SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____)
Filed by the Registrant [XX]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[XX] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
WESTWOOD CORPORATION
________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[XX] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
________________________________________________________________________
<PAGE>
(2) Aggregate number of securities to which transaction applied:
________________________________________________________________________
(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):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2)and identify the following 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:
________________________________________________________________________
<PAGE>
WESTWOOD CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
November 3, 1997
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 executive offices of the Company at
5134 South Yale Avenue, Suite 1100, Tulsa, Oklahoma 74135, on Thursday,
December 4, 1997, at 10:00 A.M.
The purpose of the meeting is to elect Directors for the
ensuing year, and will include the nomination of Mr. John H. Williams,
Sr., who was appointed to serve on the Board of Directors by a unanimous
vote of the Board on June 10, 1997. Additionally, Stockholders of the
Company will be asked to consider and to act upon a proposed amendment
(the "1997 Amendment") to the 1992 Directors' Stock Option Plan (the
"Directors' Plan"). Generally, the effect of the 1997 Amendment will be
to provide incentive compensation for new Directors in the form of a
one-time grant of an option to acquire 50,000 shares of the Company's
common stock at an exercise price per share which is equal to the
closing NASDAQ market price on the date of any new Director's
appointment. The proposed 1997 Amendment also increases the number of
shares available under the Directors' Plan by an additional 50,000
shares, from 512,820 to 562,820.
The 1997 Amendment is being proposed to (i) provide an
incentive to new Directors of the Company, in the form of compensation
(tied directly to stock performance) to such Directors for their efforts
on behalf of the Company, as presently contemplated by the Directors'
Plan, and (ii) increase the number of shares available for issuance
under the Directors' Plan to provide for the one-time issuance on
June 10, 1997, of an option to acquire 50,000 shares of the Company's
Common Stock at $2.125 per share (the NASDAQ market closing price on
June 10, 1997) to John H. Williams, Sr. Under the proposed 1997
Amendment, the one-time option granted to any new Director will be
subject to all of the terms and conditions of the Directors' Plan
including, but not limited to, the vesting schedule which vests 20% of
the 50,000 shares on an annual basis over a period of five years,
commencing on the anniversary date of such new Director's appointment.
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 30, 1997, will be entitled to notice of and to vote at the
Annual Meeting. As of the record date, the Company had 6,264,933 shares
-1-
<PAGE>
of Common Stock outstanding, entitled to one vote per share. The
affirmative vote of the holders of a majority of the Company's
outstanding Common Stock is required to elect the nominees and approve
the Amendment of the Directors' Plan.
Enclosed with this Notice is the Proxy Statement and Proxy
solicited by management on behalf of the Company, and a copy of the
Company's 1997 Annual Report.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ernest H. McKee
__________________________________________
Ernest H. McKee
ATTEST:
/s/ Paul R. Carolus
__________________________
Paul R. Carolus, Secretary
[CORPORATE SEAL]
-2-
<PAGE>
WESTWOOD CORPORATION
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,
December 4, 1997, and at any adjournments thereof. The Annual Meeting
will be held at 10:00 a.m., Central Standard Time, in the executive
offices of the Company at 5134 South Yale Avenue, Suite 1100, 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 30, 1997.
The approximate date on which this Proxy Statement and the
accompanying Proxy will first be sent to Stockholders is November 3,
1997.
Record Date and Voting Rights
Only Stockholders of record at the close of business on
October 30, 1997, will be entitled to notice of and to vote at the
Annual Meeting. As of the record date, the Company had outstanding
6,264,933 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, 1997. Unless otherwise indicated, each of the
Stockholders has sole voting and investment power with respect to the
shares beneficially owned.
1
<PAGE>
<TABLE>
<CAPTION>
Name of Owner or Number of Shares Percent of
Identity of Group Options(a) Total Outstanding
_________________ __________ _________ ___________
<S> <C> <C> <C>
Ernest H. McKee 128,205 1,447,582 25.0%
2902 E. 74th Street
Tulsa, Oklahoma 74136
Paul R. Carolus 128,205 346,019 5.6%
8511 South Canton Avenue
Tulsa, Oklahoma 74137
Robert E. Lorton -- 316,810 5.0%
1440 South Owasso Avenue
Tulsa, Oklahoma 74120-5609
William J. Preston -- 598,598 9.6%
1717 Woodstead Court
The Woodlands, Texas 77380
Richard E. Minshall 128,205 213,719 (b) 3.4%
320 South Boston Avenue, Suite 1300
Tulsa, Oklahoma 74103
Anthony Pantaleoni 128,205 103,612 (c) 1.7%
666 Fifth Avenue
New York, New York 10103
Kennedy Capital Management, Inc. -- 522,769 (d) 8.3%
Gerald T. Kennedy, President
425 N. New Ballas Road, Suite 181
St. Louis, Missouri 63141
All Executive Officers and Directors 512,820 2,110,932 33.6%
as a Group (4 persons)
</TABLE>
________________________
(a) Includes Company stock options that vest on
September 3, 1997, but are not exercisable until March 3, 1998.
