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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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EXCHANGE ACT OF 1934
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STRATFORD ACQUISITION CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<PAGE>
March 15, 1999
Dear Fellow Shareholders:
It is our pleasure to notify you of our annual meeting of shareholders which
will be held on Thursday, April 29, 1999 at 9:30 a.m. (EST) at The University
Club located at 1 West 54th Street, New York, New York 10019. We hope your
schedule will allow you to attend the meeting.
The matters to be considered and voted upon at the annual meeting are described
in the Notice of the Annual Meeting of Shareholders and the related Proxy
Statement that accompany this letter.
The year 1998 will be remembered as a very enduring, but progressive year in our
company's limited operating history. Over the past twelve months we have
dedicated ourselves to the difficult and less rewarding work of building the
infrastructure of a manufacturing enterprise that is pursuing a course to
becoming a first-tier producer of proprietary construction products. In our
communications to you throughout the year, we have expressed our expectations
for the year and we are now planning to capitalize on our accomplishments in
1998. In 1998, our company acquired the manufacturing operations and marketing
rights to the Fiberforce line of polypropylene fibers, followed through on the
development of our Novacrete proprietary admixture and a line of concrete repair
and rehabilitation products and began selling our products in Canada, the United
States, Israel, Hong Kong and, just recently, in Hungary.
The most exciting prospect for 1999 is the potential for revenue and earnings
growth from our Fiberforce concrete reinforcing fibers and our Novacrete
concrete additive and pre-packaged concrete repair products and the expansion of
our product line through key acquisitions. Although it is premature to discuss
any developments on new acquisitions we anticipate that at the time of the
shareholders' meeting we will be able to provide you with much greater detail
about our growth plans for the remainder of this year.
Synthetic fibers are regarded as one of the fastest growing product lines in the
construction product industry. Fiberforce has historically been a well-known
product in the Eastern Canadian market, but had little exposure to the much
larger United States market. Through the efforts of our larger sales force and
distribution network, we have already begun to sell Fiberforce fibers in the
United States and into international markets such as Israel and Hong Kong.
<PAGE>
By consolidating the operations of newly acquired companies, as we did with the
Fiberforce acquisition, we will be able to produce products under the
supervision of centralized management and at a substantial cost savings. Turning
our company into a financially viable entity with a diversified and full product
line that generates earnings for our shareholders is our foremost goal in 1999.
Integral to our plans to achieve greater product diversity and entry into the
vast United States market the acquisitions we are targeting will provide us
with: manufacturing facilities that are already on-line, regional distribution
capabilities, an historical level of sales that we can build on through
aggressive marketing and the introduction of new products using brand names that
have already been accepted by the contractor community. In the construction
product business, customer loyalty is placed on product brands that have been
established over time through commercial use. Despite having technically valid
products and very competitive prices, one of the greatest obstacles we
encountered in 1998 was our company's lack of history and identity of our
products with end-users and members of the specification community. By having
accepted brands in our product portfolio we will be able to leverage upon this
product awareness and customer loyalty as we launch new construction products
this year and beyond.
In addition, as our corporate infrastructure grows, we will have the ability to
recruit additional senior management with proven track records in sales and
operations and more support staff to make our company operate more efficiently.
Despite the tireless efforts that were made in 1998 to first stabilize our
company earlier in the year and then to direct it out of the development stage,
we have positioned ourselves to achieve exponential growth in 1999.
As we embark upon a year that has been earmarked for continued economic growth
we are expecting to have a very favorable environment for selling construction
products in all of North America in 1999.
We continue to appreciate your support and interest in our company as we
prospect for new opportunities that will create value for all shareholders.
Best Regards,
William K. Lavin Daniel W. Dowe
Chairman President and Chief
Executive Officer
<PAGE>
STRATFORD ACQUISITION CORPORATION
67 Wall Street, Suite 2001
New York, New York 10005
--------------
NOTICE OF THE ANNUAL MEETING
OF SHAREHOLDERS
APRIL 29, 1999
To the Shareholders of
Stratford Acquisition Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Stratford
Acquisition Corporation (the "Company") will be held at The University Club, 1
West 54th Street, New York, New York 10019 at 9:30 a.m. on Thursday, April 29,
1999, for the purpose of considering and voting upon:
1. Election of four directors to serve until the next annual meeting and
until their successors are duly elected and qualified;
2. The proposed merger of the Company into its newly-formed subsidiary,
Novex Systems International, Inc.; and
3. The appointment by the Board of Directors of Feldman Sherb & Ehrlich,
P.C. as the Company's independent accountants and auditors.
The close of business on Monday, March 1, 1999 has been fixed as the record
date for the determination of the shareholders entitled to notice of and to vote
at the annual meeting, and any adjournment.
You are cordially invited to attend the meeting and vote your shares. In
the event you cannot attend, please complete, date, sign and return the enclosed
proxy in the envelope provided. Your prompt response will be appreciated. A
shareholder who executes and returns a proxy in the accompanying form has the
power to revoke such proxy at any time prior to the exercise thereof.
By order of the Board of Directors
William K. Lavin, Secretary
New York, New York
March 15, 1999
<PAGE>
STRATFORD ACQUISITION CORPORATION
67 Wall Street, Suite 2001
New York, New York 10005
----------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
April 29, 1999
----------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Stratford Acquisition Corporation, a Minnesota
corporation (the "Company"), of proxies to be used at the Annual Meeting of
Shareholders to be held at The University Club, 1 West 54th Street, New York,
New York 10019, at 9:30 a.m. on Thursday, April 29, 1999, and any adjournments
thereof (the "Annual Meeting"). This Proxy Statement and the accompanying form
of proxy are first being mailed to shareholders on or about March 15, 1999.
Holders of record of the $.001 par value Common Shares of the Company
("Common Stock") on March 1, 1999 will be entitled to vote at the meeting. On
that date, there were 15,081,607 shares of Common Stock outstanding, each of
which are entitled to one vote on all matters properly submitted for vote of the
shareholders at the Annual Meeting. Only holders of record at the close of
business on March 1, 1999 will be entitled to notice of and to vote at the
Annual Meeting.
