SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) August 9, 1995
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MANAGEMENT TECHNOLOGIES, INC.
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Exact name of Registrant as specified in its Charter)
NEW YORK
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(State of other jurisdiction of incorporation)
0-17206 13-3029797
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Commission File No. I.R.S. Employer
Identification
630 Third Avenue, New York, NY 10017
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Address of principal Zip Code
executive offices
(212) 983 5620
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Registrant's telephone
number, including area code
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ITEM 5. OTHER EVENTS
The Registrant ("the Company") completed an Agreement
on August 9, 1995 with its former Chairman and Chief Executive
Officer, Anthony J. Cataldo ("Cataldo").
The Company entered into a Separation and Release
Agreement with Cataldo, wherein the Company agreed to retain Mr.
Cataldo as an independent financial consultant at the rate of
$25,000 per month (an aggregate of $300,000) for a period of one
(1) year, in addition to paying Mr. Cataldo vacation and expenses
due to him.
In addition, as a part of the Agreement, the Company
loaned Mr. Cataldo the sum of $280,000 to purchase 212,700 shares
of Common Stock of the Company. Mr. Cataldo issued a non-
recourse Promissory Note, which provides that the Note is to be
paid from the sale of shares by Mr. Cataldo and that, in the
event there is any deficiency in the payment due to the Company,
the Company's only recourse is to look to shares pledged to it.
The Company has agreed to provide registration rights for the
shares. The shares are subject to an Escrow Pledge Agreement.
Mr. Cataldo will continue as a Director of the Company
and does not have any disagreement with the Company's policies or
practices.
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EXHIBITS
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a) Copy of Separation Agreement and Release;
b) Copy of Non-Recourse Promissory;
c) Copy of Escrow Pledge Agreement.
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SIGNATURES
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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 hereunto duly authorized.
Dated: New York, New York
August 10, 1995
MANAGEMENT TECHNOLOGIES, INC.
-----------------------------
(Registrant)
/s/ S. Keith Williams
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KEITH WILLIAMS,
President and Chief Operating Officer
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SEPARATION AGREEMENT AND RELEASE
Between
MR. ANTHONY CATALDO
and
MANAGEMENT TECHNOLOGIES, INC.
WHEREAS, the parties desire to resolve a dispute concerning
the Employment Agreement (as hereafter defined), and
WHEREAS, the parties desire to change their relationship.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises contained herein, the parties agree as follows:
1. Resignation. Effective July 13, 1995, Anthony J. Cataldo
(`Cataldo'') hereby resigns from his position as Chairman and
Chief Executive Officer of Management Technologies, Inc.,
(`MTI''), as well as from any other position(s) held by him at
MTI or any of its affiliated or subordinate companies, in order
to start his own business. His last day of active employment
will be July 13, 1995. The payments, the loan and/or benefits
provided for in this Separation Agreement and Release
(`Agreement'') shall not be payable in the event that Cataldo
revokes this Agreement as provided in Paragraph 12 hereof.
2. Recission of Employment Agreement. The employment agreement
between MTI and Cataldo dated December 31, 1991 (Exh. `A''
attached hereto), and the Amendment and Extension Agreement dated
August 1, 1994 (Exh `B'' attached hereto) (together ``Employment
Agreement') are hereby rescinded and declared to be null and
void, effective July 13, 1995. Cataldo hereby relinquishes any
and all remuneration and benefits of whatever kind or nature
whatsoever, provided for in the Employment Agreement, including
all stock options and warrants, whether or not vested.
3. Loan. In consideration for this Separation Agreement and
Release (the `Agreement''), MTI shall provide Cataldo with an
interest-free loan in the amount of $280,000.00, for the sole
purpose of acquiring MTI shares directly from MTI upon the
following terms:
a. Such shares shall be sold to Cataldo at the average of
the closing market
asked prices on the twenty (20) trading days preceding
July 13, 1995, MTI will use its best efforts to
register the shares sold to Cataldo herein without cost
or expense to Cataldo within sixty (60) days from the
date hereof. MTI represents that it will, if
possible, file said Registration Statement for the
shares purchased herein. Cataldo agrees to co-operate
with MTI with respect to said Resignation.
b. Simultaneously with his purchase of any such shares,
Cataldo will pledge
each and all of them as collateral security for the
repayment of the loan pursuant to a Pledge-Escrow
Agreement, which shall be entered into by the parties
in a mutually agreeable form. It shall provide, inter
alta, that the Pledge-Escrow Agent shall remit the
entire proceeds of all sales of MTI shares directly to
MTI until the $280,000.00 loan has been fully
satisfied. The loan at all times shall be fully
secured by the pledged MTI shares.
