SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant { X }
Filed by a Party other than the Registrant { }
Check the appropriate box:
{X} Preliminary Proxy Statement { } CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
{ } Definitive Proxy Statement
{ } Definitive Additional Materials
{ } Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
STRATFORD ACQUISITION CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
{X} No fee required.
{ } Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11
(1) Title of each class of securities to which transaction
applies: ....
(2) Aggregate number of securities to which transaction applies:
............................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined): ........................................
(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.: ..............
(3) Filing Party: ..............................................
(4) Date Filed: ................................................
<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.
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
<PAGE>
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. A proposal to adopt a provision in the Company's Articles of
Incorporation to change the Company's name from Stratford Acquisition
Corp. to Novex Systems International, Inc.
3. Various proposals to adopt provisions in the Company's Articles of
Incorporation which would, if adopted:
(A) authorize the Board of Directors to issue preferred stock;
(B) authorize the Board of Directors or 75% of the outstanding shares
to amend the By-Laws of the Company;
(C) authorize the Chairman of the Board or the Secretary within 10
days of receipt of a written request from a majority of the Board
of Directors to call a special meeting of shareholders;
(D) authorize the Board of Directors to increase to no more than
twelve or decrease to no less than three the number of directors
of the Company and to establish a classified board of directors;
(E) permit 75% of the outstanding shares to remove a director for
cause only and only at an annual or special meeting of
shareholders called for that purpose;
(F) authorize the Company to limit the personal liability of
directors to the maximum extent permitted by law;
(G) authorize the Company to indemnify the officers, directors,
employees and agents of the Company to the maximum extent
permitted by law; and
(H) require the affirmative vote of 75% of all outstanding shares to
make, amend or repeal any provision in the Articles of
Incorporation relating to any of the foregoing proposed
resolutions which are adopted at this meeting;
<PAGE>
4. A proposal to redomesticate the Company from the State of Minnesota to
the State of New York by way of a merger with a newly-formed
wholly-owned subsidiary, Novex Systems International, Inc. and to
amend the Certificate of Incorporation of same to reflect the same
amendments to the existing Articles of Incorporation of the Company
which are adopted by the shareholders at this Annual Meeting; and
5. A proposal to ratify 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
1
<PAGE>
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 proposals to amend the company's Articles
of Incorporation and to approve the redomestication of the Company in the State
of New York by way of merger with the Company's newly-formed New York
subsidiary.
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,
2
<PAGE>
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).
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.
3
<PAGE>
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.
4
<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.
5
<PAGE>
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
6
<PAGE>
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
7
<PAGE>
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
CHANGE OF THE COMPANY'S NAME TO
NOVEX SYSTEMS INTERNATIONAL, INC.
The following resolution will be offered by the Board of Directors at the
meeting:
RESOLVED, that the Articles of Incorporation of the corporation be,
and the same hereby are, amended to change the name of the corporation to
"Novex Systems International, Inc."
The Board of Directors Recommends a Vote FOR the adoption and approval of
the Foregoing Resolutions for the following reasons:
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.
MANAGEMENT PROPOSAL III
AMENDMENTS TO ARTICLES OF INCORPORATION
The following resolutions to amend the Company's Articles of Incorporation
will be offered by the Board of Directors at the meeting:
8
<PAGE>
A. Authority to Issue Preferred Stock
RESOLVED, that the Company's Articles of Incorporation be amended to
provide as follows:
Section 1. Authorized Capital Stock. The Company is authorized to
issue two classes of capital stock, designated Common Stock and
Preferred Stock. The total number of shares of capital stock that the
Company is authorized to issue is 50,000,000 shares, consisting of
40,000,000 shares of Common Stock, per value $.001 per share and
10,000,000 shares of Preferred Stock, par value $.001 per share.
