<PAGE>
PRELIMINARY COPY
----------------
SCHEDULE 14A. INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Solicitation Materials Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
WESTWOOD CORPORATION
(Name of Registrant as Specified In Its Charter)
WESTWOOD CORPORATION
(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(j)(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:--/
-------------------------------------------------------
<PAGE>
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------
- - - - --/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:
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(4) Date Filed:
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<PAGE>
PROXY STATEMENT
The accompanying Proxy is solicited by the Board of Directors
of Westwood Corporation (the "Company"), on behalf of the Company,
for use at the Annual Meeting of Stockholders to be held on
Thursday, November 7, 1996, and at any adjournments thereof. The
Annual Meeting will be held at 10:00 a.m., Central Standard Time, in
the corporate offices of the Company at 12437 East 60th Street,
Tulsa, Oklahoma. If the accompanying Proxy is properly executed and
returned, the shares it represents will be voted in favor of the
proposals described in this Proxy Statement. Any Stockholder giving
a Proxy has the power to revoke it by oral or written notice to the
Secretary of the Company at any time before it is voted. The record
date for voting and for entitlement to receipt of the Proxy
Statement is October 11, 1996.
The approximate date on which this Proxy Statement and the
accompanying Proxy will first be sent to Stockholders is October 14,
1996.
Record Date and Voting Rights
Only Stockholders of record at the close of business on
October 11, 1996, will be entitled to notice of and to vote at the
Annual Meeting. As of the record date, the Company had outstanding
5,581,682 shares of Common Stock entitled to one vote per share. A
majority of the shares entitled to vote, represented in person or by
Proxy, shall constitute a quorum. Abstentions and broker non-votes
are counted as present for purposes of determining the existence of
a quorum.
Dissenters' Right of Appraisal
Pursuant to Nevada corporation law, the actions contemplated to
be taken at the Annual Meeting do not create appraisal or
dissenters' rights.
STOCK OWNERSHIP
The following table sets forth information regarding the
ownership of the Company's Common Stock by (i) each beneficial owner
of more than 5% of the outstanding Common Stock, (ii) each Director,
(iii) the Chief Executive Officer and the Chief Financial Officer,
and (iv) the Executive Officers and Directors as a group. The
information is given as of March 31, 1996. Unless otherwise
indicated, each of the Stockholders has sole voting and investment
power with respect to the shares beneficially owned.
<PAGE>
<TABLE>
<CAPTION>
Name of Owner or Number of Shares Percent of
Identity of Group Options<F1> Total Outstanding
- - - - ----------------- ------- ----- -----------
<S> <C> <C> <C>
Ernest H. McKee 66,550 1,382,469 25.0%
2902 E. 74th Street
Tulsa, Oklahoma 74136
Paul R. Carolus 66,550 314,562 5.6%
8511 South Canton Avenue
Tulsa, Oklahoma 74137
Robert E. Lorton -- 288,009 5.2%
1440 South Owasso Avenue
Tulsa, Oklahoma 74120-5609
William J. Preston -- 544,180 9.7%
1717 Woodstead Court
The Woodlands, Texas 77380
Richard E. Minshall 66,500 179,416<F2> 3.2%
320 South Boston Avenue
Suite 1300
Tulsa, Oklahoma 74103
Anthony Pantaleoni 66,500 94,191<F3> 1.7%
666 Fifth Avenue
New York, New York 10103
Kennedy Capital -- 445,643<F4> 8.0%
Management, Inc.
Gerald T. Kennedy, President
425 N. New Ballas Road
Suite 181
St. Louis, Missouri 63141
All Executive Officers 266,200 1,970,638 35.3%
and Directors as a
Group (4 persons)
<FN>
<F1>
Includes Company stock options that were exercisable on
September 20, 1996.
<F2>
Includes 94,187 shares of Common Stock owned beneficially
by Mr. Minshall individually; 4,438 shares owned beneficially by
Mr. Minshall's wife; 70,937 shares held beneficially by Capital
Advisors, Inc., and 9,854 shares owned by Minshall & Company, Inc.
Mr. Minshall is the Chief Executive Officer and controlling
shareholder of Capital Advisors, Inc., and Minshall & Company, Inc.
<PAGE>
<F3>
Includes 46,863 shares of Common Stock owned beneficially
by Mr. Pantaleoni, and an aggregate of 47,328 shares held equally
in two trusts for the benefit of Mr. Pantaleoni's children (Mr.
Pantaleoni disclaims beneficial ownership of these shares).
<F4>
Represents Common Stock held in Discretionary Investment
Advisory Accounts in a fiduciary capacity for investment purposes.
Mr. Gerald T. Kennedy serves as President of Kennedy Capital
Management, Inc., and is responsible for its investment decisions.
</FN>
</TABLE>
EXECUTIVE COMPENSATION
The following tables I through III present information
concerning the cash compensation and stock options provided to
Messrs. McKee and Carolus. The notes to these tables provide more
specific information regarding compensation. Ernest H. McKee and
Paul R. Carolus are the only Executive Officers of the Company. No
other persons are considered to be executive officers or received
compensation in excess of $100,000 during the fiscal year ended
March 31, 1996.
<PAGE>
<TABLE>
Table I
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation<F1>
Name and -------------------
Principal Position Year Salary Bonus<F2> Other
- - - - ------------------ ---- ----------------------------
<S> <C> <C> <C> <C>
Ernest H. McKee 1996 $150,000 $125,000 --
Chief Executive 1995 $150,000 $125,000 --
Officer 1994 $150,000 $150,000 --
Paul R. Carolus 1996 $ 90,000 $ 75,000 --
Chief Financial 1995 $ 90,000 $ 75,000 --
Officer 1994 $ 90,000 $ 90,000 --
<CAPTION>
Long-Term Compensation
----------------------
Securities All Other
Underlying Options<F3> Compensation<F4>
------------------ ------------
<S> <C> <C>
McKee (cont'd) 13,310 $4,500
13,310 $4,500
13,310 $4,500
Carolus (cont'd) 13,310 $4,500
13,310 $2,700
13,310 $2,700
<FN>
<F1>
Amounts shown include cash compensation earned by Executive
Officers.
<F2>
The value of other benefits to any Officer during fiscal
year 1996 did not exceed the lesser of $50,000 or 10% of the
Officer's total annual salary and bonus or fall within any other
category requiring inclusion.
<F3>
Represents the issuance of Options on March 20, 1994,
March 20, 1995, and March 20, 1996, as adjusted by 10% stock
dividends occurring on each of December 22, 1993, December 22,
1994, and December 22, 1995.
<F4>
Amounts contributed to the Company's 401(k) Plan on behalf
of the named Executive Officer.
