SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
ENVIRONMENTAL TECTONICS CORPORATION
---------------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than
the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies: n/a
2) Aggregate number of securities to which transaction applies:
n/a
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11./1/ (set forth
the amount on which the filing fee is calculated and state
how it was determined):
4) Proposed maximum aggregate value of transaction: n/a
5) Total fee paid: n/a
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
form or schedule and the date of its filing.
1) Amount Previously Paid:
________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________
3) Filing Party:
________________________________________________________________
4) Date Filed:
________________________________________________________________
ENVIRONMENTAL TECTONICS CORPORATION
----------------------------------------
Notice of Annual Meeting of Shareholders
August 30, 2001
----------------------------------------
The Annual Meeting of the Shareholders of Environmental
Tectonics Corporation (the "Company") will be held at the
offices of the Company, County Line Industrial Park,
Southampton, Pennsylvania on Thursday, August 30, 2001, at
10:00 a.m. (Eastern Time) for the following purposes:
1. To elect five directors to serve until their successors
have been elected and qualified.
2. To transact such other business as may properly come
before the meeting.
The record date for determination of shareholders entitled
to notice of, and to vote at, the meeting is July 20, 2001.
By Order of the Board of Directors
ANN M. ALLEN, Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN ORDER
THAT YOUR STOCK MAY BE VOTED. IF YOU ATTEND THE MEETING, YOU
MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
ENVIRONMENTAL TECTONICS CORPORATION
County Line Industrial Park
Southampton, Pennsylvania 18966
- ----------------------------------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
August 30, 2001
- ----------------------------------------------------------------
GENERAL
Solicitation of Proxies
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Environmental
Tectonics Corporation, a Pennsylvania corporation (the
"Company"), of proxies in the accompanying form for use at the
Annual Meeting of Shareholders to be held at 10:00 a.m. (Eastern
Time) on Thursday, August 30, 2001, at the Company's executive
offices at County Line Industrial Park, Southampton,
Pennsylvania 18966 and at any adjourned meeting thereof (the
"Annual Meeting"). This Proxy Statement and accompanying form
of proxy are being first sent or given to security holders on or
about July 26, 2001. In addition to the use of the mails,
directors, officers and employees of the Company may solicit
proxies personally or by telephone. The expense of soliciting
proxies will be borne by the Company.
USE OF PROXIES
Voting and Revocation of Proxies
When a proxy in the enclosed form is properly executed and
returned in time to be voted at the Annual Meeting, the shares
represented thereby will be voted at the Annual Meeting in
accordance with the instructions marked thereon. Signed proxies
not marked to the contrary will be voted "FOR" the election, as
directors, of the Board of Directors' nominees. Signed proxies
will be voted "FOR" or "AGAINST" any other matter that properly
comes before the Annual Meeting or any adjournment thereof, in
the discretion of the persons named as proxyholders as provided
in the rules of the Securities and Exchange Commission,
including with respect to any matter of which the Company did
not receive notice by June 9, 2001. Any such proxy may be
revoked at any time before its exercise by (i) executing and
delivering a later dated proxy to the Secretary of the Company,
(ii) giving written notice of revocation to the Secretary of the
Company, or (iii) by voting in person at the Annual Meeting.
The mailing address of the Company is County Line Industrial
Park, Southampton, Pennsylvania 18966.
Voting Securities, Record Date and Quorum
Shareholders of record at the close of business on July 20,
2001, (the "Record Date") are entitled to notice of, and to vote
at, the Annual Meeting. On the Record Date, the Company had
outstanding 7,110,546 shares of Common Stock, par value $.05 per
share ("Common Stock"). Each share of Common Stock is entitled
to one vote on all matters coming before the Annual Meeting.
The holders of Common Stock are not entitled to cumulate votes
in elections of directors.
The presence, in person or by proxy, of shareholders
entitled to cast a majority of the votes which all shareholders
are entitled to cast shall constitute a quorum at the Annual
Meeting. Abstentions with respect to one or more proposals
voted upon at the Annual Meeting will be included for purposes
of determining a quorum for the Annual Meeting.
Principal Shareholders
The following table sets forth information, as of the
Record Date, as to beneficial owners, either directly or
indirectly, of 5% or more of the outstanding shares of the
Common Stock.