All Common Shares represented by properly executed proxies in the
accompanying form received by the Company in sufficient time to permit
examination and tabulation before a vote is taken will be voted in accordance
with the directions of the shareholder specified on the proxy. IF NO DIRECTIONS
HAVE BEEN SPECIFIED BY MARKING THE APPROPRIATE SQUARES ON THE PROXY, THE SHARES
REPRESENTED BY THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS. A shareholder signing and returning the accompanying
proxy has the power to revoke it at any time prior to its exercise by delivering
to the Company a later dated proxy or by giving notice to the Company in writing
or in open meeting but without affecting any vote previously taken. Any written
notice of revocation or subsequent proxy should be sent to Stratford Acquisition
Corporation, c/o Karen Malsbenden, 67 Wall Street, Suite 2001, New York, New
York 10005, or by facsimile to 212-825-0354 or in person at the Annual Meeting
at or before the taking of the actual vote.
The holders of Common Shares entitling them to a majority of the voting
power of the Company must be present in person or by proxy at the Annual Meeting
to constitute a quorum for conducting business. Shares represented by proxies
received by the Company will be counted as present at the Annual Meeting for
purposes of determining the existence of a quorum, regardless of how or whether
such shares are voted on a specific proposal. The affirmative
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vote of a majority of the shares of common stock present at the Annual Meeting
will be required to approve the election of the directors and the appointment of
the auditors. However, the affirmative vote of a majority of the outstanding
shares will be required to approve the proposed merger.
MANAGEMENT PROPOSAL I
ELECTION OF DIRECTORS
The Company's Board of Directors consists of four directors. At the April
29, 1999 Annual Meeting, the shareholders will elect four directors to hold
office until their qualified successors are elected by the shareholders at the
next regular or special meeting of shareholders, or as otherwise provided by
law, or the Company's By-Laws.
The four persons who have been nominated for election as directors are
William K. Lavin, Douglas S. Friedenberg, Edward J. Malloy and Daniel W. Dowe,
all of whom presently serve as directors of the Company. It is the intention of
the holders of the proxies in the accompanying form to vote FOR the election of
these four nominees, unless authorization to do so is withheld. The holders of
the proxies may, in their discretion, vote for substitute nominees in the event
that any nominee becomes unable to serve for any reason presently unknown. The
Board of Directors is not aware that any nominee will be unable or unwilling to
serve as a Director. The following table sets forth certain information with
respect to each of the nominees.
NOMINEES
Directors and Executive Officers
Age Position
William K. Lavin 53 Chairman, Secretary
Douglas S. Friedenberg 45 Director, Treasurer
Daniel W. Dowe 37 Director, President
and Chief Executive Officer
Edward J. Malloy 62 Director
The Board of Directors Recommends a Vote FOR the Foregoing Nominees.
BUSINESS EXPERIENCE
William K. Lavin. Mr. Lavin became a director of the Company in October
1997 and currently operates his own consulting business that he formed in 1994.
Prior to forming his firm, he was Chief Executive Officer of Woolworth
Corporation (NYSE:Z) from 1993-1994 and, immediately prior to that position, he
served as Woolworth's Chief Administrative and Financial Officer. Mr. Lavin
serves on the board of directors of the Allegheny Corporation (NYSE:Y) and
Chicago Title Corporation (NYSE: CTZ).
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Douglas S. Friedenberg. Mr. Friedenberg has been a director of the Company
since November 1996. He has been the President of Firebird Capital Management, a
financial advisory firm, since March 1993 and currently manages three private
investment funds for Firebird. He also writes a regular column for HFR Journal,
a quarterly publication for the investment industry. In 1991, he co-founded and
became President of Unicorn Capital Management, an investment management firm.
From 1983 to 1991, he managed private investment portfolios for Morgan Stanley,
Inc., a large New York City-based investment banking firm. Mr. Friedenberg
currently serves as a Director of Datametrics Corporation (AMEX:DC).
Daniel W. Dowe. Mr. Dowe became a director of the Company in March 1997,
Acting President on November 17, 1997 and President and Chief Executive Officer
on April 1, 1998. Mr. Dowe has agreed to serve in this capacity for a three-year
period pursuant to a written employment agreement and will have an option to
serve for an additional three-year period. He was the founder of Dowe & Dowe,
the predecessor to Dowe, Capetanakis & Preite, a New York City-based law firm
that occasionally provides corporate and securities law services to the Company.
From 1993 to November 17, 1997, Mr. Dowe was practicing corporate and securities
law at his firm. From 1990 to 1993, Mr. Dowe was an associate with Donohue &
Donohue, a New York City-based law firm concentrating on international trade
matters. Prior to practicing law, he was employed by Salomon Brothers, Inc.
(Salomon Smith Barney, a division of Citigroup, Inc.) and J. P. Morgan Bank.
Edward J. Malloy. Mr. Malloy became a director in January, 1998. He is
currently President of the Building and Construction Council of Greater New
York. Mr. Malloy represents the interests of over 200,000 laborers involved in
the building trades in the Greater New York City area. He is responsible for
developing employment opportunities in the construction industry in both the
public and private sectors to achieve an adequate level of work for union
members. Mr. Malloy brings to the Company an extensive level of contacts and
industry experience.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
There were four meetings of the Board of Directors during 1998. In addition
the Board acted on a number of occasions by unanimous written consent. Each of
the Directors of the Company attended all of the meetings of the Board of
Directors, and committees of which they were a member that were held in the last
fiscal year.
The Company does not have a standing audit or nominating committee or any
other committees performing similar functions. The Company does have a
compensation committee consisting of William Lavin, Douglas Friedenberg and
Edward Malloy (the "Compensation Committee") which had one meeting during 1998.
The Compensation Committee is responsible for assuring that the officers and key
management of the Company are effectively compensated in terms of salaries,
incentive compensation and benefits which are internally equitable and
externally competitive. The Compensation Committee is responsible for setting
the compensation of the executive officers.
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EXECUTIVE COMPENSATION
The following table shows all remuneration in excess of $100,000 paid by
the Company and its subsidiaries during the fiscal year ending May 31, 1998, to
all directors and officers:
Long-Term Compensation
Annual compensation Awards Payouts
Securi-
ties
Name Other Underly- All
and Annual Restrict- ing Other
Princi- Compen- ed Stock Options/ LTIP Compen-
pal Salary Bonus sation Awards SARs Payouts sation
Position/Year ($) ($) ($) (#) ($) ($) ($)
- --------------------------------------------------------------------------------
Daniel
Dowe
President/1996 n/a
(1)(2)(3) 1997 n/a
1998 $89,850 432,357 575,924
- ----------
(1) From November 17, 1997 through March 31, 1998, during which time Mr. Dowe
served as interim president of the Company, he earned $52,500 in cash
compensation. Commencing April 1, 1998, Mr. Dowe became an employee of the
Company at an annual salary of $180,000. For the two-month period ended May
31, 1998, Mr. Dowe earned $37,530 in cash compensation. Mr. Dowe does not
receive any additional remuneration for serving as a director.