</FN>
</TABLE>
<PAGE>
<TABLE>
Table II
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Number of Percent of Total Exercise/
Securities Options Granted Base Price
Underlying To Employees Per Share
Name Options Granted<F1> In Fiscal Year 03/20/96
- - - - ---- --------------- ---------------- ---------
<S> <C> <C> <C>
Ernest H. McKee 13,310 25% $1.75
Paul R. Carolus 13,310 25% $1.75
All Stockholders: N/A N/A N/A
5,581,682 shares
outstanding at
March 31, 1996
<CAPTION>
Gains Based on Assumed Rates of Stock Price
Appreciation for Option Term<F2>
------------------------------------------
Expiration Assumed Rate Assumed Rate
Date 5% 10%
---------- ------------ ------------
<S> <C> <C> <C>
McKee (cont'd) 03/20/2001 $1,165 $2,329
Carolus (cont'd) 03/20/2001 $1,165 $2,329
All (cont'd) N/A N/A N/A
<FN>
<F1>
These option grants are not exercisable prior to six (6)
months from the date of grant and expire five (5) years from date
of grant.
<F2>
The potential gain is calculated from the closing price of
Common Stock on March 20, 1996, the date of grants to Executive
Officers. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises
and Common Stock holdings are dependent on the future performance of
the Common Stock and overall market conditions. There can be no
assurance that the amounts reflected in this table will be
achieved.
</FN>
</TABLE>
The Company maintains a 401(k) Plan which was effective
January 1, 1989, and is available for participation by all NMP
Corp. employees without minimum age or service requirements.
Each participating employee can defer up to 17% of his annual
compensation to a specified limit. The Company matches 100% of the
employee's deferrals, with such matching contributions not to exceed
3% of the employee's annual compensation. The Company's total
contributions to the Plan for fiscal year 1996 were $120,000.
<PAGE>
<TABLE>
Table III
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Unexercised
Options at 03/31/96
Shares ---------------------
Acquired Value Exer- Unexer-
Name On Exercise Realized cisable<F1> cisable<F2>
- - - - ---- ----------- -------- ------- -------
<S> <C> <C> <C> <C>
Ernest H. McKee 0 $0 53,240 13,310
Paul R. Carolus 0 $0 53,240 13,310
<CAPTION>
Value of Unexercised In-The-Money
Options At March 31, 1996
--------------------------------
Exercisable Unexercisable
----------- -------------
<S> <C> <C>
McKee (cont'd) $ 0 $ 0
Carolus (cont'd) $ 0 $ 0
<FN>
<F1>
Represents grants of Options to acquire 13,310 shares on
each of March 20, 1992, March 30, 1993, March 20, 1994, March 20,
1995, and March 20, 1996, to Messrs. McKee and Carolus pursuant to
the 1992 Directors' Stock Option Plan, as amended on October 28,
1993 (the "Directors' Plan"). The shares issued under these Options
have been adjusted as a result of the 10% stock dividends occurring
on December 22, 1993, December 22, 1994, and December 22, 1995. The
exercise prices of the 1992, 1993, 1994 and 1995 Option grants were
$3.00, $3.125, $3.50 and $2.25 per share, respectively, which were
the NASDAQ closing prices on the date of the grants ($2.25, $2.35,
$2.89 and $2.05 per share, respectively, after automatic adjustment
for the 10% stock dividends occurring on December 22, 1993, 1994 and
1995). The Options became exercisable six (6) months after the date
of the grants, and will expire five (5) years from the date of
grant.
<F2>
On March 20, 1996, additional grants of Options to acquire
13,310 shares were made to Messrs. McKee and Carolus pursuant to the
Directors' Plan. The exercise price of these Option grants was
$1.75 per share, which was the NASDAQ closing price on the date of
the grants.
<PAGE>
Stock Performance Graph
The following graph compares the Company's five-year cumulative
total return to the NASDAQ U.S. Stock Index and the S&P Electronic
Defense Index for the period beginning March 31, 1991, and ending
March 31, 1996. Total stockholder return assumes $100 invested in
the Company and each of the Indexes shown on March 31, 1991. It
also assumes reinvestment of all dividends.
The Company is in a unique industry which has few competitors
manufacturing electrical switching panel boards, switchboards, and
electronic components used primarily on naval combat vessels. The
Company's three primary competitors are not actively traded on any
U.S. Stock Market and therefore, no financial data is offered for
comparative purposes.
With the acquisition of E. Systems, Inc. in mid-1995 and Loral
Corp. in January of 1996, the S&P Electronic Defense Index is now
composed solely of one company, EG&G, Inc. The public acquisitions
of E. Systems, Inc. and Loral Corp., at substantial premiums over
the then trading prices of these companies, has, in the Company's
opinion, resulted in a substantial inflation of the performance of
the S&P Electronic Defense Index for the period March 31, 1995
through March 31, 1996. The Company is currently exploring other
possible indexes for purposes of future reporting.
Price performance of the Company's Common Stock may be affected
by many factors other than earnings, including the small
capitalization of the Company, limited availability of public float,
and the relatively small number of market makers in the Company
stock. Past financial performance should not be considered to be a
reliable indicator of future performance, and investors should not
use historical trends to anticipate results or trends in future
periods.
<PAGE>
</TABLE>
<TABLE>
Table IV
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN<F1>
AMONG WESTWOOD CORPORATION, NASDAQ U.S.
STOCK INDEX AND S&P ELECTRONIC DEFENSE INDEX
<CAPTION>
Measurement Period Westwood NASDAQ U.S. S&P Electronic
(Fiscal Year Covered) Corporation Stock Index Defense Index
----------- ----------- --------------
<S> <C> <C> <C>
Measurement Pt-03/31/91 $100 $100 $100
FYE 03/31/92 $303 $125 $ 97
FYE 03/31/93 $292 $142 $122
FYE 03/31/94 $312 $154 $134
FYE 03/31/95 $234 $169 $143
FYE 03/31/96 $271 $223 $271
<FN>
Total Return assumes reinvestment of dividends.
</FN>
</TABLE>
Executive Officer Agreements
Messrs. McKee and Carolus have employment contracts with NMP
Corp. through March 1999. These contracts, as amended in March
1995, provide for a base salary of $150,000 for Mr. McKee and
$90,000 for Mr. Carolus. Bonus provisions are subject to the
discretion of the Board of Directors of NMP Corp. Both contracts
provide for other benefits to these individuals, including Company
owned automobiles, club memberships, and reimbursement of business
expenses. Although both contracts can be terminated by the Board of
Directors of NMP Corp., at its discretion, each contract provides
for continued salary payments through March of 1999.
On February 1, 1991, after approval by the Board of Directors,
NMP Corp. loaned Ernest McKee ("McKee") the sum of $315,000 pursuant
to a secured promissory note and related pledge agreement. The
purpose of the loan was to allow Mr. McKee to satisfy indebtedness
of an unrelated family corporation. At the time the loan was made,
the 333,334 shares of common stock owned by Mr. McKee, and pledged
as collateral for the repayment of this loan, had a value
approximately three times greater than the loan amount made
available to him. These shares currently have a value in excess of
four times the amount of Mr. McKee's indebtedness. The Board
believes that the loan was made on a fair basis to Mr. McKee and the
Company. However, the Board does not know if Mr. McKee could have
obtained a loan on an equivalent basis with an unaffiliated lending
institution.