(b) Includes 103,603 shares of Common Stock owned
beneficially by Mr. Minshall individually; 4,882 shares owned
beneficially by Mr. Minshall's wife; 91,394 shares held beneficially by
Capital Advisors, Inc., and 10,840 shares owned by Minshall & Company,
Inc. Mr. Minshall is the Chief Executive Officer and controlling
shareholder of Capital Advisors, Inc., and Minshall & Company, Inc.
(c) Includes 51,550 shares of Common Stock owned
beneficially by Mr. Pantaleoni, and an aggregate of 52,062 shares held
equally in two trusts for the benefit of Mr. Pantaleoni's children
(Mr. Pantaleoni disclaims beneficial ownership of these shares).
2
<PAGE>
(d) 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.
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 for the fiscal year ended March 31, 1997.
3
<PAGE>
<TABLE>
TABLE I
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Annual Compensation(a) Compensation
_______________________________ _____________________
Other
Name and Annual Securities All Other
Principal Compen- Underlying Compen-
Position Year Salary Bonus sation(b) Options sation(c)
________________ ____ ________ ________ _________ _________ _________
<S> <C> <C> <C> <C> <C> <C>
Ernest H. McKee 1997 $150,000 $150,000 -- 55,000 (d) $4,500
Chief Executive 1996 150,000 125,000 -- 14,641 (e) 4,500
Officer 1995 150,000 125,000 -- 14,641 (e) 4,500
Paul R. Carolus 1997 $ 90,000 $ 90,000 -- 55,000 (d) $4,500
Chief Financial 1996 90,000 75,000 -- 14,641 (e) 4,500
Officer 1995 90,000 75,000 -- 14,641 (e) 2,700
</TABLE>
________________________
(a) Amounts shown include cash compensation earned by
Executive Officers.
(b) The value of other benefits to any Officer during
fiscal year 1997 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.
(c) Amounts contributed to the Company's 401(k) Plan on
behalf of the named Executive Officer.
(d) Represents the issuance of a one-time grant of an
option on September 3, 1996, as automatically adjusted by the stock
dividend occurring on December 22, 1996, which option shall vest at
twenty percent (20%) per year on the anniversary date of such grant.
(e) Represents the issuance of options on March 20, 1995,
and March 20, 1996, as adjusted by 10% stock dividends occurring on
December 22, 1995, and December 22, 1996.
4
<PAGE>
<TABLE>
TABLE II
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Gains based on Assumed Rates
of Stock Price Appreciation
for Option Term(a)
____________________________
Number of Percent of
Securities Total Options Exercise/
Underlying Granted to Base Price Assumed Assumed
Options Employees in per share Exp. Rate Rate
Name Granted(b) Fiscal Year 09/03/96 Date 5% (d) 10% (d)
__________________ __________ _____________ __________ ____ _______ _______
<S> <C> <C> <C> <C> <C> <C>
Ernest H. McKee 55,000 25% $2.125 (c) $-0- $-0-
Paul R. Carolus 55,000 25% $2.125 (c) $-0- $-0-
All Stockholders:
6,264,933 shares
outstanding at
March 31, 1997 N/A N/A N/A N/A N/A N/A
</TABLE>
________________________
(a) The potential gain is calculated from the closing price
of Common Stock on September 3, 1996, the date of the one-time grant 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.
(b) On September 3, 1996, each of the Executive Officers
received a one-time grant of an option to acquire 55,000 shares (as
automatically adjusted for the stock dividend occurring on December 22,
1996) of the Company's Common Stock at an exercise price of $2.125 per
share, which was the NASDAQ closing share price on the date of the grant
($1.93 per share, as automatically adjusted for the stock dividend
occurring on December 22, 1996). Each Executive Officer will
automatically vest in the option at the rate of 20% per year, on the
anniversary date of the option grant.
