SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Stratford American Corporation
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(Name of Registrant as Specified In Its Charter)
Timothy A. Laos
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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4) Proposed maximum aggregate value of transaction:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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STRATFORD AMERICAN CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of the Shareholders of
Stratford American Corporation, an Arizona corporation (the "Company"), will be
held on Wednesday, July 10, 1996, at 2:00 o'clock P.M., at the Company's
principal office, 2400 East Arizona Biltmore Circle, Building 2, Suite 1270,
Phoenix, Arizona 85016, for the following purposes:
To elect a Board of four Directors to serve for the coming
year and until their successors are elected and qualified.
To approve the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the year ending December 31, 1996.
To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Shareholders of record at the close of business on May 15, 1996 are
entitled to notice of and to vote at the meeting.
All Shareholders are cordially invited to attend the meeting in person.
Only those shares which are represented at the meeting personally by the holder
or by proxy may vote. To assure your representation at the meeting, please mark,
date, sign and return the enclosed proxy card as promptly as possible in the
envelope provided. You may attend the meeting and vote in person even if you
have returned a proxy.
By Order of the Board of Directors
/s/ Mel L. Shultz
------------------------
Mel L. Shultz, President
June 1, 1996
Phoenix, Arizona
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
Stratford American Corporation (the "Company") for use at its Annual Meeting of
Shareholders to be held on Wednesday, July 10, 1996, at 2:00 o'clock P.M., or at
any adjournment thereof. The purposes of the meeting are set forth herein and in
the accompanying Notice of Annual Meeting of Shareholders. The meeting will be
held at the Company's principal office, 2400 East Arizona Biltmore Circle,
Building 2, Suite 1270, Phoenix, Arizona 85016.
Proxies will be solicited from the Company's Shareholders by mail. The
Company will bear the cost of this solicitation, including postage, printing and
handling and the expenses incurred by brokers, custodians, nominees and
fiduciaries in forwarding proxy material to beneficial owners. It is possible
that directors, officers and regular employees of the Company may make further
solicitation personally or by telephone, telegraph, facsimile or mail.
Shareholders of record at the close of business on May 15, 1996 (the
"Record Date"), are entitled to notice of and to vote at the meeting and any
postponement or adjournment thereof. At the Record Date, 100,000,000 shares of
the Company's common stock, $0.01 par value were authorized and 84,076,806
shares were issued and outstanding.
Each share has one vote on all matters. An affirmative vote of the
majority of shares of the Company's common stock represented and entitled to
vote at the meeting is required for all items being submitted to the
shareholders for their consideration. Abstentions and broker non-votes are
included in the number of shares represented for purposes of a quorum.
Abstentions are counted in tabulations of the votes cast whereas broker
non-votes are not counted for purposes of determining whether a proposal has
been approved. Shareholders voting on the election of Directors may cumulate
their votes and give one candidate a number of votes equal to the number of
Directors to be elected multiplied by the number of votes to which the
Shareholder's shares are entitled, or may distribute their votes on the same
principle among as many candidates as they choose, provided that votes cannot be
cast for more than the total number of Directors to be elected at the meeting.
In order to cumulate votes, at least one Shareholder must announce, prior to the
casting of votes for the election of Directors, that he or she intends to
cumulate votes. As is indicated in the proxy, discretionary power to cumulate
votes is being solicited.
Shareholders may revoke any proxy given pursuant to the solicitation at
any time before it is exercised at the meeting by: (a) delivering a written
notice of revocation to Timothy A. Laos, Corporate Secretary, Stratford American
Corporation, 2400 East Arizona Biltmore Circle, Building 2, Suite 1270, Phoenix,
Arizona 85016; or (b) a duly executed proxy bearing a later date; or (c)
attending the meeting and voting in person (attendance at the meeting will not
in and of itself constitute revocation of a proxy).
This Proxy Statement is being first mailed to Shareholders on or about
June 1, 1996.