<PAGE>
As of February 1, 1996, the principal balance due under the
note was $170,000. In March 1996, Mr. McKee paid $15,296 for
accrued interest on the promissory note and $70,000 in principal
reduction. The remaining principal balance of $100,000 due under
the note is payable in full on March 31, 1997, along with all
accrued interest. The loan is secured by a pledge of 333,334 shares
of Westwood Corporation Common Stock owned by McKee. Interest on
the promissory note is accruing at a rate equal to the Company's
borrowing rate, which is currently New York prime plus 1/4%. On
February 28, 1996, the principal and accrued interest on the loan
was $185,000, which was the largest aggregate amount of principal
and interest due during the fiscal year ended March 31, 1996. As of
June 30, 1996, the principal and accrued interest totaled $102,000.
Compensation Committee Interlocks
and Insider Participation
Ernest H. McKee as President, and Paul R. Carolus as Chief
Financial Officer, are the Company's only Executive Officers and
both also serve on the Company's four-person Board of Directors.
The Company's Executive Officers and its Board of Directors has
remained the same since March of 1988. Because of the small size of
the Board, Messrs. McKee and Carolus participate in its
deliberations regarding Executive Officer compensation. Because the
salaries of Messrs. McKee and Carolus are set by written employment
agreements which have been renewed annually upon the same terms, the
determination of additional compensation is generally limited to
the amount of bonus to be awarded to Messrs. McKee and Carolus on a
yearly basis. Decisions of the Board relating to annual renewal of
contracts, as well as yearly bonus compensation, are finalized by a
vote of Directors. Mr. McKee abstains from voting on the annual
extension of his employment contract and the amount of bonus
compensation to be awarded to him. Likewise, with respect to the
annual extension of his employment contract, as well as bonus
compensation to be awarded, Mr. Carolus abstains from the actual
vote awarding these items of compensation to him.
Compensation Report
The Board of Directors is responsible for setting the policies
that govern the Company's compensation programs, administering the
Company's stock option plans, and establishing the cash compensation
of Executive Officers. Due to its small size, the Board has
determined that a Compensation Committee is not needed and all
matters of compensation for Executive Officers is determined by the
Board as a whole. Generally, compensation matters are considered by
the Board in March of each year when sufficient financial
information is available for the Board to review projected year-end
results. As discussed below, the two primary compensation issues
determined by the Board are: (i) the annual renewal of the existing
employment agreements with Messrs. McKee and Carolus, and (ii) the
award of bonus compensation.
<PAGE>
While the Board reviews the financial performance of the
Company on an annual basis in connection with its compensation
review, such policies of the Board are informal and are, to a large
part, subjective. Based on the particular nature of the Company's
primary business, the manufacture of electrical switchboards for the
United States Navy, the Company is, in reality, a niche manufacturer
with very few competitors or comparable companies located in the
industry. The Company has only two primary competitors, neither of
which have publicly available financial information regarding
assets, earnings, or compensation arrangements for their Executive
Officers. Moreover, the Company's peer group for purposes of the
Performance Chart (Table IV of this Proxy Statement), offers little
assistance in the comparison of executive compensation. When the
Company selected the S&P Electronic Defense Index, five corporations
made up the Index, of which only one remains: EG&G, Inc. EG&G,
Inc., is a much larger corporation in regard to asset size, sales,
employee size, and other quantifiable factors.
The Board's determination of executive compensation is centered
on six factors, including:
1. Earnings per share;
2. Enhancement of net worth;
3. Backlog/development of defense contracts;
4. Reputation for quality;
5. Expansion of product base and services, including
development of new generation electronic devices, within the defense
industry; and
6. Diversification into commercial, non-defense related,
products.
The Board has no quantifiable compensation formulas or policies
based on the six factors set forth above. For example, the annual
salaries of Messrs. McKee and Carolus were increased only once
during the period from fiscal year 1988 through fiscal year 1994,
even though the Company's net worth and earnings per share continued
to grow annually during that period. The salaries of Messrs. McKee
and Carolus have remained the same during the Company's last three
fiscal years. The bonus compensation to Messrs. McKee and Carolus
for the fiscal years ending 1995 and 1996 was reduced from prior
levels in recognition of slightly decreased net earnings for such
years. The decrease in bonus compensation was in recognition of the
tightening economic conditions in the defense industry. The amount
of the reduction in bonus compensation was not based on a formula,
nor was it based on an equivalent percentage determined by the
smaller earnings of fiscal year 1996 as compared to fiscal year
1995.
<PAGE>
The employment contracts for Messrs. McKee and Carolus were
negotiated in March of 1988, upon the acquisition of NMP Corp. The
initial salary structures were determined in accordance with general
salary levels in the Tulsa area at such time, and were based
primarily upon the individual expertise, management and
technological skills, experience and industry relationships of each
of Messrs. McKee and Carolus.
The Board believes that a significant method of providing
additional incentive compensation to its Officers is through the
annual bonus. As stated above, the salaries of Messrs. McKee and
Carolus have been increased only once, and these salaries have
remained the same since 1991. Messrs. McKee and Carolus, as
Directors of the Company, also participate in options granted
pursuant to the Directors' Plan, along with each of the other two
Directors. However, as set forth in Tables II and III, on pages 7
and 8 of this Proxy Statement, participation in the Directors' Plan
cannot be said to provide an adequate incentive or award for the
services of the Company's Officers. The Directors' Plan, which was
adopted by the Stockholders of the Company in 1992, provides for the
issuance of options to acquire 13,310 shares of the Company's common
stock to Directors of the Company annually for a five-year period at
an exercise price which is equal to the reported closing price of
NASDAQ on the date of grant. The Directors' Plan is automatic in
that the amount of the grants and the computation of the exercise
price are fixed by the Plan previously adopted by the Stockholders
and no action by the Board of Directors is required to perfect the
award. It was originally designed as an incentive to maintain
appropriate members on the Board, and to induce others to become
members of the Board, should that be in the best interest of the
Company's Stockholders.
With respect to Mr. McKee's compensation, the Board recognized
that earnings and earnings per share were down but was also aware of
the continuing efforts of Mr. McKee to maintain and increase market
share in defense contracts, both domestic and foreign. The Board
recognized that the Company is facing substantially increased
competition as a result of the shrinking defense budget. Moreover,
the Board acknowledges that a naval contract award involves not only
maintenance of a quality manufacturing company, but most times
includes substantial communication by and between the President of
the Company and officials with the Navy and large prime contracting
shipbuilding corporations. The Company has essentially maintained
its backlog of government defense contracts by increasing market
share in a finite industry. Even though bonus compensation was
maintained at the 1995 reduced amount, the Board recognizes Mr.
McKee's continuing efforts and leadership in causing the Company to
diversify into other commercial products.
<PAGE>
Compensation Report Submitted by the Board of Directors:
Ernest H. McKee, Director
Paul R. Carolus, Director
Richard E. Minshall, Director
Anthony Pantaleoni, Director
Director's Compensation
Directors' fees are payable to each Director for attendance at
all regular and special board meetings for the Company and its
wholly-owned subsidiary, NMP Corp. Messrs. McKee and Carolus,
although Directors of each company, are not paid Directors' fees.
Richard E. Minshall and Anthony Pantaleoni, the Company's outside
Directors, have each been paid the sum of $6,000 for attendance at
board meetings during the fiscal year ended March 31, 1996.
