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. )
( X ) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
( X ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Allied Research Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
( X ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
( ) 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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: *
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
( ) 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:
( ) Filing Fee of $ was previously paid on , 199 ,
the date the Preliminary Proxy Statement was filed.
<PAGE>
ALLIED RESEARCH CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 31, 1995
Notice is hereby given that the annual meeting of shareholders of Allied
Research Corporation (the "Company") will be held at The Tower Club, 17th
floor, 8000 Towers Crescent Drive, Vienna VA 22182, at 10:30 a.m. local time,
on Wednesday, May 31, 1995, for the following purposes:
1. To elect four (4) directors of the Company to serve for the ensuing
year and until their successors are elected and qualified.
2. To consider and act upon a proposal to ratify the selection of Grant
Thornton LLP as the Company's independent auditors for the year 1995.
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 17, 1995 as
the record date for determining the shareholders entitled to notice of and to
vote at the Meeting.
A copy of the Annual Report of the Company for calendar year 1994 is
enclosed.
We urge you to complete and sign the enclosed form of proxy and return it
to us promptly in the accompanying postpaid envelope so that your shares
are represented. By promptly returning the proxy, you as a shareholders help
the Company avoid the necessity and expense of follow-up communications
to assure a quorum for the meeting. Please note that sending us your proxy
will not prevent you from voting in person at the meeting should you be
present and wish to do so.
By order of the Board of Directors,
J. R. Sculley,
President
April 21, 1995
<PAGE>
ALLIED RESEARCH CORPORATION
8000 TOWERS CRESCENT DRIVE, SUITE 750
VIENNA, VIRGINIA 22182
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
General
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Allied Research Corporation, a Delaware corporation
(the "Company"), for use at the annual meeting of shareholders to be held
at The Tower Club, 17th Floor, 8000 Towers Crescent Drive, Vienna, Virginia
22182, on Wednesday, May 31, 1995, at 10:30 a.m., local time, or any
adjournment thereof (the "annual meeting").
The record date for determination of the shareholders entitled to vote at
the annual meeting is April 17, 1995, at the close of business. Any
shareholder giving a proxy may revoke it at any time before it is exercised
(including a revocation at the annual meeting) by filing with the Secretary
of the Company a written revocation or duly executed proxy bearing a later
date.
In accordance with the laws of the State of Delaware and the Company's
Restated Certificate of Incorporation, as amended, and Amended and Restated
Bylaws, a majority of the outstanding shares of common stock will constitute a
quorum at the meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business.
In accordance with the laws of the State of Delaware and the Company's
Restated Certificate of Incorporation, as amended, and Amended and Restated
Bylaws (i) for the election of directors, which requires a plurality of the
votes cast, only proxies and ballots indicating votes "FOR all nominees",
"WITHHELD from all nominees" or specifying that votes be withheld for one or
more designated nominees are counted to determine the total number of votes
cast, and broker non-votes are not counted, and (ii) for the adoption of all
other proposals, which are decided by a majority of the shares of the stock
of the Company present in person or by proxy and entitled to vote, only
proxies and ballots indicating votes "FOR", "AGAINST" or "ABSTAIN" on the
proposal or providing the designated proxies with the right to vote in their
judgment and discretion on the proposal are counted to determine the number
of shares present and entitled to vote, and broker non-votes are not counted.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokers, banks and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy
materials to the beneficial owners of the common stock. In addition to
solicitations by mail, directors, officers and regular employees of the
Company may solicit proxies personally or by telegraph or telephone without
additional compensation. The Company has also retained Corporate Investor
Communications, Inc. to aid in the solicitation at an estimated cost of $4,000
plus out-of-pocket expenses.
The approximate date on which this Proxy Statement and enclosed form of
proxy are to be mailed to shareholders is April 21, 1995.
Voting Securities and Principal Shareholders
On April 17, 1995, the record date for the determination of shareholders
entitled to notice of and to vote at the annual meeting, 4,404,170 shares of
common stock of the Company were outstanding. Common stock is the only class
of capital stock of the Company currently outstanding. Each shareholder of
record is entitled to one vote for each share of common stock owned on all
matters to come before the annual meeting.