Amount and
Nature of Percent
Name and Address Beneficial of Common
of Beneficial Owner Ownership Stock
- --------------------------- ------------ ---------
William F. Mitchell (1)(2)............ 1,731,998 24.4%
c/o Environmental Tectonics
Corporation
County Line Industrial Park
Southampton, PA 18966
Pete L. Stephens, M.D. (2)(3)......... 675,800(4) 9.5%
31 Ribaut Drive
Hilton Head Island
South Carolina 29926
FINOVA Mezzanine Capital ............ 832,800(5) 11.2%
500 Church Street, Suite 200
Nashville, TN 37219
Emerald Advisors, Inc................ 1,051,513(6) 14.7%
1857 William Penn Way
P.O. Box 10666
Lancaster, PA 17605-0666
- ------------
(1) Chairman of the Board, President and Director of the
Company. Shares of Common Stock include 192,000 shares held
by Mr. Mitchell's wife.
(2) Nominee of the Board of Directors of the Company for
election, as Director, of the Company at the Annual
Meeting.
(3) Director of the Company.
(4) Includes 25,500 shares of Common Stock held by or for the
benefit of Dr. Stephens' wife and two of his children.
(5) Includes 332,820 shares of Common Stock underlying a
presently exercisable warrant.
(6) As reported in a Schedule 13G filed on December 31, 2000
by Emerald Advisors, Inc., Emerald has sole voting power
with respect to 743,273 shares of Common Stock and sole
dispositive power over 308,240 shares of Common Stock.
Security Ownership of Management
The following table sets forth, as of the Record Date, the
number of shares and percentage of the Company's Common Stock
owned beneficially by each director, each nominee for director,
and each named executive officer set forth in the Summary
Compensation Table. The table also sets forth the holdings of
all directors and executive officers as a group.
Amount and
Nature of Percent
Name and Address Beneficial of Common
of Beneficial Owner Ownership Stock
- --------------------------- ------------ ---------
William F. Mitchell (1)(2)(3)........ 1,731,998 24.4%
c/o Environmental Tectonics
Corporation
County Line Industrial Park
Southampton, PA 18966
Pete L. Stephens, M.D. (2)(3)........ 675,300(4) 9.5%
31 Ribaut Drive
Hilton Head Island
South Carolina 29926
Richard E. McAdams (2)(3)............ 38,992(5) *
c/o Environmental Tectonics
Corporation
County Line Industrial Park
Southampton, PA 18966
Philip L. Wagner, Ph.D. (2)(3)........ 12,000(6) *
Chadds Ford Technologies, Inc.
P.O. Box 377
Chadds Ford, PA 19317
David P. Lazar (2)(3) ............... 0 *
c/o Berwind Financial, L.P.
3000 Centre Square West
1500 Market Street
Philadelphia, PA 19102
All directors and executive
officers as a group (6 persons).... 2,462,540(7) 34.5%
- ------------
* less than 1%
(1) Chairman of the Board, President and Director of the
Company. Shares of Common Stock include 192,000 shares held
by Mr. Mitchell's wife.
(2) Nominee of the Board of Directors of the Company for
election, as Director, of the Company at the Annual
Meeting.
(3) Director of the Company.
(4) Includes 25,500 shares of Common Stock held by or for the
benefit of Dr. Stephens' wife and two of his children.
(5) Includes options to purchase 21,250 shares of Common Stock
held under the Company's Incentive Stock Option Plan that
are presently exercisable.
(6) Includes 8,000 shares of Common Stock held by or for the
benefit of Dr. Wagner's wife.
(7) Includes options to purchase 21,250 and 3,750 shares of
Common Stock which may be acquired by Director McAdams and
Duane Deaner, Chief Financial Officer, respectively, upon
the exercise of options granted under the Company's
Incentive Stock Option Plan.
ELECTION OF DIRECTORS
General
The Bylaws of the Company provide that the Board of
Directors of the Company shall consist of not less than three
nor more than ten directors. Within the foregoing limits, the
Board of Directors may, from time to time, fix the number of
directors. The Board of Directors of the Company has fixed the
number of directors at five directors.
At the 2001 Annual Meeting, five directors shall be elected
to serve for a one-year term and until their successors are
elected and qualified.
The Board of Directors has unanimously nominated William F.
Mitchell, Richard E. McAdams, Philip L. Wagner, Ph.D., Pete L.
Stephens, M.D., and David P. Lazar for election as directors of
the Company. Each of the nominees has consented to being named
in this Proxy Statement and to serve if elected. If any of the
nominees become unable to accept nomination or election, the
persons named in the proxy may vote for a substitute nominee
selected by the Board of Directors. The Company's management,
however, has no present reason to believe that any nominee
listed below will be unable to serve as a director, if elected.