c. In the event that the loan is not fully paid by
December 31, 1996, it shall
be canceled and Cataldo shall have no right to any of
the remaining shares securing the said loan. There
shall be no personal recourse against Cataldo for the
repayment of the loan.
d. Cataldo and MTI shall execute all documents which are
required to
effectuate the loan, including the Pledge-Escrow
Agreement.
e. In the event that any payment provided for in Paragraph
`4.a.'' shall not be
made when due and such default continues without cause
for a period of seven (7) days after a written notice
to MTI of such default is received, the loan will be
canceled, the pledge of shares will be terminated and
the Pledge-Escrow Agent will release the shares to
Cataldo.
4. Consulting agreement. The parties agree to enter into a
Consulting Agreement which shall provide for MTI's retention of
Cataldo, on a non-exclusive basis, to locate and introduce
businesses to MTI which MTI might have an interest in acquiring,
as well as individuals and companies which might have an interest
in making a substantial investment in MTI, The Consulting
Agreement shall include, inter alia, the following provisions:
a. MTI will pay Cataldo a consulting fee in the gross
amount of Three
Hundred Thousand Dollars ($300,000.00), in equal
monthly payments of Twenty-Five Thousand Dollars
($25,000.00) for twelve (12) months commencing on the
fifteenth (15th) day following MTI's receipt of a fully
executed copy of this Agreement. No consulting fee or
other benefits shall be payable in the event that
Cataldo revokes this Agreement as provided in Paragraph
12 hereof. MTI agrees to deposit with the firm of
Baratta & Goldstein twelve (12) checks in the sum of
Twenty-Five Thousand Dollars ($25,000.00) each with an
irrevocable letter of instruction to release the first
check on the fifteenth and subsequently each check on
the fifteenth (15) day of each month to Cataldo. The
escrow agents will not have any liability or
responsibility other than to release each check, as
provided for herein.
b. In the event that any payment provided for in Paragraph
`4.a.'' shall not be
made when due and such default continues for a period
of seven (7) days after a written notice to MTI of such
default is received, Cataldo shall have the right to
accelerate payment of all amounts then remaining unpaid
hereunder, and MTI shall be obligated to pay all costs
and expenses, including reasonable attorneys' fees,
incurred by Cataldo in connection with the enforcement
of MTI's obligations hereunder.
c. Any fees earned by Cataldo under the Consulting
Agreement shall be
subject to an offset of $300,000.00 MTI and Cataldo
will set the fees for each transaction or financing on
an ad hoc basis. Cataldo understands he does not have
any authority to bind MTI without its specific written
consent.
d. No confidential or proprietary information of any kind,
nature or
description may be distributed by Cataldo to any
company or person unless publicly released by MTI or
with the prior written consent of MTI and subject to a
written confidentiality covenant approved by MTI.
5. Health insurance premiums. As additional consideration for
his Agreement and for the waivers and releases set forth in
Paragraph 14, if Cataldo elects to continue his group health
insurance coverage under COBRA, MTI will pay the premiums for the
initial three (3) months.
6,7. Salary, expenses and vacation pay. For salary earned
through July 13, 1995 and expenses due and owing to him and for
the balance of his vacation time, and expenses, Cataldo will be
paid the gross amount of $20,000 said sum will be paid by them
until 7/30/95.
8. Office use. Cataldo shall be permitted to use an office and
telephone until July 31, 1995 at MTI's discretion.
9. Board of Directors. Cataldo agrees to serve as a non-
employee member of MTI's Board of Directors throughout the
remainder of his term and thereafter, if re-elected.
10. Greater benefits. It is understood and acknowledged that
the rights and claims Cataldo herein waives are in exchange for
the loan, consulting agreement and other valuable consideration
provided under this Agreement to which he otherwise would not be
entitled, and which are greater than benefits normally given by
MTI to terminated employees. Accordingly, no such loan,
Consulting Agreement or any better benefits set forth herein will
be provided or payable in the event the Agreement is revoked as
provided in Paragraph `12'' below.
11. Waiver of reinstatement/re-employment. Cataldo expressly
waives any and all rights he may have to reinstatement or to
employment at MTI. Cataldo will not apply for, or accept,
employment with MTI or any of its subsidiaries or affiliates at
any time in the future.
