue Date in accordance with the terms of such securities as of
         such date; (ii) upon exercise of any stock or options which may
         hereafter be exercised under any employee benefit plan of the Company
         now existing or to be implemented in the future, so long as the
         issuance of such stock or options is approved by a majority of the
         non-employee members of the Board of Directors of the Company or a
         majority of the members of a committee of non-employee directors


                                       4


         established for such purpose; or (iii) upon the issuance of securities
         in connection with a strategic transaction, the primary purpose of
         which, in the good faith determination of the Board of Directors of the
         Company, is not to raise capital for the Company.

            (b) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at
any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any
time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder
into a smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.

            (c) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.

            (d) CONSOLIDATION, MERGER OR SALE. In case of any consolidation of
the Company with, or merger of the Company into any other Company, or in case of
any sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company,
then as a condition of such consolidation, merger or sale or conveyance,
adequate provision will be made whereby the holder of this Warrant will have the
right to acquire and receive upon exercise of this Warrant in lieu of the shares
of Common Stock immediately theretofore acquirable upon the exercise of this
Warrant, such shares of stock, securities or assets as the holders of the
Warrants would have received had the Warrants been exercised immediately prior
to such consolidation, merger or sale or conveyance. In any such case, the
Company will make appropriate provision to insure that the provisions of this
Section 4 hereof will thereafter be applicable as nearly as may be in relation
to any shares of stock or securities thereafter deliverable upon the exercise of
this Warrant. The Company will not effect any consolidation, merger or sale or
conveyance unless prior to the consummation thereof, the successor or acquiring
entity (if other than the Company) and, if an entity different from the
successor or acquiring entity, the entity whose capital stock or assets the
holders of the Common Stock of the Company are entitled to receive as a result
of such consolidation, merger or sale or conveyance assumes by written
instrument the obligations of the Company under this Warrant (including under
this Section 4) and the obligations to deliver to the holder of this Warrant
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, the holder may be entitled to acquire. This Section 4(d) shall apply
to any successive consolidations, mergers, sales or conveyances.

            (e) DISTRIBUTION OF ASSETS. In case the Company shall declare or
make any distribution of its assets (including cash) to holders of Common Stock
as a partial liquidating dividend, by way of return of capital or otherwise,
then, after the date of record for determining stockholders entitled to such
distribution, but prior to the date of distribution, the holder of this Warrant

                                       5




shall be entitled upon exercise of this Warrant for the purchase of any or all
of the shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the determination
of stockholders entitled to such distribution.

            (f) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.

            (g) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.

            (h) NO FRACTIONAL SHARES. No fractional shares of Common Stock are
to be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.

            (i) OTHER NOTICES. In case at any time:

                (i) the Company shall declare any dividend upon the Common Stock
         payable in shares of stock of any class or make any other distribution
         (including dividends or distributions payable in cash out of retained
         earnings) to the holders of the Common Stock;

                (ii) there shall be any capital reorganization of the Company,
         or reclassification of the Common Stock, or consolidation or merger of
         the Company with or into, or sale of all, substantially all or a
         material portion of its assets to, another Company or entity; or

                (iii) there shall be a voluntary or involuntary dissolution,
         liquidation or winding-up of the Company;

then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend or distribution or for determining the holders of Common Stock
entitled to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, notice of the date (or, if not


                                       6



then known, a reasonable approximation thereof by the Company) when the same
shall take place. Such notice shall also specify the date on which the holders
of Common Stock shall be entitled to receive such dividend, distribution, or
subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding-up, as the
case may be. Such notice shall be given at least ten (10) business days prior to
the record date or the date on which the Company's books are closed in respect
thereto. Failure to give any such notice or any defect therein shall not affect
the validity of the proceedings referred to in clauses (i), (ii) and (iii)
above; provided that if notice is not given in accordance with this Section
4(i), the Company will use its best efforts to insure that the holder of this
Warrant shall nevertheless receive the same rights and benefits received by
other holders of securities of the Company from the proceedings referred to in
clauses (i), (ii) and (iii) above, unless the holder of this Warrant chooses not
to receive such rights and benefits.

            (j) CERTAIN EVENTS. If any event occurs of the type contemplated by
the adjustment provisions of this Section 4 but not expressly provided for by
such provisions, the Company will give notice of such event as provided in
Section 4(i) hereof, and the Company's Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of shares of Common
Stock acquirable upon exercise of this Warrant so that the rights of the holder
shall be neither enhanced nor diminished by such event.

            (k) CERTAIN DEFINITIONS.

                (i) "MARKET PRICE," as of any date, (i) means the average of the
         high and the low sale prices for the shares of Common Stock as reported
         on the American Stock Exchange ("AMEX") by Bloomberg Financial Markets
         ("BLOOMBERG") for the twenty five (25) consecutive trading days
         immediately preceding such date, or (ii) if the AMEX is not the
         principal trading market for the shares of Common Stock, the average of
         the reported closing sale prices reported by Bloomberg on the principal
         trading market for the Common Stock during the same period, or (iii) if
         the foregoing do not apply, the last sale price of such security in the
         over-the-counter market on the pink sheets or bulletin board for such
         security as reported by Bloomberg, or if no sale price is so reported
         for such security, the last bid price of such security as reported by
         Bloomberg, or (iv) if market value cannot be calculated as of such date
         on any of the foregoing bases, the Market Price shall be determined in
         good faith by the Board of Directors.

