UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
ENVIRONMENTAL TECTONICS CORPORATION
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(Name of Issuer)
Common Stock, $0.05 Par Value Per Share
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(Title of Class of Securities)
294092101
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(CUSIP Number)
Thomas K. Pasch, Esquire
General Counsel
The Lenfest Group, LLC
1332 Enterprise Drive, Suite 200
West Chester, PA 19380
610-918-8435
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(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications)
copy to: Francis V. McNamara, III, Esquire
Saul Ewing LLP
1200 Liberty Ridge Drive
Suite 200
Wayne, PA 19087
610-251-5066
February 18, 2003
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[_]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
________________________________________________________________________________
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
H.F. Lenfest
________________________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
________________________________________________________________________________
3. SEC USE ONLY
________________________________________________________________________________
4. SOURCE OF FUNDS
PF
________________________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
________________________________________________________________________________
7. SOLE VOTING POWER
NUMBER OF 2,455,940
SHARES _________________________________________________________________
8. SHARED VOTING POWER
BENEFICIALLY
3,813,748
OWNED BY
_________________________________________________________________
EACH 9. SOLE DISPOSITIVE POWER
REPORTING 2,455,940
PERSON _________________________________________________________________
10. SHARED DISPOSITIVE POWER
WITH
0
________________________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,455,940
________________________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
[X]
________________________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.6%
________________________________________________________________________________
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
________________________________________________________________________________
Item 1. Security and Issuer
This Statement on Schedule 13D relates to common stock, par value $.05
per share, issuable pursuant to a 10.0% Senior Subordinated Convertible Note
(the "Note") and a common stock purchase warrant (the "Warrant") of
Environmental Tectonics Corporation (the "Issuer"), whose principal executive
office is located at County Line Industrial Park, Southampton, PA 18966. The
Common Stock is currently traded on the American Stock Exchange ("AMEX") under
the symbol "ETC."
Item 2. Identity and Background
(a)-(c) This Schedule 13D is filed by H.F. Lenfest, an individual (the
"Reporting Person"). The Reporting Person is President and Chief Executive
Officer of The Lenfest Group, LLC, located at 1332 Enterprise Drive, Suite 200,
West Chester, PA 19380.
(d) The Reporting Person has not been convicted in a criminal
proceeding in the past five years.
(e) During the past five years, the Reporting Person has not been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction which resulted in the Reporting Person being subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) The Reporting Person is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration
On February 18, 2003, the Issuer and the Reporting Person entered into
a Convertible Note and Warrant Purchase Agreement (the "Agreement") pursuant to
which the Reporting Person purchased the Note and the Warrant at a purchase
price of $10,000,000. This transaction was funded from the Reporting Person's
personal funds.
Item 4. Purpose of Transaction
The Reporting Person has and is acquiring the securities of the Issuer
described in this Schedule 13D as an investment. The Reporting Person has not
formulated any plans or proposals of the types referred to in clauses (a)
through (j) of Item 4 of Schedule 13D except as set forth below:
o Under the terms of the Agreement, as long as the Reporting Person or
any of his affiliates beneficially own five percent (5%) of the
outstanding shares of common stock, calculated on a fully-diluted
basis, the Issuer agrees to nominate for election to its Board of
Directors the Reporting Person or a designee of the Reporting Person
to serve in such capacity, and the Issuer agrees to use its best
efforts to procure the election and reelection to the Board of
Directors of the Reporting Person or his designee.
o Upon each conversion of the Note or upon the grant by the Issuer of
any of the 568,386 available but unissued stock options under the
Issuer's stock option plan, the Issuer agrees to issue additional
warrants entitling the Reporting Person to purchase shares of common
stock equal to ten percent (10%) of the shares of common stock either
issued upon such conversion of the Note or issuable upon the exercise
of such stock options. The exercise price and other terms and
conditions of these additional warrants shall be the same as may then
apply to the original Warrant.
o The number of shares of common stock issuable under the Warrant is
subject to adjustment in accordance with anti-dilution provisions in
the Warrant.
o The Note bears interest on the outstanding principal amount at an
annual rate equal to ten percent (10%). The Note permits the Issuer to
defer its quarterly payments of interest, which, upon deferral, will
be added to the principal and accrue interest thereon. At any time, or
from time to time, the Reporting Person may convert all or a portion
of the then outstanding principal balance of, and accrued and unpaid
interest on, the Note into shares of common stock at a conversion
price of $6.05 per share.
o The aggregate number of shares that the Reporting Person may acquire
pursuant to the exercise of the Warrant and conversion of the Note may
not exceed 1,325,732 shares prior to the approval by the shareholders
of the Issuer of the transactions contemplated by the Agreement.
