Exhibit 10.9
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT
UNDER THE ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE ACT
AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER.
STOCK PURCHASE WARRANT
This Warrant is issued this 27th day of March, 1997, by
ENVIRONMENTAL TECTONICS CORPORATION, a Pennsylvania corporation
(the "Company"), to SIRROM CAPITAL CORPORATION, a Tennessee
corporation (SIRROM CAPITAL CORPORATION and any subsequent
assignee or transferee hereof are hereinafter referred to
collectively as "Holder" or "Holders").
AGREEMENT:
1. Issuance of Warrant; Term. For and in
consideration of SIRROM CAPITAL CORPORATION purchasing from the
Company its debenture due March 27, 2004, in the initial
principal amount of Four Million and no/100ths Dollars (the
"Debenture") pursuant to the terms of a Debenture Purchase
Agreement of even date herewith (the "Debenture Purchase
Agreement"), and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Company hereby grants to Holder the right to purchase
166,410 shares of the Company's common stock, par value $.10 per
share (the "Common Stock"), which the Company represents to equal
five percent (5%) of the shares of capital stock outstanding on
the day immediately prior to the date hereof, calculated on a
fully diluted basis, excluding the shares of Common Stock
issuable upon conversion of the Series A Convertible Preferred
Stock of the Company issued and sold to Sirrom Capital
Corporation on the date hereof and assuming exercise of this
Warrant ("Base Amount"). The shares of Common Stock issuable
upon exercise of this Warrant are hereinafter referred to as the
"Shares." This Warrant shall be exercisable at any time and from
time to time from the date hereof until March 27, 2004.
2. Exercise Price. The exercise price (the "Exercise
Price") per share for which all or any of the Shares may be
purchased pursuant to the terms of this Warrant shall be One
Dollar ($1.00).
3. Exercise. This Warrant may be exercised by the
Holder hereof (but only on the conditions hereinafter set forth)
as to all or any increment or increments of one hundred (100)
Shares (or the balance of the Shares if less than such number),
upon delivery of written notice of intent to exercise to the
Company at the following address: 000 Xxxxx Xxx, Xxxxxxxxxxx, XX
00000-0000 or such other address as the Company shall designate
in a written notice to the Holder hereof, together with this
Warrant and payment to the Company of the aggregate Exercise
Price of the Shares so purchased. The Exercise Price shall be
payable, at the option of the Holder, (i) by certified or bank
check, (ii) by the surrender of the Debenture or portion thereof
having an outstanding principal balance equal to the aggregate
Exercise Price or (iii) by the surrender of a portion of this
Warrant where the Shares subject to the portion of this Warrant
that is surrendered have a Fair Market Value (as defined in
Section 4(c) below) equal to the aggregate Exercise Price. Upon
exercise of this Warrant as aforesaid, the Company shall as
promptly as practicable, and in any event within fifteen (15)
days thereafter, execute and deliver to the Holder of this
Warrant a certificate or certificates for the total number of
whole Shares for which this Warrant is being exercised in such
names and denominations as are requested by such Holder. If this
Warrant shall be exercised with respect to less than all of the
Shares, the Holder shall be entitled to receive a new Warrant
covering the number of Shares in respect of which this Warrant
shall not have been exercised, which new Warrant shall in all
other respects be identical to this Warrant. The Company
covenants and agrees that it will pay when due any and all state
and federal issue taxes which may be payable in respect of the
issuance of this Warrant or the issuance of any Shares upon
exercise of this Warrant.
4. Covenants and Conditions. The above provisions
are subject to the following:
(a) Neither this Warrant nor the Shares have been
registered under the Securities Act of 1933, as amended
("Securities Act") or any state securities laws ("Blue Sky
Laws"). This Warrant has been acquired for investment purposes
and not with a view to distribution or resale and may not be sold
or otherwise transferred without (i) an effective registration
statement for such Warrant under the Securities Act and such
applicable Blue Sky Laws, or (ii) an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under
the Securities Act or under any applicable Blue Sky Laws (the
Company hereby acknowledges that Xxxxxxxx & Xxx, PLC is
acceptable counsel). Transfer of the shares issued upon the
exercise of this Warrant shall be restricted in the same manner
and to the same extent as the Warrant and the certificates
representing such Shares shall bear substantially the following
legend:
THE SHARES OF COMMON STOCK
REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (I) A
REGISTRATION STATEMENT UNDER THE
ACT AND SUCH APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR
(II) IN THE OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY,
REGISTRATION UNDER SUCH ACT AND
SUCH APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED IN CONNECTION
WITH SUCH PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such other
documents and instruments as counsel for the Company reasonably
deems necessary to effect the compliance of the issuance of this
Warrant and any shares of Common Stock issued upon exercise
hereof with applicable federal and state securities laws.