         5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof.

         6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights, rights to dividends, or other
rights as a shareholder of the Company. No provision of this Warrant, in the
absence of affirmative action by the holder hereof to purchase Warrant Shares,
and no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Exercise Price or as a
shareholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

                                       7



         7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.

            (a) RESTRICTION ON TRANSFER. This Warrant and the rights granted to
the holder hereof are transferable, in whole or in part (which such amount shall
be not less than 25,000 Warrant Shares, or a whole multiple of 5,000 in excess
thereof; provided that, the foregoing shall not apply if the remaining Warrant
Shares issuable hereunder are less than such minimum amount), upon surrender of
this Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Section 7(e)
below; provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Section 7(f). Notwithstanding the foregoing, this
Warrant, the shares of Common Stock issuable upon exercise hereof, and the
rights granted hereunder may not be transferred to a competitor of the Company
or any Subsidiary or affiliate of the Company.

            (b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant
is exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Warrants of
like tenor representing in the aggregate the right to purchase the number of
shares of Common Stock which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of shares as shall be
designated by the holder hereof at the time of such surrender.

            (c) REPLACEMENT OF WARRANT. Upon receipt of evidence of the loss,
theft, destruction, or mutilation of this Warrant and, in the case of any such
loss, theft, or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company, or, in the case of any such
mutilation, upon surrender and cancellation of this Warrant, the Company, at its
expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

            (d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Section 7.

            (e) REGISTER. The Company shall maintain, at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this Warrant has
been issued, as well as the name and address of each transferee and each prior
owner of this Warrant.

            (f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time of
the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such exercise, transfer, or exchange, that
the holder or transferee of this Warrant, as the case may be, furnish to the


                                       8




Company a written opinion of counsel to the effect that such exercise, transfer,
or exchange may be made without registration under the Securities Act and under
applicable state securities or blue sky laws; provided however, that no legal
opinion shall be required in connection with a transfer pursuant to Rule 144
under the Securities Act unless in the opinion of counsel to the Company, such
transfer does not comply with the provisions of Rule 144. Notwithstanding the
foregoing, the initial holder of this Warrant, by taking and holding the same,
represents to the Company that such holder is acquiring this Warrant for
investment and not with a present view to the distribution thereof.

         8. NOTICES. Any notice which is required or provided to be given under
this Warrant shall be deemed to have been sufficiently given and received for
all purposes when delivered by hand, telecopy (if a copy of such confirmed
telecopy transmission shall be contemporaneously sent by first class mail), or
nationally recognized overnight courier, or five days after being sent by
certified or registered mail, postage and charges prepaid, return receipt
requested, to the following addresses:

         If to the Company:

                  Environmental Tectonics Corporation
                  125 James Way
                  Southampton, PA 18966
                  Attention:  Chief Financial Officer
                  Facsimile:  (215) 357-4000








                                       9



         With a copy to:

                  Klehr, Harrison, Harvey, Branzburg & Ellers LLP
                  260 S. Broad Street
                  Philadelphia, PA  19102
                  Attention:  William W. Matthews, III, Esquire
                  Facsimile:  (215) 568-6603

         If to a holder hereof, at the address shown for such holder on the
books of the Company; or, with respect to any party hereto, at any other address
designated in writing by such party in accordance with the provisions of this
Section 8.

         9. GOVERNING LAW; JURISDICTION. This Warrant shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed in the Commonwealth of
Pennsylvania (without regard to principles of conflict of laws). The Company and
the holder hereof consent to the jurisdiction of the United States federal
courts and the state courts located in the Commonwealth of Pennsylvania with
respect to any suit or proceeding based on or arising under this Warrant or the
transactions contemplated hereby and agree that all claims in respect of such
suit or proceeding may be determined in such courts. The Company and the holder
hereof waive the defense of an inconvenient forum to the maintenance of such
suit or proceeding and agree that service of process upon a party mailed by
first class mail shall be deemed in every respect effective service of process
upon the party in any such suit or proceeding. Nothing herein shall affect
either party's right to serve process in any other manner permitted by law.

         10. MISCELLANEOUS.

            (a) AMENDMENTS. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and a majority in
interest of the outstanding Warrants.

            (b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.

                            [SIGNATURE PAGE FOLLOWS]








                                       10




       IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.

                                    ENVIRONMENTAL TECTONICS CORPORATION


                                    By: Duane D. Deaner
                                        Name:  Duane Deaner
                                        Title: C.F.O.



                                    Dated as of September 7, 2004







                           FORM OF EXERCISE AGREEMENT


                                                        Dated: ________ __, 20__


To:   [Company]
      [Address]


         The undersigned, pursuant to the provisions set forth in the Warrant
attached hereto, hereby agrees to purchase ________ shares of Common Stock
covered by such Warrant, and makes payment herewith in full therefor at the
price per share provided by such Warrant in cash, by wire transfer or by
certified or official bank check in the amount of $______________. Please issue
a certificate or certificates for such shares of Common Stock in the name of and
pay any cash for any fractional share to:


                                   Name:________________________________________

                                   Signature:___________________________________
                                   Address:  ___________________________________
                                             ___________________________________


                                   Note: The above signature should correspond
                                         exactly with the name on the face
                                         of the within Warrant.

and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.