1
<PAGE>
The following table sets forth information as of March 15, 1995, with
respect to the shares of the Company's common stock which are held by the only
persons known to the Company to be the beneficial owners of more than 5% of
such common stock:
Title Amount and nature
of Name and address of of beneficial Percent of
class beneficial owner ownership class(1)
Common Linder Fund, Inc./ 442,470 10.04%
Ryback Management Owned
Corporation directly
7711 Carondelet Avenue
P.O. Box 16900
St. Louis, MO 63105
Common Fidelity Management 261,610 5.93%
& Research Company Owned
82 Devonshire Street directly
Boston, MA 02109
(1)Based upon 4,398,448 shares of common stock outstanding plus 10,000 shares
which may be acquired within 60 days pursuant to outstanding stock options.
The following table sets forth the information as of March 15, 1995, with
respect to the beneficial ownership by management of the Company's common
stock:
Title Amount and nature
of Name of of beneficial Percent of
class beneficial owner ownership class(1)
Common Charles T. Scott 1,000 *
Owned directly
Common Earl P. Smith 2,085 *
Owned directly
Common Clifford C. Christ 7,000 *
Owned directly
Common J.R. Sculley 56,598 1.3%
Owned directly
Common W. Glenn Yarborough, Jr. 7,251 *
Owned directly
Common All executive officers
and directors as a 73,934 1.7%
group (6) Owned directly
(1)Based upon 4,398,448 shares of common stock outstanding plus 10,000 shares
which may be acquired within 60 days pursuant to outstanding stock options.
*Less than 1%
2
<PAGE>
ELECTION OF DIRECTORS
Four (4) directors are to be elected to serve until the next annual meeting
and until their successors are elected and qualified. The accompanying proxy
will be voted for the election of all of the persons named below as nominees
unless the shareholder otherwise specifies in the proxy. If any of the
nominees should become unavailable, the persons named in the proxy or their
substitutes shall be entitled to vote for one or more substitutes to be
designated by the Board of Directors.
J.R. Sculley and Charles T. Scott became members of the Board of Directors
in 1991. Clifford C. Christ and Earl P. Smith joined the Board of Directors in
April, 1993.
The following information is presented with respect to each nominee, each
of whom has indicated approval of his nomination and willingness to serve if
elected:
Year in which Principal business occupation
first elected for past five years and
Name of nominee a director Age other directorships
J.R. Sculley 1991 54 Chairman of the Board and chief
executive officer of the Company
since December, 1992; president and
chief operating officer of the
Company since April, 1992; director
of MECAR S.A. ("MECAR") since
April 1992; director of Barnes &
Reinecke Inc. ("Barnes & Reinecke")
since April, 1992; director
of Allied Research Corporation
Limited ("Limited") since April,
1992; director of ARC Services,
Inc. ("Services") since January,
1993; Director of Advanced Studies
and Technologies of Grumman
Corporation, a defense company,
from 1989 to April, 1992; formerly
Assistant Secretary of the Army
(Research, Development and
Acquisition).
Charles T. Scott 1991 73 Retired business executive; from
1978 to 1990, president of
Management Services Corporation, a
subsidiary of Lear Siegler Corp., a
defense company.
Clifford C. Christ 1993 47 President and chief executive
officer of NavCom Defense
Electronics, Inc., a defense
electronics company, since 1988.
Earl P. Smith 1993 56 Principal in Earl P. Smith and
Associates, a defense consulting
firm, since 1990; vice president-
commercial operations of Management
Services Corporation, a subsidiary
of Lear Siegler Corp., a defense
company, during 1990; vice
president marketing and contracts
of Management Services Corporation
from 1986-1990.
During calendar year 1994, there were (5) formal meetings of the Board of
Directors. The directors frequently communicate with one another on an
informal basis.
The Audit Committee and the Compensation Committee each met once in calendar
year 1994.
