SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 30, 1996 0-011228
For the Quarter Ended Commission File Number:
SYSTEMS ASSURANCE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 02-337028
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
18 West King Street, Malvern, PA 19355 19355
(Address of principal executive offices) (zip code)
(610) 647 -7840
Registrant's telephone number including area code:
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest possible date.
Class Outstanding at June 14, 1996
Common Stock, 27,918,454
par value $.01 per share
<PAGE>
SYSTEMS ASSURANCE CORPORATION
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
April 30, 1996 October 31, 1995
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,585 $ 382
Income taxes refundable 1,442 1,442
------------ ------------
Total current assets 3,027 1,824
------------ ------------
$ 3,027 $ 1,824
============ ============
LIABILITIES AND CAPITAL DEFICIT
Current liabilities:
Notes payable $ 50,000 $ --
Accounts payable and accrued expenses 1,146 19,000
Advances from shareholders -- 63,960
------------ ------------
Total current liabilities 51,146 82,960
------------ ------------
Capital deficit:
Common stock, par value $.01 per share;
authorized 30,000,000 shares; outstanding
27,918,454 and 24,418,454 shares,
respectively 279,185 244,185
Additional paid-in capital 9,802,200 9,786,233
Deficit (10,129,504) (10,111,554)
Total capital deficit (48,119) (81,136)
------------ ------------
$ 3,027 $ 1,824
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
SYSTEMS ASSURANCE CORPORATION
STATEMENTS OF OPERATIONS
Three and Six-Month Periods Ended April 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three- Month Six -Month
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
General and administrative expenses 17,554 -- 17,804 --
------------ ------------
Interest expense 146 -- 146 --
------------ ------------ ------------ ------------
Income (loss) before provision for
income taxes (17,700) -- (17,950) --
Provision (credit) for income taxes -- -- -- --
------------ ------------ ------------ ------------
Net income (loss) $ (17,700) $ -- $ (17,950) $ --
============ ============ ============ ============
Income (loss) per common share:
Net income (loss) $ -- $ -- $ -- $ --
============ ============ ============ ============
Weighted average number of common shares 25,585,121 23,118,454 25,001,787 23,118,454
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
SYSTEMS ASSURANCE CORPORATION
STATEMENTS OF CAPITAL DEFICIT
Twelve-month Period Ended October 31, 1995
and the Six-Month Period Ended April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Additional Total
Number Par Paid-in Capital
of Shares Value Capital Deficit Deficit
<S> <C> <C> <C> <C> <C>
Balance, October 31, 1994 23,118,454 $ 231,185 $ 9,798,983 $(10,077,753) $ (47,585)
Issuance of common shares 1,300,000 13,000 (12,750) 250
Net loss
(33,801) (33,801)
---------- ------------ ------------ ------------ ------------
Balance, October 31, 1995 24,418,454 244,185 9,786,233 (10,111,554) (81,136)
Issuance of common shares 3,500,000 35,000 15,967 50,967
Net loss (17,950) (17,950)
---------- ------------ ------------ ------------ ------------
Balance, April 30, 1996 27,918,454 $ 279,185 $ 9,802,200 $(10,129,504) $ (48,119)
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
SYSTEMS ASSURANCE CORPORATION
STATEMENTS OF CASH FLOWS
Six-Month Periods Ended April 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(17,950) $ --
Adjustment for items not affecting cash flow:
Change in accounts payable and
accrued expenses (7,054) --
-------- --------
Net cash provided (used) by operating
activities (25,004) --
-------- --------
Cash flows from financing activities:
Proceeds from issuance of note 50,000 --
Shareholder advances, net (23,793) --
-------- --------
Net cash provided by financing activities 26,207 --
-------- --------
Net increase (decrease) in cash $ 1,203 --
Cash at beginning of period 382 --
-------- --------
Cash at end of period $ 1,585 $ --
======== ========
Supplemental cash flow information:
Issuance of stock to satisfy shareholder advances-
Common stock, at par value $ 35,000 $ --
Additional paid-in capital 15,967 --
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
SYSTEMS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information normally included
in footnote disclosures in financial statements prepared in accordance with
generally accepted accounting principles has been condensed or omitted
pursuant to such rules and regulations, although the Company believes that
the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K for the year
ended October 31, 1995.
2. Net Income Per Share
Net income per share of Common Stock is computed by dividing net income by
the weighted average number of shares of Common Stock and Common Stock
Equivalents, if dilutive, outstanding during the year.
3. Restatement - Correction of Errors
Certain liabilities of the Company have been determined to have exceeded
various applicable states statutes of limitations. These liabilities should
have been written off by the Company in the years in which the statutes
were determined to have expired. The Company has corrected this error and,
accordingly, has restated its statements of capital deficit through October
31, 1994 as noted in the Company's annual report on Form 10-K for the year
ended October 31, 1995.
Additionally, during 1991, a majority shareholder forgave certain
indebtedness of the Company amounting to $825,242 which was previously
reflected as extraordinary income in 1991. The financial statements have
been adjusted to reflect this transaction as a contribution to capital.
4. Notes Payable
The note payable in the amount of $50,000 is unsecured and bears interest
at 7%. The note and all accrued interest is due and payable on the later of
December 31, 1996 or the extended expiration of certain irrecovocable
proxies granted by certain shareholders to the issuer of the note.
<PAGE>
SYSTEMS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
5. Shareholder Advances
On April 1, 1996, the Board of Directors of Systems Assurance Corporation
authorized the issuance of 3,500,000 shares of common stock to AAH
Development Company, Inc. (a related entity of certain shareholders of the
Company) in exchange for all shareholder advances existing as of March 31,
1996 in excess of $40,000.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
During the six months ended April 30, 1996 the Company had no principal business
activity. The company had no revenues and had operating expenses of $17,950. The
Company is presently seeking investment opportunities but has not yet entered
into any substantive negotiations other than as described under Financial
Condition and Liquidity.