(2) Prior to becoming an employee of the company, Mr. Dowe received 64,857
shares of common stock in payment for $22,700 of legal services rendered to
the Company through November, 1997. From November 17, 1997 through March
31, 1998, during which time Mr. Dowe served as interim president of the
Company, he earned 97,500 shares of Common Stock. When Mr. Dowe became an
employee of the Company, he received 270,000 shares of Common Stock
representing 30,000 shares per month for the remainder of the calendar
year.
(3) On June 25, 1997, the Company issued an aggregate of 1,727,772 stock
options to its directors as an incentive for future performance. Of these
options, Mr. Dowe received 575,924 options. The stock options were
exercisable when issued at then current market price of $.35 per Share and
will expire on June 25, 2002.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the amount of common stock owned as of May 31,
1998 by each director and officer and affiliates and by all directors and
officers as a group. Each individual has beneficial ownership of the shares
which are subject to unexercised stock options and stock warrants held by him,
and each individual has sole voting power and sole investment power with respect
to the number of shares beneficially owned:
Amount and Nature
Name and Address of Beneficial Percent of
of Beneficial owner ownership Class (1)
- ------------------- --------- ---------
Douglas Friedenberg, 3,353,376 21.37%
Director, Treasurer
67 Wall Street, Suite 2001
New York, New York 10005
Daniel W. Dowe 1,008,281 6.42%
Director, President,
Chief Executive Officer
67 Wall Street, Suite 2001
New York, New York 10005
William K. Lavin 206,250 1.31%
Chairman, Secretary
67 Wall Street, Suite 2001
New York, New York 10005
Edward J. Malloy 106,250 0.68%
Director
71 West 23rd Street
New York, New York 10010
All Directors and
Executive Officers as
a group 4,674,157 29.78%
- ----------
(1) The class includes stock options and stock warrants granted to the
directors and officers prior to May 31, 1998 which are deemed by the
Company to be acquirable by the beneficial owner within 60 days of the date
of this proxy statement by exercise of the option or warrant. As of May 31,
1998, there were 11,965,646 shares issued and outstanding, 15,695,422 on a
fully diluted basis. Percentages are stated on a fully diluted basis.
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PRINCIPAL SHAREHOLDERS
Set forth below is certain information about the only shareholder known by
the Company (other than Mr. Friedenberg and his affiliated companies) to be a
beneficial owner of more than 5% of the outstanding Common Shares of the Company
as of the May 31, 1998:
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class(1)
- ------------------- ----------------------- -----------
Quilcap Corporation 1,200,000 7.64%
375 Park Avenue
Suite 1404
New York, New York
(1) Percentage is stated on a fully diluted basis.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Stratford's directors, executive officers and holders
of more than 10% of Stratford's Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common stock and other equity securities of Stratford. Stratford
believes that during 1998, its officers and directors have complied with all
Section 16(a) filing requirements. The Company is not aware of holders of more
than 10% of its Common Stock as of May 31, 1998.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The following sets forth all transactions with the Company in excess of
$60,000 in which a director, executive officer, 5% shareholder or an immediate
family member thereof, had a direct or indirect material interest during the
fiscal year ended May 31, 1998 and since that date:
During the fiscal year ended May 31, 1998, three private investment funds
that are controlled by Mr. Friedenberg have loaned funds to the Company and have
purchased equity securities to provide working capital to the Company. The
Company has established an informal policy whereby common stock is sold to any
funds controlled by Mr. Friedenberg. The price is the average between the
closing bid and asking price for the common stock on the day prior to the
purchase. The Company believes that this policy is fair in that the common stock
issuable to Mr. Friedenberg's funds is not registered and thereby restricted
from transfer, and actually has a value that is discounted to the market price
of common stock that can be freely-traded.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Over the past year, the Company has undergone substantial operational
changes with the objective of building a competitive construction product
company. These changes resulted in the need to attract and retain key
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executive officers and employees who would be instrumental in the success of
these new operations. Accordingly, the Company's compensation policy and
practices are aimed at achieving this objective. The Company's executive
compensation program combines what the Compensation Committee considers to be
competitive but reasonable base salaries with incentive programs linked to the
success of the Company's operations and stock performance.
Going forward, Stratford's compensation program shall consist of the
following elements: salary based on the Committee's assessment of the
individual's level of responsibility, performance and contributions to the
company; an annual bonus which takes into account both financial progress of the
company as well as less quantifiable criteria; and grants of stock options
designed to motivate individuals to enhance the long-term value of the Company's
stock. The Committee will not allocate a fixed percentage of compensation to
each of these three elements nor does the Committee intend to use specific
qualitative or quantitative measures or factors in assessing individual
performance.
Since Mr. Dowe only became President and Chief Executive Officer in April
1998, his base salary is primarily based on the Committee's general
understanding of ranges of compensation for executives of companies similar in
size, complexity and development as that of the Company. The Committee believes
that Mr. Dowe's base salary is competitive within a range that is considered to
be reasonable and necessary and that it reflects his financial and legal
experience and personal contributions to the Company.
The Company also intends to provide incentive compensation to its executive
officers and key employees in the form of annual cash bonuses relating to
financial and operational achievements during the prior year. The amount and
form of such bonuses shall be determined by the Committee based primarily upon
an analysis of the officer's job performance and the specific accomplishments of
the officer during the preceding calendar year. Although the achievement of
certain financial objectives will be considered in determining incentive
compensation, other subjective and less quantifiable criteria will also be
considered. In this regard, the Compensation Committee shall take into account
specific operational achievements that were expected to affect future earnings
and results or that had an identifiable impact on the prior year's results.
Mr. Dowe's bonus for 1998 shall be based on the Committee's evaluation of
his individual performance in assisting the Company to achieve its corporate and
strategic objectives, namely, to establish the groundwork from which the company
can evolve from the development stage into a company which is capable of
competing effectively in the construction products industry.
The Company also provides long-term incentive compensation to its executive
officers and key employees through stock options. The use of stock options is
intended to provide incentives to the Company's executive officers and key
employees for working toward the long-term growth of the Company by providing
them with a benefit that will increase only to the extent the value of the
common stock increases. Accordingly, the Company from time to time has granted
the Company's executive officers and other key employees options to purchase
shares of common stock. Options are not granted by the Company as a matter of
course or as part of the regular compensation of any executive or key employee.