Section 2. Preferred Stock. The Preferred Stock may be issued in one
or more series. The Board of Directors of the Company (the "Board") is
hereby authorized to issue the shares of Preferred Stock, without
additional stockholder approval, in such series and to fix from time
to time before issuance the number of shares to be included in any
such series and the designation, relative powers, preferences, and
rights and qualifications, limitations, or restrictions of all shares
of such series. The authority of the Board with respect to each such
series will include, without limiting the generality of the foregoing,
the determination of any and or all of the following:
(a) the number of shares of any series and the designation to
distinguish the shares of such series from the shares of all other
series;
(b) the voting powers, if any, and whether such voting powers are
full or limited in such series;
(c) the redemption provisions, if any applicable to such series,
including the redemption price or prices to be paid;
(d) whether dividends, if any, will be cumulative or
noncumulative, the dividend rate of such series, and the dates and
preferences of dividends on such series;
(e) the rights of such series upon the voluntary or involuntary
dissolution of, or upon any distribution of the assets of, the
Company;
(f) the provisions, if any, pursuant to which the shares of such
series are convertible into, or exchangeable for, shares of any other
class or classes or of any other series of the same or any other class
or classes of stock, or any other security, of the Company or any
other corporation or other entity, and the price or prices or the
rates of exchange applicable thereto;
9
<PAGE>
(g) the right, if any, to subscribe for or to purchase any
securities of the Company or any other corporation or other entity;
(h) the provisions, if any, of a sinking fund applicable to such
series; and
(i) any other relative, participating, optional or other special
powers, preferences, rights, qualifications, limitations, or
restrictions thereof all as may be determined from time to time by the
Board and stated in the resolution or resolutions providing for the
issuance of such Preferred Stock (collectively, a "Preferred Stock
Designation").
Section 3. Common Stock. The holders of Common Stock will be entitled
to one vote on each matter submitted to a vote at a meeting of
stockholders for each share of Common Stock held of record by such
holder as of the record date for such meeting.
The Board of Directors Recommends a Vote FOR the adoption and approval of
the Foregoing Resolution for the following reasons:
The existing Articles of Incorporation do not provide for the issuance of
Preferred Stock. In certain instances relating to the Company's ability to
finance its operations or to complete complex acquisitions, it may be beneficial
and perhaps necessary for the timely completion of such financing for the Board
of Directors to have the ability to issue Preferred Stock. For this reason,
Management proposes that the above amendment to the Company's Articles of
Incorporation be adopted so as to authorize the Board of Directors to issue such
stock when it is deemed to be in the best interest of the Company and its
shareholders to do so.
B. Amendment to By-Laws
RESOLVED, that the Company's Articles of Incorporation be amended to
provide as follows:
The Board may make, amend, and repeal the By-Laws of the Company. Any
By-Law made by the Board under the powers conferred hereby may be
amended or repealed by the Board or by the stockholders in the manner
provided in the By-Laws of the Company. The By-Laws may only be
adopted, amended or repealed by the stockholders by the affirmative
vote of at least 75% of the votes of the shares at the time entitled
to vote in the election of any Directors, voting together as a single
class. The Company may in its By-Laws confer powers upon the Board in
addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board by applicable law.
10
<PAGE>
C. Special Meetings of Shareholders
RESOLVED, that the Company's Articles of Incorporation be amended to
provide as follows:
Subject to the rights of the holders of any series of Preferred Stock:
(a) any action required or permitted to be taken by the
stockholders of the Company must be effected at a duly called annual
or special meeting of stockholders of the Company or by unanimous
consent in writing, as provided by the applicable state corporation
law; and
(b) special meetings of stockholders of the Company may be called
only by (i) the Chairman of the Board (the "Chairman") or (ii) the
Secretary of the Company (the "Secretary") 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
(the "Whole Board"), or as required pursuant to relevant provisions of
the applicable state corporations law.