                               FORM OF ASSIGNMENT


         FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:

Name of Assignee                  Address                          No. of Shares
- ----------------                  -------                          -------------





, and hereby irrevocably constitutes and appoints_______________________________
______________________________________ as agent and attorney-in-fact to transfer
said Warrant on the books of the within-named Company, with full power of
substitution in the premises.


Dated: _________________ __, 20__

In the presence of:



_________________________________

                                        Name:__________________________________

                                        Signature:_____________________________

                                        Title of Signing Officer
                                        or Agent (if any):
                                                 ______________________________
                                        Address: ______________________________
                                                 ______________________________


                                        Note: The above signature should
                                              correspond exactly with the name
                                              on the face of the within Warrant.

EX-10

                                  EXHIBIT 10.1
                                  ------------


                          AMENDMENT TO CREDIT AGREEMENT
                          -----------------------------

         This AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as of the
24th day of August, 2004, between ENVIRONMENTAL TECTONICS CORPORATION (the
"Borrower") and PNC BANK, NATIONAL ASSOCIATION (the "Bank").

                                   BACKGROUND
                                   ----------

         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 Borrower has requested that the Bank waive certain Events of
Default and amend the Credit Agreement in certain respects and the Bank has
agreed to do so on and 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
                                    ---------

         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 August 24, 2004 (except as hereinafter
specifically set forth):

            (a) The definitions of "Annual EBIDTA", "Borrowing Base", "Borrowing
Base Certificate", "Debt Service", "EBIDTA", "Eligible Costs and Earnings",
"Eligible Inventory", "Eligible Receivables", "Existing Centrifuge", "Fixed
Asset Availability", "Fixed Charges", "Permitted Overadvance" and "Total Funded
Debt" are hereby deleted from Section 1.1 of the Credit Agreement.

            (b) The definitions of "Available Revolving Credit Commitment",
"Loan Documents" and "Obligations" are hereby amended and restated to read in
full as follows:

         "Available Revolving Credit Commitment": at any particular time, an
         amount equal to the excess, if any, of the Revolving Credit Commitment
         over the aggregate unpaid principal amount of the Revolving Credit
         Loans and the face amount of the Revolving Credit Letters of Credit
         outstanding at such time.




         "Loan Documents": this Agreement, the Revolving Credit Note, the ExIm
         Notes, the Guaranty, the Lenfest Guaranty, the Reimbursement Agreement,
         the Security Documents, any Letters of Credit, the Bond Letter of
         Credit, any Interest Hedge Agreement entered into with the Bank, the
         ExIm Borrower Agreement and any other "Loan Document" as such term is
         defined in the ExIm Borrower Agreement.

         "Obligations": collectively, (a) all unpaid principal of and accrued
         and unpaid interest (including, without limitation, any interest
         accruing subsequent to the commencement of a bankruptcy, insolvency or
         similar proceeding with respect to the Borrower, whether or not such
         interest constitutes an allowed claim in such proceeding) on the Loans,
         (b) all accrued and unpaid Fees, (c) any other amounts due hereunder or
         under any of the other Loan Documents, including all Reimbursement
         Obligations and reimbursement obligations in respect of the Bond Letter
         of Credit, indemnities, Fees, costs, expenses, prepayment premiums,
         break-funding costs and other obligations of the Borrower to the Bank
         or any indemnified party hereunder and thereunder, (d) any obligations
         owed by the Borrower to the Bank or to any Affiliate of the Bank
         pursuant to an Interest Hedge Agreement or any other financing or
         leasing arrangement provided by the Bank or any such Affiliate, and (e)
         all reasonable out-of-pocket costs and expenses incurred by the Bank in
         connection with this Agreement and the other Loan Documents, including,
         but not limited to, the reasonable fees and expenses of the Bank's
         counsel, which the Borrower is responsible to pay pursuant to the terms
         of this Agreement and the other Loan Documents.

            (c) The following new definitions are added to Section 1.1 of the
Credit Agreement in the appropriate alphabetical order:

         "Lenfest": H.F. Lenfest, an individual.

         "Lenfest Guaranty": that certain Limited Guaranty Agreement from
         Lenfest to the Bank dated on or about August 24, 2004, as the same may
         be amended, supplemented or modified from time to time, guaranteeing
         the obligations of the Borrower arising in connection with Revolving
         Credit Letters of Credit.

            (d) The definition of "Revolving Credit Commitment" appearing in
Section 1.1 of the Credit Agreement is hereby amended by deleting the dollar
amount "Fourteen Million Eight Hundred Thousand Dollars ($14,800,000)" appearing
therein and inserting the amount "Five Million Dollars ($5,000,000)" in lieu
thereof; and the definitions of "Maximum ExIm Credit Commitment" appearing in


                                       2


Section 1.1 of the Credit Agreement is hereby amended by deleting the dollar
amount "One Million Ten Thousand Dollars ($1,010,000)" and inserting the amount
"Nine Hundred Ninety-Five Thousand Dollars ($995,000)" in lieu thereof.

            (e) The Bank shall hereafter have no further obligation to make
Revolving Credit Loans pursuant to Sections 2.1(a) and 2.3(a) of the Credit
Agreement. Revolving Credit Loans will only result from unreimbursed
Reimbursement Obligations pursuant to the provisions of Section 2.1(d) of the
Credit Agreement.