The decision to grant an option is based on the perceived
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incentive that the grant will provide and the benefits that the grant may have
on long-term shareholder value. The number of shares granted is determined based
on the level and contribution of the employee. Consideration is also given to
the anticipated contribution of the business operations for which the optionee
has responsibility on the overall shareholder value of the Company and on
existing holdings of options by the employee. Certain of the stock options which
are currently outstanding are subject to vesting over a number of years and have
exercise prices based on the market price of the common stock at of the date of
grant.
The Compensation Committee believes that the Company's executive
compensation program is reasonable and provides a mechanism by which
compensation is appropriately related to corporate and individual performance
and is designed to align the interest of the Company's executive officers with
the interest of shareholders on both a long and short-term basis.
PERFORMANCE GRAPH
As of May 31, 1998, the Company was still in the development stage.
Therefore, the Company is not aware of any similarly-situated public company
within the construction product industry that would be comparable in size,
products or circumstance as the Company.
MANAGEMENT PROPOSAL II
PLAN OF MERGER WITH THE COMPANY'S WHOLLY-OWNED SUBSIDIARY,
NOVEX SYSTEMS INTERNATIONAL, INC.
The following resolution will be offered by the Board of Directors at the
meeting:
RESOLVED, that the plan of merger of the Company into its wholly-owned
subsidiary, Novex Systems International, Inc., with the latter to be the
surviving corporation, be and the same is hereby adopted and that the
Company be merged with Novex Systems International, Inc., and be it further
RESOLVED, that the terms and conditions of the merger and the manner
and basis of converting the shares of each constituent corporation into
shares of the surviving corporation be as set forth in the said plan of
merger of Stratford Acquisition Corporation and Novex Systems
International, Inc., and be it further
RESOLVED, that the president and the secretary of the Company be and
are hereby authorized and empowered to do or cause to be done any and all
such other acts and things as they in their discretion may deem necessary
or appropriate to accomplish the said merger and to carry out the purpose
and intent of the foregoing resolutions.
The Board of Directors Recommends a Vote FOR the adoption and approval of
the Foregoing Resolutions for the following reasons:
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In conjunction with the Company's business plan to develop a corporate
image that is compatible with its products, services and marketing approach to
offering complete concrete repair "systems" to its customers, management
proposes to change the company's name from Stratford Acquisition Corporation to
Novex Systems International, Inc. This name change will also create uniformity
with the company's Canadian operating subsidiary, which changed its name to
Novex Systems International, Ltd. in December, 1998.
In addition, the Company has moved its principal executive offices to New
York City and believes it is in the best interest of the Company and its
shareholders to be governed by the corporate laws of the State of New York,
which management believes are more favorable for the governance of public
companies. The Company also experienced negative rulings on procedural grounds
from a federal court in Minnesota which determined that the company's lack of
operations in Minnesota diminished the availability of legal jurisdiction in the
state. By redomesticating the Company in New York, the company will not only
avail itself of a more comprehensive corporate body of law, but will also have
access to a local forum to adjudicate any future disputes that might require
judicial intervention and closer access to its local New York-based counsel and
auditors.
The Company proposes that this redomestication and name change be
accomplished by merging Stratford Acquisition Corporation into a newly-formed,
wholly-owned subsidiary, Novex Systems International, Inc. that was recently
incorporated in the State of New York principally for this purpose. The merger
will entail an exchange of one (1) share of $.001 par value common stock of
Novex Systems International, Inc. for one (1) share of $.001 par value common
stock of Stratford Acquisition Corporation. Owners of outstanding debentures,
stock options and stock warrants will be offered an exchange of outstanding
securities bearing identical rights and obligations in Novex Systems
International, Inc. The effect of this merger will result in the termination of
Stratford Acquisition Corporation and the survival of Novex Systems
International, Inc. as the publicly-traded operating entity. The existing
officers and directors of the Company shall serve as the officers and directors
of Novex Systems International, Inc., until their successors have been duly
qualified and elected or as otherwise provided in the certificate of
incorporation of Novex Systems International, Inc.
The Company believes that additional protections will be derived through
provisions set forth in the Certificate of Incorporation of Novex Systems
International, Inc. which would survive the merger. For example, pursuant to the
Company's current certificate of incorporation and all amendments thereto,
shareholders owning common stock in Stratford Acquisition Corporation have no
protection against persons wishing to take undue advantage of the corporation
without paying any more than a simple majority of shareholders fair value for
the intrinsic worth of the company's proprietary technology, know-how and
business prospects. As a public company, the company is vulnerable to becoming
subject to the control of another person that wishes to capitalize on the
company's low market value. Novex Systems International, Inc. has adopted a
number of provisions in its certificate of incorporation such that upon the
proposed merger of the Company into Novex Systems International, Inc., the
Company will have the basic protections afforded under New York corporate laws
to protect it against unsolicited offers for the Company's common stock that may
not reflect the fair value of the company's common stock. By merging into
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Novex Systems International, Inc., a person wishing to acquire control of the
company, or elect new directors will be required to purchase at least 75% of all
the outstanding common stock of Novex Systems International, Inc. Management
believes that this provision will discourage persons having only a short-term
financial interest in controlling the company from taking undue advantage of
shareholders holding a minority interest in the Company.
Comparison of Shareholder Rights
The following is a summary of material differences between the rights of
holders of the Company's Common Stock and the rights of holders of the Novex
Common Stock. The differences arise primarily from various provisions of the
respective Certificates of Incorporation and By-Laws of the Company and Novex.
Amendment to Certificate of Incorporation and By-Laws
Under Novex' Certificate of Incorporation, the alteration, amendment or
repeal of, or adoption of any provision inconsistent with the provisions of such
Certificate of Incorporation relating to the calling of special shareholder
meetings (Article Eighth), the classified board of directors and the removal of
directors (Article Ninth), limitation of director liability (Article Eleventh),
indemnification of officers and directors (Article Twelfth) and amendments to
the Company's By-Laws (Article Seventh) will require the affirmative vote of the
holders of at least 75% of the voting power of the shares entitled to vote for
the election of directors.
The Company's Certificate of Incorporation does not contain a provision
specifying the vote needed to amend the Certificate of Incorporation.
Accordingly, only the majority vote required by the Minnesota Business
Corporations Laws is required to amend the Company's Certificate of
Incorporation.
Classified Board of Directors
Novex' Certificate of Incorporation provides for the Board of Directors to
be divided into three classes, with the term of one such class expiring each
year.
The Company's Certificate of Incorporation does not provide for a
classified Board of Directors. The terms of all of the Company's directors
currently expire each year.