(c) The one-time grant of an option vests at 20% per year
on the anniversary date of the grant; accordingly, each grant shall vest
20% on each of September 3, 1997, 1998, 1999, 2000 and 2001. The grants
are not exercisable prior to six (6) months from the vesting date of any
20% increment thereof, and expire ten (10) years from such vesting date.
(d) As set forth in Note (c) above, none of the options
have vested as of March 31, 1997.
5
<PAGE>
<TABLE>
TABLE III
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options
at March 31, 1997 at March 31, 1997
___________________ ____________________
Exer- Unexer- Exer- Unexer-
Acquired on Value cisable cisable cisable cisable
Name Exercise Realized (a) (b) (a) (b)
_______________ ___________ ________ _________ _________ _________ _________
<S> <C> <C> <C> <C> <C> <C>
Ernest H. McKee $0 $0 73,205 55,000 $0 $0
Paul R. Carolus $0 $0 73,205 55,000 $0 $0
</TABLE>
________________________
(a) Represents grants of options to acquire 14,641 shares
on 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, and
September 3, 1996 (the "Directors' Plan"). The shares issued under
these options have been automatically adjusted as a result of 10% stock
dividends occurring on December 22, 1993, December 22, 1994,
December 22, 1995, and December 20, 1996. The exercise prices of the
1992, 1993, 1994, 1995 and 1996 option grants were $3.00, $3.125, $3.50,
$2.25 and $1.75 per share, respectively, which were the NASDAQ closing
prices on the date of the grants ($2.05, $2.13, $2.63, $1.86 and $1.59
per share, respectively, after automatic adjustment for the 10% stock
dividends occurring on December 22, 1993, 1994, 1995 and 1996). The
options became exercisable six (6) months after the date of the grants,
and will expire ten (10) years from the date of grant.
(b) On September 3, 1996, an additional one-time grant of
an option to acquire 55,000 shares (as adjusted for the 10% stock
dividend occurring on December 22, 1996) was made to each of Messrs.
McKee and Carolus pursuant to the Directors' Plan. The exercise price
of these option grants was $2.125 per share, which was the NASDAQ
closing price on September 3, 1996. These options will vest at the rate
of 20% (11,000 shares) per year on each of September 3, 1997, 1998,
1999, 2000 and 2001.
6
<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 over a period beginning on March 31, 1992, and
ending on March 31, 1997. The total stockholder return assumes $100
invested on March 31, 1992, in the Company and each of the Indexes
shown. 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 two primary competitors are not publicly 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. Moreover, since the Defense Index contains only one company, it
is not actually representative of an industry group or segment. The
Company has explored other possible indexes for purposes of future
reporting, but does not believe that any existing industry segment index
provides meaningful comparisons as of this date.
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.
7
<PAGE>
<TABLE>
TABLE IV
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG WESTWOOD CORPORATION, NASDAQ U.S. STOCK INDEX
AND S&P ELECTRONIC DEFENSE INDEX**
Tabular Description of Performance Graph
<CAPTION>
Measurement Period Westwood NASDAQ S&P Electronic
(Fiscal Year Covered) Corporation U.S. Stock Index Defense Index
_____________________ ___________ ________________ ______________
<S> <C> <C> <C>
March 31, 1992 $100 $100 $100
FYE 03/31/93 101 112 111
FYE 03/31/94 111 127 136
FYE 03/31/95 79 129 132
FYE 03/31/96 81 170 250
FYE 03/31/97 72 194 316
</TABLE>
Assumes $100 invested on March 31, 1992, in Westwood Common Stock,
NASDAQ U.S. Stock Index and S&P Electronic Defense Index.
* Total Returns assumes reinvestment of dividends.
** Fiscal Year ended March 31, 1997
Executive Officer Agreements
Messrs. McKee and Carolus have employment contracts with NMP
Corp. through March 2000. These contracts, as amended in March 1997,
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 2000.
On February 1, 1991, after approval by the Board of
Directors, NMP Corp. loaned Ernest McKee the sum of $315,000 pursuant to
a secured promissory note and related pledge agreement. 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. Mr. McKee has made annual interest and principal payments on this
indebtedness as agreed. The remaining principal balance, due March 31,
8
<PAGE>
1998, is $50,000. Interest accrues on the principal balance at a rate
equal to the Company's borrowing rate, currently New York Prime plus
1/4%. As of March 31, 1997, the 333,334 shares pledged by Mr. McKee had
a value in excess of eleven times the principal amount of his
indebtedness. The Board believes that the loan was made on a fair basis
to Mr. McKee and the Company.