(b) The Company covenants and agrees that all
Shares which may be issued upon exercise of this Warrant will,
upon issuance and payment therefor, be legally and validly issued
and outstanding, fully paid and nonassessable, free from all
taxes, liens, charges and preemptive rights, if any, with respect
thereto or to the issuance thereof. The Company shall at all
times reserve and keep available for issuance upon the exercise
of this Warrant such number of authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full
of this Warrant.
(c) The Company covenants and agrees that it
shall not sell any shares of the Company's capital stock at a
price per share below the Fair Market Value of such shares,
without the prior written consent of the Holder hereof except
pursuant to exercise of (i) options outstanding as of the date
hereof, (ii) options granted subsequent to the date hereof
provided, however, the exercise price of such options is no less
than the Fair Market Value of the Common Stock at the date of the
grant, or (iii) the warrant for the purchase of 100,000 shares of
Common Stock currently held by Chase Manhattan Capital
Corporation. In the event that the Company sells shares of the
Company's capital stock in violation of this Section 3(c), the
number of shares issuable upon exercise of this Warrant shall be
equal to the product obtained by multiplying the number of shares
issuable pursuant to this Warrant prior to such sale by the
quotient obtained by dividing (i) the Fair Market Value of the
shares issued in violation of this Section 3(c) by (ii) the price
at which such shares were sold.
(d) "Fair Market Value" per share of Common Stock
shall mean (i) in the case of a security listed or admitted to
trading on any securities exchange, the last reported sale price,
regular way (as determined in accordance with the practices of
such exchange), on such day, or if no sale takes place on such
day, the average of the closing bid and asked prices on such day
(and in the case of a security traded on more than one national
securities exchange, at such price or such average, upon the
exchange on which the volume of trading during the last calendar
year was the greatest), (ii) in the case of a security not then
listed or admitted to trading on any securities exchange, the
last reported sale price on such day, or if no sale takes place
on such day, the average of the closing bid and asked prices on
such day, as reported by a reputable quotation service designated
by the Company, (iii) in the case of a security not then listed
or admitted to trading on any securities exchange and as to which
no such reported sale price or bid and asked prices are
available, the average of the reported high bid and low asked
prices on such day, as reported by a reputable quotation service,
or the Wall Street Journal, or if there are no bids and asked
prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than 30
days prior to the date in question) for which prices have been so
reported, and (iv) in the case of a security determined by the
Company's Board of Directors as not having an active quoted
market or in the case of other property, such fair market value
as shall be determined by the Board of Directors. The
determination as to whether any fractional shares are issuable
shall be based upon the total number of shares of Preferred
Stock being converted at any one time by any holder thereof, not
upon each share of Preferred Stock being converted.
(e) In the event that the Company, pursuant to
the terms of that certain letter agreement dated July 28, 1994,
between the Company and Osprey Partners ("Osprey"), grants to
Osprey a warrant to purchase 125,000 shares of the Common Stock,
then the number of Shares as to which this Warrant initially is
exercisable shall be increased by 6,250 shares, subject to
further adjustment as provided herein.
5. Transfer of Warrant. Subject to the provisions of
Section 3 hereof, this Warrant may be transferred, in whole or in
part, to any person or business entity, by presentation of the
Warrant to the Company with written instructions for such
transfer; provided, however, that this Warrant shall not be
transferred without the prior written consent of the Company to
either of Wyle Labs or Latecoere or to any entity that controls,
is controlled by, or is under common control with either of Wyle
Labs or Latecoere. Upon such presentation for transfer, the
Company shall promptly execute and deliver a new Warrant or
Warrants in the form hereof in the name of the assignee or
assignees and in the denominations specified in such
instructions. The Company shall pay all expenses incurred by it
in connection with the preparation, issuance and delivery of
Warrants under this Section.