12. Acknowledgments. Cataldo acknowledges that, by letter dated
6th, 1995, Mr. Keith Williams advised him to consult with an
attorney for the purpose of determining whether he should sign
this Agreement; that he, in fact, has consulted with Leon
Braunstein, Esq. of Braunstein & Co., for this purpose; that he
has been given at least twenty-one (21) days inwhich to consider
whether to sign this Agreement; that he may revoke the Agreement
within seven (7) days following its execution; and that the
Agreement does not become effective until expiration of the seven
(7) day revocation period. He further acknowledges that he fully
understands its terms and contents and that he has executed this
agreement freely and voluntarily, without duress, coercion or
undue influence.
13. Release. In consideration of the receipt of the promises
and benefits provided for in this Agreement, to which they
otherwise would not be entitled, and with the intention of
binding themselves, their heirs, families, legal representatives
and assigns, Cataldo and MTI hereby promise to forever refrain
form institution, maintaining, or in any way aiding and
proceeding upon, and FULLY AND FOREVER RELEASE AND DISCHARGE each
other and their successors and assigns, officers, directors,
shareholders, agents and employees (collectively `Releases''),
from any and all claims, demands, debts, damages, injuries
contracts (express or implied, including the Employment
Agreement), actions, or rights of actions of whatever kind or
nature whatsoever, whether known or unknown, which they had, now
have or hereafter may have against Releases by reason of or
arising our of any matter from the beginning of the world to the
day of the date of this Agreement. LIMITED TO, any and all claims
in connection with Cataldo's Employment Agreement and the
termination thereof, except any claims to enforce this Agreement.
Without limiting the generality of the foregoing, Cataldo agrees
that by entering into this Agreement he knowingly and voluntarily
waives all rights he has or may have (or the right of anyone on
his behalf) to prosecute, initiate or commence any legal
proceeding or action under the Age Discrimination in Employment
Act of 1967m 29 U.S.C. ' 621 et seq., Title VII of the Civil
Rights Act of 1964, 42 U.S.C. ' 2000e et seq., 42 U.S.C. ' 1981,
The Employee Retirement Income Security Act of 1974, 20 U.S.C. '
1001 et seq., the Family and Medical Leave Act, 29 U.S.C. ' 2601
et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. '
12101 et seq., under any and all other federal, state and local
equal employment, fair employment and civil or human rights laws
(whether statutory, regulatory or decisional(, under the
statutory, regulatory or common law of any jurisdiction,
including, but not limited to, any and all tort claims (e.g.
defamation, intentional infliction of emotional distress,
negligent hiring or retention, wrongful termination, conversion,
interference with contract, abusive discharge), and under any and
all federal, state or local laws relating to benefits, labour or
employment standards or retaliation (e.g. whistleblowing). Nor
will he voluntarily participate or assist others in any suit or
proceeding against Releases, or any of them, involving claims of
the kind waived herein.
If, prior to the date of execution of this Agreement,
Cataldo filed a charge(s) or complaint(s) against MTI and/or its
officers, directors, employees, representatives and agents,
relating to any matter released or waived herein, he agrees to
withdraw or discontinue same and execute all documents necessary
to effectuate said withdrawal.
MTI and Cataldo agree that the Release is specifically
limited to the Employment Agreement and Amendment to the
Employment Agreement stated in Exhibit `B''.
14. Not an MTI agent or representative. Cataldo agrees that he
will not hold himself out as an employee, agent or representative
of MTI or any of its subsidiaries or affiliates in connection
with any matter. In the even that he is a speaker, panelist or
participant or is called upon to otherwise participate in any
meeting, seminar, conference or forum in which matters related to
MTI are discussed (e.g., trade association meeting, investor
meetings, etc.), he agrees to disclaim expressly that he is an
employee, agent or representative of MTI or any of its
subsidiaries or affiliates in connection with any discussion
concerning MTI's business activities.
15. Duty to co-operate. Cataldo shall provide his full co-
operation to MTI and its counsel in the event MTI and/or its
successors and assigns, officers, directors, shareholders, agents
or employees commence suit against a third party(ies) or a re
named defendants or respondents in any legal proceeding, whether
before a court or administrative tribunal or in arbitration.
16. Public relations. The parties will jointly issue the press
release attached hereto on Exhibit `C''. Further, Cataldo will
submit the statement attached as Exhibit `D'' to the Securities
and Exchange Commission.