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 five-person Board of Directors. The
Company's Board of Directors and Executive Officers remained the same
from March of 1988 through June 10, 1997, when Mr. John H. Williams,
Sr., was appointed to the Board of Directors. 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.
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
9
<PAGE>
compensation arrangements for their Executive Officers. Moreover, the
Company's peer group, for purposes of the Stock Performance Chart at
Table IV, 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 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 for the last four fiscal years of the Company. The
bonus compensation of Messrs. McKee and Carolus for fiscal years ending
1995 and 1996 was reduced from prior levels in recognition of slightly
decreased net earnings during those time periods. The decreases in
bonus compensation were 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. For the fiscal year ended
March 31, 1997, Messrs. McKee and Carolus were awarded bonus
compensation of $150,000 and $90,000 respectively, which was the same
bonus amounts awarded for fiscal years 1988 through 1994, which
represents a 20% increase over the two prior fiscal years. Reasons for
the increases in bonus compensation included improvements in net
earnings, the continued growth of the asset base of the Company and
recognition of the substantial efforts Messrs. McKee and Carolus in
dealing with the business and economic effects of the loss of the
Destroyer program and continued efforts in diversification into
commercial and related defense segments.
The employment contracts for Messrs. McKee and Carolus were
negotiated in March of 1988, upon the acquisition of NMP Corp. The
10
<PAGE>
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 hereof, 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, provided for the issuance of options to acquire
14,641 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. In 1996, the
Directors' Plan was amended to provide for the one-time grant of an
option to acquire 55,000 shares (as adjusted for the 10% stock dividend
occurring on December 20, 1996) of the Company's Common Stock at an
exercise price which is equal to the reported closing price of NASDAQ on
September 3, 1996. The option vests 20% of the 55,000 shares on each of
September 3, 1997, 1998, 1999, 2000 and 2001. 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.
Compensation Report Submitted by the Board of Directors as at March 31,
1997:
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 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,
1997. Compensation of $1,500 per meeting to the outside Directors was
11
<PAGE>
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, 1997, 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 $5,791.32
for the fiscal year ending March 31, 1997.
Michael A. McKee, the son of Ernest H. McKee, has served as
the Company's Program Manager for RoxSystem products and applications,
and was named President of Rox Corp. upon its formation in February of
1997. For the Company's fiscal year ending March 31, 1997, Michael A.
McKee received salary of $71,600 and bonus compensation of $25,000.
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' Stock Option Plan (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 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. On March 20, 1996, grants of options
to acquire 14,641 shares of the Company's Common Stock were issued to
each of the Directors of the Company pursuant to the terms of the
Directors' Plan, which represented the final options reserved under the
October 28, 1993, authorization.
In 1996, the Directors' Plan was amended (the "1996
Amendment"), as approved by the Stockholders of the Company at the
Annual Meeting on November 7, 1996, to provide for the one-time grant of
an option to acquire 50,000 shares of the Company's Common Stock at
$2.125 per share. The 1996 Amendment imposed a vesting schedule which
vests 20% of the 50,000 shares on each of September 3, 1997, 1998, 1999,
2000 and 2001. Additionally, the 1996 Amendment increased the term of
the options granted pursuant to the Directors' Plan to ten (10) years
12
<PAGE>
from the grant date of each option and, with respect to the one-time
grant of an option to purchase 50,000 shares, ten years from the vesting
date of any 20% increment thereof. Finally, the 1996 Amendment
increased the number of shares available under the Directors' Plan by an
additional 200,000 shares from 266,200 to 466,200.
The Directors' Plan was automatically adjusted as a result of
the 10% stock dividends occurring on December 22, 1993, December 22,
1994, December 22, 1995, and December 22, 1996. A total of 512,820
shares are now reserved for issuance under its terms.
Prior to the 1996 Amendment, each Director received an
initial grant of an option to purchase 14,641 shares of Common Stock,
and was granted additional options to purchase 14,641 shares of Common
Stock on March 30, 1993, March 20, 1994, March 20, 1995, and March 20,
1996. On September 3, 1996, All members of the Board of Directors
received the grant of an option to acquire 50,000 shares of the
Company's common stock at an exercise price of $2.125 per share, which
was the NASDAQ market closing share price as of such date. Each
Director will automatically vest in the option at the rate of 20% per
year, on the anniversary date of the option grant, based upon specific
criteria set forth in the Directors' Plan. The annual vesting in 20% of
the one-time grant is an automatic provision of the Plan previously
approved and does not require the vote of the 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 ten 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 is 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.