Compensation of $1,500 per meeting to the outside Directors was
originally determined as part of the Company's acquisition of NMP
Corp. in March of 1988, and has continued thereafter to provide some
compensation for the efforts and time expended by Messrs. Minshall
and Pantaleoni. While there are only four to six scheduled meetings
of the Board of Directors in Tulsa, Oklahoma, on a yearly basis,
there generally is a substantial number of communications by and
between the Directors throughout the course of the year which are
not in any way compensated.
Minshall & Company, Inc., provides services to the Company and
its wholly-owned subsidiary, NMP Corp., in regard to public news
releases and public relations matters. A fee of $1,500 per month is
paid to Minshall & Company, Inc., for these services. For the
fiscal year ended March 31, 1996, the total sum of $18,000 was paid
to Minshall & Company, Inc., in connection with these services.
Capital Advisors, Inc., serves as a plan fiduciary with
non-discretionary authority over the Company's 401(k) plan accounts.
In such capacity, Capital Advisors, Inc., received fees totaling
$5,177 for the fiscal year ending March 31, 1997.
Michael A. McKee, a son of Ernest H. McKee, has served as the
Company's Program Manager for RoxSystem products and applications.
For the Company's fiscal year ending March 31, 1996, Michael A.
McKee received salary of $57,750 and bonus compensation of $28,000.
Three other family members of Ernest H. McKee, including a son,
daughter, and son-in-law, are also employed at NMP at salaries
commensurate with their duties and at comparable rates with other
employees of the Company.
Directors' Stock Option Plan
On March 20, 1992, the Board of Directors of the Company
adopted the Directors' Plan, which was approved by Stockholders of
the Company at the Annual Meeting held September 24, 1992. The
Directors' Plan originally provided for the issuance of up to
<PAGE>
100,000 shares of Common Stock. An additional 100,000 shares were
authorized for issuance under the Directors' Plan by the
Stockholders on October 28, 1993. The Directors' Plan was
automatically adjusted as a result of the 10% stock dividends
occurring on December 22, 1993, December 22, 1994, and December 22,
1995. A total of 266,200 shares was reserved for issuance under its
terms. All members of the Board of Directors are eligible to
receive grants of options. Each Director receives automatic,
nondiscretionary grants of options based upon specific criteria set
forth in the Directors' Plan. Each Director received an initial
grant of an option to purchase 13,310 shares of Common Stock, and
has been granted additional options to purchase 13,310 shares of
Common Stock on March 30, 1993, March 20, 1994, March 20, 1995, and
March 20, 1996. The yearly grant of 13,310 shares to Directors is
an automatic provision of the Plan previously approved and does not
require the vote of the Directors and is in fact issued without a
vote of Directors. Moreover, the exercise price is also an
automatic provision previously approved by the Stockholders which
sets the price equal to the closing share price as determined on
NASDAQ on the date of grant.
All options granted are exercisable six months after the grant
date, and shall expire five years after the grant date, except in
the case of a Director's death or permanent disability, upon which
event the options immediately vest and are exercisable for a period
of one year thereafter and then would terminate. If a Director's
membership on the Board of Directors terminates for any reason, any
option held on such date may be exercised any time within one year
after the date of termination, unless the option terminates sooner
by its terms.
The Directors' Plan was originally adopted to provide
additional incentive to Directors of the Company, the benefits of
which would be tied directly to stock performance of the Company.
Moreover, it was hoped that the Plan could partially compensate the
two outside Directors, Messrs. Minshall and Pantaleoni, both of whom
are professionals, for the considerable amount of consulting and
communication time spent by them outside of any Board meeting.
While compensated at the rate of $1,500 per Board meeting, this
compensation only applies when they are actually in attendance at a
Board meeting in Tulsa, Oklahoma. They are not otherwise
compensated for their additional efforts during the year.
Additionally, Ernest H. McKee and Paul R. Carolus, do not
participate in the Company's Incentive and Non-Qualified Stock
Option Plan. The only options received by Messrs. McKee and Carolus
are as part of the Directors' Plan.
At the inception of the Directors' Plan in 1992, the average
trading price for Common Stock of the Company was approximately
$3.00 per share. It was hoped that the price per share of the
Common Stock would grow by approximately 10% per year, and result in
a potential gain of approximately $3,000 annually to each Director.
However, as of the date hereof, none of the options issued to
<PAGE>
Directors over the last five years have resulted in any gain and
none have been exercised.
As of this date, all option grants provided by the Directors'
Plan have been awarded. No other grants of options can be awarded
to the Directors without an amendment to the Directors' Plan as
approved by the Company's Stockholders. Amendment of the Directors'
Plan, as proposed by the Board of Directors, is discussed beginning
at page 19 hereof.
ELECTION OF DIRECTORS
The Board of Directors currently consists of Ernest H. McKee,
Paul R. Carolus, Richard E. Minshall and Anthony Pantaleoni, who
have all served since March of 1988. Each of these Directors are
nominated for re-election as Directors until the next Annual Meeting
of Stockholders or until their successors are duly elected and
qualified.
If, at the time of the Annual Meeting of Stockholders, any of
the nominees should be unable or decline to serve, the discretionary
authority provided in the Proxy may be used to vote for a substitute
or substitutes designated by the Board of Directors. The Board of
Directors has no reason to believe that any substitute nominee or
nominees will be required.
Nominees
The nominees for directorships, and certain additional
information with respect to each of them, are as follows:
Ernest H. McKee, age 58, has served as President, Chief
Executive Officer, and Chairman of the Board of Directors of both
Westwood Corporation and NMP Corp. since 1988.
Paul R. Carolus, age 63, has served as Secretary-Treasurer,
Chief Financial Officer, and a Director of both Westwood Corporation
and NMP Corp. since 1988. Mr. Carolus is a Certified Public
Accountant, and a member of the American Institute of Certified
Public Accountants.
Richard E. Minshall, age 58, has served as a Director of both
Westwood Corporation and NMP Corp. since 1988. Mr. Minshall is
President and Chairman of the Board of Directors of Capital
Advisors, Inc. of Tulsa, Oklahoma. Mr. Minshall is a Director of
AAON, Inc. Mr. Minshall is a member of the Oklahoma Society of
Financial Analysts and the Oklahoma Bar Association.
Anthony Pantaleoni, age 57, has served as a Director of both
Westwood Corporation and NMP Corp. since 1988. Mr. Pantaleoni is a
member of the law firm of Fulbright & Jaworski, L.L.P., New York,
New York. Mr. Pantaleoni is a Director of Universal Health
Services, Inc., AAON, Inc., and Faircom, Inc.
<PAGE>
The Board of Directors presently has no standing committees.
During the fiscal year ended March 31, 1996, the Board had four
meetings, which were attended by all Directors.
Vote Required
The affirmative vote of a majority of the shares represented by
Stockholders who are present in person or by Proxy at the meeting is
required for election of the nominees. Abstentions and broker
non-votes will have no effect on the vote. Proxies solicited hereby
will be voted "For" all four nominees unless Stockholders specify
otherwise in their proxies.