The five nominees who receive the highest number of votes
cast at the Annual Meeting will be elected as directors. Shares
represented by properly executed proxies in the accompanying
form will be voted for the nominees named below unless otherwise
specified in the proxy by the shareholder. Any shareholder who
wishes to withhold authority from the proxyholders to vote for
the election of directors or to withhold authority to vote for
any individual nominee may do so by marking his or her proxy to
that effect. Shareholders cannot cumulate their votes for the
election of directors. No proxy may be voted for a greater
number of persons than the number of nominees named.
Abstentions and broker non-votes will not constitute or be
counted as votes cast for purposes of the Annual Meeting.
Nominees for Election as Director
The following table sets forth certain information with
respect to the Board of Directors' nominees for director and
executive officers of the Company.
Principal
Served as Occupations
Director and Positions
or Officer and Offices
Name Age Since(1) with the Company
- ---- --- --------- ----------------
William F. Mitchell(2) 59 1969 Chairman of the
Board, President
and Director
Richard E. McAdams(3) 65 1985 Executive Vice
President and
Director
Philip L. Wagner, Ph.D.(4) 64 1993 Director
Pete L. Stephens, M.D.(5) 63 1974 Director
David P. Lazar(6) 44 2000 Director
Duane D. Deaner (7) 53 1996 Chief Financial
Officer
- ------------
(1) Directors serve one-year terms.
(2) Mr. Mitchell has been Chairman of the Board, President and
Chief Executive Officer of the Company since 1969, except
for the period from January 24,1986 through January 24,
1987, when he was engaged principally in soliciting sales
for the Company's products in the overseas markets.
(3) Mr. McAdams has been with the Company since 1970. He
became a Vice President in 1978, and an Executive Vice
President in 1990, with responsibility for contract
administration.
(4) Dr. Wagner is an organic chemist with over 30 years of
diversified experience managing research and development
and new business development at E.I. du Pont de Nemours &
Company. In November 1992, he founded Chadds Ford
Technologies, Inc., a consulting firm. He is currently
President of Chadds Ford Technologies, Inc.
(5) Dr. Stephens has been a physician engaged in the private
practice of medicine for over 30 years.
(6) Since February 1, 1993, Mr. Lazar has served as Managing
Director of Berwind Financial, L.P., and since June, 1999,
co-head of Berwind's Investment Bank, specializing in
investment banking services to both privately-held and
publicly-traded companies. He also heads the firm's
Financial Services group. Prior to Berwind, Mr. Lazar
served as President, Ryan, Beck & Co./Mid-Atlantic, a
regional investment banking firm specializing in the
financial services industry. Mr. Lazar holds an MBA from
the College of William and Mary Graduate School of Business
Administration and a B.S. from Duke University. He also
serves as an advisory director of First Virtual, Inc., a
Florida based internet company that provides financial
services and as a trustee of the Academy of Natural
Sciences.
(7) Mr. Deaner has served as Chief Financial Officer of the
Company since January 1996. Mr. Deaner served as Vice
President of Finance for Pennfield Precision Incorporated
from September 1988 to December 1995.
Committees of Board of Directors
During the year ended February 23, 2001, the Company had an
Audit Committee and a Compensation Committee. The Audit
Committee is charged with reviewing and overseeing the Company's
financial systems and internal control procedures and conferring
with the Company's independent accountants with respect thereto.
The Compensation Committee is charged with reviewing the
compensation of officers and key personnel. During the year
ended February 23, 2001, Messrs. Lazar, Stephens and Wagner
served on both the Audit Committee and the Compensation
Committee. The Company does not have a standing nominating
committee.
Meetings of Board of Directors and Committees
During the year ended February 23, 2001, the Board of
Directors held two meetings and the Audit and Compensation
Committees each held one meeting. All Members of the Board
attended all of the meetings of the Board held while they were
members of the Board. All Members of the Audit and Compensation
Committees attended all meetings of the Committees held while
they were members thereof.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of the
Company is composed of three independent directors, as defined
in Section 121(A) of the American Stock Exchange listing
standards.
The Audit Committee operates under a written charter
adopted by the Board of Directors. A copy of the Audit
Committee's charter is attached to this proxy statement as
Exhibit A.