17. No disclosure. Cataldo understands that in connection with
his employment by MTI he has been privy to and acquired certain
proprietary or business confidential information and trade or
business secrets not readily available in the marketplace or to
the public. Such information may include, but is not limited to,
MTI's operations, business and strategic plans, financial and
accounting matters, sales, trading and marketing data and
strategies, the identity of customers, and the terms, conditions
and status of customers and their accounts. Cataldo agrees he
will not disclose to any third parties, directly or indirectly
(except to the extent required by judicial process or as
authorised in writing by MTI), any such confidential or
proprietary information.
18. Non-removal/return of MTI property. Cataldo agrees not to
remove any documents, equipment or property belonging to MTI, its
employees, customers or others doing business with it. He
further agrees to return, on or before July 13, 1995, all
equipment and property belonging to MTI which is now in his
possession or control, including copies of any and all documents
containing information of a proprietary or confidential nature.
He will also return, or before July 13, 1995, all credit card
representing corporate charge accounts, as well as any MTI keys,
passes, identification cards, or badges, letter heads and
visiting cards. Cataldo will purchase all furniture in his
office, and his secretarial furniture for the sum of $500, in
addition to the PC and Fax Machine for an additional $500.
19. No admission.
a. Cataldo acknowledges this Agreement is not intended,
and should not be
construed, as evidence of any wrongdoing on the part of
MTI or as any admission or evidence of liability under
any federal, state or local laws or regulations of any
nature whatsoever.
b. MTI acknowledges this Agreement is not intended, and
should not be
construed, as evidence of any wrongdoing on the part of
Cataldo or as any admission or evidence of liability
under any federal, state or local laws or regulations
of any nature whatsoever.
20. Confidentiality. Cataldo agrees that neither he nor any of
his agents or representatives shall publish, publicize or
disseminate, or cause to be published, publicised or
disseminated, any information data or documents which pertain to
or arise out of this Agreement including, but not limited to, the
terms thereof and any consideration received by him for entered
into same. Further, except as required for enforcement purposes,
Cataldo agrees not to discuss or make any statements with regard
to the terms of this Agreement, or matters relating thereto, to
the public at large or customers, employees or former employees
of MTI.
21. Successors and assigns. The provisions of this Agreement
shall inure to the benefit of and be binding upon the Releases'
successors, assigns, heirs, executors and administrators.
22. Separability. Except with respect to the Release provided
in Paragraph `13'' hereof, if any provision or part of provision
of this Agreement is found to be in violation of law or otherwise
unenforceable in any respect, the remaining provisions or part of
a provision shall remain unaffected and the Agreement shall be
reformed and construed to the maximum extent possible as if such
provision or part of a provision held to be in violation of law
or otherwise unenforceable had never been contained herein.
23. Complete agreement. It is understood this Agreement
contains the entire understanding between MTI and Cataldo and
that in executing this Agreement he is not relying upon any
representations or statements made by or on behalf of MTI not set
forth herein, The Agreement may not be changed except by an
instrument in writing signed by both parties.
24. New York law. The interpretation and application of the
terms of this Agreement shall be governed by the federal laws of
the United States and the laws of the State of New York, without
giving effect to the principles of conflict laws.
25. IN SIGNING THIS AGREEMENT, CATALDO ACKNOWLEDGES THE
FOLLOWING:
a. THAT HE HAS READ AND UNDERSTANDS THIS AGREEMENT AND HAS
BEEN ADVISED TO CONSULT WITH, AND DID CONSULT WITH AN
ATTORNEY PRIOR TO SIGNING THIS AGREEMENT;
b. THAT HE SIGNS THIS AGREEMENT VOLUNTARILY AND UNDERSTANDS
THAT THIS AGREEMENT CONTAINS A FULL AND FINAL RELEASE OF ALL
CLAIMS THAT HE HAS OR MAY HAVE AGAINST RELEASES WITH REGARD
TO THE EMPLOYMENT AGREEMENT UP TO THE PRESENT, SUBJECT TO
THE EXPECTATION SET FORTH IN PARAGRAPH 13 OF THIS AGREEMENT;
c. THAT HE HAS BEEN GIVEN A PERIOD OF AT LEAST TWENTY-ONE (21)
CALENDAR DAYS WITHIN WHICH TO CONSIDER THIS AGREEMENT; AND
d. THAT THIS AGREEMENT IS NOT MADE IN CONNECTION WITH AN EXIT
INCENTIVE OR OTHER EMPLOYMENT TERMINATION PROGRAM OFFERED
TO A GROUP OR CLASS OF EMPLOYEES.
