<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
WESTWOOD CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
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(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 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
WESTWOOD CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 8, 1999
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 5314 South Yale Avenue, Suite 1100, Tulsa,
Oklahoma 74135, on Wednesday, December 29, 1999, at 10:00 a.m.
The purpose of the meeting is to elect Directors for the ensuing year and
approve an amendment to the Directors' Plan.
Only Stockholders of record at the close of business on December 7, 1999,
will be entitled to notice of and to vote at the Annual Meeting. As of the
record date, the Company had 6,891,647 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 Common Stock is required to elect the
nominees.
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 1999 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 ]
<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 Wednesday, December 29, 1999, 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 5314 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
proposal 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 December 7, 1999.
The approximate date on which this Proxy Statement and the accompanying
Proxy will first be sent to Stockholders is December 8, 1999.
Record Date and Voting Rights
Only Stockholders of record at the close of business on December 7, 1999,
will be entitled to notice of and to vote at the Annual Meeting. As of the
record date, the Company had outstanding 6,891,647 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, 1999. Unless otherwise
indicated, each of the Stockholders has sole voting and investment power with
respect to the shares beneficially owned.
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name of Owner or Exercisable Common Percent of
Identity of Group Options(a) Stock(b) Outstanding(b)
- ----------------- ----------- -------- --------------
<S> <C> <C> <C>
Ernest H. McKee 104,730 1,441,040 20.9%
2902 E. 74th Street
Tulsa, Oklahoma 74136
Paul R. Carolus 104,730 380,621 5.5%
8511 South Canton Avenue
Tulsa, Oklahoma 74137
Robert E. Lorton ---- 348,491 5.1%
1440 South Owasso Avenue
Tulsa, Oklahoma 74120-5609
William J. Preston ---- 770,558 11.2%
1717 Woodstead Court
The Woodlands, Texas 77380
Richard E. Minshall 104,730 310,856(c) 4.5%
320 South Boston Avenue, Suite 1300
Tulsa, Oklahoma 74103
Anthony Pantaleoni 104,730 203,612(d) 3.0%
666 Fifth Avenue
New York, New York 10103
John H. Williams, Sr. 22,000 15,000 .2%
One Williams Center, 49/th/ Floor
Tulsa, Oklahoma 74172
All Executive Officers and Directors
as a Group (6 persons) 440,920 3,121,687 45.3%
</TABLE>
(a) Includes Company stock options that vested on September 3, 1999, but
are not exercisable until March 3, 2000.
(b) Does not include unexercised options.
(c) Includes 129,967 shares of Common Stock owned beneficially by Mr.
Minshall individually; 5,371 shares owned beneficially by Mr. Minshall's wife;
174,434 shares held beneficially by Capital Advisors, Inc., and 1,084 shares
owned by Minshall & Company, Inc. Mr. Minshall is the Chief Executive Officer
and controlling shareholder of Capital Advisors, Inc., and Minshall & Company,
Inc. A revocable trust for the benefit of Mr. Minshall's mother owns 74,855
shares of which Mr. Minshall is Trustee. Mr. Minshall does not claim any
beneficial ownership in the shares held by the Trust.
(d) Includes 51,550 shares of Common Stock owned beneficially by Mr.
Pantaleoni; 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), 40,00 shares held by a trust of which Mr. Pantaleoni
is a trustee (Mr. Pantaleoni disclaims beneficial ownership of these shares),
and 60,000 shares held by a trust of which Mr. Pantaleoni is a trustee and a
beneficiary.
-2-
<PAGE>
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. At
March 31, 1999, Ernest H. McKee and Paul R. Carolus were the only Executive
Officers of the Company. No other persons were considered to be executive
officers or received compensation in excess of $100,000 for the fiscal year
ended March 31, 1999.
On October 27, 1999, the Board appointed John P. Gigas as Executive Vice
President and Chief Operating Officer. Mr. Gigas' employment contract commenced
October 27, 1999 for a two year term. Salary compensation for Mr. Gigas is
$172,000 per annum payable in equal monthly installments. The Company also
granted Mr. Gigas a stock option to purchase up to 120,000 shares of the Common
Stock of the Company at an exercise price of $1.00 per share through October 27,
2004. The stock option granted to Mr. Gigas vests at the rate of 30,000 shares
at the end of each calendar quarter commencing December 31, 1999.
Table I
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(a) Compensation
------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Other
Annual Securities All Other
Name and Compen- Underlying Compen-
Principal Position Year Salary Bonus sation(b) Options sation(c)
- -------------------- ---- -------- ----------- --------- --------- ------------
Ernest H. McKee 1999 $225,000 $ ---- - ---- $5,606
Chief Executive 1998 150,000 75,000 - ---- 4,500
Officer 1997 150,000 150,000 - 69,641 (d) 4,500
Paul R. Carolus 1999 $130,000 $ ---- - ---- $7,575
Chief Financial 1998 90,000 40,000 - ---- 4,500
Officer 1997 90,000 90,000 - 69,641 (d) 4,500
</TABLE>
(a) Amounts shown include cash compensation earned by Executive Officers.