            (f) Section 2.1(d) of the Credit Agreement is hereby amended and
restated to read in full as follows:

         "(d) Subject to the terms and conditions hereof, the Bank shall during
         the Revolving Credit Commitment Period issue or cause the issuance of
         letters of credit ("Revolving Credit Letters of Credit") on behalf of
         the Borrower; provided, however, that the Bank will not be required to
         issue or cause to be issued any Revolving Credit Letter of Credit which
         expires later than one year following the Revolving Credit Termination
         Date or, if after giving effect to such issuance, either the sum of the
         aggregate face amount of all Revolving Credit Letters of Credit plus
         the outstanding principal amount of all Revolving Credit Loans would
         exceed the Available Revolving Credit Commitment or the Borrower would
         not be in compliance with any of the applicable financial covenants set
         forth in Section 6.1. The Borrower shall be required immediately to
         reimburse the Bank any amounts paid by the Bank pursuant to drawings on
         Revolving Credit Letters of Credit. All payments by the Bank of
         drawings on Revolving Credit Letters of Credit to the extent not
         immediately reimbursed shall become, at the time such drawings are
         paid, Revolving Credit Loans which shall be due and payable and shall
         bear interest until paid at the applicable default rate for Base Rate
         Loans provided in Section 2.17 until repaid in full and may not be
         converted to Eurodollar Loans. If any Revolving Credit Letters of
         Credit remain outstanding on the Revolving Credit Termination Date, the
         Borrower shall deposit in the Cash Collateral Account, as cash
         collateral for its Obligations under this Agreement an amount equal to
         the aggregate Letter of Credit Coverage Requirement which shall be held
         and applied by the Bank otherwise as provided in the final paragraph of
         Section 7.1."

            (g) the following new Section 2.1(f) is added to the Credit
Agreement:

         "(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). 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

                                       3



         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. 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."

            (h) Section 2.5(d) of the Credit Agreement is hereby amended by
deleting the reference to "1.75% per annum" and inserting "1.00% per annum" in
lieu thereof.

            (i) Section 2.9(d) of the Credit Agreement is hereby amended and
restated to read in full as follows:

         "(d) Mandatory Prepayments. If at any time the aggregate principal
         amount of the outstanding Revolving Credit Loans and the aggregate face
         amount of all Revolving Credit Letters of Credit outstanding at such
         time exceeds the Revolving Credit Commitment at such time, the Borrower
         shall make a payment on the outstanding Revolving Credit Loans equal to
         the amount of such excess."

            (j) Effective as of June 1, 2004, Section 5.2(c) of the Credit
Agreement is hereby amended and restated to read in full as follows:

         "(c) Intentionally Omitted"

            (k) Sections 6.1(a) and (b) of the Credit Agreement are hereby
amended and restated to read in full as follows:

         "(a) Intentionally Omitted

          (b) Intentionally Omitted"

            (l) 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
         August 27, 2004, November 26, 2004 and February 25, 2005 to be less
         than $16,400,000 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.

                                       4




            (m) Section 6.1(d) is hereby amended and restated to read in full as
follows:

         "(d) Intentionally Omitted"

            (n) Section 7.1(d) of the Credit Agreement is amended and restated
to read in full as follows:

         "(d) An Event of Default (as defined in the Mortgage or in the Lenfest
         Guaranty); or"

            (o) Exhibit E is hereby deleted from the Credit Agreement.

         3. Line of Credit Note. In order to evidence the reduced maximum
principal amount available under the Revolving Credit Commitment to $5,000,000,
the Borrower shall execute and deliver to the Bank an Amended and Restated
Revolving Credit Note (the "Second Amended and Restated Revolving Credit Note")
in the form attached hereto as Exhibit A.

         4. Amendments to Loan Documents. All references to the Credit Agreement
in any of the Loan Documents shall be deemed to refer to the Credit Agreement,
as amended by this Amendment and all references to the Revolving Credit Note in
any of the Loan Documents shall be deemed to refer to the Second Amended and
Restated Revolving Credit Note.

         5. Ratification; Acknowledgment. Except as the provisions thereof have
been expressly amended or waived by this Amendment, the Credit 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. The Borrower hereby acknowledges that in connection with the
acceptance by the Bank of the Lenfest Guaranty, the Bank has agreed with Lenfest
that it will not release any substantial or material portion of the Collateral
without the prior written consent of Lenfest.

         6. Representations and Warranties.

            (a) The Borrower hereby certifies that (i) the representations and
warranties of the Borrower in the Credit 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
and the Second Amended and Restated Revolving Credit Note 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,

                                       5



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;

                (ii) The executed original of the Second Amended and Restated
         Revolving Credit Note; and

                (iii) The executed original of the Lenfest Guaranty; and

                (iv) 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 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.

            (d) The Borrower shall have paid to the Bank a restructuring fee in
the amount of $30,000.

         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


                                       6



agree to any further modifications to the Loan 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 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 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.



                                       7




         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.