Financial Condition and Liquidity
The Company has suffered recurring losses, has no current expectations of
revenue and has a capital deficit. The Company has entered into certain
agreements with an investment firm to actively seek an investment opportunity
acceptable to the Company. In connection with those agreements, the investment
firm has received irrevocable proxies from certain of the Company's shareholders
to vote their shares in connection with any recapitalization of the Company's
common stock, election of members of the Board of Directors and any proposed
merger candidate that meets certain minimum requirements. The irrevocable
proxies expire on September 1, 1996 but may be extended at the option of the
investment firm. As an incentive to enter into the above agreements, the
investment firm has lent the Company $50,000 evidenced by a Promissory Note due
and payable (including interest at the rate 7%) on the later of December 31,
1996 or the extended expiration of the irrecovocable proxies. The investment
firm has additionally agreed to assume responsibility for certain operating
costs which may be incurred.
General
The Company has completed its review of the legal status of previously reported
liabilities. The purpose of the review was to determine whether any or all of
the liabilities are no longer enforceable under the statutes of the particular
states involved. See Note 3 to the accompanying financial statements for a
discussion of the results of that review. The Annual Report on Form 10-K for the
year ended October 31, 1995 was filed with the appropriate restatements of
previously reported liabilities and was audited by independent certified public
accountants whose opinion is included therein and which opinion covers the
financial statements as of and for the years ended October 31, 1995 and 1994.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is the defendant in an action brought in Massachusetts Superior
Court, County of Suffolk, by McDevitt Recruitment Advertisement, Inc. The
complaint was served in December 1986 and alleges a breach of an oral warranty
of fitness for a particular purpose of a computer system sold to plaintiff in
1982, which allegedly never performed properly. Plaintiff seeks damages of
$30,000. The Company believes that it is not liable for any damages; however, in
order to save the cost of potential litigation, has offered a settlement in the
amount of $1,000 to attorneys for the plaintiff which it believes is sufficient
to settle this case. At this date, the attorneys have not been able to locate
plaintiff.
The Company, in conjunction with its research regarding the various statutes of
limitations, also pursued the current status of any legal proceedings previously
reported as having been brought against the Company. The Company has determined
that, except for the matter discussed above, it is not probable that any of the
previously reported legal proceedings will have a materially adverse effect on
the Company.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit I - Unanimous Consent of Board of Directors in Liew of
Special Meeting (issuance of shares to AAH Development Company)
Exhibit II - Sale of common stock of Systems Assurance Corporation
by the Undersigned (restriction on sale by principal
shareholders)
Exhibit III - Agreement (loan and assistance in locating merger
candidate)
Exhibit IV - Promissory Note
Exhibit V - Irrevocable Proxy Coupled With and Interest
(Appointment of Exchange Place Capital Partners, L.L.C. as
proxy for shares owned by principal shareholders)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYSTEMS ASSURANCE CORPORATION
-----------------------------
(Registrant)
Date: June 14, 1996 By: /s/ William E. Chipman, Sr.
-----------------------------
WILLIAM E. CHIPMAN, SR.,
PRESIDENT AND CHAIRMAN
Date:June 14, 1996 By: /s/ Thomas R. Petree
---------------------
THOMAS R. PETREE, TREASURER
AND DIRECTOR
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000705581
<NAME> SYSTEMS ASSURANCE CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-1-1996
<PERIOD-END> APR-30-1996
<CASH> 1,585
<SECURITIES> 0
<RECEIVABLES> 1,442
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,027
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,027
<CURRENT-LIABILITIES> 51,146
<BONDS> 0
0
0
<COMMON> 279,185
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,027
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,804
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 146
<INCOME-PRETAX> (17,950)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,950)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,950)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
Exhibit I
SYSTEMS ASSURANCE CORPORATION
UNANIMOUS CONSENT OF
BOARD OF DIRECTORS
IN LIEU OF SPECIAL MEETING
April 1, 1996
The undersigned, being all of the members of the Board of Directors of Systems
Assurance Corporation, a Delaware corporation (the "corporation"), in accordance
with the provisions of Section 141(f) of the Delaware General Corporation Law,
do hereby consent in writing to and adopt the following resolution as if
presented to and adopted at a duly called and convened meeting of the Board of
Directors of the Corporation.
RESOLVED, in exchange for certain costs incurred by AAH
Development Company, Inc. on behalf of the Corporation, the
Corporation hereby authorizes the issuance of 3,500,000 shares of
its common stock ($.01 Par Value) in exchange for all shareholder
advances existing as at March 31, 1996 in excess of $40,000.
The action taken by the foregoing resolution shall be deemed to have been taken
at the offices of the Corporation on the day and year first written above.
/s/ William Chipman
William Chipman
/s/Thomas Petree
Thomas Petree
/s/James Wagner
James Wagner
Exhibit II
April 15, 1996
Systems Assurance Corporation Exchange Place Capital Partners, L.L.C.
18 West King Street 10 Exchange Place, Suite 309
Malvern, Pennsylvania 19355 Salt Lake City, Utah 84111
Re: Sale of common stock of Systems Assurance Corporation by the Undersigned
Gentlemen:
The undersigned is the holder of 1,549,913 shares of common stock
Systems Assurance Corporation, a Delaware corporation, (the "Company"), and may,
therefore, personally benefit from the efforts of Exchange Place Capital
Partners, L.L.C., ("Exchange Place"), to locate a business to merge with the
Company, as well as, provide business consulting to the Company. Exchange Place
has agreed to attempt to locate a potential merger candidate for the Company and
provide other business consulting on behalf of the Company, provided that, among
others, that the undersigned agrees not to sell his or her shares of common
stock prior to September 1, 1996, without the prior written consent of Exchange
Place, which may be withheld at its discretion. In consideration thereof, the
undersigned hereby covenants and agrees that the undersigned will not sell any
shares of common stock of the Company now owned by the undersigned, whether
pursuant to rule 144 or otherwise prior to September 1, 1996, except pursuant to
the written consent of Exchange Place, which may be withheld for any reason.
