SETTLEMENT AND EXCHANGE AGREEMENT
THIS SETTLEMENT AND EXCHANGE AGREEMENT ("Agreement") is made and entered into effective
September 25, 1995 by and between InMedica Development Corporation, a Utah corporation ("InMedica" or
the "Company") and J. Lynn Smith, an individual whose address is 5770 South 250 East, Suite 115, Salt Lake
City, Utah 84107 (the "Holder"), with regard to the following factual recitals, each of which is incorporated herein
by this reference.
A. Holder is currently the owner, beneficially and of record, of a Series A and a Series C Convertible Debenture
of the Company (the "Debenture(s)"), in the face amount of $50,000 each ($100,000 total), originally accruing
interest on the outstanding principal amount at the rate of ten percent (10%) per annum from date of purchase.
The Series A Debenture was due and payable on or before December 31, 1993 and the Series C Debenture
was due and payable on or before June 30, 1994.
B. When the Company was unable to make payment of certain interest payments, Holder and others filed suit
during 1992 in the Third District Court of Salt Lake County, Civil No. 920906818, (the "Litigation") seeking
payment of all principal and interest owing under the Debentures, which action is presently pending.
C. Thereafter, the Board of Directors of the Company agreed, among other things, to pay Holder 15% interest
(the default rate provided for in the Debentures) on the unpaid principal owing from October 1, 1992. The total
amount of principal and accrued but unpaid interest owing to Holder as of September 25, 1995 is:
D. Effective August 31, 1995, the Board of Directors of the Company has authorized the issuance of a Series A
Convertible Preferred Stock, par value $4.50 per share, paying dividends of 8% per annum on a quarterly basis
and has offered to settle the forgoing Litigation and retire Holder's Debenture by paying Holder 50% of the
amount owing in cash and issuing to Holder shares of the Series A Preferred Stock, at $