The Audit Committee is currently comprised of Messrs. Christ, Scott and
Smith. Among its functions, the Audit Committee (i) recommends the selection of
the Company's independent public accountants, (ii) reviews the scope of
the independent public accountants' audit activity, (iii) reviews the
financial statements which are the subject of the independent public
accountants' certification, and (iv) reviews the adequacy of the Company's
basic accounting and internal control systems.
The Compensation Committee is currently comprised of Messrs. Christ, Scott,
and Smith. The Compensation Committee establishes the Company's executive
compensation program. It also periodically reviews the compensation of
executives and other key officers and employees of the Company and its
subsidiaries.
The Board of Directors of the Company has no standing nominating or similar
committee.
3
<PAGE>
Compensation of Directors and Executive Officers
The following table sets forth information concerning all compensation paid
for services rendered in all capacities to the Company and its subsidiaries
during the years ended December 31, 1994, 1993 and 1992, by the chief
executive officer of the Company and by other executive officers of the
Company whose total annual salary and bonus exceeds $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION> Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options LTIP Compen-
Position Year Salary ($) Bonus($) sation ($) Award(s) ($) SARs (#) Payouts sation ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J.R. Sculley, 1994 $235,000 $103,125(1) $ 82,762.85(2) 56,000(3)
Chief 1993 $225,000 $ 44,654(4)
Executive Officer(7) 1992 $161,430 $237,500(5) $167,500(6)
W. Glenn
Yarborough, Jr. 1994 $130,000 $ 26,250(8) 14,000(9)
</TABLE>
(1)Mr. Sculley was granted 25,000 shares of Company stock which had a market
value of $4.125 per share on the date of grant.
(2)Mr. Sculley was paid $82,762.85 in payment of federal and state taxes paid
as a result of the 1994 stock award.
(3)Mr. Sculley was granted incentive stock options to acquire up to 56,000
shares of Company stock in March, 1994. The options first become exercisable
in March 1996 at which point they become exercisable at the rate of 20% of the
underlying shares per year.
(4)Mr. Sculley was paid $44,654 in partial payment of federal and state taxes
paid as a result of 1992 stock award.
(5)Mr. Sculley was granted 25,000 shares of Company stock which had a market
value of $9.50 per share on the date of grant.
(6)Mr. Sculley was paid for reimbursement for moving expenses, temporary
lodging and reimbursement for loss incurred on the sale of his personal
residence in order for Mr. Sculley to promptly relocate in April, 1992 as
well as a partial payment in consideration of federal and state taxes paid
as a result of the 1992 stock award.
(7)Mr. Sculley first became an executive officer of the Company in April, 1992.
(8)Mr. Yarborough was granted 6,000 shares of Company stock which had a
market value of $4.375 per share on the date of grant.
(9)Mr. Yarborough was granted incentive stock options to acquire up to 14,000
shares of Company stock in March, 1994. The options first become exercisable
in March, 1996 at which point they become exercisable at the rate of 20% of
the underlying shares per year.
4
<PAGE>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION> Potential Realizable
Value at Assumed
Annual Rates of Stock
Individual Grants Price Appreciation for Option Term
(a) (b) (c) (d) (e) (f)
Number of % of
Securities Total Options/ Exercise
Underlying SARs Granted or
Options/SARs To Employees Base Price Expiration
Name Granted (#) In Fiscal Year ($/sh) Date 5($)(3) 10($)(3)
<S> <C> <C> <C> <C> <C> <C>
J. R. Sculley(1) 56,000 25.75% $8.25 3/2/04 $290,550 $736,309
W. Glenn
Yarborough, Jr.(2) 14,000 5.98% $8.25 3/2/04 $ 72,632 $184,077
</TABLE>
(1)The options issued to Mr. Sculley, together with all options granted in
1994, first become exercisable in March, 1996 at which point they become
exercisable at the rate of 20% of the underlying shares of common stock
per year.
(2)The options issued to Mr. Yarborough, together with all options granted in
1994, first become exercisable in March, 1996 at which point they become
exercisable at the rate of 20% of the underlying shares of common stock
per year.