I agree that Company may place a restrictive legend to the foregoing
effect on the certificates representing the undersigned's shares and may issue
appropriate stop-transfer instructions to its transfer agent.
I acknowledge that the breach or threatened breach by the undersigned
of the covenants set forth herein may result in irrreparable injury to the
Company and Exchange Place which will not be adequately compensated by the
payment of damages. Accordingly, I agree that the Company and Exchange Place may
seek and obtain injunctive relief against the breach or threatened breach by the
undersigned of any of the foregoing covenants.
Sincerely,
Barry R. Sharer
Dated: April 16, 1996 /s/Barry R. Sharer
Agreed and Accepted:
Systems Assurance Corporation Exchange Place Capital Partner, L.L.C.
By: /s/ William E. Chipman By: /s/Dean Becker
William E. Chipman, A Duly Authorized Officer
President/Director
By: /s/ James C. Wagner
James C. Wagner, Secretary/Director
By: /s/ Thomas R. Petree
Thomas R. Petree, Treasurer
and Director
<PAGE>
April 15, 1996
Systems Assurance Corporation Exchange Place Capital Partners, L.L.C.
18 West King Street 10 Exchange Place, Suite 309
Malvern, Pennsylvania 19355 Salt Lake City, Utah 84111
Re: Sale of common stock of Systems Assurance Corporation by the Undersigned
Gentlemen:
The undersigned is the holder of 1,549,913 shares of common stock
Systems Assurance Corporation, a Delaware corporation, (the "Company"), and may,
therefore, personally benefit from the efforts of Exchange Place Capital
Partners, L.L.C., ("Exchange Place"), to locate a business to merge with the
Company, as well as, provide business consulting to the Company. Exchange Place
has agreed to attempt to locate a potential merger candidate for the Company and
provide other business consulting on behalf of the Company, provided that, among
others, that the undersigned agrees not to sell his or her shares of common
stock prior to September 1, 1996, without the prior written consent of Exchange
Place, which may be withheld at its discretion. In consideration thereof, the
undersigned hereby covenants and agrees that the undersigned will not sell any
shares of common stock of the Company now owned by the undersigned, whether
pursuant to rule 144 or otherwise prior to September 1, 1996, except pursuant to
the written consent of Exchange Place, which may be withheld for any reason.
I agree that Company may place a restrictive legend to the foregoing
effect on the certificates representing the undersigned's shares and may issue
appropriate stop-transfer instructions to its transfer agent.
I acknowledge that the breach or threatened breach by the undersigned
of the covenants set forth herein may result in irrreparable injury to the
Company and Exchange Place which will not be adequately compensated by the
payment of damages. Accordingly, I agree that the Company and Exchange Place may
seek and obtain injunctive relief against the breach or threatened breach by the
undersigned of any of the foregoing covenants.
Sincerely,
Thomas R. Petree
Dated: April 16, 1996 /s/Thomas R. Petree
Agreed and Accepted:
Systems Assurance Corporation Exchange Place Capital Partner, L.L.C.
By: /s/ William E. Chipman By: /s/Dean Becker
William E. Chipman, President/Director A Duly Authorized Officer
By: /s/ James C. Wagner
James C. Wagner, Secretary/Director
By: /s/ Thomas R. Petree
Thomas R. Petree, Treasurer and Director
<PAGE>
April 15, 1996
Systems Assurance Corporation Exchange Place Capital Partners, L.L.C.
18 West King Street 10 Exchange Place, Suite 309
Malvern, Pennsylvania 19355 Salt Lake City, Utah 84111
Re: Sale of common stock of Systems Assurance Corporation by the Undersigned
Gentlemen:
The undersigned is the holder of 2,479,860 shares of common stock
Systems Assurance Corporation, a Delaware corporation, (the "Company"), and may,
therefore, personally benefit from the efforts of Exchange Place Capital
Partners, L.L.C., ("Exchange Place"), to locate a business to merge with the
Company, as well as, provide business consulting to the Company. Exchange Place
has agreed to attempt to locate a potential merger candidate for the Company and
provide other business consulting on behalf of the Company, provided that, among
others, that the undersigned agrees not to sell his or her shares of common
stock prior to September 1, 1996, without the prior written consent of Exchange
Place, which may be withheld at its discretion. In consideration thereof, the
undersigned hereby covenants and agrees that the undersigned will not sell any
shares of common stock of the Company now owned by the undersigned, whether
pursuant to rule 144 or otherwise prior to September 1, 1996, except pursuant to
the written consent of Exchange Place, which may be withheld for any reason.
I agree that Company may place a restrictive legend to the foregoing
effect on the certificates representing the undersigned's shares and may issue
appropriate stop-transfer instructions to its transfer agent.
I acknowledge that the breach or threatened breach by the undersigned
of the covenants set forth herein may result in irrreparable injury to the
Company and Exchange Place which will not be adequately compensated by the
payment of damages. Accordingly, I agree that the Company and Exchange Place may
seek and obtain injunctive relief against the breach or threatened breach by the
undersigned of any of the foregoing covenants.
Sincerely,
James C. Wagner
Dated: April 16, 1996 /s/James C. Wagner
Agreed and Accepted:
Systems Assurance Corporation Exchange Place Capital Partner, L.L.C.
By: /s/ William E. Chipman By: /s/Dean Becker
William E. Chipman, President/Director A Duly Authorized Officer
By: /s/ James C. Wagner
James C. Wagner, Secretary/Director
By: /s/ Thomas R. Petree
Thomas R. Petree, Treasurer and Director
<PAGE>
April 15, 1996
Systems Assurance Corporation Exchange Place Capital Partners, L.L.C.
