SERIES C PREFERRED STOCK PURCHASE AGREEMENT

Exhibit 10.1

SERIES C PREFERRED STOCK PURCHASE AGREEMENT

Dated as of August 23, 2007

Between

ENVIRONMENTAL TECTONICS CORPORATION

and

H.F. LENFEST

TABLE OF CONTENTS

		Page
ARTICLE 1 CERTAIN DEFINITIONS			1
ARTICLE 2 PURCHASE AND SALE OF SERIES C PREFERRED STOCK			4
Section 2.1 Purchase and Sale of Preferred Stock			4
Section 2.2 Closing			4
ARTICLE 3 BUYER’S REPRESENTATIONS AND WARRANTIES			5
Section 3.1 Investment Purpose			5
Section 3.2 Accredited Buyer Status			5
Section 3.3 Reliance on Exemptions			5
Section 3.4 Information			5
Section 3.5 Governmental Review			5
Section 3.6 Transfer or Resale			5
Section 3.7 Authorization; Enforcement			6
Section 3.8 Residency			6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY			6
Section 4.1 Organization and Qualification			6
Section 4.2 Authorization; Enforcement			6
Section 4.3 Capitalization			7
Section 4.4 Issuance of Shares			7
Section 4.5 No Conflicts			8
Section 4.6 SEC Documents; Financial Statements			8
Section 4.7 Absence of Certain Changes			9
Section 4.8 Absence of Litigation			9
Section 4.9 Patents, Copyrights, etc			9
Section 4.10 No Materially Adverse Contracts, Etc			10
Section 4.11 Tax Status			10
Section 4.12 Certain Transactions			10
Section 4.13 Disclosure			10
Section 4.14 Acknowledgment Regarding the Buyer’s Purchase of Securities			11
Section 4.15 No General Solicitation			11
Section 4.16 No Integrated Offering			11
Section 4.17 No Brokers			11
Section 4.18 Acknowledgment Regarding Securities			11
Section 4.19 Permits; Compliance			11
Section 4.20 Environmental Matters			11
Section 4.21 Title to Property			12
Section 4.22 Insurance			12
Section 4.23 Internal Accounting Controls			12
Section 4.24 Foreign Corrupt Practices			13

		Page
ARTICLE 5 COVENANTS			13
Section 5.1 Best Efforts			13
Section 5.2 Statement With Respect to Shares; Form D; Blue Sky Laws			13
Section 5.3 Reporting Status			13
Section 5.4 Use of Proceeds			13
Section 5.5 Reservation of Shares			14
Section 5.6 Listing			14
Section 5.7 No Integration			14
Section 5.8 Issuance of Series C Shares			14
Section 5.9 Legal Compliance			14
Section 5.10 Expenses			14
ARTICLE 6 INDEMNIFICATION			14
ARTICLE 7 MISCELLANEOUS			15
Section 7.1 Governing Law			15
Section 7.2 Notices			15
Section 7.3 Counterparts; Signatures by Facsimile			16
Section 7.4 Headings			16
Section 7.5 Severability			16
Section 7.6 Entire Agreement; Amendments			16
Section 7.7 Successors and Assigns			16
Section 7.8 Third Party Beneficiaries			17
Section 7.9 Survival			17
Section 7.10 Further Assurances			17
Section 7.11 No Strict Construction			17

EXHIBITS

EXHIBIT A — REGISTRATION RIGHTS AGREEMENT
EXHIBIT B — STATEMENT WITH RESPECT TO SHARES

      THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”), is entered into as of the 23 ^rd day of August, 2007, by and between Environmental Tectonics Corporation, a Pennsylvania corporation (the “Company”), and H.F. Lenfest, a Pennsylvania resident (the “Buyer”).

RECITALS

      WHEREAS , the parties desire that, upon the terms and subject to the conditions contained herein, the Company may issue and sell to the Buyer and the Buyer shall purchase from the Company Three Million Three Hundred Thousand Dollars (U.S.) ($3,300,000) of the Company’s Series C Preferred Stock (as defined below) from time to time as provided herein; and

      WHEREAS , such investment will be made in reliance upon the provisions of Section 4(2) (“Section 4(2)”) and Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), and/or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to the investment to be made hereunder.

      NOW, THEREFORE , intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1
CERTAIN DEFINITIONS

		Section 1.1		“ Agreement ” shall have the meaning set forth in the preamble of this Agreement.
		Section 1.2		“ Articles of Incorporation ” shall have the meaning set forth in Section 4.3 .
		Section 1.3		“ Buyer ” shall have the meaning set forth in the preamble of this Agreement.
		Section 1.4		“ Bylaws ” shall have the meaning set forth in Section 4.3 .
		Section 1.5		“ Closing ” shall have the meaning set forth in Section 2.2(a) .
		Section 1.6		“ Closing Date ” shall mean the date on which the Closing occurs.
		Section 1.7		“ Common Stock ” shall mean the Company’s common stock, $0.05 par value per share.
		Section 1.8		“ Company ” shall have the meaning set forth in the preamble of this Agreement.
		Section 1.9		“ Company Permits ” shall have the meaning set forth in Section 4.19 .