                                 ENVIRONMENTAL TECTONICS CORPORATION

                                 By: _________________________________________
                                 Name:
                                 Title:


                                 PNC BANK, NATIONAL ASSOCIATION

                                 By: _________________________________________
                                 Name:
                                 Title:






                                       8




                                    EXHIBIT A

                SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE

$5,000,000                                                       August 24, 2004
                                                                Philadelphia, PA


         FOR VALUE RECEIVED, ENVIRONMENTAL TECTONICS CORPORATION (the
"Borrower"), hereby unconditionally promises to pay to the order of PNC BANK,
NATIONAL ASSOCIATION (the "Bank"), at the office of the Bank located at 1600
Market Street, Philadelphia, Pennsylvania, 19103, on the Revolving Credit
Termination Date (as such term is defined in the Credit Agreement hereinafter
referred to) in lawful money of the United States of America and in immediately
available funds, the principal sum of (a) FIVE MILLION DOLLARS ($5,000,000), or,
if less, (b) the aggregate unpaid principal amount of all Revolving Credit Loans
made or deemed made by the Bank to the Borrower pursuant to the Credit
Agreement. The Borrower further unconditionally agrees to pay interest accrued
on the unpaid principal amount outstanding hereunder from time to time from the
date hereof in like money at such office at the rates and on the dates specified
in the Credit Agreement together with all other costs, fees and expenses as
provided in the Credit Agreement.

         The holder of this Note is authorized to endorse on Schedule 1 annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the respective date, Type, and amount of
each Revolving Credit Loan made by the Bank to the Borrower, each continuation
thereof, each conversion of all or a portion thereof to another Type, the date
and amount of each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto,
which endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed absent manifest error; provided, however, that the failure
to make any such endorsement (or any error in such recordation) shall not affect
the obligations of the Borrower to make payments of principal, interest and
other amounts outstanding in accordance with the terms of this Note and the
Credit Agreement.

         This Note amends and completely restates and evidences the indebtedness
outstanding under and is substituted for, but not in payment, satisfaction,
cancellation or novation of, the Amended and Restated Revolving Credit Note
dated April 30, 2003 issued by the Borrower to the Bank and, as of the date
hereof, shall be deemed to be the Revolving Credit Note referred to in,
evidences indebtedness incurred under, and is entitled to the benefits of, the
Credit Agreement, dated as of the date hereof (as it may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
between the Borrower and the Bank. The Credit Agreement, among other things,
contains provisions for the acceleration of the maturity hereof upon the
happening of certain events, for optional or mandatory prepayments of the
principal hereof prior to the maturity thereof, for a higher rate of interest
upon the occurrence of an Event of Default and for certain security interests
granted by the Borrower and certain related entities. Reference is made to the
Credit Agreement and the other Loan Documents for a statement of the terms and
conditions under which the Revolving Credit Loans evidenced hereby have been
secured.





         Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Note shall become, or may be declared to be, immediately due and payable, all as
provided therein.

         All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and notice (except as required under the Credit
Agreement) of any kind. No failure to exercise, and no delay in exercising, any
rights hereunder on the part of the holder hereof shall operate as a waiver of
such rights.

         Capitalized terms not otherwise defined herein shall have the meanings
set forth in the Credit Agreement. This Note shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Pennsylvania.


                                      ENVIRONMENTAL TECTONICS CORPORATION


                                      By:____________________________________
                                         Name:
                                         Title:








                                                        SCHEDULE 1

                                                    LOANS AND PAYMENTS


=======================================================================================================================
                                                                             UNPAID
                                                  AMOUNT OF                PRINCIPAL
                        AMOUNT OF                 PRINCIPAL                BALANCE OF                 NOTATION
     DATE                  LOAN                    REPAID                    LOANS                    MADE BY
=======================================================================================================================
                                                                                            


- -----------------------------------------------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------------------------------------------


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- -----------------------------------------------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------------------------------------------


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- -----------------------------------------------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------------------------------------------


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- -----------------------------------------------------------------------------------------------------------------------


=======================================================================================================================

EX-10

                                  EXHIBIT 10.2
                                  ------------


                SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE

$5,000,000                                                       August 24, 2004
                                                                Philadelphia, PA


         FOR VALUE RECEIVED, ENVIRONMENTAL TECTONICS CORPORATION (the
"Borrower"), hereby unconditionally promises to pay to the order of PNC BANK,
NATIONAL ASSOCIATION (the "Bank"), at the office of the Bank located at 1600
Market Street, Philadelphia, Pennsylvania, 19103, on the Revolving Credit
Termination Date (as such term is defined in the Credit Agreement hereinafter
referred to) in lawful money of the United States of America and in immediately
available funds, the principal sum of (a) FIVE MILLION DOLLARS ($5,000,000), or,
if less, (b) the aggregate unpaid principal amount of all Revolving Credit Loans
made or deemed made by the Bank to the Borrower pursuant to the Credit
Agreement. The Borrower further unconditionally agrees to pay interest accrued
on the unpaid principal amount outstanding hereunder from time to time from the
date hereof in like money at such office at the rates and on the dates specified
in the Credit Agreement together with all other costs, fees and expenses as
provided in the Credit Agreement.

         The holder of this Note is authorized to endorse on Schedule 1 annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the respective date, Type, and amount of
each Revolving Credit Loan made by the Bank to the Borrower, each continuation
thereof, each conversion of all or a portion thereof to another Type, the date
and amount of each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto,
which endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed absent manifest error; provided, however, that the failure
to make any such endorsement (or any error in such recordation) shall not affect
the obligations of the Borrower to make payments of principal, interest and
other amounts outstanding in accordance with the terms of this Note and the
Credit Agreement.