PRINCIPAL SHAREHOLDERS
To the knowledge of the Company, as of March 31, 1996, the following
persons are the beneficial owners of more than 5% of the Company's voting
securities:
Amount and
Nature of
Name and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class(3)
-------------- ------------------- --------- -----------
Common Stock, JDMK Investments, LLC
$0.01 par value 2400 E. AZ Biltmore Circle
Phoenix, AZ 85016 21,318,077(1) 25.35%
Common Stock, Investments Four Corporation
$0.01 par value 8630 E. Via de Ventura
Suite 220
Scottsdale, AZ 85258 6,506,667(2) 7.7%
Common Stock, Gerald J. Colangelo
$0.01 par value 2400 E. AZ Biltmore Circle
Phoenix, AZ 85016 5,329,519.25(1) 6.35%
Common Stock, David H. Eaton
$0.01 par value 2400 E. AZ Biltmore Circle
Phoenix, AZ 85016 5,329,519.25(1) 6.35%
Common Stock, Mel L. Shultz
$0.01 par value 2400 E. AZ Biltmore Circle
Phoenix, AZ 85016 5,329,519.25(1) 6.35%
Common Stock, E.G. "Ken" Kendrick, Jr.
$0.01 par value 2400 E. AZ Biltmore Circle
Phoenix, AZ 85016 5,329,519.25(1) 6.35%
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(1) In March 1996, Messrs. Colangelo, Eaton and Shultz transferred 100% of
their shares of common stock previously owned into a newly formed limited
liability company, each obtaining a 25% interest in JDMK Investments, LLC.
Messr. Kendrick, Jr., by investing in the newly formed limited liability
company, obtained the remaining 25% interest in JDMK Investments, LLC. JDMK
Investments, LLC and Messrs. Colangelo, Eaton, Shultz and Kendrick, Jr.
share voting and investment power with respect to the shares held by JDMK
Investments, LLC.
(2) Investments Four Corporation has sole voting and investment power with
respect to its shares.
(3) Based on 84,076,806 shares of common stock outstanding at March 31, 1996.
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ELECTION OF DIRECTORS
Four Directors are to be elected at the Annual Meeting to hold office
from election until the next Annual Meeting of Shareholders, or until their
successors are duly elected and qualified. The persons named in the enclosed
proxy intend to vote the shares covered thereby for the nominees listed below.
Should any of the nominees become unavailable for any reason, the proxies intend
to vote for such other persons as the present Board may nominate.
The names of the nominees and other executive officers of the Company,
together with certain information about them, is set forth below.
Nominees
Name Age Position and/or Offices Director Since
---- --- ----------------------- --------------
David H. Eaton 60 Director and Chairman 2/88
of the Board, Chief
Executive Officer
Mel L. Shultz 45 Director, President 5/87
Gerald J. Colangelo 56 Director 4/89
William G. Was, Jr. 47 Director 4/90
David H. Eaton has been the Chairman of the Board of Directors of the
Company since February 29, 1988, and its Chief Executive Officer since June 1,
1988. Mr. Eaton earned his Bachelor of Arts degree in Business Administration
and Economics from Wheaton College in 1958 and his Doctor of Jurisprudence
degree from Stanford University in 1961. Mr. Eaton serves as a Director of
Stratford American Resource Corporation ("SARC"), Stratford American Energy
Corporation ("SAEC"), Stratford American Gold Venture Corporation ("SAGVC") and
Stratford American Oil and Gas Corporation ("SAOGC"), as a Director and Chief
Executive Officer of Stratford American Car Rental Systems, Inc. ("SCRS") and
Stratford American Sports Corp. ("SASC"), and as a Director and the President of
Stratford American Properties Corporation ("SAPC").