18 West King Street 10 Exchange Place, Suite 309
Malvern, Pennsylvania 19355 Salt Lake City, Utah 84111
Re: Sale of common stock of Systems Assurance Corporation by the Undersigned
Gentlemen:
The undersigned is the holder of 3,500,000 shares of common stock
Systems Assurance Corporation, a Delaware corporation, (the "Company"), and may,
therefore, personally benefit from the efforts of Exchange Place Capital
Partners, L.L.C., ("Exchange Place"), to locate a business to merge with the
Company, as well as, provide business consulting to the Company. Exchange Place
has agreed to attempt to locate a potential merger candidate for the Company and
provide other business consulting on behalf of the Company, provided that, among
others, that the undersigned agrees not to sell his or her shares of common
stock prior to September 1, 1996, without the prior written consent of Exchange
Place, which may be withheld at its discretion. In consideration thereof, the
undersigned hereby covenants and agrees that the undersigned will not sell any
shares of common stock of the Company now owned by the undersigned, whether
pursuant to rule 144 or otherwise prior to September 1, 1996, except pursuant to
the written consent of Exchange Place, which may be withheld for any reason.
I agree that Company may place a restrictive legend to the foregoing
effect on the certificates representing the undersigned's shares and may issue
appropriate stop-transfer instructions to its transfer agent.
I acknowledge that the breach or threatened breach by the undersigned
of the covenants set forth herein may result in irrreparable injury to the
Company and Exchange Place which will not be adequately compensated by the
payment of damages. Accordingly, I agree that the Company and Exchange Place may
seek and obtain injunctive relief against the breach or threatened breach by the
undersigned of any of the foregoing covenants.
Sincerely,
AAH Development Company
Dated: April 16, 1996 /s/James C. Wagner
Agreed and Accepted:
Systems Assurance Corporation Exchange Place Capital Partner, L.L.C.
By: /s/ William E. Chipman By: /s/Dean Becker
William E. Chipman, President/Director A Duly Authorized Officer
By: /s/ James C. Wagner
James C. Wagner, Secretary/Director
By: /s/ Thomas R. Petree
Thomas R. Petree, Treasurer and Director
<PAGE>
April 15, 1996
Systems Assurance Corporation Exchange Place Capital Partners, L.L.C.
18 West King Street 10 Exchange Place, Suite 309
Malvern, Pennsylvania 19355 Salt Lake City, Utah 84111
Re: Sale of common stock of Systems Assurance Corporation by the Undersigned
Gentlemen:
The undersigned is the holder of 619,964 shares of common stock Systems
Assurance Corporation, a Delaware corporation, (the "Company"), and may,
therefore, personally benefit from the efforts of Exchange Place Capital
Partners, L.L.C., ("Exchange Place"), to locate a business to merge with the
Company, as well as, provide business consulting to the Company. Exchange Place
has agreed to attempt to locate a potential merger candidate for the Company and
provide other business consulting on behalf of the Company, provided that, among
others, that the undersigned agrees not to sell his or her shares of common
stock prior to September 1, 1996, without the prior written consent of Exchange
Place, which may be withheld at its discretion. In consideration thereof, the
undersigned hereby covenants and agrees that the undersigned will not sell any
shares of common stock of the Company now owned by the undersigned, whether
pursuant to rule 144 or otherwise prior to September 1, 1996, except pursuant to
the written consent of Exchange Place, which may be withheld for any reason.
I agree that Company may place a restrictive legend to the foregoing
effect on the certificates representing the undersigned's shares and may issue
appropriate stop-transfer instructions to its transfer agent.
I acknowledge that the breach or threatened breach by the undersigned
of the covenants set forth herein may result in irrreparable injury to the
Company and Exchange Place which will not be adequately compensated by the
payment of damages. Accordingly, I agree that the Company and Exchange Place may
seek and obtain injunctive relief against the breach or threatened breach by the
undersigned of any of the foregoing covenants.
Sincerely,
Charles K. Forsman
Dated: April 16, 1996 /s/Charles K. Forsman
Agreed and Accepted:
Systems Assurance Corporation Exchange Place Capital Partner, L.L.C.
By: /s/ William E. Chipman By: /s/Dean Becker
William E. Chipman, President/Director A Duly Authorized Officer
By: /s/ James C. Wagner
James C. Wagner, Secretary/Director
By: /s/ Thomas R. Petree
Thomas R. Petree, Treasurer and Director
<PAGE>
April 15, 1996
Systems Assurance Corporation Exchange Place Capital Partners, L.L.C.
18 West King Street 10 Exchange Place, Suite 309
Malvern, Pennsylvania 19355 Salt Lake City, Utah 84111
Re: Sale of common stock of Systems Assurance Corporation by the Undersigned
Gentlemen:
The undersigned is the holder of 6,199,650 shares of common stock
Systems Assurance Corporation, a Delaware corporation, (the "Company"), and may,
therefore, personally benefit from the efforts of Exchange Place Capital
Partners, L.L.C., ("Exchange Place"), to locate a business to merge with the
Company, as well as, provide business consulting to the Company. Exchange Place
has agreed to attempt to locate a potential merger candidate for the Company and
provide other business consulting on behalf of the Company, provided that, among
others, that the undersigned agrees not to sell his or her shares of common
stock prior to September 1, 1996, without the prior written consent of Exchange
Place, which may be withheld at its discretion. In consideration thereof, the
undersigned hereby covenants and agrees that the undersigned will not sell any
shares of common stock of the Company now owned by the undersigned, whether
pursuant to rule 144 or otherwise prior to September 1, 1996, except pursuant to
the written consent of Exchange Place, which may be withheld for any reason.
I agree that Company may place a restrictive legend to the foregoing
effect on the certificates representing the undersigned's shares and may issue
appropriate stop-transfer instructions to its transfer agent.
I acknowledge that the breach or threatened breach by the undersigned
of the covenants set forth herein may result in irrreparable injury to the
Company and Exchange Place which will not be adequately compensated by the
payment of damages. Accordingly, I agree that the Company and Exchange Place may
seek and obtain injunctive relief against the breach or threatened breach by the
undersigned of any of the foregoing covenants.
Sincerely,
William E. Chipman, Sr.
Dated: April 16, 1996 /s/ William E. Chipman, Sr.