IN WITNESS WHEREOF, this Agreement was executed this 6 day of
July, 1995
July 7, 1995 By: /s/ S. Keith Williams
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Date Name: S.K. Williams
Title: President
ANTHONY CATALDO
July 6, 1995 /s/ Anthony J. Cataldo
NON-RECOURSE
PROMISSORY NOTE
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New York, New York
July 17, 1995
FOR VALUE RECEIVED, the undersigned, ANTHONY J. CATALDO
(the "Maker"), hereby promises to pay to the order of MANAGEMENT
TECHNOLOGIES, INC. (the "Holder"), the principal sum of $280,000,
without interest, payable as per the terms and conditions of the
Separation and Release Agreement dated July 6, 1995 by and
between the Maker and the Holder.
1. Payment of principal is to be made at such address
as to which Holder shall notify the Maker, in writing, prior to
maturity, in lawful money of the United States.
2. If, under any bankruptcy or insolvency law or other
law for the reorganization arrangement, composition or similar
relief or aid of debtors or creditors: (a) the Maker is
1
adjudicated a bankrupt, or takes or seeks to take or to have
taken, or consents to the taking of, any action with respect to
him or a substantial part of his property or affairs, or (b) a
Court or other governmental authority of competent jurisdiction
(i) approves a petition seeking any such relief or aid with
respect to the Maker, (ii) appoints a trustee, receiver, or
liquidator of the Maker or of substantially all of his property
or affairs, or (iii) assumes custody or control of substantially
all of the property or affairs of the Maker; and, in both cases,
such approval or appointment is not vacated, or the custody or
control is not terminated, within sixty (60) days or stayed on
appeal, then, at the option of the Holder, the Holder may declare
the unpaid balance of the principal, if not then due and payable,
to be due and payable.
3. This Note and the rights of the Holder and
obligations of the Maker hereunder are subject to the provisions
of a Pledge Agreement by and between Anthony J. Cataldo and
Management Technologies, Inc. dated July , 1995, and the
Separation and Release Agreement as stated herein.
4. The Maker shall have the right of prepayment
subject to Paragraph 3 herein.
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5. Holder agrees that Maker will not be personally
responsible for payment, other than the pledge of stock of Maker
as provided in the Pledge Agreement stated herein.
6. In the event of any default which shall remain
uncured for a period of ten (10) days, the Holder thereof shall
have the right to accelerate payment of all principal and be
entitled to receive reasonable attorneys' fees in the event an
attorney is required to collect the amount due.
/s/ Anthony J. Cataldo
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ANTHONY J. CATALDO
PLEDGE-ESCROW AGREEMENT
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PLEDGE-ESCROW AGREEMENT made this 10th day of August,
1995, by and between ANTHONY J. CATALDO, hereinafter referred to
as the "Pledgor" and MANAGEMENT TECHNOLOGIES, INC., hereinafter
referred to as the "Pledgee".
W I T N E S S E T H:
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WHEREAS, Pledgor is a Shareholder of a Company known as
MANAGEMENT TECHNOLOGIES, INC. ("MTI"); and
WHEREAS, Pledgee has entered into a Separation
Agreement and Release dated July 6, 1995 with Pledgor; and
WHEREAS, Pledgor, in consideration of Pledgee entering
into said Agreement, is desirous of pledging his stock ownership
in MTI to Pledgee, and
WHEREAS, the parties are further desirous of defining
their rights and responsibilities with respect to said Pledge-
Escrow Agreement.
NOW, THEREFORE, IN CONSIDERATION OF
THE PREMISES AND THE MUTUAL
1
COVENANTS HEREIN CONTAINED AND
OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT OF WHICH
EACH OF THE PARTIES HERETO
ACKNOWLEDGES, IT IS HEREBY AGREED
AS FOLLOWS:
SECTION 1. Pledge. Pledgor hereby grants to Pledgee
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a first priority security interest in and to the following (the
"Pledged Collateral"):
(i) 212,700 of the issued and outstanding restricted
shares owned by Pledgor in MTI;
(ii) all additional rights received by Pledgor
pursuant to any reclassification, reorganization, increase or
reduction of capital, or stock dividend, or in substitution of or
in exchange for any of the Pledged Shares;
(iii) all shares and rights related to the 212,700
shares owned directly or indirectly by Pledgor of any person who,
after the date of this Pledge-Escrow Agreement, becomes, as a
result of any occurrence, a Subsidiary or Pledgor;
(iv) all certificates representing the shares
referred to in clauses (i), (ii) and (iii) above; and
(v) all dividends, cash, instruments and other
property or proceeds, from time to time received, receivable or
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otherwise distributed in respect of or in exchange for any and
all of the shares referred to in clauses (I), (ii) and (iii)
above.