6. Warrant Holder Not Shareholder; Rights Offering;
Preemptive Rights. Except as otherwise provided herein, this
Warrant does not confer upon the Holder, as such, any right
whatsoever as a shareholder of the Company. Notwithstanding the
foregoing, if the Company should offer to all of the Company's
shareholders the right to purchase any securities of the Company,
then all shares of Common Stock that are subject to this Warrant
shall be deemed to be outstanding and owned by the Holder and the
Holder shall be entitled to participate in such rights offering.
The Company shall not grant any preemptive rights with respect to
any of its capital stock without the prior written consent of the
Holder.
7. Observation Rights. A nominee of the holder of
that portion of this Warrant representing a majority of
underlying shares shall receive notice of and be entitled to
attend or may send a representative to attend all meetings of the
Company's Board of Directors in a non-voting observation capacity
and shall receive a copy of all correspondence and information
delivered to the Company's Board of Directors, from the date
hereof until such time as the indebtedness evidenced by the
Debenture has been paid in full; provided, however, that this
requirement shall be deemed satisfied so long as a nominee of the
original purchaser of the Debenture is a director of the Company.
8. Adjustment Upon Changes in Stock.
(a) If all or any portion of this Warrant shall
be exercised subsequent to any stock split, stock dividend,
recapitalization, combination of shares of the Company, or other
similar event, occurring after the date hereof, then the Holder
exercising this Warrant shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of shares
which such Holder would have received if this Warrant had been
exercised immediately prior to the record date for such stock
split, stock dividend, recapitalization, combination of shares,
or other similar event. If any adjustment under this Section
8(a), would create a fractional share of Common Stock or a right
to acquire a fractional share of Common Stock, such fractional
share shall be disregarded and the number of shares subject to
this Warrant shall be the next higher number of shares, rounding
all fractions upward. Whenever there shall be an adjustment
pursuant to this Section 8(a), the Company shall forthwith notify
the Holder or Holders of this Warrant of such adjustment, setting
forth in reasonable detail the event requiring the adjustment and
the method by which such adjustment was calculated.
(b) If all or any portion of this Warrant shall
be exercised subsequent to any merger, consolidation, exchange of
shares, separation, reorganization or liquidation of the Company,
or other similar event, occurring after the date hereof, as a
result of which shares of Common Stock shall be changed into the
same or a different number of shares of the same or another class
or classes of securities of the Company or another entity, or the
holders of Common Stock are entitled to receive cash or other
property, then the Holder exercising this Warrant shall receive,
for the aggregate price paid upon such exercise, the aggregate
number and class of shares, cash or other property which such
Holder would have received if this Warrant had been exercised
immediately prior to such merger, consolidation, exchange of
shares, separation, reorganization or liquidation, or other
similar event. If any adjustment under this Section 8(b) would
create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant
shall be the next higher number of shares, rounding all fractions
upward. Whenever there shall be an adjustment pursuant to this
Section 8(b), the Company shall forthwith notify the Holder or
Holders of this Warrant of such adjustment, setting forth in
reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated.
9. Certain Notices. In case at any time the Company
shall propose to:
(a) declare any cash dividend upon its Common
Stock;
(b) declare any dividend upon its Common Stock
payable in stock or make any special dividend or other
distribution to the holders of its Common Stock;
(c) offer for subscription to the holders of any
of its Common Stock any additional shares of stock in any class
or other rights;
(d) reorganize, or reclassify the capital stock
of the Company, or consolidate, merge or otherwise combine with,
or sell of all or substantially all of its assets to, another
corporation;
(e) voluntarily or involuntarily dissolve,
liquidate or wind up of the affairs of the Company; or
(f) redeem or purchase any shares of its capital
stock or securities convertible into its capital stock;
then, in any one or more of said cases, the Company shall give to
the Holder of the Warrant, by certified or registered mail,
(i) at least twenty (20) days' prior written notice of the date
on which the books of the Company shall close or a record shall
be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, and (ii) in the case of
such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, at least twenty
(20) days' prior written notice of the date when the same shall
take place. Any notice required by clause (i) shall also
specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common
Stock shall be entitled thereto, and any notice required by
clause (ii) shall specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be.