(3)The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates as required by the Securities and Exchange Commission and
are not intended to forecast future price appreciation of the common stock of
the Company.The gains reflect a future value based upon growth at these
prescribed rates. The Company is not aware of any formula which will determine
with reasonable accuracy a present value based on future unknown or
volatile factors.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Value
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARS Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
J.R. Sculley 0 0 0/56,000 0(1)
W. Glenn Yarborough, Jr. 0 0 0/14,000 0(1)
(1)At December 31, 1994, the Company's common stock traded at $3.375 per
share; the exercise price was $8.25 per share.
Director Compensation
Each director of the Company is currently compensated for services as a
director, including as a member of committees of the Board, as follows:
(i) each director who is also an employee of the Company is compensated in the
amount of $1,000 per month; and (ii) each director who is not also an employee
of the Company ("Outside Director") is compensated in accordance with the
Allied Research Corporation Outside Directors Compensation Plan (the
"Directors Compensation Plan") by which the Company pays each one of its
Outside Directors $1,000 per month during such Outside Director's tenure and
awards 1,000 shares of the Company's stock to each individual who serves as an
Outside Director on each July 1. As initially adopted by the Board of
Directors, the Directors Compensation Plan authorized the issuance of up to
50,000 shares of common stock of the Company;
5
<PAGE>
a result of the 5% stock dividend paid on November 6, 1992, the 48,000 shares
remaining to be issued automatically increased to 50,400 shares. In addition,
Outside Directors are compensated (a) $1,000 for each Board meeting in excess
of (4) personally attended during each calendar year, (b) $500 for each
committee meeting attended which is not held in conjunction with a Board
meeting, and (c) $250 for each teleconference Board meeting in excess of two
(2) in which a director participates during each calendar year.
In 1992, the Board of Directors of the Company adopted the Allied Research
Corporation Outside Directors Retirement Plan (the "Directors Retirement
Plan") to provide retirement benefits for long-standing Outside Directors.
Under the Directors Retirement Plan, Outside Directors are eligible for a
retirement benefit if they retire from the Board and have served as a member
of the Board for a minimum of (5) years. An eligible Outside Director
who retires from the Board is entitled to receive, commencing on the last day
of the first month following the month in which the director attains age
seventy (70), monthly payments equal to the monthly cash compensation received
from the Company at the time the director terminated service in such capacity.
Such payments will cease upon the earlier of the expiration of a period of
time equivalent to the period of time the director served as a member of the
Board or the death of the director. In the event that a director has breached
any fiduciary or legal duty to the Company, the director will forfeit the
right to payment of benefits under the Directors Retirement Plan. The
Directors Retirement Plan is administered by the Board of Directors.
In 1991, the Board of Directors of the Company adopted the Allied Research
Corporation Outside Directors Stock Option Plan (the "Directors Option Plan")
by which the Company may grant options for up to 208,000 shares of stock to
its Outside Directors (which amount includes the 5% stock dividend paid on
November 6, 1992). None of the options granted pursuant to the Directors
Option Plan are intended to qualify as incentive stock options under Sections
422 through 424 of the Internal Revenue Code. The purpose of the Directors
Option Plan is to advance the interests of the Company by providing its
Outside Directors with financial incentives in the form of non-statutory
stock options in order to attract, retain and motivate such Outside Directors.
No options were granted under the Directors Option Plan in 1994 and no options
are outstanding under the Directors Option Plan.
Employment Contracts and Change-In-Control Agreements
J.R. Sculley and the Company have entered into an Employment Agreement (the
"Sculley Agreement"), which extends through March 31, 1998, and is
automatically renewable from year to year thereafter unless either the
Company or Mr. Sculley gives the other timely notice of its or his intent not
to renew. In consideration for his services as an officer of the Company and
as a director of the Company and its subsidiaries, Mr. Sculley is entitled to
receive an aggregate sum of not less than $245,000 per calendar year. The
Sculley Agreement further provides that upon the death or disability of Mr.
Sculley, the Company will make installment payments to or for the benefit
of Mr. Sculley in an amount not to exceed $250,000.