Item 5. Interest in the Securities of the Issuer
(a)-(b) The Reporting Person may be deemed to be the beneficial owner
of the shares of common stock underlying the Note and the Warrant. The Note is
convertible into 1,652,892 shares of common stock at a conversion price of $6.05
per share. The Warrant entitles the Reporting Person to purchase 803,048 shares
of 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 defined in the Warrant);
provided, however, that if the Issuer's shareholders do not approve the
transactions contemplated by the Agreement, the exercise price shall be the
lower of (i) $2.00 per share or (ii) 66 2/3 percent of the Market Price and the
aggregate number of shares that the Reporting Person may acquire pursuant to the
exercise of the Warrant and conversion of the Note may not exceed 1,325,732
shares. If fully exercised, the Note and the Warrant would give the Reporting
Person 2,455,940 shares of common stock, or 25.6% of the outstanding common
stock, subject to further adjustment under possible future application of the
anti-dilution provisions of the Warrant and future decisions by the Issuer
concerning the deferral of some or all of future quarterly interest payments
under the Note. The Reporting Person shall have the sole power to vote and
dispose of the shares issued pursuant to the Note and the Warrant. In addition,
the Reporting Person is the beneficiary of the stockholders voting agreement
described in Item 6 below ("Voting Agreement"). As a condition to the purchase
of the Note and the Warrant by the Reporting Person, certain stockholders were
required to agree to vote the shares of common stock controlled by them in favor
of the transactions contemplated by the Agreement, as further described in Item
6, below. As a result, although the Voting Agreement does not grant to the
Reporting Person the right to vote the shares of common stock subject to the
Voting Agreement, the Reporting Person has contractual remedies upon any breach
of the Voting Agreement by the stockholders or the person to whom the proxies
were granted, which remedies could include seeking specific performance of the
terms of the Voting Agreement. Therefore, the Reporting Person may be deemed to
have shared power to vote 3,813,748 shares of common stock controlled by certain
stockholders who together control the voting power of greater than fifty percent
(50%) of the issued and outstanding shares of common stock of the Issuer.
The Reporting Person expressly declares that the filing of this Schedule 13D
shall not be construed as an admission that such person is, for the purposes of
sections 13(d) and 13(g) of the Securities Exchange Act, the beneficial owner of
the shares of common stock of the Issuer to which the Reporting Person may be
deemed to have shared power to vote.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer
Pursuant to the Section 713 of the Listing, Standards, Policies and
Requirements of AMEX, stockholders owning a majority of the issued and
outstanding shares of voting stock of a listed company must approve any
transaction in which the listed company issues shares of, or securities
convertible or exercisable into shares of, common stock representing twenty
percent (20%) or more of the presently issued and outstanding common stock for
less than the greater of book or market value of the common stock. Certain
stockholders of the Issuer who control the voting power of greater than fifty
percent (50%) of the issued and outstanding shares of common stock of the Issuer
(the "Stockholders") entered into the Voting Agreement with the Reporting Person
pursuant to which each of the Stockholders agreed to vote the shares of common
stock controlled by them in favor of the transactions contemplated by the
Agreement. Pursuant to the Voting Agreement, each Stockholder executed and
delivered to William F. Mitchell ("Mitchell") an irrevocable proxy granting
Mitchell the right to vote all of the Stockholder's shares in favor of the
transactions contemplated by the Agreement and against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation of the Issuer made in connection with the Agreement.
Except for the right to receive common stock under the Note and the
Warrant and as otherwise set forth above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the Reporting Person,
any other person or the Issuer with respect to any securities of the Issuer,
including but not limited to transfer or voting of any securities of the Issuer,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies.
Item 7. Material to be Filed as Exhibits
The following documents are filed as exhibits to this Schedule 13D:
1. Convertible Note and Warrant Purchase Agreement by and between
Environmental Tectonics Corporation and H.F. Lenfest, dated February
18, 2003.
2. Stockholders Voting Agreement by and among William F. Mitchell, Pete
L. Stephens, M.D., Emerald Advisors, Inc., ETC Asset Management, LLC
and H.F. Lenfest, dated February 18, 2003.
3. Irrevocable Proxy of William F. Mitchell, dated February 18, 2003.
4. Irrevocable Proxy of Pete L. Stephens, M.D., dated February 18, 2003.
5. Irrevocable Proxy of Emerald Advisors, Inc., dated February 18, 2003.
6. Irrevocable Proxy of ETC Asset Management, LLC, dated February 18,
2003.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: February 28, 2003 /s/ H.F. Lenfest
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H.F. Lenfest
Reporting Person
EXHIBIT INDEX
Exhibit 1. Convertible Note and Warrant Purchase Agreement by and between
Environmental Tectonics Corporation and H.F. Lenfest, dated
February 18, 2003.
Exhibit 2. Stockholders Voting Agreement by and among William F. Mitchell,
Pete L. Stephens, M.D., Emerald Advisors, Inc., ETC Asset
Management, LLC and H.F. Lenfest, dated February 18, 2003.
Exhibit 3. Irrevocable Proxy of William F. Mitchell, dated February 18,
2003.
Exhibit 4. Irrevocable Proxy of Pete L. Stephens, M.D., dated February 1
8, 2003.
Exhibit 5. Irrevocable Proxy of Emerald Advisors, Inc., dated February 18,
2003.
Exhibit 6. Irrevocable Proxy of ETC Asset Management, LLC, dated February
18, 2003.