Mel L. Shultz has been a Director and the President of the Company
since May 20, 1987. Prior to 1985, Mr. Shultz was involved on his own behalf in
real estate development and oil and gas investment. Mr. Shultz is also a
Director and the President of SCRS, SARC, SAEC, SAGVC, and SAOGC, and a Director
of SAPC.
Gerald J. Colangelo has been a Director of the Company since April 26,
1989. He is also a Director of SCRS, SAPC, SAGVC and SASC. Mr. Colangelo is
President and Chief Executive Officer of the Phoenix Suns of the National
Basketball Association. Mr. Colangelo has been General Manager of the Suns since
their inception in 1968. Mr. Colangelo earned a Bachelor of Education degree in
Physical Education from the University of Illinois in 1962.
3
William G. Was, Jr. has been a Director of the Company since April
1990. Mr. Was is the principal of Western Advisory Services Co. and a partner in
Great Western Development. Both companies are involved in real estate
development. Mr. Was worked with First Interstate Bank (Arizona), N.A. from 1980
to 1990. From 1986 to 1990, he served the Bank as Executive Vice President/Real
Estate Finance and Property Management. Mr. Was earned his Bachelor of Science
degree in Political Science from Arizona State University in 1972.
Other Executive Officer
Name Age Offices and Companies Officer Since
---- --- --------------------- -------------
Timothy A. Laos 42 Vice President, Chief 3/95
Financial Officer, Treasurer
and Secretary
of Company, Treasurer,
Secretary and Vice
President of SCRS, SARC,
SAEC, SAGVC, SAPC and SAOGC,
Secretary and Treasurer of SASC.
Timothy A. Laos, C.P.A., became a Vice President, Chief Financial
Officer, Treasurer and Secretary of the Company effective March 1995. He was
involved in public accounting from 1978 to 1981 including the first two years
employed by Price Waterhouse. From 1984 through 1992, Mr. Laos was the corporate
controller for Martin Oil and Gas Company, an independent oil and gas producer.
From 1992 through 1995, he was the corporate controller for the Haworth
Corporation, a local real estate developer. Mr. Laos earned a Bachelor of
Business Administration degree in accounting from the University of Arizona in
1978. Mr. Laos is also the Vice President, Treasurer and Secretary of SCRS,
SARC, SAEC, SAGVC, SAPC and SAOGC, and also serves as Secretary, Treasurer and
Director of SASC and Director of SAPC.
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SECURITY OWNERSHIP OF MANAGEMENT
As of March 31, 1996, the Directors of the Company, and the Directors
and executive officers as a group, beneficially own the following equity
securities of the Company:
Amount and
Nature of
Beneficial Percent
Title of Class Name of Beneficial Owner Ownership of Class(3)
-------------- ------------------------ --------- -----------
Common Stock, David H. Eaton 5,329,519.25(1) 6.35%
$0.01 par value
Common Stock, Mel L. Shultz 5,329,519.25(1) 6.35%
$0.01 par value
Common Stock, Gerald J. Colangelo 5,329,519.25(1) 6.35%
$0.01 par value
Common Stock, William G. Was, Jr. 722,000(2) .0085%
$0.01 par value
Common Stock, Directors and Officers as a
$0.01 par value Group (5 persons) 16,710,557.75 19.9%
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(1) In March 1996, Messrs. Colangelo, Eaton and Shultz transferred 100% of
their shares of common stock previously owned into a newly formed limited
liability company, each obtaining a 25% interest in JDMK Investments, LLC.
Total shares of common stock held by JDMK Investments, LLC is 21,318,077.
JDMK Investments, LLC and Messrs. Colangelo, Eaton, Shultz and Kendrick,
Jr. share voting and investment power with respect to the shares held by
JDMK Investments, LLC.
(2) Messr. Was has sole voting and investment power with respect to his shares,
except to the extent that authority is shared by a spouse under applicable
law.
(3) Based on 84,076,806 shares of common stock outstanding at March 31, 1996.