Agreed and Accepted:
Systems Assurance Corporation Exchange Place Capital Partner, L.L.C.
By: /s/ William E. Chipman By: /s/Dean Becker
William E. Chipman, President/Director A Duly Authorized Officer
By: /s/ James C. Wagner
James C. Wagner, Secretary/Director
By: /s/ Thomas R. Petree
Thomas R. Petree, Treasurer and Director
Exhibit III
AGREEMENT
This Agreement (the "Agreement") is made antered into this 19th day of
Aprill 1996, by and between Systems Assurance Corporation, a Delaware
corporation (the "Company"), William E. Chipman, Sr., James C. Wagner, Thomas R.
Petree, Barry R. Sharer, Charles Forsman, AAH Development Company (collectively
referred to as "Management and Principal Shareholders") and Exchange Place
Capital Partners, L.L.C., a Utah limited liability company, ("Exchange Place"),
based on the following:
Premises
a) The Company has ceased all of its operations and has been
investigating potential business opportunities to pursue in an affort to
commence profitable operations. Management and Principal Shareholders have
agreed to certain condititions in an effort to entice Exchange Place into
loaning the Company some monies to pay creditors and to assist in locating a
potential merger candidate or new business opportunity for the Company.
b) Exchange Place has agreed to loan the Company monies subject to
certain conditions including, but not limited to, restrictions of future debt
and equity issuance, attainment of corporate records for its due diligence
review, lock up agreements on certain shares and irrevoable proxies covering a
proposed reverse split and potential merger candidtate. The Company has agreed
to these conditions as has Management and Principal Shareholders. Accordingly,
the parties to this Agreement want to set forth their understanding herein.
Agreeement
Based on the foregoing premises, which are incorporated herein by this
reference, and for and in consideration of the mutual covenants and conditions
contained herein and other good and valuable consideration which is hereby
expressly acknowledged, the parties hereby agree as follows:
1) Promissory Note. Pursuant to the terms and conditions of this
Agreement and of the promissory note attached hoereto as Exhibit "A" and made a
part hereof by this reference (the "Promissory Note"), Exchange Place will loan
to the Company fifty thousand dollars ($50,000) which funds shall be dispersed
only pursuant to written instruction of Exchange Place. The fifty thousand
dollars ($50,000) shall be used to certain debt owed by the Company to AAH
Development Company in the amount of $40,000 with the remaining $10,000 paid to
Lance King for services he has provided the Company. The Company agrees that the
fifty thousand dollars ($50,000) will not be paid to the above parties unless
upon the completion of the payment the only known debt owed by the Company wil
that owed to the Company's transfer agent.
2) Additional Debts and Shares. As partial consideration and as an
inducement to Exchange Place for the loan of fifty thousand dollars ($50,000),
the Company hereby agreest that (i) it will not incur any additional debt, other
than that owed to its transfer agent on a monthly basis, without the prior
written approval of Exchange Place which may be withheld for any reason, and
(ii) it will not issue any additional shares of its equity securities including
but not limited to its common stock, part value $0.01 per share (th "Common
Stock") nor make any commitments, pledges or otherwise bind the Company to issue
any equity securities for as long as the Promissory Note remains outstanding,
and if any equity securities of the Company are issued, for whatever reason, the
Company wil grant an equal number of shares to Exchange Place sp that if
Exchange Place were to convert the Promissory Note to shares of Common Stock,
its percentage of ownership interest in the Company would remain unchanged after
the new issuance of equity securities of the Company. Exchange Place shall
assume responsibility for all costs related to any fililngs with the Securities
and Exchange Commission including but not limite to proxies, information
statements, quarterly and annual reporting requirements, and also all costs
related a special meeting of shareholders for the purpose of approving up to a
350 to 1 reverse split of Company's issued and outstanding common stock.
3) Prior Approval of Merger or Acquisition. The Company hereby agrees
to present for prior approval all companies, entities, organization, division or
business concepts to Exchange Place prior to any agreements being entered into
regarding any acquisition, merger, consolidation, or joint venture. If Exchange
<PAGE>
Place, at its discretion, advises the Company against entering into any
agreement with such an entity, the Company will not proceed with such an
agreement.
4) Special Meeting of Shareholders. Management and Principal
Shareholders shall cause the Company to call and hold a special meeting of its
shareholders for the purpose of approving up to a 350 to 1 reverse split of the
Company's issued and outstanding Common Stock. Management and Principal
Shareholders shall vote their shares in favor of such reverse slpit and use
their best efforts to have the reverse split approved.
5) Irrevocable Proxies. Management and Principal Shareholders shall,
at the discretion of Exhange Place, enter into irrevocable proxies (the
"Proxies") appointing Exchange Place as their proxy to vote Management and
Principal Shareholders shares in favor of (i) up to a proposed 350 to 1 reverse
split, (ii) a proposed merger between the Company and another entity provided
the other entity meets the minimum listing requirement as to assets and
shareholders equity to be listed on the National Association of Securities
Dealers Automatic Quotation System ("NASDAQ") The Proxies shall expire on
September 1, 1996. At Exhcnage Place option, they may extend the proxies in 30
day increments by paying to Management and Principal Shareholders $5,000 for
each 30 day increase. All monies paid to Management and Principal Shareholders
shall be allocated pro rata based on the number of shares held by Management and
Principal Shareholders who have provided proxies. In the event any extension is
requested beyond December 31, 1996, the Promissory Note shall likewise be
extended for the same time period.
6) Access to Corporate Documents. The Company, Management and
Principal Shareholders shall provice Exchange Place access to all of the
Company's records, books and files and the ability to copy any such documents
for its files.
7) Notices. All notices, demands, or requests provided for or
permitted to be given pursuant to this Agreement must be in writing. All
notices, demands and requests to be sent to the respective parties or any
permitted assignee of the interest of any party hereunder pursuant hereto shall
be deemed to have been properly given or served by depositiong the same in the
United States mail, postage prepaid, and reistered or certified with return
receipt requested, personal delivery; overnight courier, or by facsimile
transmission and addressed to such party or assignee at the following adress:
If to Exchange Place: Dean Becker
Exchange Place Capital Partners, L.L.C.
