EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
This Subscription Agreement pertains to the offering by Environmental
Tectonics Corporation (the "COMPANY") of 373,831 shares of the Company's common
stock, par value $.05 per share (the "SHARES"), at a purchase price of $5.35 per
share for an aggregate offering of $1,999,995.85. The Company is making this
offering solely to an accredited investor (as defined under Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT")).
The undersigned, intending to be legally bound, hereby offers to
purchase from the Company 373,831 Shares for an aggregate purchase price of
$1,999,995.85.
The Company will be deemed to have accepted this offer upon execution
by it of the Receipt and Acceptance attached to this Subscription Agreement.
This subscription is submitted to the Company subject to its acceptance and in
accordance with, and subject to the terms and conditions described in, this
Subscription Agreement.
1. Verification of Investor Suitability under Regulation D. The
undersigned understands that in order to subscribe for the Shares in this
Offering, the undersigned must be an "accredited investor" as defined in Section
501 of Regulation D under the Securities Act.
2. Amount and Method of Payment. The purchase price for the Shares is
$1,999,995.85 and shall be paid by tender of a check made payable to the Company
or wire transfer of immediately available funds to the account set forth on the
last page hereof in the amount of $1,999,995.85 (the "PURCHASE PRICE").
3. Acceptance of Subscription.
(a) The undersigned understands and agrees that the Company, in its
sole discretion, reserves the right to accept or reject this or any other
subscription for Shares in whole or in part at any time prior to the Closing (as
defined below).
(b) In the event that this subscription is rejected in whole or in
part, the Company shall promptly return all or the applicable portion of the
Purchase Price to the undersigned, as the case may be, and this Subscription
Agreement shall thereafter have no force or effect except with respect to the
portion, if any, of this subscription that is accepted by the Company.
4. (a) Restrictions on Resale or Transfer. The Shares have not been
registered under the Securities Act or any state securities laws, and may not be
sold or transferred unless (i) such sale or transfer is subsequently registered
thereunder; (ii) the undersigned shall have delivered to the Company an opinion
of counsel (which opinion and counsel shall be reasonably acceptable to the
Company) to the effect that the securities to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration; or (iii) the
securities are sold pursuant to Rule 144 promulgated under the Securities Act
(or a successor rule).
(b) The certificate(s) representing the Shares shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or applicable state securities laws, and may not
be offered for sale, sold, transferred or assigned in the absence of
an effective registration statement for the securities under the
Securities Act, or an opinion of counsel, in form, substance and
scope reasonably acceptable to the Company, that registration is not
required under the Securities Act or unless sold pursuant to Rule
144 under the Securities Act."
5. Delivery of the Stock Certificate, Listing of Shares on American
Stock Exchange. The Company will execute and deliver certificate(s) representing
the Shares to the subscriber within five (5) business days after acceptance of
the subscription and receipt of the Purchase Price. The Company shall secure the
listing of the Shares in accordance with the Listing Standards, Policies and
Requirements of the American Stock Exchange within thirty (30) business days
after acceptance of the subscription and receipt of the Purchase Price.