When the Directors' Plan was instituted in 1992, an average
trading price for Common Stock of the Company was approximately $3.00
13
<PAGE>
per share and it was hoped that the price per share of the Common Stock
would grow by approximately 10% per year, which would result in a
potential gain to each Director of approximately $3,000 on an annual
basis. However, as of the date hereof, none of the options issued to
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.
An amendment of the Directors' Plan, to provide for the
issuance of the one-time grant of an option to acquire 50,000 shares of
the Company's common stock to new Directors, as unanimously approved by
the Board of Directors on June 10, 1997, is discussed beginning at
page 18 hereof.
ELECTION OF DIRECTORS
As of March 31, 1997, the Board of Directors consisted of
Ernest H. McKee, Paul R. Carolus, Richard E. Minshall and Anthony
Pantaleoni, who have all served since March of 1988.
On June 10, 1997, John H. Williams, of Tulsa, Oklahoma, was
appointed to the Company's Board of Directors, bringing the number of
Directors for the Company to five. As an outside Director, Mr. Williams
will receive a Director's fee of $1,500 for attendance at each regular
and special Board meeting of the Company, and will participate in the
Directors' Plan. Accordingly, subject to Stockholder approval,
Mr. Williams received a one-time grant of an option to acquire 50,000
shares of the Company's Common Stock at the NASDAQ closing price on
June 10, 1997 ($2.125 share), pursuant to the Directors' Plan. Under
the terms of the Directors' Plan and grant, the option granted to
Mr. Williams will vest in 20% (10,00 shares) of the optioned shares of
the one-time grant on June 10, 1998, and on the four successive
anniversary dates of the grant.
Each of Messrs. McKee, Carolus, Minshall, Pantaleoni and
Williams are nominated for re-election as Directors to serve 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.
14
<PAGE>
Nominees
The nominees for directorships, and certain additional
information with respect to each of them, are as follows:
Ernest H. McKee, age 59, 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 64, 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 59, 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 also serves on the Board of
Directors of AAON, Inc., American Gilsonite, and First National Bank &
Trust Company of Broken Arrow. Mr. Minshall is a member of the Oklahoma
Society of Financial Analysts and the Oklahoma Bar Association.
Anthony Pantaleoni, age 58, 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.
John H. Williams, Sr., age 79, was elected to the Company's
Board of Directors on June 10, 1997. Mr. Williams is an honorary
Director of The Williams Companies, Inc. (NYSE: WMB), of Tulsa,
Oklahoma, having resigned as Chairman of the Board and Chief Executive
Officer in late 1978. Mr. Williams joined the Williams Brothers Company
in 1946, and was elected President and Chief Executive Officer in 1950.
In 1971, the name of the company was changed to The Williams Companies,
Inc. Mr. Williams received his civil engineering degree from Yale
University in 1940. Mr. Williams presently serves on the Board of
Directors of Apco Argentina Inc., Unit Corporation (NYSE: UNT) and
Willbros Group, Inc. (NYSE: WG).
The Board of Directors presently has no standing committees.
During the fiscal year ended March 31, 1997, the Board had four
meetings. Messrs. McKee, Carolus, Minshall and Pantaleoni attended all
meetings.
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 five nominees unless Stockholders specify otherwise in their
proxies.
15
<PAGE>
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, December 22, 1995, and December 22, 1996. A total of 439,230
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 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
Incentive Stock Option Plan will be adjusted proportionately.
16
<PAGE>
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, 133,100 shares of the Company's Common Stock (as adjusted by
the 10% stock dividends occurring on each of December 22, 1994,
December 22, 1995, and December 22, 1996), 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 ($1.69 per share
after automatic adjustment for the 10% stock dividends occurring on
December 22, 1994, December 22, 1995, and December 22, 1996). 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 13,310 shares with the Director of
Engineering receiving options for 26,610 shares. Two of the employees
receiving options, Michael A. and Matthew E. McKee, are sons of
Ernest H. McKee. The options issued were adjusted as a result of the
10% stock dividends occurring on December 22, 1994, December 22, 1995,
and December 22, 1996, as set forth in the Incentive Stock Option Plan.
There have been no additional issuances of options under the Incentive
Stock Option Plan since November 17, 1994.