W. Glenn Yarborough, Jr. and the Company have entered into an Employment
Agreement (the "Yarborough Agreement") which extends through July, 1996, and
is automatically renewable from year to year thereafter unless either the
Company or Mr. Yarborough gives the other timely notice of its or his intent
not to renew. In consideration for his services as an officer of the Company
and as a director of the entities comprising The VSK Group, Mr. Yarborough is
entitled to receive an aggregate sum of not less than $144,500 per calendar
year commencing with calendar year 1995. The Yarborough Agreement further
provides that in the event Mr. Yarborough ceases to serve in any capacity as
an officer of the Company as a result of a voluntary or involuntary
termination within a period of twelve (12) months following a change in
control, Mr. Yarborough shall be entitled to a lump sum payment equal to
the aggregate amount of compensation payable to Mr. Yarborough throughout the
remaining term of the Yarborough Agreement.
In June, 1991, the Board of Directors of the Company adopted the Preferred
Share Purchase Rights Agreement (the "Agreement"). The Board amended the
Agreement in April, 1993, to reduce the acquisition threshold described
below from 25% to 10%. The Agreement provides each stockholder of record on
June 20, 1991, a dividend distribution of one "right" for each outstanding
share of the Company's common stock. Rights become exercisable at the earlier
of ten days following: (1) a public announcement that an acquirer has
purchased or has the right to acquire 10% or more of the Company's common
stock, or (2) the commencement of a tender offer which would result in an
offeror beneficially owning 30% or more of the outstanding common stock of the
Company. All rights held by an acquirer or offeror expire on the announced
acquisition date, and all rights expire at the close of business on June
6
<PAGE>
20, 2001. Each right entitles a stockholder to acquire at a stated purchase
price, 1/100 of a share of the Company's preferred stock which carries voting
and dividend rights similar to one share of its common stock. Alternatively, a
right holder may elect to purchase for the stated price an equivalent number
of shares of the Company's common stock (or in certain circumstances, cash,
property or other securities of the Company) at a price per share equal to
one-half of the average market price for a specified period. In lieu of the
purchase price, a right holder may elect to acquire one-half of the common
stock available under the second option. The purchase price of the preferred
stock fractional amount is subject to adjustment for certain events as
described in the Agreement. At the discretion of a majority of the Board and
within a specified time period, the Company may redeem all of the rights at a
price of $.01 per right. The Board may also amend any provisions of the
Agreement prior to exercise.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company during the fiscal year ended
December 31, 1994 consisted of Messrs. Charles T. Scott, Clifford C. Christ
and Earl P. Smith. None of such individuals has served as an officer or
employee of the Company nor is there any other relationship between any
member of the Compensation Committee and the Company which is required to be
disclosed under applicable proxy regulations.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors establishes the
compensation arrangements for executive officers of the Company. The
Compensation Committee's executive compensation program is structured to
attract, motivate and retain qualified executives, to reward individual
initiative and to link executive compensation with the interests of the
Company's shareholders. This program is implemented by establishing
competitive base salaries for its executive officers, coupled with bonuses
with an emphasis on stock awards for exceptional performance and achievements
and stock option grants to both retain executive officers and better assure
that executive compensation is tied directly to the performance of the
Company's stock.
There are three components of the executive compensation program: (i) base
salary, (ii) annual bonuses with an emphasis on stock awards and (iii) annual
stock option grants. To date: (a) the base salary component has been based
upon contractual obligations and not performance evaluations; (b) annual
bonuses have been based on operating results and subjective performance
criteria; and (c) stock options grants have been based in part on subjective
performance evaluations and in part to facilitate increased ownership of
Company stock by key employees.
Salaries of the Company's executive officers are determined on the basis of
comparisons with salaries of executives holding similar positions at
comparably sized public companies. During 1992, the Chairman of the
Compensation Committee engaged in an extensive study of compensation paid to
chief executive officers of comparably sized public companies. This study was
utilized to establish the compensation payable to the individual then serving
as chief executive officer of the Company, the predecessor to the current
chief executive officer, J.R. Sculley.