The Audit Committee has reviewed the audited financial
statements of the Company for the fiscal year ended February 23,
2001, and discussed them with management and the Company's
independent accountants, Grant Thornton LLP. The Audit
Committee also has discussed with the independent accountants
the matters required to be discussed by the U.S. Statement of
Auditing Standards No. 61.
The Audit Committee has received from the independent
accountants the written disclosures and letter required by the
U.S. Independent Standards Board Standard No. 1, and the Audit
Committee has discussed with the accountants their independence
from the Company and management.
Based on the review and discussions described above, the
Audit Committee recommended to the Board of Directors that the
Company's audited financial statements for the fiscal year ended
February 23, 2001, be included in the Company's Annual Report on
Form 10-K for that fiscal year.
In connection with new standards for independence of the
Company's external auditors issued by the Securities and
Exchange Commission, during the 2002 fiscal year the Audit
Committee will consider in advance whether the provision of any
non-audit services by the Company's independent accountants is
compatible with maintaining such independence.
This report has been furnished by the Audit Committee whose
members are:
David P. Lazar
Peter L. Stephens, M.D.
Philip L. Wagner, Ph.D.
Compensation of Directors
Directors of the Company who are not officers of the
Company are paid $600 for Board meetings which they attend.
Additional compensation is not paid for committee meetings.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is
administered by the Compensation Committee of the Board of
Directors. The Compensation Committee is composed entirely of
non-employee Directors. The executive compensation program
is structured to link executive compensation to the Company's
performance and, through programs which use the Company's stock
as a compensation medium, to more closely align the interests of
executive management with those of the Company's shareholders.
The Compensation Committee evaluates and recommends, to the
Board of Directors, compensation and awards for the Chief
Executive Officer and other executive officers.
Compensation Philosophy
One of the Company's principal goals in establishing its
compensation policies is to maximize the possibilities for
enhanced shareholder value by closely aligning compensation for
its executive officers with the profitability of the Company.
In that regard, it is considered essential to the success of
the Company that compensation policies enable the Company to
attract, retain and satisfactorily reward executive officers who
are contributing to the long-term growth and success of the
Company.
Components of Compensation
At present, the executive compensation program is comprised
of salary, annual cash bonus incentive opportunities and long-
term incentive opportunities in the form of options to acquire
Company stock. Base salary levels for the executive officers of
the Company are set near the average base salary levels paid by
other companies within the Company's peer group. Mr. William F.
Mitchell, President and Chief Executive Officer, received a base
salary of $225,000 in the 2001 fiscal year, which the
Compensation Committee believes is below average compared to the
Company's peer group.
Short-Term Incentive Compensation
Incentive compensation awards paid in May 2001 were based
on a review of the Company's performance for the fiscal year
ended February 23, 2001. This review included an assessment of
the Company's performance against financial and non-financial
hurdles, set at the beginning of the 2001 fiscal year, relating
to bookings, sales, net income, stock price and individually
tailored goals. The hurdles reflected the Board of Directors'
determination of the appropriate goals for the Company. Under
the Executive Management/Key Employee Plan (the "Executive
Management Plan") executive officers (other than CEO) are
eligible to receive bonuses in an amount up to 25% of base
salary if the predetermined goals are attained.
Under the Chief Executive Officer Plan (the "CEO Plan"),
Mr. Mitchell was eligible to receive a bonus for fiscal 2001
(i) in an amount up to 25% of base salary if the Company
attained predetermined goals regarding sales and net income and
(ii) in an amount from 25% to 100% of base salary if the
Company's stock price performance met predetermined goals.
Based on these criteria, Mr. Mitchell did not receive any bonus
for fiscal 2001, but was paid in 2001 a deferred bonus from
fiscal 1999 of $10,969.
Under the CEO Plan and the Executive Management Plan, 75%
of any bonuses awarded for the a particular fiscal year are paid
in May of the following fiscal year, and the remaining 25% is
paid in equal installments over the succeeding five years with
interest at the average prime rate being charged over the period
by the Company's principal bank. Deferred bonus amounts are not
vested until paid and subject to continued employment. Bonus
awards totaling $9,413 were paid in May 2001 under these Plans
to two executive officers and managers for the 2001 fiscal year,
and $3,137 of bonus awards were deferred. Additionally, $13,536
of deferred bonus awards from fiscal years 1999 through 2000
were paid in May 2001. No bonuses would have been paid to these
executive officers and managers if the Company had not achieved
the predetermined goals.