10 Exchange Place, Suite 309
Salt Lake City, Utah 84111
If to the Company: William E. Chipman, Sr.
18 West King Street
Malvern, Pennsylvania 19355
If to Management and
Principal Shareholders: William E. Chipman, Sr.
18 West King Street
Malvern, Pennsylvania 19355
or such other adressee as shall by furnished in writing by any party in the
manner for giving notices hereunder. All notices, demands, and requests shall be
effective on being deposited in the United States mail. However, the time period
in which a response to any such notice, demand, or request must be given shall
commence to run from the date of delivery in the event of personal delivery, one
day after writing by overnight courier, or three days after deposit in the
United States mail. All notices, demands and requests shall be deemed given only
if given by the ersons listed above or an authorized representative, who shall
be authorized in writing by the above person.
<PAGE>
8) Amendment of Waiver. No waiver of any of the provisions contained
in this Agreement shall be valid unless made in writing and executed by the
waiving party. It is expressly understood that in the event either party shall
on any occasion fail to perform any terms of this Agreement and the other party
shall not enforce that term, the failure to enforce on that occasion shall not
prevent enforcement on any other occasion.
9) Third Party Beneficiaries. No director, officer, employee, agent,
independent contractor, or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
10) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which taken
together shall be but a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.
Exchange Place Capital Partners, L.L.C. Systems Assurance Corporation
By: /s/ Dean Becker By: /s/William E. Chipman, Sr.
Dean Becker William E. Chipman, Sr.,
President/Director
By: /s/ James C. Wagner
James C. Wagner, Secretary/Director
By: /s/ Thomas R. Petree
Thomas R. Petree, Treasurer/
Director
Management and Principal
Shareholders
By: /s/ William E. Chipman, Sr.
William E. Chipman, Sr.
(individually)
By: /s/ James C. Wagner
James C. Wagner (individually)
By: /s/ Thomas R. Petree
Thomas R. Petree (individually)
By: /s/ Barry R. Sharer
Barry R. Sharer (individually)
By: /s/ Charles Forsman
Charles Forsman (individually)
AAH Development Company
By: /s/ James C. Wagner
James C. Wagner, President
Exhibit IV
$50,000 (U.S.) Dated: April 15, 1996
PROMISSORY NOTE
FOR VALUE RECEIVED, Systems Assurance Corporation, a Delaware
corporation ("Maker"), promises to pay to Exchange Place Capital Partners,
L.L.C., a Limited Liability Company ("Holder"), on order, fifty thousand dollars
($50,000).
1. Payments. The principal on the obligation respresented hereby shall
be repaid in full on or before December 31, 1996, or (if later) the expiration
date of all extended irrevocable proxies.
2. Interest. The obligation shall bear simple interest at the rate of
seven percent (7%) per annum, with the entire unpaid interest payable on or
before December 31, 1996.
3. Type and place of Payments. Payment of principal and interest shall
be made in lawful money of the United States of America to the above named
holder at 10 Exchange Place, Suite 309, Salt Lake City, Utah 84111, or order.
4. Prepayments. Advance payment or payments may be made on the
principal and interest, without penalty or forfeiture. There shall be no penalty
for any prepayment.
5. Default. Upon the occurrence or duing the continuance of any one or
more of the events hereinafter enumerated, Holder or the holder of this Note may
forthwith or at any time thereafter during the continuance of any such event, by
notice in writing to the Maker, declare the unpaid balance of the principal and
interest on the Note to be immediately due and payable, and the principal and
interest shall become and shall be immediately due and payable without
presentation, demand, protest, notice of protest, or other notice of dishonor,
all of which are hereby expressly waived by Maker, such events being as follows:
(a) Default in the payment of the principal and interest of this
Note or any portion thereof when the same shall become due and payable, whether
at maturity as herein expressed, by acceleration, or otherwise, unless cured
within five (5) days after notice thereof by Holder or the holder of such Note
to Maker;
(b) Maker shall file a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization, or shall file an answer admitting the
jurisdiction of the court and any material allegations of an involuntary
petition filed pursuant to any act of Congress relating to bankruptcy or to any
act purporting to be amendatory thereof, or shall be adjudicated bankrupt, or
shall make an assignment for the benefit of creditors, or shall apply for or
consent to the appointment of any receivor or trustee for Maker, or al all or
any substantial portion of its property, or Maker shall make an assignment to
any agent authorized to liquidate any substantial part of its assets; or
(c) An order shall be entered pursuant to any act of Congress
relating to bannkruptcy or to any act purporting to be amendatory thereof
approving an involuntary petition seeking reorganization of the Maker, or an
order of any court shall be entered appointing any receiver or trustee of or for
Maker, or any reveiver or trustee of all or any substantial portion of the
prperty of Maker, or a writ or warrant of attachment or any similar process
shall be issued by any court against all or any substantial portion of the
property of Maker, and such order approving a petition seeking reorganization or
appointing a receiver or trustee is not vacated or stayed, or such writ, warrant
of attachment, or similar process is not released or bonded within 60 days after
its entry or levy.
<PAGE>
(6) Attorneys' Fees. If this Note is placed with an attorney for
collection, or if suit be instituted for collection, herein, then in such event,
the undersigned agrees to pay reasonable attornerys' fees, costs, and other
expenses incurred by holder in so doing.
(7) Construction. This Note shall be governed by and construed in
accordance with the laws of the state of Utah.