Removal of Directors
Under the New York Business Corporations Law, unless the certificate of
incorporation provides otherwise, directors of a corporation with a classified
board, such as Novex, may be removed only for cause by the holders of a majority
of the shares then entitled to vote at an election of directors. The term
"cause" is not defined under the New York Business Corporations Law.
Consequently, any question concerning the legal standard for "cause" would have
to be judicially determined, and such determination could be difficult,
expensive and time-consuming. Novex' Certificate of Incorporation provides for
removal for cause only and defines the term therein.
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The Company's Certificate of Incorporation does not provide for the removal
of directors. Accordingly, under the Minnesota Business Corporations Law,
directors may be removed, with or without cause, by a majority vote of the
shareholders.
Special Meetings
Under the New York Business Corporations Laws, special meetings of
shareholders for purposes other than the election of directors may be called by
the Board of Directors or by such persons as may be authorized by the
corporation's certificate of incorporation or by-laws. Novex' Certificate of
Incorporation provides for special meetings of shareholders to be called by the
Chairman of the Board or by the Secretary of the Company within 10 calendar days
after receipt of the written request of a majority of the total number of
Directors which the Company would have if there were no vacancies.
Under Minnesota Business Corporations Law, a special meeting may be called
by the Chief Executive Officer, the Chief Financial Officer, two or more
directors, a person authorized in the Articles of Incorporation or ByLaws to
call a special meeting, or shareholders holding 10% or more of the voting power
of all shares entitled to vote except that a special meeting for the purpose of
considering any action to directly or indirectly facilitate or effect a business
combination including any action that would change or otherwise affect the board
of directors must be called by 25% or more of the voting power of all shares
entitled to vote.
THE PLAN OF MERGER
General
Subject to the approval of the shareholders of the Company at the Annual
Meeting and the satisfaction of certain other conditions, Stratford Acquisition
Corporation ("SAC") will be merged with and into Novex Systems International
Inc. ("Novex"). As a result of the Merger, the separate corporate existence of
SAC will cease, and Novex, as the surviving Corporation, will succeed, insofar
as permitted by law, to all rights and obligations of SAC.
Required Vote
Minnesota law requires that the Merger be approved by the Board of
Directors and adopted by the holders of at least a majority of the outstanding
shares of Stratford's Common Stock. The Company's Board of Directors has
unanimously approved the proposed Merger.
Effective Time of the Merger
The Merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of New York. It is presently anticipated that such
filing will be made as promptly as practicable after the approval of
shareholders of the Company has been obtained.
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Bylaws of Surviving Corporation
Upon the Effective Time of the Merger, the Company shall be governed in
accordance with the provisions of the Certificate of Incorporation and Bylaws of
Novex until they shall be altered, amended or repealed, or until new bylaws
shall be adopted, and in accordance with the provisions of law.
Directors and Officers
After the Effective Time of the Merger, Mr. William K. Lavin, Mr. Douglas
S. Friedenberg, Mr. Daniel W. Dowe and Mr. Edward J. Malloy will serve as the
officers and directors of Novex and shall hold the same offices as they
currently serve in the Company until their successors have been duly elected and
shall have qualified, or as otherwise provided in the certificate of
incorporation of Novex. The first annual meeting of the shareholders of Novex
after the Effective Time of the Merger shall be the annual meeting provided by
the bylaws of the Novex for the year 2000. If, on or after the Effective Time of
the Merger a vacancy shall, for any reason, exist in the board of directors or
in any of the offices of Novex, the vacancy shall be filled in the manner
provided in the certificate of incorporation of Novex or in its bylaws.
Merger Consideration
At the Effective Time and subject to the right of the Company's
shareholders to dissent and receive payment for all shares held by such
dissenting shareholders as described below, each publicly held share ("Publicly
Held Share") will be exchanged for one (1) share of Novex Common Stock as a
result of the merger.
Exchange of Company Stock Certificates
In order to receive the shares of Novex Common Stock to which they will be
entitled as a result of the Merger, holders of publicly held SAC shares
("Publicly Held Shares") will be required to surrender their stock certificates
after the Effective Time, together with a duly completed and executed letter of
transmittal to the Company or its designated agent (the "Exchange Agent"). Upon
receipt of such stock certificate and letter of transmittal from the
shareholders of such Publicly Held Shares, the Company or the Exchange Agent
will arrange for the issuance and delivery of a Novex Common Stock certificate
to the registered holder or his transferee for the number of shares of Novex
Common Stock that such person is entitled to receive as a result of the Merger.
Instructions with regard to the surrender of certificates together with a letter
of transmittal to be used for such purpose, will be mailed as promptly as
practicable after the Effective Time to holders of Publicly Held Shares. Holders
of Publicly Held Shares who wish to exercise their dissenters' rights must
submit their stock certificates in accordance with the instructions set forth in
Procedures for Exercising Dissenters' Rights set forth below. Holders of
Publicly Held Shares who are not electing to dissent should not submit their
stock certificates for exchange until such letter of transmittal and
instructions are received.
If any certificate for shares of Novex Common Stock is to be issued to a
person other than the person in whose name the certificate for shares of the
Publicly Held Shares surrendered in exchange therefor is registered, it shall be
a condition of such issuance that the stock certificate so surrendered
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shall be properly endorsed (with such signature guarantees as may be required by
the letter of transmittal) and otherwise in proper form for transfer and that
the person requesting such issuance shall pay any transfer or other taxes
required by reason of the issuance of certificates for shares of Novex Common
Stock to a person other than the registered holder of the Publicly Held Shares
surrendered or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable.
Until a certificate that previously represented Publicly Held Shares held
by a Company shareholder is actually surrendered for exchange and received by
the Exchange Agent, the holder thereof will not be entitled to vote or receive
any dividends or other distributions with respect to Novex Common Stock payable
to holders of record after the Effective Time. Subject to applicable law, upon
such surrender of stock certificates the previously represented Publicly Held
Shares held by Company shareholders, such dividends or other distributions will
be remitted (without interest) to the record holder of certificates for shares
of Novex Common Stock issued in exchange therefor. Any certificates for shares
of Novex Common Stock delivered or made available to the Exchange Agent and not
exchanged for Publicly Held Share certificates within six months after the
Effective Time will be returned by the Exchange Agent to Novex, which will
thereafter act as Exchange Agent subject to the rights of holders of
certificates for unsurrendered Publicly Held Shares. However, none of Novex, the
Company or the Exchange Agent will be liable to any holder of Publicly Held
Shares for any Novex Common Stock or dividends or distributions thereon or cash
delivered to a public official pursuant to applicable escheat, unclaimed
property or similar laws.