10. Article and Section Headings. Numbered and titled
article and section headings are for convenience only and shall
not be construed as amplifying or limiting any of the provisions
of this Warrant.
11. Notice. Any and all notices, elections or demands
permitted or required to be made under this Warrant shall be in
writing, signed by the party giving such notice, election or
demand and shall be delivered personally, telecopied, telexed, or
sent by certified mail or overnight via nationally recognized
courier service (such as Federal Express), to the other party at
the address set forth below, or at such other address as may be
supplied in writing and of which receipt has been acknowledged in
writing. The date of personal delivery or telecopy or two (2)
business days after the date of mailing (or the next business day
after delivery to such courier service), as the case may be,
shall be the date of such notice, election or demand. For the
purposes of this Warrant:
The Address of Holder is: Sirrom Capital Corporation
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Fax No. (000) 000-0000
with a copy to: Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx I.N. XxXxxxxx,
Esq.
Fax No. (000) 000-0000
The Address of Company is: Environmental Tectonics Corporation
000 Xxxxx Xxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Fax No. (000) 000-0000
with a copy to: Xxxxxxx & Xxx, A Professional
Corporation
One Glenhardie Corporate Center
0000 Xxxxxxxx Xxxx
X.X. Xxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax No. (000) 000-0000
12. Severability. If any provisions(s) of this
Warrant or the application thereof to any person or circumstances
shall be invalid or unenforceable to any extent, the remainder of
this Warrant and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall
be enforced to the greatest extent permitted by law.
13. Entire Agreement. This Warrant between the
Company and Holder represents the entire agreement between the
parties concerning the subject matter hereof, and all oral
discussions and prior agreement are merged herein.
14. Governing Law and Amendments. This Warrant shall
be construed and enforced under the laws of the State of
Tennessee applicable to contracts to be wholly performed in such
State. No amendment or modification hereof shall be effective
except in a writing executed by each of the parties hereto.
15. Counterparts. This Warrant may be executed in any
number of counterparts and be different parties to this Warrant
in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same Warrant.
16. Jurisdiction and Venue. The Company hereby
consents to the jurisdiction of the courts of the State of
Tennessee and the United States District Court for the Middle
District of Tennessee, as well as to the jurisdiction of all
courts from which an appeal may be taken from such courts, for
the purpose of any suit, action or other proceeding arising out
of any of its obligations arising under this Agreement or with
respect to the transactions contemplated hereby, and expressly
waives any and all objections it may have as to venue in any of
such courts.
17. Equity Participation. This Warrant is issued in
connection with the Debenture Purchase Agreement. It is intended
that this Warrant constitute an equity participation under and
pursuant to T.C.A. Section 00-00-000, et seq. and that equity
participation be permitted under said statutes and not constitute
interest on the Debenture. If under any circumstances
whatsoever, fulfillment of any obligation of this Warrant, the
Debenture Purchase Agreement, or any other agreement or document
executed in connection with the Debenture Purchase Agreement,
shall violate the lawful limit of any applicable usury statute or
any other applicable law with regard to obligations of like
character and amount, then the obligation to be fulfilled shall
be reduced to such lawful limit, such that in no event shall
there occur, under this Warrant, the Debenture Purchase
Agreement, or any other document or instrument executed in
connection with the Debenture Purchase Agreement, any violation
of such lawful limit, but such obligation shall be fulfilled to
the lawful limit. If any sum is collected in excess of the
lawful limit, such excess shall be applied to reduce the
principal amount of the Debenture.
IN WITNESS WHEREOF, the parties hereto have set their
hands as of the date first above written.
COMPANY: ENVIRONMENTAL TECTONICS
CORPORATION:
By:/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Chief Financial Officer
HOLDER: SIRROM CAPITAL CORPORATION
By:/s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President