SECTION 2. Security for Obligations. The Agreement
secures and the Pledged Collateral is security for the
indefeasible payment in full when due, whether at maturity, by
acceleration or
otherwise the obligations of Pledgor to Pledgee.
SECTION 3. Delivery of Pledged Collateral. All of
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the certificates representing the Pledged Collateral shall be
delivered to Baratta & Goldstein, as Pledge-Escrow Agents,
pursuant to the within Agreement. The consent of Baratta &
Goldstein is endorsed upon the within Agreement. The
certificates shall be in suitable form for transfer and
accompanied by duly executed instruments undated and in blank and
in the appropriate form which will enable the transfer of said
stock certificates in the event of a default which remains
uncured. In the event of a default under the terms and
conditions of the Separation and Release Agreement
("Separation"), which default shall specifically and only refer
to payment by CATALDO of all sums due as per the Separation
Agreement, then and in that event, the Pledgee, upon receipt from
the Pledge-Escrow Agent of the Pledged Shares shall have the
right to exchange such stock certificates in the name of Pledgee
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and/or take the action it deems appropriate to sell, assign or
transfer all or any part of said stock in satisfaction of the
outstanding financial obligation of Pledgor to the Pledgee.
The Pledgee will have the discretion to sell by public
or private sale the shares of stock herein and as long as the
provisions of the Uniform Commercial Code concerning the sale of
collateral are adhered to, then and in that event, Pledgee shall
be permitted, at its discretion, to retain said shares of stock
or sell said shares of stock to a third party or entity subject
to the applicable rules and regulations of the Securities and
Exchange Act as made and promulgated.
At the written instruction of the Pledgor to the Pledge
Agent to deliver said pledged shares against payment to Pledgee,
the Escrow Agent shall notify the Pledgor. Payments received
will be paid to Pledgee against the $280,000 sum due Pledgee.
Upon payment in full, the balance of shares and/or funds will be
paid to Pledgor. Pledgee and Pledgor indemnify and hold harmless
the Pledge-Escrow Agents from any actions as per the request to
sell and deliver said shares as long as payment is made to
Pledgee or its successors in interest.
SECTION 4. Representations and Warranties . Pledgor
------------------------------
makes the following representations and warranties, each and all
of which shall survive the execution and delivery of this
Agreement:
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(a) The Pledged Shares (i) have been duly authorized
and validly issued; (ii) are fully paid and non-assessable; and
(iii) constitute fully paid non-assessable issued and outstanding
shares of the capital stock of Pledgee. There are no existing
options, warrants, calls or commitments of any character
whatsoever relating to any of the Pledged Shares except as
provided for herein.
(b) Pledgor is, and at the time of the delivery of the
Pledged Collateral to the Pledge-Escrow Agents, will be the legal
and beneficial owner of the Pledged Collateral, free and clear of
any lien, security interest or other charge or encumbrance,
except for the lien created hereby.
(c) The pledge of the Pledged Shares pursuant hereto
creates a valid and perfected first priority security interest in
the Pledged Collateral, securing payment of the full sum due
Pledgee as per the Promissory Note and Separation Agreement. A
true copy of said Agreement is annexed hereto and made a part
hereof, and Pledgor and Pledgee recognize and agree that said
Agreement and the terms contained therein, with respect to the
212,700 shares of common stock of Pledgee, will be binding on all
parties to the within Agreement.
(d) No consent, authorization, approval, or other
action by, and no notice to or filing with, any person or
Governmental authority is required for (i) the pledge by Pledgor
of the Pledged Collateral pursuant hereto or the execution,
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delivery of performance hereof by Pledgor or (ii) the exercise by
the Pledgee of the voting or other rights provided for herein or
the remedies in respect of the Pledged Collateral pursuant
hereto, except as may be required in connection with the
disposition of the Pledged Collateral by laws affecting the
offering and sale of securities generally.
(e) Pledgor has full power, authority and legal right
to pledge all the Pledged Collateral pursuant hereto.
(f) Pledgor acknowledges that he was represented by
independent counsel.
(g) Pledgor warrants that he qualifies under the
exemption relied upon by Pledgee of the Securities Act and that
Pledgor is a qualified investor.