(b) The value of other benefits to any Officer during fiscal year 1999 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.
-3-
<PAGE>
(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 and 1997, which option shall vest at twenty percent (20%) per year on
the anniversary date of such grant.
Table II
Option Grants in Last Fiscal Year
No option grants were made to Executive Officers during the last fiscal year.
Table III
Aggregated Option Exercises
in Last Fiscal Year and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options
at March 31, 1999 at March 31, 1999
----------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Exer- Unexer- Exer- Unexer-
Acquired on Value cisable cisable cisable cisable
Name Exercise Realized (a) (b) (a) (b)
- --------------------- -------- -------- ------- ------ ----- -----
Ernest H. McKee $0 $0 104,730 36,300 $0 $0
Paul R. Carolus 0 $0 104,730 36,300 $0 $0
</TABLE>
(a) Represents grants of options to acquire 16,106 shares annually on March
20, 1992 through 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 automatically adjusted
as a result of 10% stock dividends occurring annually on December 22, 1993
through 1997. 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 ($1.86, $1.94,
$2.39, $1.69, and $1.45 per share, respectively, after automatic adjustment for
the 10% stock dividends occurring annually on December 22, 1993 through 1997).
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 60,500 shares (as adjusted for the 10% stock dividends occurring on
December 22, 1996 and 1997) 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
($1.76 per share after automatic adjustment for the 10% stock dividend occurring
on December 22, 1997). These options will vest at the rate of 20% (12,100
shares) per year on September 3, 1997 through 2001.
-4-
<PAGE>
The Company maintains a 401(k) Plan which was effective January 1, 1989,
and is available for participation by all 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 1999 were $168,000.
Messrs. McKee and Carolus have employment contracts through March 2000.
These contracts, as amended effective March 31, 1998, provide for a base salary
of $225,000 for Mr. McKee and $130,000 for Mr. Carolus. Bonus provisions are
subject to the discretion of the Board of Directors. Both contracts provide for
other benefits to these individuals, including Company provided automobiles,
club memberships, and reimbursement of business expenses. Although both
contracts can be terminated by the Board of Directors, at its discretion, each
contract provides for continued salary payments through March of 2000.
Directors' fees are payable to each Director for attendance at all regular
and special board meetings for the Company. Messrs. McKee and Carolus, although
Directors, are not paid Directors' fees. Richard E. Minshall, Anthony
Pantaleoni and John H. Williams, Sr., 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, 1999. 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, Pantaleoni
and Williams. While there are only four to six scheduled meetings of the Board
of Directors in Tulsa, Oklahoma, on a yearly basis, there 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., a company controlled by Richard E. Minshall,
provides services to the Company 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, 1999, the total
sum of $18,000 was paid to Minshall & Company, Inc., in connection with these
services.
In conjunction with the sale of RoxCorp. to Roxtec in September, 1997, NMP
Corp., the Company's subsidiary located in Tulsa, Oklahoma, entered into an
Administrative Services Agreement with RoxCorp. to provide certain
administrative services and facilities to RoxCorp. on a month-to-month basis
including office and warehouse space, and telephone service. Either party can
terminate the Administrative Services Agreement upon sixty (60) days' notice.
The services provided, and the consideration to be received, were essentially
identical to those previously provided based on the then inter-corporate expense
allocation determined by NMP Corp. and RoxCorp. During the fiscal year ended
March 31, 1999, NMP Corp. received the sum of $88,000 from RoxCorp. pursuant to
the Administrative Services Agreement. Additionally, NMP Corp. sells materials
and manufactured parts to RoxCorp. which resulted in revenues to NMP Corp. of
$174,000 during the fiscal year ended March 3, 1999.
-5-
<PAGE>
Matthew E. McKee, a son of Ernest H. McKee, serves as Production Manager of
NMP Corp. For the Company's fiscal year ending March 31, 1999, Matthew E. McKee
received salary of $64,000 and bonus compensation of $5,800. Matthew E. McKee's
current salary is $64,000 per year which includes a car allowance of $500 per
month. Mr. McKee obtained a B.B.A. degree from the University of Texas, College
of Business in 1992 and has been employed in various management capacities at
NMP Corp. since 1992.
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, 1994, and ending on March 31, 1999. The total
stockholder return assumes $100 invested on March 31, 1994, in the Company and
each of the Indexes shown. It also assumes reinvestment of all dividends.