Long-Term Incentive Compensation
The Company's 1998 Incentive Stock Option Plan is a long-
term plan designed not only to provide incentive to management,
but also to align a significant portion of the executive
compensation program with shareholder interests. The 1998
Incentive Stock Option Plan permits the Company to grant certain
officers and employees a right to purchase shares of stock at
the fair market value per share at the date the option is
granted. No options were granted in fiscal 2001. In granting
stock options to officers and employees, the Compensation
Committee takes into account the Company's financial
performance, long-term strategic goal of increasing shareholder
value, the executive's level of responsibility and his
continuing contributions to the Company. The amount of the
award is based on the employee's base salary and the total award
is limited to one percent (1%) of total outstanding shares on
award date. Mr. Mitchell did not receive any options during the
past three fiscal years.
This report has been furnished by the Compensation
Committee whose members are:
David P. Lazar
Peter L. Stephens, M.D.
Philip L. Wagner, Ph.D.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation paid by the
Company to the Chief Executive Officer for services rendered
during fiscal years 2001, 2000 and 1999. There are no other
executive officers whose total annual salary and bonus exceeded
$100,000 for such fiscal years. The footnotes to the table
provide additional information concerning the Company's
compensation and benefit programs.
SUMMARY COMPENSATION TABLE
Annual Compensation
--------------------------------------
Name and Other annual All other
Principal Fiscal Salary Bonus Compensation(1) Compensation(2)
Position Year ($) ($) ($) ($)
- ------------------- ------ ------- ---------- --------------- ---------------
William F. Mitchell, 2001 225,000 10,969(3) 0 4,000
President and 2000 225,000 12,023(3) 0 4,160
Chief Executive 1999 207,085 126,563 0 3,876
Officer
- ------------
(1) The Company's executive officers receive certain
perquisites. For fiscal years 2001, 2000 and 1999, the
perquisites received by Mr. Mitchell did not exceed the
lesser of $50,000 or 10% of his salary and bonus.
(2) These amounts represent the Company's contribution to the
Retirement Savings Plan.
(3) No bonus award for fiscal years 2001 or 2000 was paid. The
amount represents a portion of the $42,188 deferred bonus
from fiscal year 1999. The remaining $19,196 of Mr.
Mitchell's deferred bonus from fiscal year 1999 is not
vested until paid and is subject to continued employment.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's
equity securities to file reports of ownership and changes in
ownership with the SEC and the American Stock Exchange.
Officers, directors and greater than ten percent shareholders
are required by SEC regulation to furnish the Company with
copies of all Section 16(a) Forms they file. The rules of the
SEC regarding the filing of such statements require that "late
filings" of such statements be disclosed in the Company's proxy
statement.
Based solely on its review of the copies of such forms
received by it, or written representations from certain
reporting persons that no Forms 5 were required for those
persons, the Company believes that, during the fiscal year ended
February 23, 2001, the Company's directors, officers and greater
than ten percent beneficial owners complied with all applicable
filing requirements.
PERFORMANCE GRAPH
The following graph compares the percentage change in the
cumulative total shareholder return on the Company's Common
Stock against the cumulative total return on the American Stock
Exchange ("AMEX") Index and Peer Group Index for the periods
indicated. The graph assumes an initial investment of $100.00
with dividends, if any, reinvested over the periods indicated.
[PERFORMANCE GRAPH OMITTED]
ASSUMES $100 INVESTED MAR. 1, 1996
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING FEB. 23, 2001
FISCAL YEAR ENDED
---------------------------------------------------------------------
COMPANY/INDEX/MARKET 2/29/1996 2/28/1997 2/27/1998 2/26/1999 2/25/2000 2/23/2001
- -------------------- --------- --------- --------- --------- --------- ---------
The Company .......... 100.00 189.29 250.00 460.71 814.29 482.86
Peer Group Index(1)... 100.00 108.32 185.70 104.49 126.19 82.75
AMEX Market Index..... 100.00 106.54 126.96 124.13 172.89 154.70
- ------------
(1) The Peer Group Index is comprised of companies that have
the same Standard Industrial Classification Code as the
Company. The composition of the Peer Group Index is as
follows: BVR Systems LTD., Datakey, Inc., ECC
International Corp., Evans & Sutherland Co., Firearms
Training Systems, Isomet Corp., Quad Systems Corp., Relm
Wireless Corp., Rofin-Sinar Tech, Inc., Standard Motor
Products and United Industrial Corp.
