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/
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
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:
________________________
/1/ Set forth the amount on which the filing fee is calculated
and state how it was determined. <PAGE 1>
<PAGE 2>
ENVIRONMENTAL TECTONICS CORPORATION
_________________________________________
Notice of Annual Meeting of Shareholders
September 9, 1999
_______________________________________
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 Wednesday, September 9, 1999, 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 consider and act upon a proposal to amend the Company's
Articles of Incorporation to increase the number of
authorized shares of Common Stock from 10,000,000 shares to
20,000,000 shares.
3. 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 August 9, 1999.
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.
<PAGE 3>
ENVIRONMENTAL TECTONICS CORPORATION
County Line Industrial Park
Southampton, Pennsylvania 18966
- -----------------------------------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
September 9, 1999
- -----------------------------------------------------------------
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,
September 9, 1999, 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 August 18, 1999. 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 and "FOR" the
proposal to amend the Company's Articles of Incorporation to
increase the number of authorized shares of common stock from
10,000,000 shares to 20,000,000 shares. 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 July 28, 1999. 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
<PAGE 4> 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 August 9,
1999 (the "Record Date"), are entitled to notice of, and to vote
at, the Annual Meeting. On the Record Date, the Company had
outstanding 6,845,378 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 July 30,
1999, 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
Beneficial of Common
Name and Address of Beneficial Owner Ownership Stock
William F. Mitchell (1)(2) 1,826,898 26.7%
c/o Environmental Tectonics
Corporation
County Line Industrial Park
Southampton, PA 18966
Pete L. Stephens, M.D. (2)(3) 663,800(4) 9.7%
1150 Eleni Lane
West Chester, PA 19382
FINOVA Mezzanine Capital 944,386(5) 13.2%
500 Church Street, Suite 200
Nashville, TN 37219
Emerald Advisors, Inc. 622,030(6) 9.1%
1857 William Penn Way
P.O. Box 10666
Lancaster, PA 17605-0666
____________________
<PAGE 5>
(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 18,000 shares of Common Stock held by or for the
benefit of Dr. Stephens' wife and two of his children.
(5) These shares include 332,820 shares of Common Stock
underlying a presently exercisable warrant to purchase
shares of Common Stock.
(6) As reported in a Schedule 13G, dated January 21, 1999, filed
by Emerald Advisors, Inc. ("Emerald"). As reported in the
Schedule 13G, Emerald has sole voting power with respect to
218,725 shares of Common Stock and sole dispositive power
over 311,015 shares of Common Stock.
Security Ownership of Management
The following table sets forth, as of July 30, 1999, 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
Beneficial of Common
Name and Address of Beneficial Owner Ownership Stock
William F. Mitchell (1)(2) 1,826,898 26.7%
c/o Environmental Tectonics
Corporation
County Line Industrial Park
Southampton, PA 18966
Pete L. Stephens, M.D. (2)(3) 663,800(4) 9.7%
1150 Eleni Lane
West Chester, PA 19382
Richard E. McAdams (2)(3) 30,802(5) *
c/o Environmental Tectonics
Corporation
County Line Industrial Park
Southampton, PA 18966
<PAGE 6>
Philip L. Wagner, Ph.D. (2)(3) 12,000(6) *
Chadds Ford Technologies, Inc.
P.O. Box 377
Chadds Ford, PA 19317
Craig Macnab (2)(3) 0 *
428 Westview Avenue
Nashville, TN 37205
All directors and executive 2,533,500(7) 36.9%
officers as a group (6 persons)
* 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 18,000 shares of Common Stock held by or for the
benefit of Dr. Stephens' wife and two of his children.
(5) Includes options to purchase 4,750 shares of Common Stock
held under the Company's Incentive Stock Option Plan which
are presently exercisable.
(6) Includes 7,000 shares of Common Stock held by or for the
benefit of Dr. Wagner's wife.
(7) Includes 5,750 shares of Common Stock which may be acquired
by each of Director McAdams and Duane Deaner, Chief
Financial officer, upon the exercise of options granted
under the Company's Incentive Stock Option Plan.