APPROVAL OF AMENDMENT TO DIRECTORS' PLAN
AND AUTHORIZATION TO INCREASE SHARES
AVAILABLE FOR ISSUANCE THEREUNDER
The Directors' Plan was approved by the Stockholders of the
Company on September 24, 1992. The Directors' Plan originally provided
for the issuance of up to 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. On March 20, 1996, grants of
options to acquire 14,641 shares of the Company's Common Stock were
issued to each of the Directors of the Company pursuant to the terms of
the Directors' Plan, which represented the final options reserved under
the October 28, 1993, authorization. On September 3, 1996, the
Directors' Plan was amended (the "1996 Amendment"), as approved by the
17
<PAGE>
Stockholders of the Company on November 7, 1996, to provide for the
one-time grant of an option to acquire 50,000 shares of the Company's
Common Stock at $2.125 per share. The 1996 Amendment imposed a vesting
schedule which vests 20% of the 50,000 shares on each of September 3,
1997, 1998, 1999, 2000 and 2001. Additionally, the 1996 Amendment
(i) increased the term of the options granted pursuant to the Directors'
Plan to ten (10) years from the grant date of each option and, with
respect to the one-time grant of an option to purchase 50,000 shares,
ten years from the vesting date of any 20% increment thereof; and
(ii) increased the number of shares available under the Directors' Plan
by an additional 200,000 shares from 266,200 to 466,200. The Directors'
Plan presently provides for the reservation of 512,820 shares of the
Company's Common Stock for issuance thereunder.
By Resolution dated June 10, 1997, attached hereto as
Appendix "A", the Board of Directors unanimously approved amendments
(the "1997 Amendment") to the Directors' Plan which would:
1. Upon acceptance of a position as Director of the
Company, provide each new Director 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 the date
of such new Director's appointment; and
2. Increase the number of shares available under the
Directors' Plan from 512,820 to 562,820 to satisfy the one-time grant of
an option to purchase 50,000 shares to Mr. John H. Williams, Sr.
Reasons for Proposed Amendment
of the Directors' Plan
The Directors' Plan is 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. However, the Directors' Plan makes no provision
for initial grants to new Directors. The 1997 Amendment to the
Directors' Plan provides, upon acceptance of a position as Director of
the Company, such new Director will receive the one-time issuance of an
option to acquire 50,000 shares of the Company's Common Stock at the
NASDAQ market price on the date of such new Director's appointment. The
1997 Amendment imposes a vesting schedule which vests 20% of the 50,000
shares on an annual basis over a period of five years, commencing on the
anniversary date following the date of the one-time grant to any new
Director. The 1997 Amendment also increases the number of shares
available under the Directors' Plan by an additional 50,000 shares, from
512,820 to 562,820, in order to satisfy the one-time grant of an option
to purchase 50,000 shares to John H. Williams, Sr., on June 10, 1997.
Text of Proposed Amendments
1. The phrase "(As Amended September 3, 1996)" below the
title on page 1 shall be deleted and replaced with the phrase "(As
Amended June 10, 1997)".
18
<PAGE>
2. The number "466,200" in the first sentence of the
paragraph at Article IV, on page 3, shall be deleted and replaced with
the number "562,820."
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 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."
shall be amended to read:
"*As adjusted for 10% stock dividends to Shareholders
occurring on December 22, 1993, 1994, 1995 and 1996; the
additional 200,000 shares subject to Option Agreements dated
September 3, 1996; and a 50,000-share Option granted,
subject to Shareholder approval, to a new Director appointed
on June 10, 1997."
4. The number "13,310" in the sentence at Paragraph 5.1
under Article V, on page 3, shall be deleted and replaced with the
number "14,641."
5. The footnote at the bottom of page 3 (which is
referenced by the "**" in the sentence at Paragraph 5.1 under Article V)
which reads:
"**As adjusted for 10% stock dividends to Shareholders
occurring on December 22, 1993, 1994 and 1995."
shall be amended to read:
"**As adjusted for 10% stock dividends to Shareholders
occurring on December 22, 1993, 1994, 1995 and 1996."
6. The number "13,310" in the first sentence of
Paragraph 5.2 under Article V, on page 3, shall be deleted and replaced
with the number "14,641."
7. The number "50,000" in the second and third sentences
of Paragraph 5.2 under Article V, on page 3, shall be deleted and
replaced with the number "55,000."