         This Note amends and completely restates and evidences the indebtedness
outstanding under and is substituted for, but not in payment, satisfaction,
cancellation or novation of, the Amended and Restated Revolving Credit Note
dated April 30, 2003 issued by the Borrower to the Bank and, as of the date
hereof, shall be deemed to be the Revolving Credit Note referred to in,
evidences indebtedness incurred under, and is entitled to the benefits of, the
Credit Agreement, dated as of the date hereof (as it may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
between the Borrower and the Bank. The Credit Agreement, among other things,
contains provisions for the acceleration of the maturity hereof upon the
happening of certain events, for optional or mandatory prepayments of the
principal hereof prior to the maturity thereof, for a higher rate of interest
upon the occurrence of an Event of Default and for certain security interests
granted by the Borrower and certain related entities. Reference is made to the





Credit Agreement and the other Loan Documents for a statement of the terms and
conditions under which the Revolving Credit Loans evidenced hereby have been
secured.

         Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Note shall become, or may be declared to be, immediately due and payable, all as
provided therein.

         All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and notice (except as required under the Credit
Agreement) of any kind. No failure to exercise, and no delay in exercising, any
rights hereunder on the part of the holder hereof shall operate as a waiver of
such rights.

         Capitalized terms not otherwise defined herein shall have the meanings
set forth in the Credit Agreement. This Note shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Pennsylvania.


                                       ENVIRONMENTAL TECTONICS CORPORATION


                                       By:____________________________________
                                          Name:
                                          Title:



                                       2






                                                        SCHEDULE 1

                                                    LOANS AND PAYMENTS


=======================================================================================================================
                                                                             UNPAID
                                                  AMOUNT OF                 PRINCIPAL
                        AMOUNT OF                 PRINCIPAL                BALANCE OF                 NOTATION
     DATE                  LOAN                    REPAID                    LOANS                    MADE BY
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EX-10

                                                                    EXHIBIT 10.3
                                                                    ------------


LIMITED GUARANTY AGREEMENT                                    [PNC LOGO OMITTED]



         THIS LIMITED GUARANTY AGREEMENT (this "GUARANTY") is made and entered
into as of this 24th day of August, 2004, by H.F. LENFEST, an individual (the
"GUARANTOR"), with an address at 300 Barr Harbor Drive, Suite 460, West
Conshohocken, PA 19428, in consideration of the extension of credit by PNC BANK,
NATIONAL ASSOCIATION (the "BANK"), with an address at 1000 Westlakes Drive,
Suite 200, Berwyn, PA 19312, to ENVIRONMENTAL TECTONICS CORPORATION (the
"BORROWER"), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.

         1. GUARANTY OF OBLIGATIONS. The Guarantor hereby unconditionally
guarantees, as a primary obligor, and becomes surety for, the prompt payment and
performance of all loans, advances, debts, liabilities, reimbursement and other
obligations, covenants and duties owing by the Borrower to the Bank 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 Borrower,
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 letter of credit
facility established under Section 2.1(d) of that certain Credit Agreement
between the Borrower and the Bank (as the same has been amended through the date
hereof, the "CREDIT AGREEMENT") and the Revolving Credit Letters of Credit (as
defined in the Credit Agreement) issued pursuant to said Section 2.1(d), and any
amendments, extensions, renewals and increases of or to the foregoing, and all
costs and expenses of the Bank incurred in the enforcement, collection and
otherwise in connection with the foregoing, including reasonable attorneys' fees
and expenses (hereinafter referred to collectively as the "OBLIGATIONS");
provided, however, that the Guarantor's liability hereunder shall not exceed
$5,000,000 in principal amount of the Obligations (consisting of the face amount
of all then outstanding Revolving Credit Letters of Credit and any reimbursement
obligations with respect thereto or otherwise due at such time, as calculated on
the date of acceleration or demand by the Bank), plus all interest thereon and
all costs and expenses arising from the Obligations (the "GUARANTEED AMOUNT").

If the Borrower defaults under any such Obligations, the Guarantor will pay the
Guaranteed Amount to the Bank. Until the Obligations are indefeasibly paid in
full, the Guaranteed Amount shall not be reduced in any manner, whatsoever by
any amounts which the Bank may realize before or after maturity of the
Obligations, by acceleration or otherwise, as a result of payments made by or on
behalf of the Borrower or by or on behalf of any other person or entity other
than the Guarantor primarily or secondarily liable for the Obligations or any
part thereof, or otherwise credited to the Borrower or such person or entity, or
as a result of the exercise of the Bank's rights with respect to any collateral




for the Obligations or any part thereof. Payments made to the Bank by the
Guarantor (other than, directly or indirectly, from collateral or other persons
or entities liable for any portion of the Obligations) after maturity of the
Obligations, by acceleration or otherwise, shall reduce the Guaranteed Amount.

         2. NATURE OF GUARANTY; WAIVERS. This is a guaranty of payment and not
of collection and the Bank shall not be required, as a condition of the
Guarantor's liability, to make any demand upon or to pursue any of its rights
against the Borrower, or to pursue any rights which may be available to it with
respect to any other person who may be liable for the payment of the
Obligations.

This is an absolute, unconditional, irrevocable and continuing guaranty and will
remain in full force and effect until all of the Obligations have been
indefeasibly paid in full, and the Bank has terminated this Guaranty. This
Guaranty will remain in full force and effect even if there is no principal
balance or other amounts outstanding under the Obligations at a particular time
or from time to time. This Guaranty will not be affected by any surrender,
exchange, acceptance, compromise or release by the Bank of any other party, or
any other guaranty or any security held by it for any of the Obligations, by any
failure of the Bank to take any steps to perfect or maintain its lien or
security interest in or to preserve its rights to any security or other
collateral for any of the Obligations or any guaranty, or by any irregularity,
unenforceability or invalidity of any of the Obligations or any part thereof or
any security or other guaranty thereof. The Guarantor's obligations hereunder
shall not be affected, modified or impaired by any counterclaim, set-off,
recoupment, deduction or defense based upon any claim the Guarantor may have
(directly or indirectly) against the Borrower or the Bank, except payment or
performance of the Obligations.