SECTION 5. Further Assurances; Supplements. Pledgor
-------------------------------
agrees that at any time and from time to time, at the reasonable
expense of Pledgor, Pledgor will promptly execute and deliver
such further instruments and documents, and take such further
action, as may be necessary or desirable, or that the Pledgee may
request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the
Pledgee to exercise and enforce their rights and remedies
pursuant hereto with respect to any of the Pledged Collateral.
Pledgor agrees to defend the title to the Pledged
Collateral and the lien thereon and security interest therein of
the Pledgee against the claim of any person and to maintain and
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preserve such lien and security interest until payment in full
of the obligations of Pledgor to Pledgee.
SECTION 6. Voting Rights; Dividends; etc.
------------------------------
(a) As long as no default or event of default shall
have occurred and be continuing;
(i) As long as there is no prejudice to Pledgee's
rights with respect to the collateral pledged, Pledgor shall be
entitled to exercise any and all voting and other consensual
rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms hereof. However,
no Pledgor shall exercise or refrain from exercising any such
right, if in the Pledgee's reasonable judgment, such action would
(A) have a material adverse effect on the value of the Pledged
Collateral or any part thereof or the Pledgee's interests
therein, or (B) authorize or effect (x) a dissolution,
liquidation, merger, or sale of all or substantially all of the
assets of MTI, (y) a material amendment of the Certificate of
Incorporation of MTI, or (z) an alteration of the voting rights
of the stock of MTI; and provided further, that Pledgor shall
give the Pledgee at least five (5) days written notice of the
manner in which it intends to exercise, or the reasons for
refraining from exercising. It is understood, however, that the
voting by Pledgor of any of the Pledged Shares for or Pledgor's
consent to the election of directors at a regularly scheduled
annual or other meeting of stockholders, shall not be deemed
7
inconsistent with the terms of this Agreement, and no notice of
any such voting or consent need be given to Pledgee.
(ii) Pledgor shall be entitled to receive and retain
any and all dividends and other distributions paid in respect of
the Pledged Collateral, other than any and all
(A) dividends or other distributions paid or
payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed in
respect of, or in exchange for, any of the Pledged Collateral;
(B) dividends or other distributions paid or
payable in cash in respect of any of the Pledged Collateral in
connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or
paid-in surplus; and
(C) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any of the Pledged
Collateral, all of which shall be, and all of which shall be
forthwith delivered to Pledgee to hold as, part of the Pledged
Collateral and, if received by Pledgor, shall be received in
trust of the benefit of the Pledgee, segregated from the other
property or funds of Pledgor, and forthwith delivered to Pledgee
as part of the Pledged Collateral in the form received (with any
necessary endorsement).
(b) Upon the occurrence and during the continuance of
a default or event of default:
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(i) Upon notice to Pledgor by Pledgee, all rights
of Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to
Section 6 (a) (i) hereof shall cease, and all such rights shall
thereupon become vested in the Pledgee, who shall thereupon have
the sole right to exercise such voting and other consensual
rights.
(ii) All rights of Pledgor to receive the
dividends.
SECTION 7. Transfers and Other Liens; Additional
----------------------------------------
Shares.
------
(A) Pledgor agrees that it will not:
(i) sell, assign, or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged
Collateral, or
(ii) create or permit to exist any lien, security
interest, or other charge or encumbrance upon or with respect to
any of the Pledged Collateral, except for the lien in favor of
the Pledgee pursuant hereto.
(b) Pledgor agrees that it will:
(i) cause each issuer of the Pledged Shares not
to issue any stock or securities in addition to or in
substitution for the Pledged Shares except to Pledgor;
9
(ii) pledge, immediately upon its acquisition
(directly or indirectly) thereof, any and all shares of stock of
any person who, after the date of this Agreement, becomes a
Subsidiary of Pledgee.
SECTION 8. Pledgee Appoints Attorney-in-Fact. Pledgor
---------------------------------
hereby irrevocably appoints Pledgee as Pledgor's attorney-in-
fact, with the full authority in the place and stead of Pledgor
and in the name of Pledgor or otherwise, from time to time in the
Pledgee's discretion to take any action and to execute any
instrument which Pledgee may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to Pledgor representing any dividend, interest payment or
other distribution in respect of the Pledged Collateral or any
part thereof and to give full discharge for the same. This
power, being coupled with an interest, is irrevocable.
SECTION 9. Remedies upon Default. If any default or
---------------------
event of default shall have occurred and be continuing:
(a) (i) Pledgee may exercise in respect of the
pledged Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights
and remedies of a secured party in case of a default by a debtor
under the Uniform Commercial Code, and the Pledgee may also,
without notice except as specified below, sell the Pledged
10
Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange or broker's board, at any of the
Pledgee's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Pledgee may deem
commercially reasonable.