At any annual meeting or special meeting of stockholders of the
Company, only such business will be conducted or considered as has
been brought before such meeting in the manner provided in the Bylaws
of the Company. Notwithstanding anything contained in these Articles
of Incorporation to the contrary, in order to repeal, adopt, or amend
any provision of this Article requires the affirmative vote of at
least 75% of the votes of the shares at the time entitled to vote in
the election of any Directors, voting together as a single class.
D. Number, Election and Terms of Directors
RESOLVED, that the Company's Articles of Incorporation be amended to
provide as follows:
Section 1. Number, Election and Terms of Directors. Subject to the
rights, if any of the holders of any series of Preferred Stock to
elect additional Directors under circumstances specified in a
Preferred Stock Designation, the number of the Directors of the
Company may be increased or decreased from time to time in the manner
described in the By-Laws of the Company, but shall never be less than
three nor more than twelve. The Directors, other than those who may be
elected by the holders of any series of Preferred Stock, will be
classified with respect to the time for which they severally hold
office into three classes, as nearly equal in number as possible,
designated Class 1, Class 2, and Class 3. The Directors first
appointed to Class 1 will hold office for a term expiring at the
annual meeting of
11
<PAGE>
stockholders to be held in 2000; the Directors first appointed to
Class 2 will hold office for a term expiring at the annual meeting of
stockholders to be held in 2001; and the Directors first appointed to
Class 3 will hold office for a term expiring at the annual meeting of
stockholders to be held in 2002, with the members of each class to
hold office until their successors are elected and qualified. At each
succeeding annual meeting of the stockholders of the Company, the
successors of the class of Directors whose terms expire at that
meeting will be elected by a plurality vote of all votes cast at such
meeting to hold office for a term expiring at the end of the period
designated for that class in which the Director shall be elected.
Election of Directors of the Company need not be by written ballot
unless requested by the Chairman or by the holders of a majority of
the Voting Stock present in person or represented by proxy at a
meeting of the stockholders at which Directors are to be elected.
Section 2. Nomination of Directors. Advance notice of stockholder
nominations for the election of Directors must be given in the manner
provided in the By-Laws of the Company.
Section 3. Creation of New Directors. The Board of Directors may
create new Directorships from time to time at their discretion,
without additional stockholder approval.
Section 4. Newly Created Directorships and Vacancies. Subject to the
rights, if any, of the holders of any series of Preferred Stock to
elect additional Directors under circumstances specified in a
Preferred Stock Designation, newly created directorships resulting
from any increase in the number of Directors and any vacancies on the
Board resulting from death, resignation, disqualification, removal, or
other cause will be filled solely by the affirmative vote of a
majority of the remaining Directors then in office, even though less
than a quorum of the Board, or by a sole remaining Director. Any
director elected in accordance with the preceding sentence will hold
office for the remainder of the full term of the class of Directors in
which the new directorship was created or the vacancy occurred and
until such Director's successor has been duly elected and qualified.
No decrease in the number of Directors constituting the Board may
shorten the term of any incumbent Director.
Section 5. Amendment, Repeal, Etc. Notwithstanding anything contained
in these Articles of Incorporation to the Contrary, the affirmative
vote of at least 75% of the votes of the shares at the time entitled
to vote in the election of any Directors, voting together as a single
class, is required to amend, adopt or repeal any provision
inconsistent with this Article.
12
<PAGE>
The Board of Directors Recommends a Vote FOR the adoption and approval
of each of the Foregoing Resolutions for the following reasons:
It is Management's belief that the Company's current certificate of
incorporation does not adequately protect the Company 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.
For example, the Company's existing Articles of Incorporation do not
contain a provision specifying the vote needed for shareholders to amend
the By-Laws or the Articles of Incorporation of the Corporation.
Accordingly, only a simple majority vote is required by the Minnesota
Business Corporations Law to amend the Company's By-Laws Certificate of
Incorporation. Management believes that any amendments to the Company's
By-Laws and Articles of Incorporation relating to its corporate governance
should only be made with the interest of at least 75% of all shareholders
versus a simple majority.