The annual bonus component of the executive compensation program will
largely be implemented using Company stock awards. In 1994, the Compensation
Committee granted stock awards to Mr. Sculley and other key members of
the management teams of the Company's subsidiaries based on 1993 performance.
No stock awards are contemplated for 1994 performance. Going forward, it is
the intent of the Compensation Committee to provide specific objectives for
all executive officers and the key members of management of the Company's
subsidiaries.
The final component of the Company's executive compensation program is an
annual grant of stock options. These grants are intended to provide a direct
linkage between increased compensation for the Company's executives and an
increase in the price of the Company's stock which constitutes enhanced value
for all of the Company's shareholders. The number of options granted will be
based on the executives' level of responsibility, Company performance and
individual performance. As is the case with annual stock awards, the
Compensation Committee intends to use stock options to incent and motivate the
key managers of the Company's subsidiaries as well as Company executive
officers. As an additional objective, stock option grants to executive
officers are intended to induce the executive to remain in the employment of
the Company. Accordingly, the Compensation Committee intends for stock options
to be exercisable only after an employee has satisfied a minimum tenure
requirement.
7
<PAGE>
Mr. Sculley's base salary as chief executive officer of the Company is at a
level below that of his predecessor as chief executive officer. Mr. Sculley's
employment agreement was negotiated at the time he became chief operating
officer of the Company. It provided that his salary would be reviewed in the
event he was elected chief executive officer. Mr. Sculley was not afforded an
increase in salary at the time he assumed the duties of chief executive
officer. The only compensatory change following his assumption of the title
and responsibilities of chief executive officer was an amendment which
provides for the Company to make installment payments to or for the benefit of
Mr. Sculley, in an amount not to exceed $250,000, upon his death or disability.
In 1994, the term of Mr. Sculley's agreement was extended through March, 1998.
The 1994 amendment does not entitle Mr. Sculley to any increase in base salary
over 1995 levels. During 1994, Mr. Sculley was awarded a bonus consisting of
25,000 shares of Company stock in recognition of the Company's profitable
performance during 1993. In addition, $103,125 of cash compensation was paid
to Mr. Sculley in 1994 which was related to the stock award. This additional
cash compensation was for reimbursement of income taxes incurred by him
relative to the stock award. Also in 1994, Mr. Sculley was awarded options to
acquire up to 56,000 shares of Company stock, which options first become
exercisable in 1996 and are exercisable thereafter at the rate of 20% of the
underlying shares per year. The Compensation Committee took into consideration
in determining the size of the option grant to Mr. Sculley the fact that he
had no outstanding options.
This report is submitted by the Compensation Committee of the Board of
Directions.
Charles T. Scott
Clifford C. Christ
Earl P. Smith
Certain Relationships and Transactions
On April 1, 1993, the Company entered into an agreement with Mr. Kusai
H. M. Al Azzawi, a beneficial owner of more than 5% of the Company's common
stock, to purchase from him 350,000 shares of its common stock. During 1993,
the Company purchased and retired 130,000 of such shares. The balance of the
shares were acquired in 1994 for an aggregate purchase price of approximately
$3.7 million. Based on reports filed by Mr. Al Azzawi, he no longer owns in
excess of 5% of the Company's common stock.
8
<PAGE>
Performance Graph
The following graph assumes $100 was invested on December 31, 1989 in
Allied Research Corporation common stock, the S&P 500 Index and the S&P
Aerospace/Defense Industry Index. It compares the cumulative total return on
each, assuming reinvestment of dividends, for the five-year period ended
December 31, 1994.
Comparison of Cumulative Total Return
Assumes initial investment of $100 and reinvestment of dividends
[graph appears here]
The plot points are as follows:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Allied Research Corporation (ARC) 100 162.47 606.19 715.22 439.63 262.47
S&P Index (S&P) 100 96.89 126.42 136.05 149.76 151.74
S&P Aerospace/Defense Industry Index (IG) 100 104.39 124.79 131.28 170.75 184.70
</TABLE>
ALLIED RESEARCH:
Represents Allied Research Corporation common stock's total return over the
past five years including reinvestments of dividends.