Systems Assurance Corporation
By: /s/William E. Chipman
William E. Chipman, President/Director
By: /s/James C. Wagner
James C. Wagner, Secretary/Director
By: /s/Thomas R. Petree
Thomas R. Petree, Treasurer/Director
Exhibit V
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
The undersigned, Charles Forsman, having received valuable consideration from
Exchange Place Capital Partners, L.L.C. ("Exchange Place") the receipt and
adequacy of which is hereby acknowledged, hereby irrevocably appoints Exchange
Place as attorney-in-fact and proxy, with full power of substitution, to vote
all of the shares of common stock of Systems Assurance Corporation, A Delaware
corporation, (the "Company"), which the undersigned is entitled to bote at any
and all special or annula shareholder meetings or through a written consent of
the shareholders, in its sole discretion on (i) up to a 350 to 1 reverse split
of the Company's issued and outstanding common stock, (ii) the election of new
directors of the Company, and (iii) a proposed merger candidate which meets the
minimum lisitng requirements as to assets and shareholders' equity to be listed
on the National Association of Security Dealaers Automatic Quotation System
("NASDAQ"). The proxy shall be effective for a period commencing upon signing
and expiring on September 1, 1996; provided that, at the option of Exchange
Place, this proxy may be extended for 30 day increments by the payment of
additional consideration as agreed to under the Agreement dated April 15, 1996,
by and between the Company, Exchange Place, the undersigned and other
individuals who are principal shareholders of the Company.
In connection with the granting of this Proxy, the undersigned represents the
following:
(1) The undersigned is the holder of 619,964 shares of common stock of the
Company, of record and beneficially, and has not granted any other proxies with
respect to such shares which are not revoked by this Proxy and intends for all
such shares to be covered by this Proxy.
(2) The undersigned agrees to provide such confirmations of this Proxy as
Exchange Place, or its substitutes deem necessary.
This Proxy and power of attorney is expressly intended by the undersigned to be
coupled with an interest, shall be irrevocable during the term hereof, and shall
survive the death of the undersigned and the conveyance by the undersigned of
any all interest in the shres of the Company held by him.
Dated: April 15, 1996
Charles Forsman
/s/ Charles Forsman
Signature
________________________
Signature (if held jointly)
Print Name ________________________
<PAGE>
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
The undersigned, William E. Chipman, Sr., having received valuable consideration
from Exchange Place Capital Partners, L.L.C. ("Exchange Place") the receipt and
adequacy of which is hereby acknowledged, hereby irrevocably appoints Exchange
Place as attorney-in-fact and proxy, with full power of substitution, to vote
all of the shares of common stock of Systems Assurance Corporation, A Delaware
corporation, (the "Company"), which the undersigned is entitled to bote at any
and all special or annula shareholder meetings or through a written consent of
the shareholders, in its sole discretion on (i) up to a 350 to 1 reverse split
of the Company's issued and outstanding common stock, (ii) the election of new
directors of the Company, and (iii) a proposed merger candidate which meets the
minimum lisitng requirements as to assets and shareholders' equity to be listed
on the National Association of Security Dealaers Automatic Quotation System
("NASDAQ"). The proxy shall be effective for a period commencing upon signing
and expiring on September 1, 1996; provided that, at the option of Exchange
Place, this proxy may be extended for 30 day increments by the payment of
additional consideration as agreed to under the Agreement dated April 15, 1996,
by and between the Company, Exchange Place, the undersigned and other
individuals who are principal shareholders of the Company.
In connection with the granting of this Proxy, the undersigned represents the
following:
(1) The undersigned is the holder of 6,199,650 shares of common stock of the
Company, of record and beneficially, and has not granted any other proxies with
respect to such shares which are not revoked by this Proxy and intends for all
such shares to be covered by this Proxy.
(2) The undersigned agrees to provide such confirmations of this Proxy as
Exchange Place, or its substitutes deem necessary.
This Proxy and power of attorney is expressly intended by the undersigned to be
coupled with an interest, shall be irrevocable during the term hereof, and shall
survive the death of the undersigned and the conveyance by the undersigned of
any all interest in the shres of the Company held by him.
Dated: April 15, 1996
William E. Chipman, Sr.
/s/ William E. Chipman, Sr.
Signature
________________________
Signature (if held jointly)
Print Name ________________________
<PAGE>
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
The undersigned, Barry R. Sharer, having received valuable consideration from
Exchange Place Capital Partners, L.L.C. ("Exchange Place") the receipt and
adequacy of which is hereby acknowledged, hereby irrevocably appoints Exchange
Place as attorney-in-fact and proxy, with full power of substitution, to vote
all of the shares of common stock of Systems Assurance Corporation, A Delaware
corporation, (the "Company"), which the undersigned is entitled to bote at any
and all special or annula shareholder meetings or through a written consent of
the shareholders, in its sole discretion on (i) up to a 350 to 1 reverse split
of the Company's issued and outstanding common stock, (ii) the election of new
directors of the Company, and (iii) a proposed merger candidate which meets the
minimum lisitng requirements as to assets and shareholders' equity to be listed
on the National Association of Security Dealaers Automatic Quotation System
("NASDAQ"). The proxy shall be effective for a period commencing upon signing
and expiring on September 1, 1996; provided that, at the option of Exchange
Place, this proxy may be extended for 30 day increments by the payment of
additional consideration as agreed to under the Agreement dated April 15, 1996,
by and between the Company, Exchange Place, the undersigned and other
individuals who are principal shareholders of the Company.
In connection with the granting of this Proxy, the undersigned represents the
following:
(1) The undersigned is the holder of 1,549,913 shares of common stock of the
Company, of record and beneficially, and has not granted any other proxies with
respect to such shares which are not revoked by this Proxy and intends for all
such shares to be covered by this Proxy.
(2) The undersigned agrees to provide such confirmations of this Proxy as
Exchange Place, or its substitutes deem necessary.
This Proxy and power of attorney is expressly intended by the undersigned to be
coupled with an interest, shall be irrevocable during the term hereof, and shall
survive the death of the undersigned and the conveyance by the undersigned of
any all interest in the shres of the Company held by him.