Under the proposed amendments, the alteration, amendment or repeal of,
or adoption of any provision inconsistent with the provisions of the
Articles of Incorporation relating to the calling of special shareholder
meetings, the classified board of directors, the removal of directors, and
amendments to the Company's By-Laws 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.
Furthermore, 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 By-Laws 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. 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. The proposed
amendment 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.
Therefore, if adopted, and the Company remains incorporated in Minnesota,
this resolution would expand on a limited basis those persons who are
eligible to call a shareholders meeting. Alternatively, if this provision
is adopted and the shareholders approve the merger of the Company with its
wholly-owned subsidiary, Novex Systems International, Inc., this provision
would be reflected in the Certificate of Incorporation of Novex and, thus,
would serve to protect
13
<PAGE>
the interest of all shareholders by eliminating the ability of a person
owning only 25% of the Company's stock to call a special shareholders
meeting for the purpose of effecting substantial changes in the corporate
governance, operations or future plans of the company.
In addition, 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. The proposed amendment
provides for the Board of Directors to be divided into three classes, with
the term of one such class expiring each year. The board of directors
believes that a classified or "staggered" board, where approximately
one-third of the directors are elected annually, is in the best interests
of the Corporation and its shareholders. This system helps provide
continuity and stability of Stratford's management and policies because a
majority of the directors at any one time will have prior experience as
directors of Stratford and in-depth knowledge of the Company. This system
permits directors to effectively represent the interests of all
shareholders in a variety of circumstances, including those created by a
minority shareholder.
In summary, management believes that the proposed amendments 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. For this reason, Management proposes
that the above amendments to the Company's Articles of Incorporation be
adopted so as to protect the Company against unsolicited offers for the
Company's common stock that may not reflect the fair value of the company's
common stock. With these provisions in place, 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 the Company.
E. Removal of Directors
RESOLVED, that the Company's Articles of Incorporation be amended to
provide as follows:
Section 6. Removal. Subject to the rights, if any, of the holders of
any series of Preferred Stock to elect additional Directors under
circumstances specified in a Preferred Stock Designation, any Director
may be removed from office by the stockholders only for cause and only
in the manner provided in this Section 6. At any annual meeting or
special meeting of stockholders, the notice of which states that the
removal of a Director or Directors is among the purposes of the
meeting, the affirmative vote of at least 75% of the votes of the
shares at the time entitled to vote in the election of any Directors,
voting together as a single class, may remove such Director or
Directors for cause. Except as may be provided by applicable law,
cause for removal will be deemed to exist only if the Director whose
removal is proposed has been adjudged by a court of competent
jurisdiction to be liable to the Company or its stockholders for
misconduct as a result of (a) a breach of such Director's duty of
loyalty to the Company, (b) any act or
14
<PAGE>
omission by such Director not in good faith or which involves a knowing
violation of law, or (c) any transaction from which such Director derived
an improper personal benefit, and such adjudication is no longer subject to
direct appeal.
The Board of Directors Recommends a Vote FOR the adoption and approval
of each of the Foregoing Resolutions for the following reasons:
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. Under the New York Business Corporations
Law, unless the certificate of incorporation provides otherwise, directors
of a corporation 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 either Minnesota or 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. The proposed amendment
provides for removal for cause only and defines the term therein. Once
again, such a provision would make an unsolicited takeover more difficult
in that a potential purchaser having only a short-term financial interest
in controlling the company may be deterred if unable to obtain immediate
control of the company's decision-making powers.
F. Personal Liability of Directors
RESOLVED, that the Company's Articles of Incorporation be amended to
provide as follows:
To the fullest extent permitted by applicable state law currently or
hereafter in effect, no Director of the Company will be personally
liable to the Company or its stockholders for or with respect to any
acts or omissions in the performance of his or her duties as a
Director of the Company. Any repeal or modification of this Article
will not adversely affect any right or protection of a Director of the
Company existing prior to such repeal or modification.