THE COMPANY'S AUDITORS
Under the Company's Bylaws and the governing law, authority
to select the Company's independent accountants rests with the
Board of Directors. Such selection is made through formal act
of the Board of Directors. It has not been and is not the
Company's policy to submit selection of its auditors to the vote
of the shareholders because there is no legal requirement to do
so. Grant Thornton LLP was the Company's auditors for the
fiscal year ended February 23, 2001. Auditors have not been
selected for the current fiscal year. A representative of Grant
Thornton is expected to be present at the Annual Meeting and
will be given an opportunity to make a statement to the
shareholders, if he desires to do so. Such representative will
also be available to answer appropriate questions from
shareholders.
Set forth below is information relating to the aggregate
Grant Thornton LLP fees for professional services provided to
the Company for the fiscal year ended February 23, 2001.
Audit Fees
The aggregate Grant Thornton LLP fees for all professional
services provided in connection with the audit of the Company's
financial statements for the fiscal year ended February 23,
2001, and for the reviews of the unaudited financial statements
included in the Company's quarterly reports on Form 10-Q for the
fiscal year ended February 23, 2001, were $94,811.
Financial Information Systems Design and Implementation Fees
The Company did not engage Grant Thornton LLP to provide
advice to the Company regarding financial information systems
and design and implementation during the fiscal year ended
February 23, 2001.
All Other Fees
The aggregate Grant Thornton LLP fees for professional
services provided to the Company during the fiscal year ended
February 23, 2001, for all other services, including audit
services for the Company's pension plan and tax related
services, were $31,498.
SHAREHOLDER PROPOSALS
The Company's 2002 annual meeting of shareholders will be held
on or about August 29, 2002.
Shareholders may propose matters for consideration at the 2002
annual meeting by notice, in writing, delivered to or mailed and
received by the Secretary of the Company no later than June 11,
2002. If proposals are submitted after June 11, 2002,
management proxyholders could have discretionary authority to
vote on those matters at the 2002 annual meeting.
Proposals which shareholders desire to have included in the
Proxy Statement for the 2002 annual meeting of shareholders must
be received at the Company's executive offices, County Line
Industrial Park, Southampton, Pennsylvania 18966 on or before
March 28, 2002.
OTHER MATTERS
The Company knows of no other business which will be
presented for consideration at the meeting. However, if other
matters come before the annual meeting, it is the intention of
the proxyholders to vote upon such matters as they, in their
discretion, may determine.
The Company's Annual Report to the Shareholders for the
year ended February 23, 2001, is enclosed. Each person
solicited hereunder can obtain a copy of the Company's Annual
Report on Form 10-K for the year ended February 23, 2001, as
filed with the Securities and Exchange Commission, without
charge, except for exhibits to the report, by sending a written
request to Environmental Tectonics Corporation, County Line
Industrial Park, Southampton, Pennsylvania 18966, Attention:
Ann M. Allen, Secretary.
By Order of the Board of Directors
ANN M. ALLEN, Secretary
Exhibit A
ENVIRONMENTAL TECTONICS CORPORATION
AUDIT COMMITTEE CHARTER
I. ORGANIZATION
The Audit Committee will consist of a minimum of three
and a maximum of five Directors who are independent of
the management of the Corporation and are free of any
relationship that, in the opinion of the Corporation's
Board of Directors, would interfere with their exercise
of independent judgment as a committee member. Three
members of the Audit Committee shall constitute a quorum.
Audit Committee members are elected in accordance with
the Corporation's bylaws and policies established by the
Board of Directors. All members are to be financially
literate and at least one member shall have accounting,
or related financial management expertise.
II. STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Board
of Directors in fulfilling their responsibility to the
shareholders, potential shareholders, the investment
community and others relating to the Corporation's
corporate accounting and financial reporting practices,
the systems of internal accounting and financial
controls, the internal audit function, and the annual
independent audit of the Corporation's financial
statements. In so doing, it is the responsibility of the
Audit Committee to maintain free and open communication
between the Board of Directors, the independent auditors,
the internal auditors, and the management of the
Corporation.
III. RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee
believes its policies and procedures should remain
flexible, in order to best react to changing conditions.