The Company is in a unique industry and has few competitors manufacturing
electrical generation and control equipment, primarily for military application,
switching panel boards, switchboards, and electronic components. The Company's
primary competitors are not publicly traded on any U.S. Stock Market and
therefore, no financial data is obtainable 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, 1998. 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.
-6-
<PAGE>
Table IV
Comparison of Five-Year Cumulative Total Return*
Among Westwood Corporation, NASDAQ U.S. Stock Index
and S&P Electronic Defense Index**
[GRAPH APPEARS HERE]
Tabular Description of Performance Graph
<TABLE>
<CAPTION>
Measurement Period Westwood NASDAQ S&P Electronic
(Fiscal Year Covered) Corporation U.S. Stock Index Defense Index
- ----------------------- ----------- ---------------- --------------
<S> <C> <C> <C>
March 31, 1994 $ 100 $ 100 $ 100
FYE 03/31/95 71.60 109.92 109.62
FYE 03/31/96 75.09 149.21 257.68
FYE 03/31/97 67.58 165.87 255.16
FYE 03/31/98 69.74 250.38 364.04
FYE 03/31/99 35.18 336.94 337.43
- ----------------------------------------------------------------------
</TABLE>
Assumes $100 invested on March 31, 1994, 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, 1999.
-7-
<PAGE>
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 are 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.
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.
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
electrical generation and control 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 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 four of the last five fiscal years of the
Company. The bonus compensation of Messrs. McKee and Carolus for the fiscal
year ending 1998 was reduced from the fiscal year March 31, 1997 in recognition
of decreased net earnings and in recognition of the tightening economic
conditions in the defense industry. No bonus was paid for the year ending March
31, 1999. 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 losses
of fiscal year 1999 as compared to fiscal year 1998.
The decrease in bonus is not intended to reflect negatively on the
performance of the Company's Executive Officers. Since approximately 1992,
general economic conditions of corporations in the Tulsa, Oklahoma area as well
as other corporations in the defense industry generally, indicated that the
salary structures of Messrs. McKee and Carolus, were low. The level
-8-
<PAGE>
of bonus compensation was based in part on an effort to maintain the overall
compensation packages of its Executive Officers in a competitive position with
equivalent companies. However, rather than continue this practice, the Directors
determined in 1998 to raise the base salary compensation of Messrs. McKee and
Carolus and accordingly reduce bonus compensation.
As amended effective March 31, 1998, Ernest H. McKee's salary was raised
from $150,000 to $225,000 and the annual salary of Paul R. Carolus was raised
from $90,000 to $130,000. The Board believes the new salary structure is
competitive with equivalent corporations in the same or similar business sectors
as the Company and is particularly appropriate given the efforts of the
Executive Officers in transitioning the Company from a primarily engineered
switchgear company to electrical generation and control products.
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
three 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 Shareholders of the Company
in 1992, provided for the issuance of options to acquire 16,106 (as adjusted by
the annual dividends on December 22, 1993 through 1997) 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 60,500 shares (as adjusted for the 10% stock
dividend occurring on December 22, 1996 and 1997) of the Company's Common Stock
at an exercise price equal to the reported closing price of NASDAQ on September
3, 1996. The option vests 20% of the 60,500 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 Shareholders 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
shareholders.
Stock Option Plans
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.
-9-
<PAGE>
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 annually
on December 22, 1993 through 1997. A total of 483,153 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 1992 Stock Option
Plan will be adjusted proportionately.
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, 146,410 shares of
the Company's Common Stock (as adjusted by the 10% stock dividends occurring
annually on December 22, 1994 through 1997), 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 ($1.54 per
share
-10-
<PAGE>
after automatic adjustment for the 10% stock dividends occurring annually on
December 22, 1994 through 1997). 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. There have been no additional
issuances of options under the Incentive Stock Option Plan since November 17,
1994.
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 Shareholders of the Company at the Annual Meeting, 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 through 2001.
Additionally, the 1996 Amendment 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. 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 annually on December 22, 1993 through 1997. The Directors'
Plan was also increased as a result of an amendment approved by the Shareholders
at the 1997 Annual Meeting of Shareholders ("1997 Amendment") which authorized
the additional authorization of options representing 50,000 shares of the
Company's Common Stock to John H. Williams, Sr. as a result of his appointment
to the Board of Directors. As a result of the 1997 Amendment and the 10% stock
dividend occurring on December 22, 1997, a total of 619,120 shares are now
reserved for issuance under its terms.
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.
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The Directors' Stock Option 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 three outside Directors, Messrs.
Minshall, Pantaleoni and Williams, for the considerable amount of consulting and
communication time spent by them outside of Board meetings. While compensated
at the rate of $1,500 per Board meeting, this compensation only applies when
they actually participate in a Board meeting. Directors of the Company 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' Stock Option
Plan.