(ii) Pledgor agrees that, to the extent notice of
sale shall be required by law, at least ten (10) days notice to
Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute
reasonable notification. The Pledgee shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale
having been given. The Pledgee may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Pledgor
hereby waives any claims against the Pledgee arising by reason of
the fact that the price at which any of the Pledged Collateral
may have been sold at such private sale was less than the price
which might have been obtained at a public sale, even if the
Pledgee accepts the first offer received and do not offer the
Pledged Collateral to more than one offeree.
(b) All proceeds received will be applied first to the
payment of the costs and expenses of such sale, including,
without limitation, reasonable compensation to the Pledgee and
11
her agents and counsel, and all expenses, liabilities and
advances made or incurred by the Pledgee in connection therewith;
Next, to the Pledgee, for the payment in full of the
secured obligations; and
Finally, after payment in full of all the secured
obligations, to the payment to the Pledgee, or his successors or
assigns, or to whomsoever may be lawfully entitled to receive the
same or as a Court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
SECTION 10. Expenses. Pledgor shall, upon demand, be
--------
jointly and severally responsible to pay to the Pledgee the
amount of any and all expenses, including the fees and expenses
of its counsel and of any experts and agents which the Pledgee
may reasonably incur in connection with (a) administration of
this Agreement; (b) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the
Pledged Collateral, (c) the exercise or enforcement of any of the
rights of the Pledgee pursuant hereto or (d) the failure by
Pledgor to perform or observe any of the provisions hereof.
SECTION 11. Security Interest Absolute. All rights of
--------------------------
the Pledgee and security interests granted herein, and all
obligations of the Pledgor pursuant hereto.
12
SECTION 12. Pledged Shares. The parties to the
---------------
within Agreement understand and agree that the shares of stock
delivered to the Pledge-Escrow Agent will be released as follows:
Upon written certification by Pledgee that 100% of the
purchase price for the MTI stock is paid in full to Pledgee.
SECTION 13. Amendments, etc. No amendment or waiver
----------------
of any provision of this Agreement, nor consent to any departure
by Pledgor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Pledgee, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 14. Addresses for Notices. All notices
----------------------
required or permitted to be given by the parties hereto shall be
in writing and mailed by certified mail, return receipt
requested, and by regular mail to the other parties as follows:
If to Pledgor, at
Mr. Anthony J. Cataldo
4 High Meadows Road
Mount Kisco, New York 10549
If to Pledgee, at
Management Technologies, Inc.
13
630 Third Avenue
New York, New York 10017
With a copy to
BARATTA & GOLDSTEIN
597 Fifth Avenue
New York, New York 10017
SECTION 15. No Waiver . No failure on the part of
---------
the Pledgee to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
SECTION 16. Severability. The illegality or
------------
unenforceability of any provision of this Agreement or any
instrument or document required pursuant thereto shall not in any
way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or
document required pursuant hereto.
SECTION 17. Governing Law; Terms. This Agreement
--------------------
shall be governed by, and construed in accordance with, the laws
of the State of New York.
14
IN WITNESS WHEREOF, the parties have set their hands
and seals on the day, month and year first above written.
PLEDGOR
/s/ Anthony J. Cataldo
----------------------
ANTHONY J. CATALDO,
PLEDGEE
MANAGEMENT TECHNOLOGIES, INC.
By: /s/S.Keith Williams
The undersigned, BARATTA & GOLDSTEIN, agrees to act as
Pledge-Escrow Agents, with the understanding that it is only
responsible for the possession of the pledged shares and, in the
event of a dispute, that the shares or proceeds will be deposited
in a Court of competent jurisdiction for a judicial
determination. Pledgor and Pledgee agree to pay equally all
costs and expenses related to the deposit of said shares or
proceeds. The parties agree that Baratta & Goldstein has
15
represented MTI (Pledgee), and that Cataldo (Pledgor) was
represented by Leon Braunstein, Esq. with respect to said
Agreement.
PLEDGOR
/s/ Anthony J.Cataldo
---------------------
ANTHONY J. CATALDO,
PLEDGEE
MANAGEMENT TECHNOLOGIES, INC.
By: /s/ Keith Williams
------------------
KEITH WILLIAMS
President and Chief Operating
Officer
AGREED TO:
16
BARATTA & GOLDSTEIN
By:/s/ Baratta & Goldstein
-----------------------