Incentive and Non-Qualified Stock
Option Plan of Westwood Corporation
On March 20, 1992, the Board of Directors of the Company
adopted the Incentive and Non-Qualified Stock Option Plan (the
"Incentive Stock Option Plan"), which was approved by the
Stockholders of the Company at the Annual Meeting held September 24,
1992. The Incentive Stock Option Plan is intended to assist the
Company in securing and retaining key employees by allowing them to
participate in the ownership and growth of the Company through the
grant of incentive and non-qualified options to full-time employees
of the Company and its subsidiaries. Incentive stock options
granted under the Incentive Stock Option Plan are intended to be
"Incentive Stock Options" as defined by Section 422 of the Internal
Revenue Code.
The Incentive Stock Option Plan originally provided that
300,000 shares of Common Stock were reserved for issuance upon
exercise of options to be granted under the Incentive Stock Option
Plan. The Incentive Stock Option Plan was automatically adjusted as
a result of the 10% stock dividends occurring on December 22, 1993,
December 22, 1994, and December 22, 1995. A total of 399,300 shares
are now reserved for issuance under its terms. The Incentive Stock
Option Plan is administered by the Board of Directors, which
determines who shall receive options, the number of shares of Common
Stock that may be purchased under options, the time and manner of
exercise of options and option prices. The term of options granted
under the Incentive Stock Option Plan may not exceed ten years (five
years in the case of an incentive stock option granted to an
optionee owning more than 10% of the voting stock of the Company (a
"10% Holder")). The price for incentive stock options shall not be
less than 100% of the "fair market value" of the shares of Common
Stock at the time the Option is granted; provided, however, that
with respect to an incentive stock option, in the case of a 10%
Holder, the purchase price per share shall be at least 110% of such
fair market value. The price for non-qualified options shall not be
less than 75% of the "fair market value" of the shares of Common
Stock at the time the option is granted. The aggregate fair market
value of the shares of Common Stock as to which an optionee may
<PAGE>
exercise incentive stock options may not exceed $100,000 in any
calendar year. Payment for shares of Common Stock purchased upon
exercise of options is to be made in cash, check or other
instrument, but in the discretion of the Board of Directors, may be
made by delivery of other shares of Common Stock of the Company.
Under certain circumstances involving a change in the number of
outstanding shares of Common Stock without the receipt by the
Company of any consideration therefor, such as a stock split, stock
consolidation or payment of a stock dividend, the class and
aggregate number of shares of Common Stock in respect of which
options may be granted under the Incentive Stock Option Plan, the
class and number of shares subject to each outstanding option and
the option price per share will be proportionately adjusted. In
addition, if the Company is involved in a merger or consolidation,
the options granted under the 1992 Stock Option Plan will be
adjusted equitably.
An option may not be transferred other than by will or by the
laws of descent and distribution or pursuant to a qualified domestic
relations order and, during the lifetime of the option holder, may
be exercised only by such holder.
The Incentive Stock Option Plan will terminate on September 24,
2002, and may be terminated at any time prior to that date by the
Board of Directors.
On November 17, 1994, the Board of Directors approved the total
issuance of options entitling key employees to obtain, in the
aggregate, 121,000 shares of the Company's Common Stock (as adjusted
by the 10% stock dividends occurring on each of December 22, 1994,
and December 22, 1995), with said amount being issued to nine (9)
employees as determined by the Board of Directors. For purposes of
determining distributions and provisions of the stock option
issuances to employees, Messrs. McKee and Carolus noted that they
did not plan to participate in any way in the Incentive Stock Option
Plan and therefore all Directors served to determine those
individuals entitled to stock options. The issuance of the options
to employees on November 17, 1994, contained an exercise price of
$2.25 per share, which was the NASDAQ closing share price as of that
date ($1.86 per share after automatic adjustment for the 10% stock
dividends occurring on December 22, 1994, and December 22, 1995).
Options granted to employees on November 17, 1994, are exercisable
for a period of five (5) years except that no option may be
exercised during the first six months following the date of the
grant. In the event of any of the employees' termination, for any
reason, the options held on the date of termination may be exercised
in whole or in part at any time within one (1) year after the date
of termination. Eight (8) employees received options to acquire
12,100 shares with the Director of Engineering receiving options for
24,200 shares. Two of the employees receiving options, Michael and
Matt McKee, are sons of Ernest H. McKee. The Options issued were
adjusted as a result of the 10% stock dividends occurring on
<PAGE>
December 22, 1994, and December 22, 1995, as set forth in the
Incentive Stock Option Plan.
APPROVAL OF AMENDMENT TO DIRECTORS' STOCK OPTION
PLAN AND AUTHORIZATION TO INCREASE SHARES
AVAILABLE FOR ISSUANCE UNDER THE DIRECTORS' PLAN
The 1992 Directors' Stock Option Plan, as amended on
October 28, 1993, was approved by the Stockholders of the Company
at the Annual Meetings held on September 24, 1992, and
October 28, 1993, respectively. The Directors' Plan provides for
the reservation of 220,000 shares of the Company's Common Stock for
issuance thereunder. The Directors' Plan further provides for the
grant of an initial option to acquire 11,000 shares to each Director,
and for additional grants of options to acquire 11,000 shares on each
subsequent grant date. As a result of the 10% stock dividends
occurring on December 22, 1994, and December 22, 1995, the total
number of shares reserved for issuance under the Directors' Plan is
266,200, and the number of shares available under each option grant
is 13,310. Under the Directors' Plan, each option granted has a
term of five (5) years from the grant date, subject to the earlier
termination provisions thereof. On March 20, 1996, the final grants
of options to acquire 13,310 shares of the Company's Common Stock
were issued to the Directors of the Company pursuant to the terms of
the Director's Plan.
By Resolution dated September 3, 1996, attached hereto as
Appendix "A", the Board of Directors unanimously approved amendments
(the "Amendment") to the Directors' Plan which would:
1. Increase the term of options granted thereunder from five
(5) years to ten (10) years;
2. Provide each Director, who shall have been a Director of
the Company for five consecutive years, the one-time grant of an
option to acquire fifty thousand (50,000) shares of the Company's
Common Stock at an exercise price equal to the closing NASDAQ market
price on September 3, 1996 ($2.125 per share);
3. Subject the one-time grant of an option to acquire 50,000
shares to a vesting limitation, so that such option vests at the
rate of twenty percent (20%), or 10,000 shares, per year on the
successive anniversary date thereof over a period of five (5) years;
and
4. Increase the number of shares available under the
Directors' Plan from 266,200 to 466,200, to satisfy the one-time
grant of an option to purchase 50,000 shares to each Director, as
well as the automatic vesting provisions for the next five (5)
fiscal years.
<PAGE>
Reasons for Proposed Amendment of
the Directors' Stock Option Plan
At the time of its inception, the Directors' Plan was intended
to serve as an incentive to Directors of the Company, in the form of
additional compensation (tied directly to stock performance) to such
Directors for their efforts on behalf of the Company. In 1992, the
average trading price of the Company's Common Stock was
approximately $3.00 per share, and it was hoped that such price
would increase by approximately 10% per year and result in a gain of
approximately $3,000 per year to each Director. However, as of the
date hereof, none of the options issued pursuant to the Directors'
Plan have resulted in any gain, and none of such options has been
exercised. Further, the initial options (granted March 20, 1992),
unless extended, will expire and terminate on March 20, 1997.