Treatment of Stock Options
Each option and warrant of the Company outstanding at the Effective Time
shall be converted into an equal number of options or warrants of Novex Systems
International, Inc. in a similar fashion as that set forth above with respect to
the common stock of the Company.
Conditions to Merger
In addition to the approval of shareholders of the Company at the Annual
Meeting, the obligations of Novex and the Company to effect the Merger are
subject to the satisfaction or, where permitted, waiver of certain other
conditions, including (i) consents, approvals and waivers from third parties
required to consummate the merger and (ii) the approval for listing on the NASD
bulletin board, subject to the official notice of issuance, of the shares of
Novex to be issued in the merger.
The Merger may be terminated and abandoned at any time prior to the
Effective Time, whether before or after the shareholder approval of the Merger
Agreement (i) by mutual consent of the Board of Directors of Novex and the
Company or (ii) subject to certain conditions if the Merger has not been
consummated on or before December 31, 1999.
Certain Regulatory Matters
The Company is subject to regulation under state and federal laws that
govern the sale of securities and the rules of certain self-regulatory
organizations. Certain notices are required pursuant to such regulation in
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connection with the Merger. Appropriate filings are being submitted and it is
anticipated, although there can be no assurance, that all such notices will be
effected prior to, or promptly following, the Effective Time.
Novex will file an application for listing of such shares with the NASDAQ
OTC Bulletin Board and it is anticipated that such approval will be obtained;
however, there can be no assurance that it will be obtained.
Expenses
All costs and expenses incurred in connection with the Merger will be paid
by the Company.
RIGHTS OF AND PROCEDURE FOR DISSENTING SHAREHOLDERS
Pursuant to Minnesota Business Corporations Law, shareholders of the
Company who are entitled to receive notice of and to vote on a merger
transaction such as the one proposed by the Board of Directors set forth in
Management Proposal I above, may exercise dissenters' rights to obtain payment
for their shares. In order to exercise those rights, a dissenting shareholder
must file with Stratford before the vote on the proposed merger takes place, a
written notice of the shareholder's intent to demand the fair value of the
shares owned and must not vote the shares in favor of the proposed action. Only
those shareholders and beneficial owners of common stock of the Company who were
shareholders and beneficial owners as of the record date are entitled to
exercise dissenters' rights.
Assuming the proposed merger is approved, the Company shall send to all
dissenting shareholders, who are entitled to dissent and who have given written
notice of their intent to demand payment for their shares, a notice advising
each dissenting shareholder of the address to which a demand for payment and
certificates may be sent and the date by which the demand and certificates must
be received by the Company in order to receive payment. The notice will also
advise of any restrictions that will apply on the transfer of uncertificated
shares after the demand for payment is received and will include a form to be
used to certify the date on which the shareholder or the beneficial owner
acquired the shares or an interest in them.
In order to receive the fair value of the shares, the dissenting
shareholder must, within 30 days of the Company's notice, demand payment and
deposit his/her certificated shares or comply with any restrictions on transfer
of uncertificated shares. After the Company receives a valid demand for payment
or after the merger takes effect, whichever is later, the Company shall remit to
each dissenting shareholder who has complied with the aforementioned notice and
demand requirements the amount the corporation estimates to be the fair value of
the shares, plus interest.
If the Company fails to remit payment within 60 days of the shareholder's
deposit of certificates or the imposition of transfer restrictions on
uncertificated shares, it shall return all deposited certificates and cancel all
transfer restrictions. However the Company may again give notice to all
dissenting shareholders who gave the corporation notice of their intent to
demand the fair value of their shares and require redeposit of shares or
restrict transfer at a later time.
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If a dissenter believes that the amount remitted is less than the fair
value of the shares plus interest, the dissenter may, within 30 days of
receiving such remittance, give written notice to the Company of the dissenter's
own estimate of the fair value of the shares, plus interest, demanding payment
of the difference.
If the Company receives a demand for supplemental payment, it shall, within
60 days after receiving the demand, either pay to the dissenter the amount
demanded or agreed to by the dissenter after discussion with the Company, or it
may file in court a petition requesting that the court determine the fair value
of the shares, plus interest. The petition shall name as parties all dissenters
who have demanded supplemental payment but who have not reached agreement with
the Company. The court shall determine whether the shareholder(s) in question
has fully complied with the procedures to exercise dissenters' rights pursuant
to Minnesota law and shall determine the fair value of the shares. The court's
determination shall be binding on all dissenting shareholders. A dissenter is
entitled to judgment in cash for the amount by which the fair value of the
shares as determined by the court, plus interest, exceeds the amount, if any,
already paid by the Company but shall not be liable to the Company for the
difference by which the amount already paid by the Company to the dissenter
exceeds the fair value of the shares as determined by the court, plus interest.
The court shall determine and assess the costs and expenses of a
supplemental demand proceeding against the Company, except that the court may
assess part or all of those costs and expenses again a dissenter whose action in
demanding supplemental payment is found to be arbitrary, vexatious, or not in
good faith.
The above is a brief description of a dissenting shareholders' rights
pursuant to Minnesota Business Corporations Law and is qualified in its entirety
by reference to the applicable statutes under Minnesota Business Corporations
Law, a copy of which is attached hereto as Appendix I and which is incorporated
by reference herein.
MANAGEMENT PROPOSAL III
RATIFICATION OF INDEPENDENT AUDITORS
The following resolution will be offered by the Board of Directors at the
meeting:
RESOLVED, that the appointment of Feldman Sherb & Erhlich P.C. by the
Board of Directors of the Corporation to conduct the annual audit of the
financial statements of Stratford Acquisition Corporation and its
subsidiary companies for the year ending May 31, 1999 is ratified,
confirmed and approved.
The Board of Directors Recommends a Vote FOR the adoption and approval of
the Foregoing Resolution for the following reasons:
The Board of Directors of the Company first appointed Feldman Sherb &
Ehrlich independent public accountants, as its auditors in 1997 and has
reappointed the firm as auditors in each succeeding year to date. In
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addition, Feldman Sherb & Ehrlich performed all of the auditing work relating to
the Company's acquisition of ARM PRO, Inc. in September 1998. As a result of
Feldman Sherb & Ehrlich's knowledge of Stratford's operations and its
reputation, the Board of Directors is convinced that the firm has the necessary
personnel, professional qualifications and independence to act as its auditors.
The Board has again selected Feldman Sherb & Ehrlich as its auditor for the
fiscal year ended May 31, 1999 and recommends that the shareholders ratify and
approve the selection.