		Section 1.10		“ Control Person ” shall have the meaning set forth in Article VIII .
		Section 1.11		“ Conversion Price ” shall equal the closing price for the Company’s Common Stock as reported on the American Stock Exchange by Bloomberg Financial Markets for the trading date immediately preceding the Closing Date.
		Section 1.12		“ Damages ” shall mean any loss, claim, damage, liability, costs and expenses (including, without limitation, reasonable attorneys’ fees and disbursements and costs and expenses of expert witnesses and investigation).
		Section 1.13		“ Environmental Laws ” shall have the meaning set forth in Section 4.20(a) .
		Section 1.14		“ Event of Default ” shall have the meaning set forth in Section 7.2 .
		Section 1.15		“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder.
		Section 1.16		“ Hazardous Materials ” shall have the meaning set forth in Section 4.20 .
		Section 1.17		“ Intellectual Property ” shall have the meaning set forth in Section 4.9 .
		Section 1.18		“ Investment Amount ” shall mean Three Million Three Hundred Thousand Dollars ($3,300,000).
		Section 1.19		“ Material Adverse Effect ” shall mean any material adverse effect on (i) the Securities, (ii) the assets, liabilities, business, properties, operations, financial condition or results of operations of the Company and its Subsidiaries, if any, taken as a whole, (iii) the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith or (iv) the authority or the ability of the Company to perform its obligations under the Transaction Documents (as defined below).
		Section 1.20		“ NASD ” shall mean the National Association of Securities Dealers, Inc.
		Section 1.21		“ Person ” shall mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
		Section 1.22		“ Principal Market ” shall mean the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock Exchange or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock.

		Section 1.23		“ Registration Rights Agreement ” shall mean the agreement regarding the filing of the registration statement(s) for the resale of the shares of Common Stock issuable upon conversion of the Series C Preferred Stock, entered into between the Company and the Buyer as of the Closing Date and in the form attached hereto as Exhibit A .
		Section 1.24		“ Regulation D ” shall have the meaning set forth in the recitals of this Agreement.
		Section 1.25		“ Rule 144 ” shall mean Rule 144 promulgated under the Securities Act (or a successor rule).
		Section 1.26		“ SEC ” shall mean the United States Securities and Exchange Commission.
		Section 1.27		“ SEC Documents ” shall have the meaning set forth in Section 4.6 .
		Section 1.28		“ Section 4(2) ” shall have the meaning set forth in the recitals of this Agreement.
		Section 1.29		“ Securities ” shall mean collectively the Series C Shares and the shares of Common Stock issuable upon conversion of the Series C Shares.
		Section 1.30		“ Securities Act ” shall have the definition ascribed to it in the recitals of this Agreement.
		Section 1.31		“ Series C Preferred Stock ” shall mean the Company’s Series C Cumulative Convertible Participating Preferred Stock, $0.05 par value per share.
		Section 1.32		“ Series C Shares ” shall have the meaning set forth in Section 2.1 .
		Section 1.33		“ Statement With Respect to Shares ” shall mean the Statement With Respect to Shares defining the rights and preferences of the Series C Shares, approved by the Company’s Board of Directors and filed with the Secretary of State for the Commonwealth of Pennsylvania, in the form attached hereto as Exhibit B .
		Section 1.34		“ Subsidiaries ” shall mean any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest and which would be a “Significant Subsidiary” of the Company as defined under Rule 1-02(w) of Regulation S-X promulgated under the Securities Act.
		Section 1.35		“ Transaction Documents ” shall mean this Agreement, the Registration Rights Agreement and the Statement With Respect to Shares.

ARTICLE 2
PURCHASE AND SALE OF SERIES C PREFERRED STOCK

     Section 2.1 Purchase and Sale of Preferred Stock . At the Closing, the Company shall issue and sell to the Buyer, and the Buyer shall purchase from the Company 3,300 shares of the Series C Preferred Stock (the “Series C Shares”) for the Investment Amount. The aggregate number of shares of Common Stock into which the Series C Shares shall be convertible shall be determined by dividing the Investment Amount by the Conversion Price for such Series C Shares.

     Section 2.2 Closing .

          (a) Closing Mechanics . The closing of this Agreement (the “Closing”) shall be deemed to occur when this Agreement and the Registration Rights Agreement have been executed by both the Buyer and the Company, and the other conditions set forth in Section 2.2(b) below have been met. At the Closing, the Company will deliver to the Buyer a certificate representing the Series C Shares that the Buyer has purchased hereunder against delivery to the Company by the Buyer of the Investment Amount, paid by (i) a check payable to the Company’s order, (ii) wire transfer of funds to the Company, or (iii) any combination of the foregoing.