The Amendment to the Directors' Plan provides for the one-time
issuance of an option to acquire 50,000 shares of the Company's
Common Stock at the NASDAQ price on September 3, 1996 ($2.125 per
share). Instead of annual grants of 10,000 shares each, the
Amendment imposes a vesting schedule which vests 20% of the 50,000
shares on an annual basis for the next five years, commencing on
March 20, 1997. Any portion of the option which has not vested at
the time of any termination shall be automatically terminated. The
Amendment also increases the term of the options granted pursuant to
the Directors' Plan to ten years from the grant date of each option,
and with respect to the one-time option to purchase 50,000 shares,
ten years from the vesting date of any 20% increment thereof, and
increases the number of shares available under the Directors' Plan
by an additional 200,000 shares, from 266,200 to 466,200.
Text of Proposed Amendments
1. The phrase "(As Amended September 3, 1996)" shall be added
immediately below the title of the Directors' Plan on page 1.
2. The first sentence of the paragraph at Article IV on page 3
which reads:
"Subject to an adjustment in accordance with
Article IX an aggregate of 220,000 Shares*
is reserved for issuance under this Plan."
shall be amended to read:
"Subject to an adjustment in accordance with
Article IX an aggregate of 466,200* Shares
is reserved for issuance under this Plan."
<PAGE>
3. The footnote at the bottom of page 3 (which is referenced
by the "*" in the first sentence of the paragraph at Article IV)
which reads:
"*As adjusted for a 10% stock dividend to
Shareholders on December 22, 1993."
shall be amended to read:
"*As adjusted for 10% stock dividends to
Shareholders occurring on December 22, 1993,
1994 and 1995, and the additional 200,000
Shares subject to Option Agreements dated
September 3, 1996, subject to Shareholders'
approval."
4. The sentence at Paragraph 5.1 under Article V on page 3
which reads:
"On the Initial Grant Date, each Director
shall receive the grant of an option to
purchase 11,000 Shares*."
shall be amended to read:
"On the Initial Grant Date, each Director
shall receive the grant of an option to
purchase 13,310** Shares.
5. A footnote shall be added to the bottom of page 3 (which
shall be referenced by the "**" in Paragraph 5.1 at Article IV)
which reads:
"**As adjusted for 10% stock dividends to
Shareholders occurring on December 22,
1993, 1994 and 1995."
6. The one-sentence at Paragraph 5.2 under Article V on page 3
which reads:
"On each Subsequent Grant Date, each Director
shall receive the grant of an Option to
purchase 11,000 Shares*."
shall be amended to read:
"On each Subsequent Grant Date, through and
including March 20, 1996, each Director shall
receive the grant of an Option to purchase
13,310** Shares. On September 3, 1996, each
of the Directors who shall have been a
Director of the Company for five consecutive
years, shall receive a one-time grant of an
Option to acquire 50,000 shares of the
<PAGE>
Company's common stock at an exercise price
of $2.125 per share, which is equal to the
closing NASDAQ market price on September 3,
1996. The Option for 50,000 shares granted
to each Director will vest at the rate of 20%
per year (10,000 shares) on each successive
anniversary date following the date of the
one-time grant."
7. The sentence at Paragraph 6.1 of Article VI on page 4 which
reads as follows:
"The term of the Option shall be five (5)
years from the Grant Date of each Option,
subject to earlier termination in accordance
with Articles VI and X."
shall be amended to read:
"The term of the Option shall be ten (10)
years from the Grant Date of each Option and,
with respect to the one-time Option to
purchase 50,000 shares, ten (10) years from
the vesting date of any 20% increment
thereof, subject to the earlier termination
in accordance with Articles VI and X."
8. Paragraph 6.7 of Article VI on page 5 which reads as
follows:
"If a Director's membership on the Board
terminates for any reason, an Option held on
the date of termination may be exercised in
whole or in part at any time within one (1)
year after the date of such termination (but
in no event after the term of the Option
expires) and shall thereafter terminate."
shall be amended to read:
"If a Director's membership on the Board
terminates for any reason, a vested Option
held on the date of termination may be
exercised in whole or in part at any time
within one (1) year after the date of such
termination (but in no event after the term
of the Option expires) and shall thereafter
terminate. Options which have not vested at
the time of termination shall be
automatically terminated."
<PAGE>
Proposed Stockholders' Resolution:
RESOLVED: That the Stockholders of Westwood Corporation hereby
approve, ratify and affirm the amendments to the Directors' Stock
Option Plan (the "Directors' Plan"), as approved by the Board of
Directors on September 3, 1996, which amendments are incorporated
into the 1992 Directors' Stock Option Plan, as amended on
September 3, 1996, (the "Amendment"); and
FURTHER RESOLVED: That the Stockholders of Westwood
Corporation approve, ratify and affirm the actions of the Board of
Directors on September 3, 1996, with respect to the Amendment of the
Directors' Plan, and hereby authorize the Board of Directors and the
Company's officers to carry out in full any and all actions required
to effectuate the Amendment to the Directors' Plan.
Vote Required
Under Nevada law, the affirmative vote of the holders of a
majority of the shares of stock of the Company entitled to notice
of, and to vote at, the Annual Meeting is required to approve the
proposed Amendment to the Directors' Plan. Abstentions and broker
non-votes will have the effect of a vote against the proposal. The
Board of Directors recommends a vote "For" approval of this
proposal.
PROPOSALS OF STOCKHOLDERS
Any proposal of a Stockholder intended to be presented at the
next annual meeting must be received at the Company's principal
Executive Offices no later than March 31, 1997, if the proposal is
to be considered for inclusion in the Company's Proxy Statement
relating to such meeting.
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young has served as the
Company's independent auditors since 1988 and it is anticipated that
the Board of Directors will reappoint Ernst & Young to provide the
Company's audit for its fiscal year 1997 audited financial
statements.
The Bylaws of the Company do not require Stockholder
ratification of the appointment of the Company's independent
auditors and, accordingly, no vote of the Stockholders is required
or requested at the Annual Meeting of Stockholders.
Representatives of Ernst & Young will be present at the Annual
Meeting, and are anticipated to be available to respond to
appropriate questions.
<PAGE>
FINANCIAL INFORMATION
A copy of the Company's Annual Report, including all financial
statements and schedules, is being provided to the Stockholders
along with this Proxy Statement. Additional copies may be obtained
without charge by written request to Paul R. Carolus, Chief
Financial Officer, Westwood Corporation, 12437 East 60th Street,
Tulsa, Oklahoma 74146.
OTHER MATTERS
The cost of solicitation of these proxies will be borne by the
Company. Other than the mailing of the Proxy Statement and Proxy
Cards, no other solicitation efforts will be undertaken.