S&P 500:
Represents the S&P 500 Index's total return over the past five years
including reinvestment of dividends.
S&P Aerospace/Defense:
Represents the S&P Aerospace/Defense Industry Index's total return over the
past five years including reinvestment of dividends.
This index consists of the following companies:
Boeing Company McDonnell Douglas Corporation
General Dynamics Corporation Northrop Corporation
Grumman Corporation Raytheon Company
Lockheed Corporation Rockwell International Corp.
Martin Marietta Corporation United Technologies Corp.
9
<PAGE>
PROPOSAL CONCERNING INDEPENDENT AUDITORS
The firm of Grant Thornton LLP has been reappointed by the Board of
Directors as the Company's independent auditors for the year 1995. A
resolution will be presented at the annual meeting to ratify this appointment.
The Company has been advised that representatives of Grant Thornton LLP are
expected to be present at the annual meeting, with the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
If the shareholders, by the affirmative vote of majority of the shares of
common stock represented at the meeting, do not ratify the selection of Grant
Thornton LLP, the selection of independent accountants will be reconsidered by
the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF GRANT
THORNTON AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR 1995
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with regulations of the Securities and Exchange
Commission. Should a shareholder intend to present a proposal at next year's
annual meeting, it must be in writing and must be received by the Secretary of
the Company at 8000 Towers Crescent Drive, Suite 750, Vienna, Virginia 22182,
no later than December 21, 1995, in order to be included in the Company's
proxy statement and proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors is not aware of any business requiring a vote of the
shareholders to come before the annual meeting other than those matters
described above in this Proxy Statement. However, if any other matter or
matters are properly brought before the annual meeting, or any adjournment
thereof, it is the intention of the persons named in the accompanying form
of proxy to vote the proxy on such matters in accordance with their judgment.
By Order of the Board of Directors,
J.R. Sculley,
President
Dated: April 21, 1995
YOUR VOTE IS IMPORTANT. PLEASE PROMPTLY COMPLETE AND SIGN THE ENCLOSED FORM
OF PROXY AND RETURN IT IN THE ACCOMPANYING POSTPAID ENVELOPE.
10
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APPENDIX
ALLIED RESEARCH CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J.R. Sculley and Charles T. Scott and each
of them proxies, each with full power of substitution, to vote all shares
of Common Stock of Allied Research Corporation (the "Company") which the
undersigned may be entitled to vote at the Annual Meeting of Shareholders
of the Company to be held on May 31, 1995, and any adjournment thereof,
upon the matters set forth below and described in the accompanying Proxy
Statement and upon such other business as may properly come before the
meeting or any adjournment thereof.
Please mark this Proxy as indicated below to vote on any item. If you
wish to vote in accordance with the Board of Directors' recommendations,
please sign the reverse side, no boxes need to be checked.
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS ( ) VOTE FOR all nominees listed below, except vote ( ) VOTE WITHHELD
withheld from those whose names are crossed out. from all nominees listed below.
</TABLE>
J.R. SCULLEY, CHARLES T. SCOTT, CLIFFORD C. CHRIST AND EARL P. SMITH
(2) APPROVAL OF PROPOSAL TO RATIFY GRANT THORNTON LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE YEAR 1995. ( ) FOR ( ) AGAINST ( ) ABSTAIN
(3) IN THEIR DISCRETION, PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
(continued on reverse side)
(continued from reverse side)
THIS PROXY WILL BE VOTED AS SPECIFIED HEREON. IF NO INDICATION TO THE
CONTRARY IS MADE HEREON, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR
DIRECTORS LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
Date: ___________________________, 1995
_______________________________________
Signature of Shareholder
_______________________________________
Signature of Shareholder
IMPORTANT: In signing this proxy, please sign
your name or names on the signature lines in
the same way as it is stenciled on this proxy.
When signing as an attorney, executor, admin-
istrator, trustee or guardian, please give your
full title as such. If a corporation, please
sign in full corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person. EACH JOINT TENANT SHOULD SIGN.
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