<PAGE 7>
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 1999 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 Craig Macnab 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 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. Each
of the following nominees presently serves as a director of the
Company.
<PAGE 8>
Principal
Occupations
Served as and Positions
Director and Offices
Name Age Since with the Company
William F. Mitchell(1) 58 1969 Chairman of the
Board, President
and Director
Richard E. McAdams(2) 64 1985 Executive Vice
President and
Director
Philip L. Wagner, Ph.D.(3) 63 1993 Director
Pete L. Stephens, M.D.(4) 62 1974 Director
Craig Macnab(5) 43 1997 Director
____________________
(1) 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.
(2) 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.
(3) 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.
(4) Dr. Stephens has been a physician engaged in the private
practice of medicine for over 30 years.
(5) Between January 1997 and March 1999, Mr. Macnab was the
President of Tandem Capital, Inc., a wholly owned subsidiary
of Sirrom Capital Corporation (now FINOVA Mezzanine Capital
("FINOVA"). Mr. Macnab has served as a Director of the
company since June 1997, and, until March 1999, his Board
seat was as a representative of FINOVA. Mr. Macnab now
serves as an independent member of the Board of Directors.
From 1993 to 1996, Mr. Macnab served as the general partner
of MacNiel Advisors, Inc., the general partner of three
private funds that invested in the publicly traded
securities of small public companies. From 1987 to 1993,
Mr. Macnab was a partner of J.C. Bradford & Co., a regional
brokerage firm, jointly responsible for the merger and
<PAGE 9> acquisition department and a private mezzanine
capital fund. From 1981 to 1987, Mr. Macnab was employed by
Lazarad Freres & Co. Mr. Macnab is also a director of JDN
Realty, Smart Choice automotive Group and Teltronics. Inc.
Committees of Board of Directors
During the year ended February 26, 1999, 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 26, 1999, Messrs. Mitchell, Stephens and Wagner
served on the Audit Committee and Messrs. Stevens, Wagner and
Macnab served on the Compensation Committee. The Company does
not have a standing nominating committee.
Meetings of Board of Directors and Committees
During the year ended February 26, 1999, the Board of
Directors held five 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.
Compensation of Directors
Directors of the Company who are not officers of the Company
are paid $600 for Board of Directors 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.
<PAGE 10>
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 $217,688 in the 1999 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 1999 were based on
a review of the Company's performance for the fiscal year ended
February 26, 1999. This review included an assessment of the
Company's performance against financial and non-financial
hurdles, set at the beginning of the 1999 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 1999
(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 received a bonus of $126,563 in May 1999,
which was approximately 58% of his base salary.
<PAGE 11>
Under the CEO Plan and the Executive Management Plan, 75% of
the bonuses awarded for the 1999 fiscal year were paid in May
1999, and the remaining 25% will be 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 $194,406
were paid in May 1999 under these Plans to the CEO and two other
executive officers for the 1999 fiscal year, and $73,634 of bonus
awards were deferred. No bonuses would have been paid to these
executive officers 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.
The Compensation Committee granted options to purchase 490,000
shares of common stock to officers and employees for fiscal year
1999. In granting stock options to these officers and employees,
the Compensation Committee took 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. 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:
Peter L. Stephens, M.D.
Philip L. Wagner, Ph.D.
Craig Macnab
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 1999, 1998 and 1997. There are no other
executive officers whose total annual salary and bonus exceeded
$100,000 for such fiscal years. The footnotes to the table
provide additional information concerning the Company's
compensation and benefit programs.
<PAGE 12>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Other
Name and Annual All Other
Principal Fiscal Compensation Compensation
Position Year Salary($) Bonus($)(1) ($)(2) ($)(3)
<S> <C> <C> <C> <C> <C>
William F. Mitchell 1999 $217,688 $126,563(4) $0 $4,160
President and Chief 1998 178,450 0 0 3,876
Executive Officer 1997 113,780 0 0 2,731
</TABLE>
___________________
(1) Bonus paid in May 1999.