8. A footnote shall be added to the bottom of page 3
(which shall be referenced by the "***" in Paragraph 5.2 under
Article V) which reads:
"***As adjusted for the 10% stock dividend to Shareholders
occurring on December 22, 1996."
19
<PAGE>
9. The number "10,000" in the fourth sentence of
Paragraph 5.2 under Article V, on page 3, shall be deleted and replaced
with the number "11,000."
10. A footnote shall be added to the bottom of page 3
(which shall be referenced by the "****" in Paragraph 5.2 under
Article V) which reads:
"****As adjusted for the 10% stock dividend to Shareholders
occurring on December 22, 1996."
11. A new paragraph, numbered 5.4 under Article V, shall be
added which reads as follows:
"5.7 Initial Grants to New Directors. Upon acceptance of a
position as Director of the Company, a new Director shall
receive a one-time grant of an Option to acquire 50,000
shares of the Company's common stock at an exercise price per
share which is equal to the closing NASDAQ market price on
the date of such new Director's appointment. The Option for
50,000 shares granted to a new 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."
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 June 10, 1997, which amendments are incorporated into the
Directors' Plan, as amended on June 10, 1997, attached hereto (the
"Amendment"); and
FURTHER RESOLVED: That the Stockholders of Westwood
Corporation approve, ratify and affirm the actions of the Board of
Directors on June 10, 1997, 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
20
<PAGE>
executive offices no later than March 31, 1998, 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 1998 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.
FINANCIAL INFORMATION
A copy of the Company's Annual Report, including all
financial statements and schedules, is being provided to 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, 5134 South Yale Avenue, Suite 1100,
Tulsa, Oklahoma 73135.
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
/s/ Ernest H. McKee
Ernest H. McKee, President
November 3, 1997
Tulsa, Oklahoma
21
<PAGE>
APPENDIX "A"
RESOLUTIONS OF BOARD OF DIRECTORS OF
WESTWOOD CORPORATION BY MEMORANDUM
DATED JUNE 10, 1997
<PAGE>
RESOLUTIONS OF BOARD OF DIRECTORS
OF WESTWOOD CORPORATION
BY MEMORANDUM
June 10, 1997
The undersigned, constituting all of the Directors of
Westwood Corporation (hereinafter, 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 Board of Directors believe it to be in the best
interest of the Company to appoint John H. Williams, Sr., to the
Company's Board of Directors, effective as of June 10, 1997; and
WHEREAS, Mr. Williams shall receive a one-time grant of an
option to acquire 50,000 shares of the Company's common stock, at an
exercise price equal to the closing NASDAQ market price on June 10, 1997
($2.125 per share), subject to the vesting provisions and pursuant to
all other terms and conditions of the Westwood Corporation 1992
Directors' Stock Option Plan, as amended on September 3, 1996 (the
"Directors' Plan"); and
WHEREAS, the Board of Directors deems it necessary to amend
the Directors' Plan to: (i) provide for the one-time grant of an option
to acquire 50,000 shares of the Company's common stock to new Directors
upon acceptance of a position of Director of the Company; and
(ii) increase the number of shares available under the Directors' Plan
from 512,820, as automatically adjusted as a result of the 10% stock
dividend occurring on December 22, 1996, to 562,820, to satisfy the
one-time grant of an option to purchase 50,000 shares to Mr. Williams
upon his appointment to the Company's Board of Directors.
NOW, THEREFORE, BE IT RESOLVED, that John H. Williams, Sr.,
be, and he hereby is, appointed to the Company's Board of Directors, to
serve until the next annual meeting of shareholders; and
FURTHER RESOLVED, that the text of the Directors' Plan shall
be amended as follows (the "1997 Amendment"):
1. The phrase "(As Amended September 3, 1996)" below the
title on page 1 shall be deleted and replaced with the phrase "(As
Amended June 10, 1997)".
2. The number "466,200" in the first sentence of the
paragraph at Article IV, on page 3, shall be deleted and replaced with
the number "562,820."
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:
1
<PAGE>
"*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."
shall be amended to read:
"*As adjusted for 10% stock dividends to
Shareholders occurring on December 22, 1993, 1994,
1995 and 1996; the additional 200,000 shares
subject to Option Agreements dated September 3,
1996; and a 50,000-share Option granted, subject to
Shareholder approval, to a new Director appointed
on June 10, 1997."
4. The number "13,310" in the sentence at Paragraph 5.1
under Article V, on page 3, shall be deleted and replaced with the
number "14,641."