6. Representations and Warranties. The undersigned hereby acknowledges,
represents and warrants to, and agrees with, the Company as follows:
(a) The undersigned understands that the offering and sale of the
Shares by the Company to the undersigned is intended to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act and the provisions of Rule 506 of Regulation D promulgated
thereunder and, in accordance therewith and in furtherance thereof, the
undersigned represents and warrants to and agrees with the Company as follows:
(i) The undersigned has carefully reviewed this Subscription
Agreement and the Disclosure Materials set forth at EXHIBIT "A"
hereto, and understands the information contained in each such
document;
(ii) All documents, records and books pertaining to the
Company and/or this investment that the undersigned has requested
have been made available for inspection by him and/or his attorney,
accountant and other advisor(s);
(iii) The undersigned and/or his advisor(s) have had a
reasonable opportunity to ask questions of and receive information
and answers from a person or persons acting on behalf of the Company
concerning the offering of the Shares and all such questions have
been answered and all such information has been provided to the full
satisfaction of the undersigned;
(iv) The undersigned acknowledges that all current and
periodic reports which the Company has filed with the Securities and
Exchange Commission as of the date of this Subscription Agreement
are available for review through the XXXXX filing system which is
accessible at the Securities and Exchange Commission's website at
xxx.xxx.xxx. All current and periodic reports filed with the
Securities and Exchange Commission since January 1, 2004 are
included in the Disclosure Materials at EXHIBIT "A" hereto;
(v) Neither the undersigned nor the undersigned's investment
advisors, if any, have been furnished any offering literature other
than the Disclosure Materials attached as EXHIBIT "A" hereto and the
undersigned and the undersigned's advisors, if any, have relied only
on the information contained in such Disclosure Materials and the
information, as described in subparagraphs (ii) and (iii) above,
furnished or made available to them by the Company;
(vi) No oral or written representations have been made and no
oral or written information has been furnished to the undersigned or
his advisor(s) in connection herewith that were in any way
inconsistent with the information set forth in this Subscription
Agreement;
(vii) The undersigned is not subscribing for the Shares as a
result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or presented at any
seminar or meeting;
(viii) The undersigned acknowledges that he has conducted his
own independent evaluation of the Company and has analyzed the risks
associated with an investment in the Shares and has based his
decision to invest in the Shares on the results of this evaluation
and analysis;
(ix) The undersigned's overall commitment to investments that
are not readily marketable is not disproportionate to the
undersigned's net worth and the undersigned's investment in the
Company will not cause such overall commitment to become
disproportionate to the undersigned's net worth;
(x) If the undersigned is a natural person, the undersigned
has reached the age of majority in the jurisdiction in which the
undersigned resides, has adequate net worth and means of providing
for the undersigned's current financial needs and personal
contingencies, is able to bear the substantial economic risks of an
investment in the Shares for an indefinite period of time, has no
need for liquidity in such investment and, at the present time,
could afford a complete loss of such investment;
(xi) The address set forth below is the undersigned's true and
correct residence (or, if not an individual, domiciliary) address;
(xii) The undersigned (A) has such knowledge of, and
experience in, business and financial matters so as to enable him to
utilize the information made available to him in connection with the
offering of the Shares in order to evaluate the merits and risks of
an investment in the Shares and to make an informed investment
decision with respect thereto, (B) the undersigned has carefully
evaluated the risks of investing and (C) has the capacity, either
alone, or with a professional advisor, to protect his own interests
in connection with a purchase of the Shares;
(xiii) The undersigned is not relying on the Company with
respect to the economic considerations of the undersigned relating
to this investment. In regard to such considerations, the investor
has relied on the advice of, or has consulted with, only his own
advisor(s). The undersigned recognizes that the information
furnished by the Company does not constitute investment, accounting,
legal or tax advice. The undersigned is relying on professional
advisors for such advice;
(xiv) The undersigned is acquiring the Shares solely for his
own account as principal, for investment purposes only and not with
a view to the resale or distribution thereof, in whole or in part,
and no other person has a direct or indirect beneficial interest in
such Shares; and
(xv) The undersigned understands that the certificate(s)
evidencing ownership of the Shares will bear a restrictive legend
and have not been registered under the Securities Act or any state
securities laws, and may not be sold or transferred unless (i) such
sale or transfer is subsequently registered thereunder; (ii) the
undersigned shall have delivered to the Company an opinion of
counsel (which opinion and counsel shall be reasonably acceptable to
the Company) to the effect that the Shares to be sold or transferred
may be sold or transferred pursuant to an exemption from such
registration; or (iii) the Shares are sold pursuant to Rule 144
promulgated under the Securities Act (or a successor rule).
(b) The undersigned recognizes that an investment in the Shares
involves a number of significant risks including, but not limited to, those
risks described in the Disclosure Materials included at EXHIBIT "A" hereto.