Dated: April 15, 1996
Barry R. Sharer
/s/ Barry R. Sharer
Signature
________________________
Signature (if held jointly)
Print Name ________________________
<PAGE>
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
The undersigned, Thomas R. Petree, having received valuable consideration from
Exchange Place Capital Partners, L.L.C. ("Exchange Place") the receipt and
adequacy of which is hereby acknowledged, hereby irrevocably appoints Exchange
Place as attorney-in-fact and proxy, with full power of substitution, to vote
all of the shares of common stock of Systems Assurance Corporation, A Delaware
corporation, (the "Company"), which the undersigned is entitled to bote at any
and all special or annula shareholder meetings or through a written consent of
the shareholders, in its sole discretion on (i) up to a 350 to 1 reverse split
of the Company's issued and outstanding common stock, (ii) the election of new
directors of the Company, and (iii) a proposed merger candidate which meets the
minimum lisitng requirements as to assets and shareholders' equity to be listed
on the National Association of Security Dealaers Automatic Quotation System
("NASDAQ"). The proxy shall be effective for a period commencing upon signing
and expiring on September 1, 1996; provided that, at the option of Exchange
Place, this proxy may be extended for 30 day increments by the payment of
additional consideration as agreed to under the Agreement dated April 15, 1996,
by and between the Company, Exchange Place, the undersigned and other
individuals who are principal shareholders of the Company.
In connection with the granting of this Proxy, the undersigned represents the
following:
(1) The undersigned is the holder of 1,549,913 shares of common stock of the
Company, of record and beneficially, and has not granted any other proxies with
respect to such shares which are not revoked by this Proxy and intends for all
such shares to be covered by this Proxy.
(2) The undersigned agrees to provide such confirmations of this Proxy as
Exchange Place, or its substitutes deem necessary.
This Proxy and power of attorney is expressly intended by the undersigned to be
coupled with an interest, shall be irrevocable during the term hereof, and shall
survive the death of the undersigned and the conveyance by the undersigned of
any all interest in the shres of the Company held by him.
Dated: April 15, 1996
Thomas R. Petree
/s/ Thomas R. Petree
Signature
________________________
Signature (if held jointly)
Print Name ________________________
<PAGE>
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
The undersigned, James C. Wagner, having received valuable consideration from
Exchange Place Capital Partners, L.L.C. ("Exchange Place") the receipt and
adequacy of which is hereby acknowledged, hereby irrevocably appoints Exchange
Place as attorney-in-fact and proxy, with full power of substitution, to vote
all of the shares of common stock of Systems Assurance Corporation, A Delaware
corporation, (the "Company"), which the undersigned is entitled to bote at any
and all special or annula shareholder meetings or through a written consent of
the shareholders, in its sole discretion on (i) up to a 350 to 1 reverse split
of the Company's issued and outstanding common stock, (ii) the election of new
directors of the Company, and (iii) a proposed merger candidate which meets the
minimum lisitng requirements as to assets and shareholders' equity to be listed
on the National Association of Security Dealaers Automatic Quotation System
("NASDAQ"). The proxy shall be effective for a period commencing upon signing
and expiring on September 1, 1996; provided that, at the option of Exchange
Place, this proxy may be extended for 30 day increments by the payment of
additional consideration as agreed to under the Agreement dated April 15, 1996,
by and between the Company, Exchange Place, the undersigned and other
individuals who are principal shareholders of the Company.
In connection with the granting of this Proxy, the undersigned represents the
following:
(1) The undersigned is the holder of 2,479,860 shares of common stock of the
Company, of record and beneficially, and has not granted any other proxies with
respect to such shares which are not revoked by this Proxy and intends for all
such shares to be covered by this Proxy.
(2) The undersigned agrees to provide such confirmations of this Proxy as
Exchange Place, or its substitutes deem necessary.
This Proxy and power of attorney is expressly intended by the undersigned to be
coupled with an interest, shall be irrevocable during the term hereof, and shall
survive the death of the undersigned and the conveyance by the undersigned of
any all interest in the shres of the Company held by him.
Dated: April 15, 1996
James C. Wagner
/s/ James C. Wagner
Signature
________________________
Signature (if held jointly)
Print Name ________________________
<PAGE>
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
The undersigned, AAH Development Company, having received valuable consideration
from Exchange Place Capital Partners, L.L.C. ("Exchange Place") the receipt and
adequacy of which is hereby acknowledged, hereby irrevocably appoints Exchange
Place as attorney-in-fact and proxy, with full power of substitution, to vote
all of the shares of common stock of Systems Assurance Corporation, A Delaware
corporation, (the "Company"), which the undersigned is entitled to bote at any
and all special or annula shareholder meetings or through a written consent of
the shareholders, in its sole discretion on (i) up to a 350 to 1 reverse split
of the Company's issued and outstanding common stock, (ii) the election of new
directors of the Company, and (iii) a proposed merger candidate which meets the
minimum lisitng requirements as to assets and shareholders' equity to be listed
on the National Association of Security Dealaers Automatic Quotation System
("NASDAQ"). The proxy shall be effective for a period commencing upon signing
and expiring on September 1, 1996; provided that, at the option of Exchange
Place, this proxy may be extended for 30 day increments by the payment of
additional consideration as agreed to under the Agreement dated April 15, 1996,
by and between the Company, Exchange Place, the undersigned and other
individuals who are principal shareholders of the Company.
In connection with the granting of this Proxy, the undersigned represents the
following:
(1) The undersigned is the holder of 3,500,000 shares of common stock of the
Company, of record and beneficially, and has not granted any other proxies with
respect to such shares which are not revoked by this Proxy and intends for all
such shares to be covered by this Proxy.
(2) The undersigned agrees to provide such confirmations of this Proxy as
Exchange Place, or its substitutes deem necessary.
This Proxy and power of attorney is expressly intended by the undersigned to be
coupled with an interest, shall be irrevocable during the term hereof, and shall
survive the death of the undersigned and the conveyance by the undersigned of
any all interest in the shres of the Company held by him.
Dated: April 15, 1996
AAH Development Company
/s/ James C. Wagner
Signature
________________________
Signature (if held jointly)
Print Name ________________________