5. The footnote at the bottom of page 3 (which is
referenced by the "**" in the sentence at Paragraph 5.1 under Article V)
which reads:
"**As adjusted for 10% stock dividends to
Shareholders occurring on December 22, 1993, 1994
and 1995."
shall be amended to read:
"**As adjusted for 10% stock dividends to
Shareholders occurring on December 22, 1993, 1994,
1995 and 1996."
6. The number "13,310" in the first sentence of
Paragraph 5.2 under Article V, on page 3, shall be deleted and replaced
with the number "14,641."
7. The number "50,000" in the second and third sentences
of Paragraph 5.2 under Article V, on page 3, shall be deleted and
replaced with the number "55,000."
8. A footnote shall be added to the bottom of page 3
(which shall be referenced by the "***" in Paragraph 5.2 under
Article V) which reads:
"***As adjusted for the 10% stock dividend to
Shareholders occurring on December 22, 1996."
9. The number "10,000" in the fourth sentence of
Paragraph 5.2 under Article V, on page 3, shall be deleted and replaced
with the number "11,000."
2
<PAGE>
10. A footnote shall be added to the bottom of page 3
(which shall be referenced by the "****" in Paragraph 5.2 under
Article V) which reads:
"****As adjusted for the 10% stock dividend to
Shareholders occurring on December 22, 1996."
11. A new paragraph, numbered 5.4 under Article V, shall be
added which reads as follows:
"5.7 Initial Grants to New Directors. Upon
acceptance of a position as Director of the
Company, a new Director shall receive a one-time
grant of an Option to acquire 50,000 shares of
the Company's common stock at an exercise price per
share which is equal to the closing NASDAQ market
price on the date of such new Director's
appointment. The Option for 50,000 shares granted
to a new 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."
and
FURTHER RESOLVED, that the Board of Directors, subject to
Shareholder approval and ratification at the Annual Meeting, hereby
adopts and approves the 1997 Amendment to the Directors' Plan, as set
forth above; and
FURTHER RESOLVED, that the Board of Directors hereby approves
and grants to John H. Williams, Sr., an Option to purchase 50,000 shares
of the Company's common stock at an exercise price of $2.125 per share,
which Option shall vest at the rate of 20% per year (10,000 shares)
commencing on June 10, 1997, and on each successive anniversary date
following until such Option is fully vested; and
FURTHER RESOLVED, that the Board of Directors recommends
adoption of the 1997 Amendment by the Company's Shareholders; and
FURTHER RESOLVED, that the 1997 Amendment be submitted for
consideration by the Shareholders at the Annual Meeting of Shareholders
to be held in the fall of 1997; and
FURTHER RESOLVED, that the proper officers of the Company are
hereby authorized to set a record date for voting at the next Annual
Meeting of Shareholders, and such officers are further authorized and
directed to send an appropriate Notice of Annual Meeting to the
Shareholders of record as of such record date; and
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.
3
<PAGE>
These Resolutions of Board of Directors of Westwood
Corporation by Memorandum may be executed in counterpart.
EXECUTED THE DAY AND YEAR FIRST ABOVE WRITTEN.
BOARD OF DIRECTORS:
/s/ Ernest H. McKee
_________________________________
Ernest H. McKee
/s/ Paul R. Carolus
_________________________________
Paul R. Carolus
/s/ Richard E. Minshall
_________________________________
Richard E. Minshall
/s/ Anthony Pantaleoni
_________________________________
Anthony Pantaleoni
4
<PAGE>
PROXY PROXY
WESTWOOD CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Ernest H. Mckee, Paul R.
Carolus, Richard E. Minshall, Anthony Pantaleoni and John H. Williams,
Sr., 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 Stockholders of Westwood Corporation
(herein, the "Company") to be held in the executive offices of the
Company on December 4, 1997, 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
Paul R. Carolus Richard E. Minshall
Anthony Pantaleoni John H. Williams, Sr.
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, and September 3,
1996, to: (1) provide any new Director who shall have been appointed to
the Board of Directors 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 the date of any such
Director's appointment; and (2) increase the number of shares available
under the Directors' Plan from 512,820 to 562,820, to satisfy the one-
time grant of an option to purchase 50,000 shares to the Company's new
Director, John H. Williams, Sr., on June 10, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
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 1997 Annual Report
to Stockholders of the Company.
_________________________________
_________________________________
Signature(s)
Dated: ___________________, 1997
(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.