In carrying out these responsibilities the Audit
Committee will:
- Review and recommend to the Board of Directors the
independent auditors to be selected to audit the
consolidated financial statements of the Corporation
and its divisions and subsidiaries. The Audit
Committee shall have a clear understanding with
management and the independent auditors that the
independent auditors are ultimately accountable to the
Board of Directors and to the Audit Committee, as
representatives of shareholders. The Audit Committee
shall have the ultimate authority and responsibility
to select, evaluate, and, where appropriate, replace
the independent auditor. The Audit Committee will
ensure receipt from the independent auditors a formal
written statement delineating all relationships
between the auditors and the Corporation, consistent
with Independence Standards Board Standard 1, and to
actively engage in a dialogue with the auditor with
respect to any disclosed relationships or services
that may impact the objectivity or independence of the
auditor and for taking, or recommending that the full
Board of Directors take, appropriate action to oversee
the independence of the independent auditor.
- Meet with the independent auditors and internal
auditors to review the scope and plan of the proposed
audit for the current year including the adequacy of
staffing, and at the conclusion thereof, review the
results of such audit, including any comments or
recommendations of the independent auditors.
- Review with the independent auditors, the chief
internal auditor and management, the adequacy and
effectiveness of the accounting and financial controls
of the Corporation, and elicit any recommendations for
the improvement of such internal control procedures or
particular areas where new or more detailed controls
or procedures are desirable.
- Review the financial statements to be filed on
Form 10-Q, Form 10-K, and prior to release to the
shareholders and/or filing of such financial
statements with the Securities and Exchange
Commission, review with management and the independent
auditors the results of their timely quarterly review
and annual audit, including analysis of significant
financial reporting issues and practices, changes in,
or new adoptions of, accounting principles and
disclosure practices, and any other matters required
to be communicated to the Audit Committee by the
independent auditors under generally accepted auditing
standards. Also review with management and the
independent auditors their qualitative judgments about
the appropriateness, not just the acceptability, of
accounting principles and financial disclosure
practices used or proposed to be used, and
particularly, the degree of aggressiveness or
conservatism of the Corporation's accounting
principles and underlying estimates. The chair of the
Audit Committee or his/her designee may represent the
entire Committee for the purposes of this review.
- Invite the other Directors to attend the Audit
Committee meeting when the results of the annual audit
are reviewed.
- Review the internal audit function of the Corporation
including the independence and authority of its
reporting obligations, the proposed internal audit
plan, with explanations of any deviations from the
original plan.
- Review the periodic reports provided by internal
audit.
- Meet with the Chief Internal Auditor and the
independent auditors, with management and in executive
sessions without management present to discuss the
results of their examinations and any other matters of
importance to the auditors or the Audit Committee.
- Investigate any matter brought to its attention within
the scope of its duties, with the power to retain
outside counsel for this purpose if, in its judgment,
that is appropriate.
- Submit the minutes of all meetings of the Audit
Committee to the Board of Directors.
- Review and approve this Audit Committee Charter
annually.
IV. MEETINGS
The Audit Committee shall meet at least semi-annually or
when deemed appropriate by the Chairperson of the
Committee.
Minutes of each meeting will be compiled by the Chief
Internal Auditor who shall act as Secretary to the Audit
Committee.
ENVIRONMENTAL TECTONICS CORPORATION
ANNUAL MEETING TO BE HELD ON AUGUST 30, 2001
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby
appoints Pete L. Stephens and Phillip L. Wagner, or either of
them, with full power of substitution, as the undersigned's
proxies to vote at the Annual Meeting of Shareholders called for
August 30, 2001 and at any adjournment thereof:
Please mark your
[X] votes as in this
example.
FOR all nominees WITHHOLD
listed at right the vote
(except as marked for all
to the contrary) nominees
1. Election of Nominees:
Directors: [ ] [ ] By holders of Common
Stock:
Richard E. McAdams
William F. Mitchell
Pete L. Stephens
Philip L. Wagner
David Lazar
2. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the
manner directed and designated herein by the undersigned
shareholder. In the absence of designation, this Proxy will be
voted "FOR" the election of all of the Board of Director's
nominees as directors.
I plan to attend the Annual Meeting on August 30, 2001 [ ]
In Witness Whereof, the Undersigned has set his hand and
seal.
______________________________________(SEAL)
Shareholder's Signature
______________________________________(SEAL)
Shareholder's Signature
Dated: ______________________2001
NOTE: Please sign exactly as name appears herein. When signing
as attorney, executor, administrator, trustee, guardian,
etc. please give full title as such.