Section 1. Amendment, Repeal, Etc. Notwithstanding anything contained
in these Articles of Incorporation to the contrary, the affirmative
vote of at least 75% of the votes of the shares at the time entitled
to vote in the election of any Directors, voting together as a single
class, is required to amend, adopt, or repeal any provision
inconsistent with this Article.
G. Indemnification of Officers, Directors, Employees and Agents
RESOLVED, that the Company's Articles of Incorporation be amended to
provide as follows:
15
<PAGE>
Each person who is or was or had agreed to become a Director or
officer of the Company, and each such person who is or was
serving or who had agreed to serve at the request of the Board or
an officer of the Company as an employee or agent of the Company
or as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other entity,
whether for profit or not for profit (including the heirs,
executors, administrator, or estate of such person) will be
indemnified by the Company to the full extent permitted by the
applicable state law as currently or hereafter in effect. The
right of indemnification provided in this Article will not be
exclusive of any other rights to which any person seeking
indemnification may otherwise be entitled, including without
limitation pursuant to any contract approved by a majority of the
whole Board (whether or not the Directors approving such contract
are or are to be parties to such contract or similar contracts),
and will be applicable to matters otherwise was its scope whether
or not such matters arose or arise before or after the adoption
of this Article. Without limiting the generality of the effect of
the foregoing, the Company may adopt By-Laws or enter into one or
more agreements with any person, which provide for
indemnification greater or different than that provided in this
Article or the applicable law as currently or hereafter in effect
from time to time. Notwithstanding anything contained in these
Articles of Incorporation to the contrary, the amendment or
repeal of, or adoption of any provisions inconsistent with this
Article requires the affirmative vote of at least 75% of the
votes of the shares at the time entitled to vote in the election
of any Directors, voting together as a single class. Any
amendment or repeal of, or adoption of any provision inconsistent
with, this Article will not adversely affect any right or
protection existing hereunder prior to such amendment, repeal or
adoption.
The Board of Directors Recommends a Vote FOR the adoption and approval
of each of the Foregoing Resolutions for the following reasons:
The board of directors believes that these amendments to the Articles
of Incorporation provide a reasonable contingent benefit which serves the
best interest of shareholders and are an appropriate element of sound
corporate governance. The indemnification provision encourages responsible
persons to agree to serve as directors of the Company, innocent directors
to resist unjust charges, and discourages groundless shareholder litigation
which, in the event of an unsolicited takeover, could be instituted with
the sole objective of forcing management to resign.
Management further believes that these provisions do not affect the
legal responsibility of executive officers and directors to the
shareholders with respect to discharging their duties and responsibilities.
They are designed to ensure that management perform its duties in
accordance with what they deem to be in the best interest
16
<PAGE>
of the Company and its shareholders without undue concern for personal
financial loss or other personal uncertainties, while still limiting the
Company's ability to indemnify or limit liability with respect to those
wrongful acts or omissions which would otherwise violate public policy.
MANAGEMENT PROPOSAL IV
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 whatever amendments to the Articles of Incorporation of
Stratford Acquisition Corporation are adopted by the Shareholders of the
Company at the Annual Meeting of Shareholders scheduled to be held on April
29, 1999, or at any adjournment thereof, be and the same are hereby adopted
and shall be reflected in the Certificate of Incorporation of 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:
The Board of Directors 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 for several reasons. First, the Company moved its principal executive
offices out of Mississauga, Ontario, to New York City a couple of years ago and,
therefore, much of its business is conducted in the State of New York. Indeed,
the Company received a negative ruling on procedural grounds from a federal
court in Minnesota which determined that the company had nominal operations in
Minnesota diminished the availability of legal jurisdiction in that state,
notwithstanding that the company was organized in
17
<PAGE>
Minnesota and several shareholders reside in Minnesota. Secondly, management
believes that New York corporate law is more comprehensive and more favorable to
the governance of public companies. 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 as well as closer access to
its local New York-based counsel and auditors.