(2) The Company's executive officers receive certain
perquisites. For fiscal years 1999, 1998 and 1997, these
perquisites received by Mr. Mitchell did not exceed the
lesser of $50,000 or 10% of his salary and bonus.
(3) These amounts represent the Company's contribution to the
Retirement Savings Plan.
(4) Represents 75% of the bonus awarded to Mr. Mitchell for the
1999 fiscal year. The remaining 25% will be paid over the
next five years with interest at the average prime rate
charged over the period by the Company's principal bank.
Mr. Mitchell's deferred bonus is not vested until paid and
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 Securities and Exchange Commission ("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 27,
1998, the Company's directors, officers and greater than ten
percent beneficial owners complied with all applicable filing
requirements.
<PAGE 13>
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.
[Graph to appear here]
<TABLE>
<CAPTION>
Fiscal Year Ended
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
The Company $100.00 $129.17 $116.67 $220.83 $291.67 $537.50
Peer Group index(1) 100.00 129.09 151.12 163.70 280.64 157.92
AMEX Market Value Index 100.00 91.73 111.07 118.34 141.02 137.87
__________
</TABLE>
(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:
Axcess, Inc., Britesmile, Inc., BVR Systems LTD., Datakey,
Inc., ECC International Corp., Evans & Sutherland Co.,
Firearms Training Systems, Isomet Corp., Newcom, Inc., Quad
Systems Corp., Relm Wireless Corp., Rofin-Sinar Tech, Inc.,
Standard Motor Products and United Industrial Corp.
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 10,000,000 SHARES TO 20,000,000 SHARES
The Board of Directors has approved an amendment to
Paragraph 6 of the Articles of Incorporation which, if adopted,
would increase the number of authorized shares of Common Stock
from 10,000,000 to 20,000,000 shares. The Board of Directors
recommends that shareholders approve this amendment.
As of July 30, 1999, there were 6,845,378 shares of Common
Stock issued and outstanding. Of the remaining 3,154,622 shares
of Common Stock available for issuance, 1,311,172 shares are
reserved for issuance under the Company's employee benefit plans
and 545,686 shares are reserved for issuance pursuant to
presently exercisable warrants. This leaves 1,297,764 unreserved
shares of Common Stock available for issuance by the Company. If
the number of authorized shares of Common Stock is increased from
10,000,000 to 20,000,000 shares, the Company will have 11,297,764
unreserved shares of Common Stock available for issuance.
The increase in the number of authorized shares of Common
Stock is being proposed because the Board of Directors believes
that it is advisable to have a greater number of authorized but
unissued shares of Common Stock available for various corporate
<PAGE 14> programs and purposes. The Company may from time to
time consider acquisitions, stock dividends or stock splits, and
public or private financings to provide the Company with capital,
which may involve the issuance of additional shares of Common
Stock or securities convertible into Common Stock. Also,
additional shares of Common Stock may be necessary to meet
anticipated future obligations under the Company's employee
benefit plans. The Board of Directors believes that having
authority to issue additional shares of Common Stock will avoid
the possible delay and significant expense of calling and holding
a special meeting of shareholders to increase authorized shares
of Common Stock.
The Company has no present plan, agreement or understanding
involving the issuance of its Common Stock except for shares
required or permitted to be issued under employee benefit plans.
It is possible, however, that additional merger and acquisition
opportunities involving the issuance of shares of Common Stock
will develop. It is also possible that an increase in the market
price for Common Stock, and conditions in the capital markets
generally, may make a stock dividend, a stock split or a public
offering of the Company's stock desirable. The Company believes
that an increase in the number of authorized shares of Common
Stock will enhance its ability to respond promptly to any such
opportunities.
If the proposed amendment to the Company's Articles of
Incorporation is approved, the Board of Directors will not
solicit shareholder approval to issue additional authorized
shares of Common Stock, except to the extent that such approval
may be required by law or under the rules of the American Stock
Exchange, and such shares may be issued for such consideration,
cash or otherwise, at such times and in such amounts as the Board
of Directors may determine.