In the event this resolution does not receive the necessary vote for
adoption, or if for any reason Feldman Sherb & Ehrlich ceases to act as auditors
of Stratford, the Board of Directors of Stratford will appoint other independent
public accountants as auditors.
A representative of Feldman Sherb & Ehrlich shall attend the Annual
Meeting. He will have the opportunity to make a statement if he desires and also
will be available to respond to appropriate questions from shareholders at the
meeting.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the year ended May
31, 1998 accompanies this Proxy Statement but does not constitute part of the
proxy solicitation material.
INDEPENDENT PUBLIC ACCOUNTANTS
Feldman Sherb & Ehrlich, P.C. has served as the Company's independent
public accountants during the fiscal year ended May 31, 1998, and the Board of
Directors of the Company has selected Feldman Sherb & Ehrlich as independent
public accountants for the Company for the fiscal year ended May 31, 1999. A
representative of Feldman Sherb & Ehrlich is expected to be present at the
Annual Meeting with the opportunity to make a statement if he desires to do so
and to respond to appropriate questions from shareholders.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
meeting other than those described above. If any other matter should properly
come before the meeting, or any adjournment thereof, it is intended that the
shares represented by proxies in the accompanying form will be voted by the
holders of the proxies in their discretion.
The Company will bear the cost of solicitation of proxies. In addition to
the use of the mails, proxies may be solicited by certain officers, directors,
and regular employees of the Company without extra compensation by telephone,
telegraph or personal interview. The Company will also request banking
institutions, brokerage firms, custodians, nominees, and fiduciaries to forward
solicitation materials to beneficial owners of common stock of the Company held
of record by such persons, and the Company will reimburse any forwarding
expenses.
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SHAREHOLDER PROPOSALS
If the Merger is not consummated, it is anticipated that the 2000 Annual
Meeting of shareholders of the Company will be held on or about April 28, 2000.
A proposal by a shareholder intended for inclusion in the Company's proxy
statement and form of proxy for the next Annual Meeting of shareholders must, in
accordance with applicable regulations of the Securities and Exchange
Commission, be received by the Company at 67 Wall Street, Suite 2001, New York,
New York 10005, on or before December 31, 1999, in order to be eligible for
inclusion in the proxy materials for such meeting.
By Order of the Board of Directors,
-----------------------------------
William K. Lavin, Secretary
New York, New York
March 15, 1999
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APPENDIX I TO PROXY STATEMENT
302A.471 Rights of dissenting shareholders.
Subdivision 1. Actions creating rights. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares
in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption of
the shares, including a provision respecting a sinking fund for the
redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares to
acquire shares, securities other than shares, or rights to purchase shares
or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter, or
to cumulate votes, except as the right may be excluded or limited through
the authorization or issuance of securities of an existing or new class or
series with similar or different voting rights; except that an amendment to
the articles of an issuing public corporation that provides that section
302A.671 does not apply to a control share acquisition does not give rise
to the right to obtain payment under this section;
(b) A sale, lease, transfer, or other disposition of all or substantially all of
the property and assets of the corporation, but not including a transaction
permitted without shareholder approval in section 302A.661, subdivision 1, or a
disposition in dissolution described in section 302A.725, subdivision 2, or a
disposition pursuant to an order of a court, or a disposition for cash on terms
requiring that all or substantially all of the net proceeds of disposition be
distributed to the shareholders in accordance with their respective interests
within one year after the date of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B, to which
the corporation is a party, except as provided in subdivision 3;
(d) A plan of exchange, whether under this chapter or under chapter 322B, to
which the corporation is a party as the corporation whose shares will be
acquired by the acquiring corporation, if the shares of the shareholder are
entitled to be voted on the plan; or
(e) Any other corporate action taken pursuant to a shareholder vote with respect
to which the articles, the bylaws, or a resolution approved by the board directs
that dissenting shareholders may obtain payment for their shares.
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Subdivision 2. Beneficial owners.
(a) A shareholder shall not assert dissenters' rights as to less than all of the
shares registered in the name of the shareholder, unless the shareholder
dissents with respect to all the shares that are beneficially owned by another
person but registered in the name of the shareholder and discloses the name and
address of each beneficial owner on whose behalf the shareholder dissents. In
that event, the rights of the dissenter shall be determined as if the shares as
to which the shareholder has dissented and the other shares were registered in
the names of different shareholders.
(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the terms of this
section and section 302A.473, if the beneficial owner submits to the corporation
at the time of or before the assertion of the rights a written consent of the
shareholder.
Subdivision 3. Rights not to apply.
(a) Unless the articles, the bylaws, or a resolution approved by the board
otherwise provide, the right to obtain payment under this section does not apply
to a shareholder of the surviving corporation in a merger, if the shares of the
shareholder are not entitled to be voted on the merger.
(b) If a date is fixed according to section 302A.445, subdivision 1, for the
determination of shareholders entitled to receive notice of an to vote on an
action described in subdivision 1, only shareholders as of the date fixed, and
beneficial owners as of the date fixed who hold through shareholders, as
provided in subdivision 2, may exercise dissenters' rights.
Subdivision 4. Other rights. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or
rescinded, except when the corporate action is fraudulent with regard to the
complaining shareholder or the corporation.
302A.473 Procedures for asserting dissenters' rights.
Subdivision 1. Definitions.
(a) For purposes of this section, the terms defined in this subdivision have the
meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action referred to in section 302A.471, subdivision 1 or the successor
by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a corporation
immediately before the effective date of the corporate action referred to in
section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective date of
the corporate action referred to in section 302A.471, subdivision 1, up to
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and including the date of payment , calculated at the rate provided in section
549.09 for interest on verdicts and judgments.
Subdivision 2. Notice of action. If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
Subdivision 3. Notice of dissent. If the proposed action must be approved by the
shareholders, a shareholder who is entitled to dissent under section 302A.471
and who wishes to exercise dissenters' rights must file with the corporation
before the vote on the proposed action a written notice of intent to demand the
fair value of the shares owned by the shareholder and must not vote the shares
in favor of the proposed action.
Subdivision 4. Notice of procedure; deposit of shares.
(a) After the proposed action has been approved by the board and, if necessary,
the shareholders, the corporation shall send to all shareholders who have
complied with subdivision 3 and to all shareholders entitled to dissent, if no
shareholder vote was required, a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares may be sent in order to obtain payment and the date by
which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will apply
after the demand for payment is received;
(3) A form to be used to certify the date on which the shareholder, or the
beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and a demand payment; and
(4) A copy of section 302A.471 and this section and a brief description of
the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting shareholder
must demand payment and deposit certificated shares or comply with any
restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all other
rights of a shareholder until the proposed action takes effect.