BY ORDER OF THE BOARD OF DIRECTORS
Ernest H. McKee
Ernest H. McKee, President
October 14, 1996
Tulsa, Oklahoma
<PAGE>
APPENDIX "A"
------------
RESOLUTIONS OF BOARD OF DIRECTORS
OF WESTWOOD CORPORATION
BY MEMORANDUM
September 3, 1996
The undersigned, constituting all of the Directors of
Westwood Corporation (hereinafter referred to as the "Company"), a
Nevada corporation, in accordance with Section 78:385(c) of the
Nevada Revised Statutes, do hereby take the actions below set forth,
and do hereby consent as follows:
WHEREAS, the Westwood Corporation 1992 Directors' Stock
Option Plan, as adopted by the Board of Directors on March 20, 1992,
and approved by the shareholders on September 24, 1992, and amended
on October 28, 1993 (the "Directors' Plan") was intended to
(i) provide a vehicle whereby Directors are given the option to
purchase the Company's common stock under the terms and conditions
thereof, and (ii) secure for the Company and its shareholders the
benefits arising from stock ownership by its Directors; and
WHEREAS, subject to adjustment in accordance with
Article IX thereof, 266,200 shares were reserved for issuance under
the Directors' Plan, and all such shares are subject to options
issued to the Directors on March 20, 1992, March 30, 1993,
March 20, 1994, March 20, 1995, and March 20, 1996; and
WHEREAS, the Directors' Plan, as an incentive and a method
to compensate the Directors for their efforts on behalf of the
Company has not proven effective and, as of the date hereof, none of
the options issued pursuant to the Directors' Plan have resulted in
any gain, and none of such options has been exercised; and
WHEREAS, unless extended, the initial options (granted
March 20, 1992), will expire and terminate on March 20, 1997; and
WHEREAS, based on the recommendation of Company counsel,
the Board of Directors believes it to be advisable to amend the
Directors' Plan to (i) provide the incentive to Directors of the
Company, in the form of additional compensation (tied directly to
stock performance) to such Directors for their efforts on behalf of
the Company, as originally contemplated by the Directors' Plan at
its inception in 1992 and (ii) to extend the term of the options
granted pursuant to the Directors' Plan. Now therefore, be it
<PAGE>
RESOLVED, that the Directors of the Company hereby propose
that the 1992 Directors' Stock Option Plan, as amended on
October 28, 1993, be amended (the "1996 Amendment") to provide as
follows:
1. Increase the term of options granted thereunder
from five (5) years to ten (10) years;
2. Provide each Director, who shall have been a
Director of the Company for five consecutive years, a
one-time grant of an option to acquire fifty thousand
(50,000) shares of the Company's common stock at an
exercise price equal to the closing NASDAQ market price
on September 3, 1996 ($2.125 per share);
3. Subject the one-time grant of an option to acquire
50,000 shares to a vesting limitation, so that such option
vests at the rate of twenty percent (20%), or 10,000 shares,
per year on the successive anniversary date thereof over a
period of five (5) years; and
4. Increase the number of shares available under the
Directors' Plan from 266,200 to 466,200, to satisfy the
one-time grant of an option to purchase 50,000 shares to
each Director, as well as the automatic vesting provisions
for the next five (5) fiscal years;
and
FURTHER RESOLVED, that the text of the 1996 Amendment
shall be as follows:
1. The phrase "(As Amended September 3, 1996)" shall be added
immediately below the title of the Directors' Plan on page 1.
2. The first sentence of the paragraph at Article IV on page 3
which reads:
"Subject to an adjustment in accordance with
Article IX an aggregate of 220,000 Shares*
is reserved for issuance under this Plan."
shall be amended to read:
"Subject to an adjustment in accordance with
Article IX an aggregate of 466,200* Shares
is reserved for issuance under this Plan."
<PAGE>
3. The footnote at the bottom of page 3 (which is referenced
by the "*" in the first sentence of the paragraph at Article IV)
which reads:
"*As adjusted for a 10% stock dividend to
Shareholders on December 22, 1993."
shall be amended to read:
"*As adjusted for 10% stock dividends to
Shareholders occurring on December 22, 1993,
1994 and 1995, and the additional 200,000
Shares subject to Option Agreements dated
September 3, 1996, subject to Shareholders'
approval."
4. The sentence at Paragraph 5.1 under Article V on page 3
which reads:
"On the Initial Grant Date, each Director
shall receive the grant of an option to
purchase 11,000 Shares*."
shall be amended to read:
"On the Initial Grant Date, each Director
shall receive the grant of an option to
purchase 13,310** Shares.
5. A footnote shall be added to the bottom of page 3 (which
shall be referenced by the "**" in Paragraph 5.1 at Article IV)
which reads:
"**As adjusted for 10% stock dividends to
Shareholders occurring on December 22,
1993, 1994 and 1995."
6. The one-sentence at Paragraph 5.2 under Article V on page 3
which reads:
"On each Subsequent Grant Date, each Director
shall receive the grant of an Option to
purchase 11,000 Shares*."
shall be amended to read:
"On each Subsequent Grant Date, through and
including March 20, 1996, each Director shall
receive the grant of an Option to purchase
13,310** Shares. On September 3, 1996, each
of the Directors who shall have been a
Director of the Company for five consecutive
years, shall receive a one-time grant of an
<PAGE>
Option to acquire 50,000 shares of the
Company's common stock at an exercise price
of $2.125 per share, which is equal to the
closing NASDAQ market price on September 3,
1996. The Option for 50,000 shares granted
to each Director will vest at the rate of 20%
per year (10,000 shares) on each successive
anniversary date following the date of the
one-time grant."
7. The sentence at Paragraph 6.1 of Article VI on page 4 which
reads as follows:
"The term of the Option shall be five (5)
years from the Grant Date of each Option,
subject to earlier termination in accordance
with Articles VI and X."
shall be amended to read:
"The term of the Option shall be ten (10)
years from the Grant Date of each Option and,
with respect to the one-time Option to
purchase 50,000 shares, ten (10) years from
the vesting date of any 20% increment
thereof, subject to the earlier termination
in accordance with Articles VI and X."
8. Paragraph 6.7 of Article VI on page 5 which reads as
follows:
"If a Director's membership on the Board
terminates for any reason, an Option held on
the date of termination may be exercised in
whole or in part at any time within one (1)
year after the date of such termination (but
in no event after the term of the Option
expires) and shall thereafter terminate."
shall be amended to read:
"If a Director's membership on the Board
terminates for any reason, a vested Option
held on the date of termination may be
exercised in whole or in part at any time
within one (1) year after the date of such
termination (but in no event after the term
of the Option expires) and shall thereafter
terminate. Options which have not vested at
the time of termination shall be
automatically terminated."
and
<PAGE>
FURTHER RESOLVED, that the Board of Directors, subject to
shareholder approval and ratification at the Annual Meeting, hereby
adopts and approves the 1996 Amendment to the Directors' Plan, as
set forth above; and
FURTHER RESOLVED, that the Board of Directors hereby
approves and grants each of Ernest H. McKee, Paul R. Carolus,
Richard E. Minshall and Anthony Pantaleoni an Option to purchase
50,000 shares of the Company's common stock at an exercise price of
$2.125 per share, which Options shall vest at the rate of 20% per
year (10,000 shares) commencing on September 3, 1997, and on each
successive anniversary date following until such Options are fully
vested; and
FURTHER RESOLVED, that the Board of Directors recommends
adoption of the 1996 Amendment by the Company's shareholders; and
FURTHER RESOLVED, that the 1996 Amendment be submitted for
consideration by the shareholders at the Annual Meeting of
Stockholders to be held on November 7, 1996, at 10:00 A.M., at the
offices of the Company, 12437 East 60th Street, Tulsa, Oklahoma
74146; and be it
FURTHER RESOLVED, that the shareholders of record October
11 shall be entitled to notice of and to vote at the Annual Meeting;
and be it
FURTHER RESOLVED, that the proper officers of the Company
are hereby authorized and directed to send an appropriate Notice of
Annual Meeting to the shareholders of record as of such date; and be
it
FURTHER RESOLVED, that the Company's officers and its
counsel should proceed with the preparation of all Proxy materials
for submission to the Company's shareholders and to make any
applicable Securities and Exchange Commission Proxy filings.