The Company proposes that this redomestication 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 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. In essence, the proposed
merger will be a paper transaction only resulting in the Company being
"redomesticated" in the State of New York under a new Certificate of
Incorporation and having new by-laws.
Furthermore, any amendments to the Articles of Incorporation of Stratford
Acquisition Corporation set forth above in Management's Proposals III(A) through
III(G) above, shall be reflected in the Certificate of Incorporation of Novex
Systems International, Inc., or any amendment thereto, to ensure that the
interests of the shareholders are equally protected under Novex Systems
International, Inc. as well.
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.
18
<PAGE>
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.
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. 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
19
<PAGE>
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 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.
20
<PAGE>
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
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
21
<PAGE>
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.
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 V
RATIFICATION OF INDEPENDENT AUDITORS
The following resolution will be offered by the Board of Directors at the
meeting:
22
<PAGE>
RESOLVED, that the appointment of Feldman Sherb Erhlich & Co. 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
& Co., P.C., independent public accountants, as its auditors in 1997 and has
reappointed the firm as auditors in each succeeding year to date. In addition,
Feldman Sherb Ehrlich & Co., P.C. 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 & Co., P.C. 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 & Co., P.C. 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 & Co., P.C. 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.
23
<PAGE>
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.
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
24
<PAGE>
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.
1
<PAGE>
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
2
<PAGE>
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;
3
<PAGE>
(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
4
<PAGE>
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.
5
<PAGE>
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, III(A)-(G), IV and V 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,
III(A)-(G), IV and V.
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 CHANGE OF THE COMPANY'S NAME
To consider and approve Management's resolution as set forth in Management
Proposal II of the Proxy Statement dated March 15, 1999 to change the name
of the Company from Stratford Acquisition Corp. to Novex Systems
International, Inc.
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
III. THE PROPOSALS TO ADOPT VARIOUS PROVISIONS IN THE COMPANY'S ARTICLES OF
INCORPORATION:
A. Proposal Re Issuance of Preferred Stock
To consider and approve Management's resolution as more specifically
set forth in Management Proposal III(A) of the Proxy Statement dated
March 15, 1999 to adopt provisions in the Company's Articles of
Incorporation which authorizes the Company to issue two classes of
capital stock, Common and Preferred, in denominations which do not
exceed in the aggregate 40,000,000 Common and 10,000,000 Preferred and
under such terms and conditions as the Board of Directors may
determine from time to time.
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
B. Proposal Re Amendment to By-Laws
To consider and approve Management's resolution as more specifically
set forth in Management Proposal III(B) of the Proxy Statement dated
March 15, 1999 to adopt provisions in the Company's Articles of
Incorporation which authorizes the Board of Directors to amend or
repeal any provision of the By-Laws of the Company and which requires
at least 75% of the votes of the shares at the time entitled to vote
in the election of any Directors in order to amend any provision of
the Company's By-Laws.
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
C. Proposal Re Special Meetings of Shareholders
To consider and approve Management's resolution as more specifically
set forth in Management Proposal III(C) of the Proxy Statement dated
March 15, 1999 to adopt provisions in the Company's Articles of
Incorporation requiring that any shareholder action be taken at a duly
called annual or special meeting of
2
<PAGE>
shareholders or by unanimous written consent; providing that a special
meeting of shareholders may be called only by (I) the Chairman of the
Board or (ii) by the Secretary of the Company within 10 calendar days
after receipt of a written request from the majority of the total
number of directors which the company would have if there were no
vacancies; and requiring the affirmative vote of at least 75% of the
votes of shares entitled to vote in the election of any Directors in
order to repeal, adopt or amend any provision in the Article of
Incorporation relating to how action may be taken by shareholders and
who may call a meeting of shareholders.
