SETTLEMENT AGREEMENT
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AGREEMENT dated as of the 13th day of September, 1995, by
and between MIDLAND ASSOCIATES, a New York partnership having
offices at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000
(hereinafter referred to as "MIDLAND") and MANAGEMENT
TECHNOLOGIES, INC., a New York corporation having offices at 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereinafter referred to
as "MTI").
W I T N E S S E T H:
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WHEREAS, MIDLAND has made a secured loan to MTI on July 11,
1994; and
WHEREAS, said loan was guaranteed by MTI's wholly owned
subsidiaries (Winter Partners); and
WHEREAS, MTI pledged all of its right, title and interest in
shares of stock owned by it in NEW PARADIGM SOFTWARE CORP.
("NPSC"); and
WHEREAS, MTI and Winter Partners pledged additional
collateral to MIDLAND; and
WHEREAS, the parties are desirous of settling all of the
outstanding claims of MIDLAND against MTI.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL
COVENANTS AND PROMISES AND OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY
ACKNOWLEDGED, IT IS MUTUALLY AGREED AS FOLLOWS:
FIRST: That the sum of $1,064,065.68, inclusive
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of interest and other related costs, charges and attorneys' fees,
is due to MIDLAND, and that in full settlement of MTI's
obligation to make payment to MIDLAND, MIDLAND is agreeable to
the assignment and transfer of the following:
(a) 439,999 shares of restricted common
stock owned by MTI in NPSC, representing all of the shares of
common stock of NPSC owned by MTI.
(b) 180,000 common stock purchase
warrants owned by MTI in NPSC, representing all of the warrants
to purchase common stock of NPSC owned by MTI.
(c) A revised and restructured
replacement common stock warrant in MTI currently owned by
MIDLAND, providing for the issuance of warrants to purchase
571,429 post-reverse split shares of common stock of MTI at an
exercise price of $1.00 per share exercisable during the period
commencing as of the date hereof through July 10, 2000, in
addition to a revised and restructured replacement common stock
purchase warrant owned by Xxxxxx Xxxxx in MTI, providing for the
issuance of warrants to purchase 723,572 post-reverse split
shares of common stock of MTI at an exercise price of $1.00 per
share exercisable during the period commencing as of the date
hereof through July 10, 2000.
SECOND: The parties understand and agree that
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upon execution of the within settlement agreement that MTI will
transfer to MIDLAND and Xxxxx 439,999 shares of common stock
owned by it in NPSC, 180,000 common stock purchase warrants in
NPSC and a revised common stock purchase warrants in MTI to
MIDLAND and Xxxxx as provided for herein. Annexed hereto and
marked Exhibit 1 is the form of revised and restructured common
stock purchase warrant in MTI to be issued to each of MIDLAND and
Xxxxx.
THIRD: MTI warrants and represents that MTI has
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the right and power to transfer the stock and warrants in NPSC to
Midland pursuant to this agreement. MTI has not transferred or
pledged the stock and warrants in NPSC to any party other than
Midland and since the pledge of a first priority security
interest in the stock to Midland on or about July 11, 1994, MTI
has not incurred, nor permitted to be incurred, any other liens,
claims, charges, adverse interests, restrictions or encumbrances
affecting such stock or warrants (except for certain transfer
restrictions set forth in a "lock-up" agreement between MTI and
NPSC). MTI is not aware of any claims of third parties relating
to such stock or warrants. The securities being transferred to
MIDLAND and Xxxxx in full settlement of the promissory note and
debt due to MIDLAND by MTI are being accepted by MIDLAND and
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Xxxxx based upon the within representations and warranties by
MTI.
FOURTH: Upon tendering of the stock and warrants
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referred to herein, MIDLAND agrees that it will provide
satisfactions of all liens provided to it by MTI as per the July
11, 1994 agreement. Effective upon the execution and delivery of
this agreement by both MTI and MIDLAND and the consummation of
the transactions referred to herein, MTI and MIDLAND each hereby
release and discharge the other from all claims arising out of
the promissory note and debt due from MTI to MIDLAND, except with
regard to any matters contained in or referred to in this
agreement and except further that nothing herein shall be deemed
to release or discharge MTI from its obligations relating to (a)
MTI's agreements with Xxxxxx X. Xxxxx relating to MTI's
securities or (b) MTI's agreements relating to Financial
Performance Corporation, except that MTI will be required to
comply with the terms of its settlement agreement with MCI
Telecommunications, Inc. It is further understood that MTI will
be required to amend its disclosure filing with the SEC
concerning the transaction with Midland and that it will provide
a copy of the disclosure to Midland and Xxxxx simultaneously with
its filing with the SEC.
FIFTH: That the parties agree to cooperate with
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each other in providing any additional documents which may be
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required to settle or to implement the terms and conditions of
the within settlement agreement. MTI and MIDLAND have taken the
appropriate action to implement and ratify the within agreement.
SIXTH: The within agreement is governed by the
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laws of the State of New York and cannot be changed, modified or
altered, except in writing executed by the parties hereto.
SEVENTH: In the event that any notice under the
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within Agreement is required, said notice shall be in writing,
addressed to the parties as follows:
If to Midland: Kaufman, Friedman, Plotnicki & Grun, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to MTI: Xxxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
EIGHTH: The parties hereby authorize their
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respective attorneys to make any revisions, changes or necessary
additions to this agreement and all documents executed in
connection herewith.
IN WITNESS WHEREOF, the parties have set their hands and
seals the month, day and year first above written.
MIDLAND ASSOCIATES
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By: /s/ Xxxxxx X. Xxxxx
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MANAGEMENT TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxxxxxx
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