When originally instituted in 1992, an average trading price for Common
Stock of the Company was approximately $3.00 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 eight years have resulted in any gain and none have
been exercised.
ELECTION OF DIRECTORS
As of March 31, 1999, the Board of Directors consisted of Ernest H. McKee,
Paul R. Carolus, Richard E. Minshall, Anthony Pantaleoni, and John H. Williams,
Sr.
On October 27, 1999, William J. Preston, of Houston, Texas, was appointed
to the Company's Board of Directors, bringing the number of Directors for the
Company to six. As an outside Director, Mr. Preston 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. Preston 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 October 27, 1999 ($0.8125 share), pursuant to the Directors' Plan. Under the
terms of the Directors' Plan and grant, the option granted to Mr. Preston will
vest in 20% (10,000 shares) of the optioned shares of the one-time grant on
October 27, 2000, and on the four successive anniversary dates of the grant.
Each of Messrs. McKee, Carolus, Minshall, Pantaleoni, Williams and Preston
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.
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Nominees
The nominees for directorships, and certain additional information with
respect to each of them, are as follows:
Ernest H. McKee, age 61, has served as President, Chief Executive Officer,
and Chairman of the Board of Directors of Westwood Corporation since 1988.
Paul R. Carolus, age 66, has served as Secretary-Treasurer, Chief Financial
Officer, and a Director of Westwood Corporation since 1988. Mr. Carolus is a
Certified Public Accountant, and a member of the American Institute of Certified
Public Accountants.
Richard E. Minshall, age 61, has served as a Director of Westwood
Corporation 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 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 60, has served as a Director of Westwood
Corporation 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., and AAON, Inc.
John H. Williams, Sr., age 81, 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).
William J. Preston, age 64, was elected to serve on the Board of Directors
on October 27, 1999. Since 1978, Mr. Preston has been a principal and one of
the founding partners of Preston Exploration, L.L.C., a privately owned oil and
gas exploration and production company located in The Woodlands, Texas. In
1978, Mr. Preston retired from the active practice of medicine after twelve
years of practice in Tulsa, Oklahoma, in the field of otolaryngology. Mr.
Preston received an undergraduate degree in engineering from the University of
Tulsa, and subsequently graduated from the University of Oklahoma Medical
School.
During the fiscal year ended March 31, 1999, the Board had four meetings
which were participated in by all Directors. In March, 1998, the Board created
an Audit Committee composed of Richard E. Minshall, Anthony Pantaleoni, and John
H. Williams, Sr. Other than the Audit Committee, the Board presently has no
other standing committees.
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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 six
nominees unless Stockholders specify otherwise in their proxies.
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
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 562,820 shares of the Company's Common
Stock for issuance thereunder.
By Resolution dated October 27, 1999, attached hereto as Appendix "A", the
Board of Directors unanimously approved amendments (the "1999 Amendment") to the
Directors' Plan which would:
Increase the number of shares available under the Directors' Plan from
562,820 to 612,820 to satisfy the one-time grant of an option to
purchase 50,000 shares to Mr. William J. Preston.
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<PAGE>
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. The
1997 Amendment to the Directors' Plan provided, upon acceptance of a position as
Director of the Company, a new Director will be entitled to 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 imposed 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 1999
Amendment increases the number of shares available under the Directors' Plan by
an additional 50,000 shares, from 562,820 to 612,820, in order to satisfy the
one-time grant of an option to purchase 50,000 shares to William J. Preston, on
October 27, 1999.
Text of Proposed Amendments
1. The phrase "(As Amended June 10, 1997)" below the title on page 1
shall be deleted and replaced with the phrase "(As Amended October 27, 1999)".
2. The number "562,820" in the first sentence of the paragraph at Article
IV, on page 3, shall be deleted and replaced with the number "612,820."
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 October 27, 1999,
which amendments are incorporated into the Directors' Plan, as amended on
October 27, 1999, 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 October 27, 1999,
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.
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<PAGE>
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, 2000, 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 2000 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, 5314
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
December 8, 1999
Tulsa, Oklahoma
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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, John H. Williams, Sr. and
William J. Preston, 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
29, 1999, 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 John H. Williams, Sr.
Anthony Pantaleoni William J. Preston
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 propose to amend the 1992 Directors' Stock
Option Plan, as amended on October 28, 1993, September 3, 1996, and June 10,
1997, to increase the number of shares available under the Directors' Plan from
562,820 to 612,820, to satisfy the one-time grant of an option to purchase
50,000 shares to William J. Preston on October 27, 1999.
[ ] 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. 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 1999 Annual Report to Stockholders of the
company.
_________________________________
_________________________________
Signature(s)
Dated: ___________________, 1999
(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.