(c) The undersigned understands that no federal or state agency has
passed upon the Shares or made any finding or determination as to the fairness
of this investment in the Shares.
(d) All information that the undersigned has heretofore furnished
and furnishes herewith to the Company are true, correct and complete as of the
date of execution of this Subscription Agreement and if there should be any
material change in such information prior to the closing of the sale of the
Shares (the "CLOSING"), the undersigned will immediately furnish such revised or
corrected information to the Company.
(e) The foregoing representations, warranties and agreements,
together with all other representations and warranties made or given by the
undersigned to the Company in any other written statement or document delivered
in connection with the transactions contemplated hereby, shall be true and
correct in all respects on and as of the date of the Closing as if made on and
as of such date and shall survive such date. If more than one person is signing
this Subscription Agreement, each representation, warranty and undertaking
herein shall be the joint and several representation, warranty and undertaking
of each such person.
7. Indemnification. The undersigned agrees to indemnify and hold
harmless the Company and the officers and directors thereof and each other
person, if any, who controls the Company, within the meaning of Section 15 of
the Securities Act, against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all expenses
reasonably incurred in investigating, preparing or defending against any
litigation commenced or threatened or any claim whatsoever) arising out of or
based upon any false representations or warranty or breach or failure by the
undersigned to comply with any covenant or agreement made by the undersigned
herein or in any other document furnished by the undersigned to the Company in
connection with this transaction.
8. Additional Information. The undersigned hereby acknowledges and
agrees that the Company may make or cause to be made such further inquiry and
obtain such additional information as it may deem appropriate with regard to the
suitability of the undersigned as an investor in the Shares.
9. Binding Effect. The undersigned hereby acknowledges and agrees that,
except as provided under applicable state securities laws, the subscription
hereunder is irrevocable, that the undersigned is not entitled to cancel,
terminate or revoke this Subscription Agreement or any agreements of the
undersigned hereunder and that this Subscription Agreement and such other
agreements shall survive the death or disability of the undersigned and shall be
binding upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and assigns. If the
undersigned is more than one person, the obligations of the undersigned
hereunder shall be joint and several and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and be binding upon each such person and his/her/its heirs, executors,
administrators, successors, legal representatives and assigns.
10. Modification. Neither this Subscription Agreement nor any
provisions hereof shall be waived, modified, discharged or terminated except by
an instrument in writing signed by the party against whom any such waiver,
modification, discharge or termination is sought.
11. Notices. Any notice, demand or other communication that any party
hereto may be required, or may elect, to give to any other party hereunder shall
be sufficiently given if (a) deposited, postage prepaid, in a United States mail
box, stamped, registered or certified mail, return receipt requested, addressed
to such address as may be listed on the books of the Company, or (b) delivered
personally at such address.
12. Counterparts. This Subscription Agreement may be executed through
the use of separate signature pages or in any number of counterparts, and each
of such counterparts shall, for all purposes, constitute one agreement binding
on all parties, notwithstanding that all parties are not signatories to the same
counterpart. This Subscription Agreement may be executed and delivered via
electronic facsimile transmission with the same force and effect as if it were
executed and delivered by the parties simultaneously in the presence of one
another.
13. Entire Agreement. This Subscription Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and there are
no representations, covenants or other agreements except as stated or referred
to herein.
14. Severability. Each provision of this Subscription Agreement is
intended to be severable from every other provision, and the invalidity or
illegality of any provision shall not affect the validity or legality of the
remaining provisions.
15. Assignability. This Subscription Agreement is not transferable or
assignable by the undersigned.
16. Applicable Law. This Subscription Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania as
applied to residents of that jurisdiction executing contracts wholly to be
performed therein.