This consent to action without a meeting may be executed
in counterpart.
EXECUTED THE DAY AND YEAR FIRST ABOVE WRITTEN.
BOARD OF DIRECTORS:
Ernest H. McKee
Paul R. Carolus
Richard E. Minshall
Anthony Pantaleoni
<PAGE>
APPENDIX "B"
------------
PRELIMINARY COPY
----------------
PROXY WESTWOOD CORPORATION PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Ernest H. Mckee,
Paul R. Carolus, Richard E. Minshall and Anthony Pantaleoni, lawful
attorneys and proxies of the undersigned, with full power of
substitution, for and in the name, place and stead of the
undersigned, to attend the Annual Meeting of Shareholders of
Westwood Corporation (herein, the "Company") to be held in the
Corporate office of the Company on November 7, 1996, at 10:00 a.m.,
Central Standard Time, and any adjournment(s) thereof, with all
powers the undersigned would possess if personally present, and to
vote thereat, as provided below, the number of shares the
undersigned would be entitled to vote if personally present.
Proposal 1: Election of Directors
- - - - -----------
[ ] FOR all nominees listed below except as marked to the
contrary
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Ernest H. McKee Richard E. Minshall
Paul R. Carolus Anthony Pantaleoni
IF AUTHORITY TO VOTE FOR THE ELECTION OF ANY NOMINEE IS NOT
WITHHELD, THIS PROXY SHALL BE DEEMED TO GRANT SUCH AUTHORITY.
Proposal 2: Amendment of 1992 Directors Stock Option Plan
- - - - -----------
The Company's Board of Directors proposes to amend the 1992
Directors' Stock Option Plan, as Amended on October 28, 1993, to:
(1) increase the term of options granted thereunder from five (5)
years to ten (10) years; (2) provide each Director, who shall have
been a Director of the Company for five consecutive years, a
one-time grant of an option to acquire fifty thousand (50,000)
shares of the Company's common stock at an exercise price equal to
the closing NASDAQ market price on September 3, 1996 ($2.125 per
share); (3) subject the one-time grant of an option to acquire
<PAGE>
50,000 shares to a vesting limitation, so that such option vests at
the rate of twenty percent (20%), or 10,000 shares, per year on the
successive anniversary date thereof over a period of five (5) years;
and (4) increase the number of shares available under the Directors'
Plan from 266,200 to 466,200, to satisfy the one-time grant of an
option to purchase 50,000 shares to each Director, as well as the
automatic vesting provisions for the next five (5) fiscal years.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Every properly signed Proxy will be voted in accordance with the
specifications made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL 1, AND FOR PROPOSAL 2.
All prior proxies are hereby revoked.
This Proxy will also be voted in accordance with the discretion of
the proxies or proxy on any other business. Receipt is hereby
acknowledged of the Notice of Annual Meeting, Proxy Statement and
1996 Annual Report to Stockholders of the Company.
---------------------------------
---------------------------------
Signature(s)
Dated:
(Please sign exactly as name appears on stock certificates. When
signing as an attorney, executor, administrator, trustee, guardian,
etc., give full title as such. For joint accounts, each joint owner
should sign.)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
FORM PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
APPENDIX "C"
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WESTWOOD CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF WESTWOOD CORPORATION:
Notice is hereby given that the Annual Meeting of the
Stockholders of Westwood Corporation (the "Company"), a Nevada
corporation, will be held in the offices of the Company at 12437
East 60th Street, Tulsa, Oklahoma 74146, on Thursday, November 7,
1996, at 10:00 A.M.
The purpose of the meeting is to elect directors for the
ensuing year and to consider and to act upon a proposed amendment
(the "Amendment") to the 1992 Directors' Stock Option Plan, as
amended on October 28, 1993 (the "Directors' Plan"). Generally, the
effect of this Amendment will be to provide for the one-time
issuance on September 3, 1996, of an option to acquire 50,000 shares
of the Company's Common Stock at $2.125 per share (the NASDAQ
closing price on September 3, 1996) to each Director, who shall have
been a Director of the Company for five consecutive years. Instead
of annual grants of 10,000 shares each as currently provided under
the Directors' Plan, the Amendment imposes a vesting schedule which
vests 20% of the 50,000 shares on an annual basis for the next five
years, commencing on September 3, 1997. Any portion of the option
which has not vested at the time of any termination shall be
automatically terminated. The Amendment also increases the term of
the options previously granted pursuant to the Directors' Plan from
five years to ten years from the grant date of each option, and
provides, with respect to the one-time Option to purchase 50,000
shares, a term of ten (10) years from the vesting date of any 20%
increment thereof. The Amendment also increases the number of
shares available under the Directors' Plan by an additional 200,000
shares, from 266,200 to 466,220.
This Amendment is being proposed to (i) provide the
incentive to Directors of the Company, in the form of additional
compensation (tied directly to stock performance) to such Directors
for their efforts on behalf of the Company, as originally
contemplated by the Directors' Plan at its inception in 1992, and
(ii) to extend the term of the options granted pursuant to the
Directors' Plan. In 1992, the average trading price of the
Company's common stock was approximately $3.00 per share, and it was
hoped that such price would increase by approximately 190% per year
and result in a gain of approximately $3,000 per year to each
Director. However, as of the date hereof, none of the options
issued pursuant to the Directors' Plan have resulted in any gain,
<PAGE>
and none of such options have been exercised. Further, the initial
options (granted March 20, 1992), unless extended, will expire and
terminate on March 20, 1997.
The text of the proposed Amendment to the Directors' Plan
is set forth in the Proxy Statement, and Stockholders are encouraged
to review the discussion therein.
Only Stockholders of record at the close of business on
October 11, 1996, will be entitled to notice of an to vote at the
Annual Meeting. As of the record date, the Company had 5,581,682
shares of Common Stock outstanding, entitled to one vote per share.
The affirmative vote of the holders of a majority of the Company's
outstanding stock is required to elect the nominees and approve the
Amendment of the Directors' Plan.
Enclosed with this Proxy Statement and Proxy solicited by
management on behalf of the Company, and a copy of the Company's
1996 Annual Report.
BY ORDER OF THE BOARD OF DIRECTORS
Ernest H. McKee
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Ernest H. McKee
ATTEST:
Paul R. Carolus
- - - - --------------------------
Paul R. Carolus, Secretary
[CORPORATE SEAL]