Although the Board of Directors presently intends to employ
the additional shares of Common Stock solely for the purposes set
forth above, such shares could be used by the Board of Directors
to dilute the stock ownership of persons seeking to obtain
control of the Company, thereby possibly discouraging or
deterring a nonnegotiated attempt to obtain control of the
Company and making removal of incumbent management more
difficult. The proposal, however, is not a result of, nor does
the Board of Directors have knowledge of, any effort to
accumulate capital stock of the Company or to obtain control of
the Company by means of a merger, tender offer, solicitation in
opposition to the Board of Directors or otherwise.
Paragraph 6 of the Company's Articles of Incorporation also
authorizes the issuance of 1,000,000 shares of preferred stock,
which the Board of Directors has the power to issue as a class or
in series and to determine the voting power, if any, dividend
rates, conversion or redemption prices, designations, rights,
preferences and limitations of the shares in the class or in each
<PAGE 15> series. The proposed amendment to Paragraph 6 of the
Company's Articles of Incorporation will not increase or
otherwise affect the Company's authorized preferred stock. As of
June 30, 1999, there were no shares of the Company's preferred
stock outstanding.
The amendment of the Articles of Incorporation to increase
the number of authorized shares of Common Stock from
10,000,000 to 20,000,000 will consist of a revision of the first
paragraph of Paragraph 6 of the Articles of Incorporation to read
in its entirety as follows:
"The aggregate number of shares of which the
Corporation shall have authority to issue is
20,000,000 shares of Common Stock having a par value of
$.05 per share ("Common Stock"), and 1,000,000 shares
of preferred stock (the "Preferred Stock")."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
AMENDMENT. The affirmative vote of a majority of all votes cast
at the Meeting is required to approve this amendment.
Abstentions and broker non-votes will not constitute or be
counted as "votes" cast for purposes of the Meeting. all proxies
will be voted "FOR" approval of the amendment unless a
shareholder specifies to the contrary on such shareholder's proxy
card.
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 26, 1999. 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.
SOLICITATION OF PROXIES
The Company has provided proxy materials to brokers,
custodians, nominees, and fiduciaries and requested that such
materials be forwarded to the beneficial owners of stock
registered in the names of such brokers, custodians, nominees,
and fiduciaries. In addition, solicitation of proxies may be
made by officers, directors, and regular employees of the Company
by personal interview, mail, telephone, and telegraph. The cost
of soliciting proxies and related services will be borne by the
Company. <PAGE 16>
SHAREHOLDER PROPOSALS
Shareholders may propose matters for consideration at the
2000 annual meeting by notice, in writing, delivered to or mailed
and received by the Secretary of the Company no later than
July 4, 2000. If proposals are submitted after July 4, 2000,
management proxyholders could have discretionary authority to
vote on those matters at the 2000 annual meeting.
Proposals which shareholders desire to have included in the
Proxy Statement for the 2000 Annual Meeting of Shareholders must
be received at the Company's executive offices, County Line
Industrial Park, Southampton, Pennsylvania 18966 on or before
April 20, 2000.
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 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 26, 1999, is enclosed. Each person solicited
hereunder can obtain a copy of the Company's Annual Report on
Form 10-KSB for the year ended February 26, 1999, 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
___________________________
<PAGE 17>
ENVIRONMENTAL TECTONICS CORPORATION
ANNUAL MEETING TO BE HELD ON September 9, 1999
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints
Pete L. Stephens and Philip 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 September 9,
1999 and at any adjournments thereof:
1. Election of Directors
[ ] For all nominees listed below (except as marked to
the contrary) or
[ ] Withhold the vote for all nominees.
Instruction: To withhold authority to vote for any individual
nominee, strike out his name below:
Richard E. McAdams, William F. Mitchell, Pete L. Stephens,
Philip L. Wagner, Craig Macnab
2. Proposal to Amend Articles of Incorporation to Increase
Authorized Shares of Common Stock from 10,000,000 to
20,000,000 Shares
[ ] For
[ ] Against
[ ] Abstain
_________________________ Dated:_______, 1999
Shareholder's Signature
_________________________ Dated:_______, 1999
Shareholder's Signature
