Merrimac Associates, Inc. (Merrimac) appeals from a district court1 judgment affirming limitation of Merrimac's compensation for professional consulting services rendered to a Chapter 11 debtor in possession, Daig Corporation (Daig). Daig employed Merrimac for two months in 1981 under a management consulting agreement. The bankruptcy court2 limited Merrimac's compensation to an amount previously paid by Daig and invalidated Merrimac's warrant to purchase Daig common stock. See In re Daig Corp., 48 B.R. 121, 137-38 (Bankr.D.Minn.1985). The bankruptcy court based its order on a finding that Merrimac was not a "disinterested person" under the Bankruptcy Code.3 See id. at 131-34. This order was affirmed summarily by the district court. We affirm the judgment of the district court.

Shortly after Daig entered bankruptcy in early June of 1981, it hired Merrimac as a management consultant. Merrimac's compensation rate was set at $1,500 per week. In addition, Merrimac received a five-year warrant to purchase 15% of Daig's common stock, some 138,514 shares, at one cent per share. On June 18, 1981, the Honorable Kenneth Owens, Bankruptcy Judge for the Bankruptcy Court of the District of Minnesota, authorized Daig to retain Merrimac's services. The court, however, explicitly reserved all questions regarding the terms of retention and compensation. Daig ultimately paid Merrimac $12,898.84 in compensation and expense reimbursements for the approximately two months Merrimac's employment lasted.4

Validity of Merrimac's stock purchase warrant is the focus on appeal. Although the compensation package never was approved or disapproved by the bankruptcy court during Merrimac's tenure at Daig, the bankruptcy court found that at all times Robert Stahl, Merrimac's president and owner, believed that his company held an enforceable warrant. We need not address the question whether subjective belief can make a party nondisinterested within the terms of the statute, although that rationale was the basis for the bankruptcy court's decision. We find the issuance of the warrant between the parties was sufficient to make Merrimac a warrant holder, both in law and in fact.

A warrant is defined as an option to purchase shares of corporate stock at a fixed price. 4 Fletcher Cyclopedia of the Law of Private Corporations Sec. 8907, at 70 (rev. ed. 1985); see also Bradford v. Crown-Bremson Industries, Inc., 255 F. Supp. 1009, 1012 (M.D.Tenn.1964); Miller v. General Outdoor Advertising Co., 223 F. Supp. 790, 794 (S.D.N.Y.1963). Until the bankruptcy court avoided the agreement, Merrimac possessed a legal document providing an inchoate right to purchase Daig stock at a fixed rate of one cent per share. On its face, this document was a stock purchase warrant. We find that the document was what it purported to be. The fact that the warrant was later invalidated by the bankruptcy court cannot diminish its legal significance. We thus find that Merrimac held a valid warrant under 11 U.S.C. Sec. 101(15)(C) throughout the period it was employed by Daig.

The Bankruptcy Code is clear in its treatment of warrant holders employed by debtors in possession. Warrant holders are included in the Code's definition of equity security holders. See 11 U.S.C. Sec. 101(15)(C). To be "disinterested" under the Code, a person cannot hold an equity security. See 11 U.S.C. Sec. 101(13)(A). A warrant holder thus is not a disinterested person. Moreover, 11 U.S.C. Sec. 328(c) states that the bankruptcy court "may" deny allowance of compensation for a professional who is not a disinterested person at any time during the employment by the debtor. Under this simple formula, Merrimac's status as a warrant holder in substance makes Merrimac nondisinterested and within the ambit of Sec. 328(c). Nullification of the stock purchase warrant was an appropriate sanction in light of the potential conflict of interest engendered by the putative warrant.5

We further find the bankruptcy court did not abuse its statutory discretion to deny Merrimac compensation beyond the $12,898.84 already paid by Daig.

Judgment affirmed.