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
D. Proposal Re Number, Election and Terms of Directors
To consider and approve Management's resolution as more specifically
set forth in Management Proposal III(D) of the Proxy Statement dated
March 15, 1999 to adopt provisions in the Company's Articles of
Incorporation authorizing the Board of Directors to increase or
decrease the number of directors to no less than three and no more
than twelve, to create new Directorships, and to fill Director
vacancies; authorizing the classification of directors into three
classes, with each class of directors initially to hold office for
one, two and three years, respectively; authorizing the election of
Directors without written ballot unless requested by the Chairman or
by the holders of a majority of the voting stock present; requiring
that advance notice of stockholder nominations for the election of
directors; and requiring the affirmative vote of at least 75% of the
shares entitled to vote in the election of any Directors in order to
repeal, adopt or amend any provision in the Article of Incorporation
relating to the number, classification, nomination or election of
directors, the classification of directors, or the creation of new
directorships.
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
E. Proposal Re Shareholder Removal of Directors
To consider and approve Management's resolution as more specifically
set forth in Management Proposal III(E) of the Proxy Statement dated
March 15, 1999 to adopt a provision in the Company's Articles of
Incorporation authorizing the shareholders to remove any director for
cause only; defining the phrase "cause for removal"; requiring that
the removal of any director(s) by the shareholders be conducted at an
annual meeting or special meeting of shareholders noticed for that
purpose; and requiring the affirmative vote of at least 75% of the
shares entitled to vote in
3
<PAGE>
the election of any Directors in order to repeal, adopt or amend any
provision in the Article of Incorporation relating to the removal of
directors by shareholders and the definition of "cause for removal".
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
F. Proposal Re Limiting Personal Liability of Directors
To consider and approve Management's resolution as more specifically
set forth in Management Proposal III(F) of the Proxy Statement dated
March 15, 1999 to adopt a provision in the Company's Articles of
Incorporation limiting the personal liability of directors to the
Company or its shareholders to the fullest extent permitted by
applicable law and requiring the affirmative vote of at least 75% of
the votes of shares entitled to vote in the election of any Directors
in order to repeal, adopt or amend any provision in the Articles of
Incorporation relating to liability of directors to the Company or its
shareholders.
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
G. Proposal Re Indemnification of Officers, Directors, Employees and
Agents
To consider and approve Management's resolution as more specifically
set forth in Management Proposal III(G) of the Proxy Statement dated
March 15, 1999 to adopt provisions in the Company's Articles of
Incorporation authorizing the Company to indemnify directors,
officers, employees or agents of the Company; to enter into agreements
which provide for indemnification greater than or different from that
provided in the Certificate of Incorporation or applicable law;
requiring the affirmative vote of at least 75% of the votes of shares
entitled to vote in the election of any Directors in order to repeal,
adopt or amend any provision in the Articles of Incorporation relating
to the indemnification of the Company's directors, officers, agents or
employees; and providing that any amendment or repeal or adoption of
any provision which is inconsistent with any preceding provision
relating to the indemnification of officers, directors, employees or
agents, shall not adversely affect any right or protection existing
under such provision prior to such amendment, repeal or adoption.
FOR ___ AGAINST ___ ABSTAIN ___
The Board of Directors Recommends a Vote FOR the Foregoing Proposal.
4
<PAGE>
IV. THE PROPOSED MERGER WITH NOVEX SYSTEMS INTERNATIONAL, INC.
To consider and approve Management's resolution as set forth in Management
Proposal III of the Proxy Statement dated March 15, 1999 to redomesticate
the Company from the State of Minnesota to the State of New York by way of
a merger of 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.
V. PROPOSED RATIFICATION OF INDEPENDENT AUDITORS
To consider and approve Management's resolution as set forth in Management
Proposal V of the Proxy Statement dated March 15, 1999 to approve and
ratify the appointment of Feldman Sherb Ehrlich & Co., P.C. 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, III(A)-(G), IV AND V. 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
5
<PAGE>
a corporation, please affix its corporate seal.
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.
6