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Board Meetings and Committees of the Board
The Board of Directors held four meetings during 1996, and each
Director participated in the meetings.
The Board of Directors, as a whole, serves as the Audit Committee. In
that capacity, the Board of Directors meets to review audit plans and
activities, reviews the Company's system of internal financial controls,
approves all significant fees for audit and non-audit services provided by the
independent auditors, and recommends the annual selection of independent
auditors.
The Company does not have standing nominating or compensation
committees of the Board of Directors, and the functions typically performed by
those kinds of committees are performed by the full Board of the Company.
Transactions with Management and Others
Guarantee. David H. Eaton, Mel L. Shultz and Gerald J. Colangelo in
their capacities as the officers and/or directors of SAPC, and as previous
direct shareholders of the Company, have personally guaranteed an obligation
owed by SAPC. The Company has executed an Indemnification Agreement to indemnify
the guarantors with respect to the guarantee. Certain information concerning the
guarantee, as of December 31, 1995, follows:
Guarantors Amount of Debt Payee
---------- -------------- -----
David H. Eaton $300,000 due April 1997, interest Bank of America
Mel L. Shultz and due quarterly commencing August
Gerald J. Colangelo 1994 at lender's reference rate,
unsecured.
Convertible Debenture. In March 1990, the Company executed a
convertible debenture note (the "Debenture") in the amount of $213,691 with
David H. Eaton. The Debenture bears interest at the rate of 12% per annum. The
Debenture was originally due and payable in full on April 15, 1991, but contains
provisions which automatically extend the term for successive 30-day periods
until Mr. Eaton demands payment in full. Alternatively, Mr. Eaton can convert
the Debenture to shares of the Company's common stock at the conversion price of
5/32, which was the closing price of the Company's common stock on the date the
liability to Mr. Eaton arose. The Debenture was unanimously approved by the
Board of Directors of the Company, with Mr. Eaton abstaining.
Policy on Related Transactions. The Company has represented that all
transactions between the Company and its officers, directors, principal
Shareholders or affiliates have been and will be on terms no less favorable to
the Company that can be obtained from unaffiliated third parties and have been
and will be approved by a majority of the disinterested Directors of the
Company.
6
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, 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 the Company.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the two fiscal years ended December 31, 1995 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with by such persons on a
timely basis, with the exception of a late filing of one Form 4 reporting one
transaction applicable to options of common stock granted to Mel L. Shultz,
President of the Company, in 1994, and a late filing of one Form 4 by each of
Messrs. Colangelo, Eaton and Shultz reporting one transaction in which they
acquired certain shares in 1994.
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EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
cash compensation paid to the Chief Executive Officer and the President of the
Company for each of the Company's last three fiscal years. Salary for each of
the other executive officers was less than $100,000 during such periods.
SUMMARY COMPENSATION TABLE
Name and Securities
--------- Other Annual Underlying
Principal Position Year Salary(1) Bonus(2) Compensation(3) Options(4)
------------------ ---- --------- -------- --------------- ----------
David H. Eaton 1995 $75,000 - $31,250 -
Chief Executive 1994 $43,750 - - -
Officer 1993 $66,200 - - -
Mel L. Shultz 1995 - $150,000 - -
President 1994 - - - 3,000,000 shares
1993 - - - -
(1) Mr. Shultz elected to not receive a salary during 1995, 1994 and 1993
(2) Subsequent to the sale of the University Center Project in 1995, Mr. Shultz
was paid a bonus for his performance in directing the sale and for his work
in other various projects for the Company.
(3) Mr. Eaton elected to defer payment of a portion of his salary during 1994.
The amount, recorded as a liability in the year earned, was completely paid
in 1995 as reflected above.