          (b) Conditions to the Buyer’s Obligations . As a prerequisite to the Closing and the Buyer’s obligations hereunder, all of the following conditions shall have been satisfied prior to or concurrently with the Company’s execution and delivery of this Agreement:

	(i)		the following documents shall have been delivered to the Buyer: (A) the Registration Rights Agreement (executed by the Company) (B) a Secretary’s certificate as to (I) the resolutions of the Audit Committee of the Company’s Board of Directors authorizing this transaction, (II) the Company’s Articles of Incorporation, and (III) the Company’s Bylaws; and (C) an Officer’s Certificate in form and substance to be agreed upon by the parties;
	(ii)		the Statement With Respect to Shares shall have been filed with the Secretary of State of the Commonwealth of Pennsylvania and shall be in full force and effect;
	(iii)		the Company’s Common Stock shall be listed for trading and actually trading on the American Stock Exchange or a Principal Market;
	(iv)		since the date of filing of the Company’s most recent SEC Document, other than as disclosed to Buyer, no event that had or is reasonably likely to have a Material Adverse Effect shall have occurred; and
	(v)		the representations and warranties of the Company in this Agreement shall be true and correct in all material respects.

ARTICLE 3
BUYER’S REPRESENTATIONS AND WARRANTIES

     The Buyer represents and warrants to the Company that:

     Section 3.1 Investment Purpose . As of the date hereof, the Buyer is purchasing the Securities for his own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the Securities Act; provided , however , that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act.

     Section 3.2 Accredited Buyer Status . The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Buyer”).

     Section 3.3 Reliance on Exemptions . The Buyer understands that the Securities are being offered and sold to the Buyer in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

     Section 3.4 Information . The Buyer has been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or his advisors. The Buyer and his advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigation conducted by the Buyer or any of his advisors or representatives shall modify, amend or affect the Buyer’s right to rely on the Company’s representations and warranties contained in Section 4 below. The Buyer understands that his investment in the Securities involves a significant degree of risk.

     Section 3.5 Governmental Review . The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.

     Section 3.6 Transfer or Resale . The Buyer understands that (i) except as provided in the Registration Rights Agreement, the sale or resale of the Securities has not been and is not being registered under the Securities Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the Securities Act, (b) the Buyer shall have delivered to the Company an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, (c) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 3.6 and

who is an Accredited Buyer or (d) the Securities are sold pursuant to Rule 144; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case, other than pursuant to the terms and conditions of the Registration Rights Agreement). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or other lending arrangement. In connection with any sale of Registrable Securities by the Buyer pursuant to clause (a) above, the Buyer agrees to sell all such securities in compliance with applicable prospectus delivery requirements.

     Section 3.7 Authorization; Enforcement . This Agreement and the Registration Rights Agreement have been duly and validly authorized by Buyer. This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes, and upon execution and delivery by the Buyer of the Registration Rights Agreement, such agreement will constitute, valid and binding agreements of the Buyer enforceable in accordance with their terms.

     Section 3.8 Residency . The Buyer is a resident of the Commonwealth of Pennsylvania.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to the Buyer that:

     Section 4.1 Organization and Qualification . The Company and each of its Subsidiaries is a corporation duly organized and validly subsisting under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. Schedule 4.1 sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.

     Section 4.2 Authorization; Enforcement . (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Statement With Respect to Shares and the Registration Rights Agreement and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Statement With Respect to Shares and the Registration Rights Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Series C

Shares and the issuance and reservation for the shares of Common Stock issuable upon conversion of the Series C Shares) have been duly authorized by the Audit Committee of the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required by law, regulation or regulatory body, (iii) this Agreement has been duly executed and delivered by the Company, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Statement With Respect to Shares (and the filing of the Statement With Respect to Shares with the Secretary of State of the Commonwealth of Pennsylvania on or before the Closing as required by Section 2(b)(ii)) and the Registration Rights Agreement, such documents will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

     Section 4.3 Capitalization . As of the date hereof, the authorized capital stock of the Company consists of 1,000,000 shares of Preferred Stock, of which 6,000 shares are issued and outstanding, 20,000,000 shares of Common Stock, of which 9,028,459 shares of Common Stock are issued and outstanding, 1,774,647 shares of Common Stock are reserved for issuance pursuant to the Company’s stock option plans, and 2,873,343 shares of Common Stock are reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for shares of Common Stock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 4.3 , as of the Closing Date (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the Securities Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be or could be triggered by the issuance of the Series C Shares. The Company has furnished to the Buyer true and correct copies