Subdivision 5. Payment; return of shares.
(a) After the corporate action takes effect, or after the corporation receives a
valid demand for payment, whichever is later, the corporation shall remit to
each dissenting shareholder who has complied with subdivisions 3 and 4 the
amount the corporation estimates to be the fair value of the shares, plus
interest, accompanied by:
(1) the corporation's closing balance sheet and statement of income for a
fiscal year ending not more than 16 months before the effective date of the
corporate action, together with the latest available interim financial
statements;
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(2) an estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and
(3) a copy of section 302A.471 and this section, and a brief description of
the procedure to be followed in demand supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a) from
a person who was not a shareholder on the date the action dissented from was
first announced o the public or who is dissenting on behalf of a person who was
not a beneficial owner on that date. If the dissenter has complied with
subdivisions 3 and 4, the corporation shall forward to the dissenter the
materials described in paragraph (a), a statement of the reason for withholding
the remittance, and an offer to pay to the dissenter the amount listed in the
materials if the dissenter agrees to accept that amount in full satisfaction.
The dissenter may decline the offer and demand payment under subdivision 6.
Failure to do so entitles the dissenter only to the amount offered. If the
dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the deposit of
certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under subdivision 4
and require deposit or restrict transfer at a later time.
Subdivision 6. Supplemental payment; demand. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
Subdivisions 7. Petition; determination. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in court a petition requesting that the
court determine the fair value of the shares, plus interest. The petition shall
be filed in the county in which the registered office of the corporation is
located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the court in this state in which the last registered office of the
constituent corporation was located. The petition shall name as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedure apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the
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shares, taking into account any and all factors the court finds relevant,
computed by any method or combination of methods that the court, in its
discretion, sees fit to use, whether or not used by the corporation or by a
dissenter The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any remitted under subdivision 5, but
shall not be liable to the corporation for the amount, if any by which the
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.
Subdivision 8. Costs; fees; expenses.
(a) The court shall determine the costs and expenses of a proceeding under
subdivision 7, including the reasonable expenses and compensation of any
appraisers appointed by the court, and shall assess those costs and expenses
against the corporation, except that the court may assess part or all of those
costs and expenses again a dissenter whose action in demanding payment under
subdivision 6 is found to be arbitrary, vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply substantially
with this section, the court may assess all fees and expenses of any experts or
attorneys as the court deems equitable. these fees and expenses may also be
assessed against a person who has acted arbitrarily, vexatiously, or not in good
faith in bringing the proceeding, and may be awarded to a party injured by those
actions.
(c) The court may award, in its discretion, fees and expenses to an attorney for
the dissenters out of the amount awarded to the dissenters, if any.
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P R O X Y
ANNUAL MEETING OF SHAREHOLDERS OF
STRATFORD ACQUISITION CORPORATION
APRIL 29, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
STRATFORD ACQUISITION CORPORATION PURSUANT TO
THE PROVISIONS OF MINNESOTA BUSINESS CORPORATION LAWS
The undersigned shareholder of Stratford Acquisition Corporation, having
received the Notice dated March 15, 1999 of the Annual Meeting of Shareholders
("Annual Meeting") and the Proxy Statement dated March 15, 1999 hereby
nominates, constitutes, appoints and authorizes Daniel W. Dowe, William K.
Lavin, and Douglas S. Friedenberg and each of them, attorney of the undersigned
with power of substitution, as proxy for me and in my name, place and stead, to
vote all the Common Shares of said corporation standing in my name on its books
on March 1, 1999 (the "Record Date"), at the Annual Meeting to be held at 9:30
a.m. (EST) at 1 West 54th Street, New York, New York 10005 or at any
adjournments thereof, with all the powers the undersigned would possess if
personally present, as follows:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
PURSUANT TO THE PROVISIONS OF THE MINNESOTA BUSINESS CORPORATION LAW. A Vote FOR
Proposals I, II and III are recommended. When properly executed, this proxy will
be voted in the manner directed by the undersigned shareholder. If no direction
is specified, this proxy will be voted FOR Proposals I, II and III.
The above-named Attorneys and Proxies are instructed to vote all the
undersigned's shares as follows:
I. THE ELECTION OF DIRECTORS:
Nominees
Daniel W. Dowe William K. Lavin
Douglas S. Friedenberg Edward J. Malloy
The Board of Directors Recommends a Vote FOR the Nominees Listed Above.
___ FOR the Election of All Nominees Listed Above.
(except as marked to the Contrary Above*)
___ Withhold Authority to Vote for All Nominees Listed Above.
*(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME ABOVE).
<PAGE>
II. THE PROPOSED MERGER WITH NOVEX SYSTEMS INTERNATIONAL, INC.
To consider and approve Management's resolution as set forth in Management
Proposal II of the Proxy Statement dated March 15, 1999 to merge the
Company into its wholly-owned subsidiary, Novex Systems International, Inc.
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
III. RATIFICATION OF INDEPENDENT AUDITORS
To consider and approve Management's resolution as set forth in Management
Proposal III of the Proxy Statement dated March 15, 1999 to approve and
ratify the appointment of Feldman Sherb & Ehrlich as the Company's
independent auditors.
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE NOMINEES LISTED IN PROPOSAL I AND FOR PROPOSALS II AND III. IF ANY OTHER
BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY SHALL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.
THIS PROXY MAY BE REVOKED BY WRITING TO STRATFORD ACQUISITION CORPORATION, C/O
KAREN MALSBENDEN, 67 WALL STREET, SUITE 2001, NEW YORK, NEW YORK 10005.
FACSIMILES WILL BE ACCEPTED AT 212-825-0354 OR IN PERSON AT THE ANNUAL MEETING
BEFORE THE TAKING OF THE VOTE.
Dated this ____ day of _________________, 1999.
Signature(s) of Shareholder(s)
Please print name(s)
Street Address
City, State, Zip
Please complete, date and sign exactly as your name(s) appear on your stock
certificate. Joint owners should each sign personally. Executors,
administrators, trustees, guardians and others signing in a representative
capacity should indicate the capacity in which they sign. For shares held by a
corporation, please affix its corporate seal.
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<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY TO THE COMPANY AT:
STRATFORD ACQUISITION CORPORATION
67 WALL STREET, SUITE 2001
NEW YORK, NEW YORK 10005
PROMPTLY USING THE ENCLOSED ENVELOPE.
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