         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, demand for payment, and any defense based upon the
Bank's failure to comply with the notice requirements under Sections 9-611 and
9-612 of the Uniform Commercial Code as in effect from time to time are hereby
waived. The Guarantor waives all defenses based on suretyship or impairment of
collateral.

         The Bank at any time and from time to time, without notice to or the
consent of the Guarantor, and without impairing or releasing, discharging or
modifying the Guarantor's liabilities hereunder, may (a) 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; (b) renew, substitute, modify, amend
or alter, or grant consents or waivers relating to any of the Obligations, any
other guaranties, or any security for any Obligations or guaranties; (c) apply
any and all payments by whomever paid or however realized including any proceeds
of any collateral, to any Obligations of the Borrower in such order, manner and
amount as the Bank may determine in its sole discretion; (d) settle, compromise
or deal with any other person, including the Borrower or the Guarantor, with
respect to any Obligations in such manner as the Bank deems appropriate in its
sole discretion; (e) substitute, exchange or release any security or guaranty;
or (f) take such actions and exercise such remedies hereunder as provided
herein. Notwithstanding the foregoing, by its acknowledgment of this Guaranty,
the Bank agrees that, except as otherwise required by the terms of the Credit
Agreement or any of the Security Documents (as defined in the Credit Agreement),
so long as this Guaranty remains in effect it will not release (except as
required by law or as directed by any decree or order of any court or
administrative body or in connection with a substitution therefor having
reasonably equivalent value) any substantial or material portion of the
Collateral (as defined in the Credit Agreement) held by it without the prior
written consent of the Guarantor.

         3. REPAYMENTS OR RECOVERY FROM THE BANK. If any demand is made at any
time upon the Bank for the repayment or recovery of any amount received by it in
payment or on account of any of the Obligations and if the Bank 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


                                       2



demand, the Guarantor will be and remain liable hereunder for the amount so
repaid or recovered to the same extent as if such amount had never been received
originally by the Bank. The provisions of this section will be and remain
effective notwithstanding any contrary action which may have been taken by the
Guarantor in reliance upon such payment, and any such contrary action so taken
will be without prejudice to the Bank's rights hereunder and will be deemed to
have been conditioned upon such payment having become final and irrevocable.

         4. FINANCIAL STATEMENTS. Unless compliance is waived in writing by the
Bank or until all of the Obligations have been paid in full, the Guarantor will
promptly submit to the Bank such information relating to the Guarantor's affairs
(including, but not limited to, annual financial statements and tax returns for
the Guarantor) or any security for the Guaranty at any time provided by the
Guarantor as the Bank may reasonably request.

         5. ENFORCEABILITY OF OBLIGATIONS. No modification, limitation or
discharge of the Obligations arising out of or by virtue of any bankruptcy,
reorganization or similar proceeding for relief of debtors under federal or
state law will affect, modify, limit or discharge the Guarantor's liability in
any manner whatsoever and this Guaranty will remain and continue in full force
and effect and will be enforceable against the Guarantor to the same extent and
with the same force and effect as if any such proceeding had not been
instituted. The Guarantor waives all rights and benefits which might accrue to
it by reason of any such proceeding and will be liable to the full extent
hereunder, irrespective of any modification, limitation or discharge of the
liability of the Borrower that may result from any such proceeding.

         6. EVENTS OF DEFAULT. The occurrence of any of the following shall be
an "EVENT OF DEFAULT": (i) any Event of Default (as defined in the Credit
Agreement); (ii) the Guarantor's failure to perform any of its obligations
hereunder; (iii) the falsity, inaccuracy or material breach by the Guarantor of
any written warranty, representation or statement made or furnished to the Bank
by or on behalf of the Guarantor; (iv) the termination or attempted termination
of this Guaranty; (v) the Guarantor shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to adjudicate it
a bankrupt or insolvent, or seeking arrangement, adjustment, winding-up,
liquidation, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Guarantor shall
make a general assignment for the benefit of its creditors; or (vi) there shall
be commenced against the Guarantor any case, proceeding or other action of a
nature referred to in clause (v) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days. Upon the
occurrence of any Event of Default, (a) the Guarantor shall pay to the Bank the
amount of the Obligations; or (b) on demand of the Bank, the Guarantor shall
immediately deposit with the Bank, in U.S. dollars, all amounts due or to become
due under the Obligations, and the Bank may at any time use such funds to repay
the Obligations; or (c) the Bank in its discretion may exercise with respect to
any collateral any one or more of the rights and remedies provided a secured
party under the applicable version of the Uniform Commercial Code; or (d) the
Bank in its discretion may exercise from time to time any other rights and
remedies available to it at law, in equity or otherwise.

         7. RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the Guarantor's money, securities or other property given to the Bank by
law, the Bank shall have, with respect to the Guarantor's obligations to the
Bank under this Guaranty and to the extent permitted by law, a contractual
possessory security interest in and a contractual right of setoff against, and
the Guarantor hereby grants Bank a security interest in, and hereby assigns,
conveys, delivers, pledges and transfers to the Bank all of the Guarantor's
right, title and interest in and to, all of the Guarantor's deposits, moneys,


                                       3



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 Guarantor. 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.