17. Choice of Jurisdiction. The undersigned agrees that any action or
proceeding directly or indirectly relating to or arising out of this
Subscription Agreement, any breach hereof, or any transaction covered hereby
shall be resolved, whether by arbitration or otherwise, within the Commonwealth
of Pennsylvania. Accordingly, the parties consent and submit to the jurisdiction
of the state courts located within Philadelphia County, Commonwealth of
Pennsylvania or the United States federal courts located in the Eastern District
of Pennsylvania. The parties further agree that any such relief whatsoever in
connection with this Subscription Agreement shall be commenced by such party
exclusively in the state courts located within Philadelphia County, Commonwealth
of Pennsylvania or the United States federal courts located in the Eastern
District of Pennsylvania, or if possible before an arbitral body, located within
Philadelphia, Pennsylvania.
18. Reimbursement. If any action or other proceeding is brought for the
enforcement of this Subscription Agreement or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Subscription Agreement, the successful or prevailing party or parties shall
be entitled to recover reasonable attorney's fees and other costs incurred in
such action or proceeding in addition to any other relief to which they may be
entitled.
19. Further Assurances. Each of the parties shall execute said
documents and other instruments and take such further actions as maybe
reasonably required or desirable to carry out the provisions hereof and the
transactions contemplated hereby.
20. State Securities Laws. Subscribers should also be aware of the
following additional considerations:
FOR RESIDENTS OF ALL STATES:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATES
AND THE SECURITIES ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT ACCORDING TO SUCH
RESTRICTIONS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE
ACCURACY OR ADEQUACY OF THE DISCLOSURE MATERIALS PRODUCED TO THE
SUBSCRIBERS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Subscription Information (to be completed by individual subscriber):
Shares Purchased 373,831
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Purchase Price of Shares ($5.35 per share) $1,999,995.85
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Name(s) in which the Shares is to be registered:
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Home Address
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Mailing Address
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Form of joint ownership (if applicable). (If one of these items is checked,
subscriber and co-subscriber must both sign all documents.):
Tenants-in-Common Joint Tenants
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IN WITNESS WHEREOF, the undersigned has caused this Subscription
Agreement to be duly executed on the 14th day of February, 2005.
X. X. Xxxxxxx /s/ X. X. Xxxxxxx
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Please Print Name of Subscriber Signature of Subscriber Social Security Number
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Please Print Name of Co-Subscriber Signature of Co-Subscriber Social Security Number
THIS PORTION NOT TO BE COMPLETED BY SUBSCRIBER
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RECEIPT AND ACCEPTANCE
CASH OR CHECK AND SUBSCRIPTION AGREEMENT RECEIVED ON ___________ , 2005.
By:
SUBSCRIPTION ACCEPTED ON FEBRUARY 15, 2005.
ENVIRONMENTAL TECTONICS CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Chief Financial Officer
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WIRE TRANSFER INSTRUCTIONS
If Subscriber wishes to wire transfer the purchase price of his Shares, he shall
wire transfer immediately available funds in the amount of the Purchase Price
subscribed for hereunder, as follows:
BANK:
ACCOUNT NAME:
ACCOUNT NO.:
BANK ROUTING NO.:
EXHIBIT A
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DISCLOSURE MATERIALS
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PERIODIC REPORTS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION
We have filed with the Securities and Exchange Commission (the "SEC")
all current and periodic reports necessary to comply with the information and
periodic reporting requirements of the Securities Exchange Act of 1934, as
amended. You may read and copy these reports at the SEC's public reference rooms
located at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx X.X. 00000. Copies of these
reports can be obtained from the SEC at prescribed rates. Please call the SEC at
0-000-XXX-0000 for information about the public reference rooms. Our reports are
also available to the public from the SEC's Web site at xxxx://xxx.xxx.xxx. For
your convenience, we have attached copies of the following reports:
1. our Quarterly Report on Form 10-Q for the quarterly period ended
November 28, 2003;
2. our Annual Report on Form 10-K for the fiscal year ended February
27, 2004;
3. our Quarterly Report on Form 10-Q for the quarterly period ended May
28, 2004;
4. our Quarterly Report on Form 10-Q for the quarterly period ended
August 27, 2004; and
5. our Quarterly Report on Form 10-Q for the quarterly period ended
November 26, 2004.