(4) An option to purchase 3,000,000 shares of common stock in the Company was
granted to Mr. Shultz in 1994 at an exercise price of $.01 per share. The
option is fully vested and is exercisable through March 31, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
Number of Unexercised Value of Unexercised In-The-
Securities Underlying Money Options/SARs at FY-
Options/SARs at FY-End (#) End ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable(1)
---- ------------------------- -------------------------
Mel L. Shultz 3,000,000/-0- $60,000/-0-
(1) Calculated based upon the difference between the market value per share for
the Company's common stock on December 29, 1995 and the exercise price.
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Compensation of Directors
The Company generally does not compensate its Directors for their
services as such, but reimburses them for reasonable expenses involved in
attending meetings.
Termination of Employment and Change of Control Agreements
The Company has no compensatory plans or arrangements that will result
from the termination of employment of any executive officer or other employee or
from a change in control of the Company or a change in any employee's
responsibilities following a change in control. The Company has no employment
agreements with any of its executive officers.
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APPROVAL OF AUDITORS
Previous independent accountants
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On February 14, 1996, Stratford American Corporation dismissed Price
Waterhouse LLP as its independent accountants.
The report of Price Waterhouse LLP on the financial statements for the
fiscal year ended December 31, 1994 contained no adverse opinion or disclaimer
of opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principle. The report of Price Waterhouse LLP on the financial
statements for the fiscal year ended December 31, 1993 contained no adverse
opinion or disclaimer of opinion but did contain an explanatory paragraph as to
uncertainty, stating that the Registrant had a net capital deficiency, raising
substantial doubt about the Registrant's ability to continue as a going concern.
The Board of Directors, as a whole, serves as the Audit Committee. In
that capacity, the Board of Directors participated in and approved the decision
to change independent accountants.
In connection with its audits for the two most recent fiscal years and
through February 14, 1996, there have been no disagreements with Price
Waterhouse LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements if not
resolved to the satisfaction of Price Waterhouse LLP would have caused them to
make reference thereto in their report on the financial statements for such
years.
The Registrant has received from Price Waterhouse LLP a letter
addressed to the SEC stating whether or not it agrees with the above statements.
A copy of such letter, dated February 15, 1996, was filed as Exhibit 16.1 to the
Form 8-K which was filed with the SEC on February 22, 1996.
New independent accountants
- - ---------------------------
The Registrant engaged KPMG Peat Marwick LLP as its new independent
accountants as of February 14, 1996. During the two most recent fiscal years and
through February 14, 1996, the Registrant has not consulted with KPMG Peat
Marwick LLP on items which (1) were or should have been subject to SAS 50 or (2)
concerned the subject matter of a disagreement or reportable event with the
former auditor, (as described in Regulation S-K Item 304(a)(2)).
The Board of Directors has recommended that KPMG Peat Marwick LLP
continue as auditors for 1996.
Representatives of KPMG Peat Marwick LLP are expected to attend the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so. They are expected to be available to respond to appropriate questions.
The Board of Directors recommends that KPMG Peat Marwick LLP be
approved as the Company's independent auditors for the year ending December 31,
1996.
10
FINANCIAL AND OTHER INFORMATION
The Company's 1995 Annual Report is being furnished concurrently with
this Proxy Statement. The Company will provide without charge, upon written
request, copies of its Form 10-KSB for the fiscal year ended December 31, 1995.
Any shareholder desiring the Company's Form 10-KSB should contact Timothy A.
Laos, Corporate Secretary, at the Company's principal offices.
SHAREHOLDERS' PROPOSALS
The Company welcomes comments or suggestions from its Shareholders. In
the event that a Shareholder desires to have a proposal formally considered at
the 1997 Annual Shareholders' Meeting, and included in the Proxy Statement for
that meeting, the proposal must be received in writing by the Company on or
before February 1, 1997.
OTHER MATTERS
The Board of Directors knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, it is the
intention of the persons named on the enclosed proxy to vote the shares they
represent as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
/s/ Mel L. Shultz
-------------------------------------
Mel L. Shultz, President and Director
Dated: June 1, 1996