         8. COLLATERAL. This Guaranty is secured by the property described in
any collateral security documents which the Guarantor may in the future grant to
the Bank to secure any Obligations of the Guarantor to the Bank.

         9. COSTS. To the extent that the Bank incurs any costs or expenses in
protecting or enforcing its rights under the Obligations or this Guaranty,
including reasonable attorneys' fees and the costs and expenses of litigation,
such costs and expenses will be due on demand, will be included in the
Obligations and will bear interest from the incurring or payment thereof at the
default interest rate provided under the Credit Agreement.

         10. POSTPONEMENT OF SUBROGATION. Until the Obligations and all other
obligations of the Borrower to the Bank are indefeasibly paid in full, expire,
are terminated and are not subject to any right of revocation or rescission, the
Guarantor postpones and subordinates in favor of the Bank or its designee (and
any assignee or potential assignee) any and all rights which the Guarantor may
have to (a) assert any claim whatsoever against the Borrower based on
subrogation, exoneration, reimbursement, or indemnity or any right of recourse
to security for the Obligations with respect to payments made hereunder, and (b)
any realization on any property of the Borrower, including participation in any
marshalling of the Borrower's assets.

         11. 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 Bank and the Guarantor 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 addresses for the Bank and the Guarantor as set forth above or to such other
address as either may give to the other for such purpose in accordance with this
section.

         12. PRESERVATION OF RIGHTS. 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.
The Bank may proceed in any order against the Borrower, the Guarantor or any
other obligor of, or collateral securing, the Obligations.

         13. ILLEGALITY. If any provision contained in this Guaranty should be
invalid, illegal or unenforceable in any respect, it shall not affect or impair
the validity, legality and enforceability of the remaining provisions of this
Guaranty.

         14. CHANGES IN WRITING. No modification, amendment or waiver of, or
consent to any departure by the Guarantor from, any provision of this Guaranty
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


                                       4



purpose for which given. No notice to or demand on the Guarantor will entitle
the Guarantor to any other or further notice or demand in the same, similar or
other circumstance.

         15. ENTIRE AGREEMENT. This Guaranty (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 Guarantor and the Bank with respect to the subject matter hereof; provided,
however, that this Guaranty is in addition to, and not in substitution for, any
other guarantees from the Guarantor to the Bank.

         16. SUCCESSORS AND ASSIGNS. This Guaranty will be binding upon and
inure to the benefit of the Guarantor and the Bank and their respective heirs,
executors, administrators, successors and assigns; provided, however, that the
Guarantor may not assign this Guaranty in whole or in part without the Bank's
prior written consent and the Bank at any time may assign this Guaranty in whole
or in part.

         17. INTERPRETATION. In this Guaranty, unless the Bank and the Guarantor
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 sections or exhibits are to those of this Guaranty. Section
headings in this Guaranty are included for convenience of reference only and
shall not constitute a part of this Guaranty for any other purpose. If this
Guaranty is executed by more than one party as Guarantor, the obligations of
such persons or entities will be joint and several.

         18. GOVERNING LAW AND JURISDICTION. This Guaranty 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 GUARANTY WILL BE INTERPRETED AND
THE RIGHTS AND LIABILITIES OF THE BANK AND THE GUARANTOR 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 Guarantor 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 Guaranty will prevent the Bank from
bringing any action, enforcing any award or judgment or exercising any rights
against the Guarantor individually, against any security or against any property
of the Guarantor within any other county, state or other foreign or domestic
jurisdiction. The Guarantor acknowledges and agrees that the venue provided
above is the most convenient forum for both the Bank and the Guarantor. The
Guarantor waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Guaranty.

         19. EQUAL CREDIT OPPORTUNITY ACT. If the Guarantor is not an "applicant
for credit" under Section 202.2 (e) of the Equal Credit Opportunity Act of 1974
("ECOA"), the Guarantor acknowledges that (i) this Guaranty has been executed to
provide credit support for the Obligations, and (ii) the Guarantor was not
required to execute this Guaranty in violation of Section 202.7(d) of ECOA.


         20.AUTHORIZATION TO OBTAIN CREDIT REPORTS. By signing below, the
Guarantor provides written authorization to the Bank or its designee (and any
assignee or potential assignee) to obtain the Guarantor's personal credit
profile from one or more national credit bureaus. Such authorization shall
extend to obtaining a credit profile in considering this Guaranty and
subsequently for the purposes of update, renewal or extension of such credit or
additional credit and for reviewing or collecting the resulting account.

         21. WAIVER OF JURY TRIAL. THE GUARANTOR IRREVOCABLY WAIVES ANY AND ALL
RIGHT THE GUARANTOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
CLAIM OF ANY NATURE RELATING TO THIS GUARANTY, ANY DOCUMENTS EXECUTED IN


                                       5




CONNECTION WITH THIS GUARANTY OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
DOCUMENTS. THE GUARANTOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.

         The Guarantor acknowledges that it has read and understood all the
provisions of this Guaranty, 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, with the intent to be legally bound hereby.

WITNESS:

______________________________________      ____________________________________
                                               H.F. Lenfest               (SEAL)

Print Name:___________________________

Acknowledged and accepted:

PNC BANK NATIONAL ASSOCIATION


By:___________________________________
Title:________________________________




                                       6