matechexh10_21.htm


    
      

    

     

    Exhibit 10.21

     

    SETTLEMENT AGREEMENT AND
RELEASE



     

    
                This
Settlement Agreement and Mutual Release (herein the “Agreement”) is made as of
December 27, 2006 (herein “Date of Execution”) by and between Stephen Forrest
Beck (herein “Beck”), an individual with offices at 489 Pimiento Lane, Santa
Barbara, CA 93108, on the one hand, and Material Technologies, Inc., a Delaware
corporation with offices at 11661 San Vicente Boulevard, Suite 707, Los Angeles,
CA 90049 (herein “Matech” or the “Company”) and Robert M. Bernstein, an
individual with the same offices as Matech (herein “Bernstein”, and together
with Matech, the
“Respondents”).

          This
Agreement is made for the purpose of finally and completely settling all claims
by, among and between Beck and Respondents, as more fully specified and
described below. 


       

    

    
      I.
RECITALS


       

    

    
                Whereas,
On April 30, 2001, Beck filed a lawsuit in the Los Angeles County
Superior Court against Respondents, in a case entitled Stephen
Forrest Beck v. Robert M. Bernstein, Material Technologies, Inc., et al.,
Civil No. BC 249547, seeking damages for breach of contract, among other
things.  On that same date, Matech filed a lawsuit in the Los Angeles
County Superior Court against Plaintiff, in a case entitled Material
Technologies v. Stephen Forrest Beck, Civil No. BC249495, demanding the
return of 244,427 shares of Matech Common Stock.  The actions were
thereafter
consolidated.

          Whereas,
on July 15, 2002, the parties entered into a settlement agreement (herein the
“July Agreement”) to resolve the civil actions filed in the Superior Court of
Los Angeles, case numbers BC249495 and
BC249547;

          Whereas,
under the terms of the July Agreement, and in consideration for Beck executing
and filing a Substitution of Attorney form and a Request for Dismissal,
Respondents agreed to issue Beck one million shares of Matech Class A Common
Stock subject to SEC Rule 144 limitations providing that such shares were not
tradable for a period of one year from the date of issuance;

      
 

      
        
           

        

        
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          Whereas
the one million shares of Matech Class A Common Stock were thereafter to be
freely tradable on NASDAQ by Beck with the limitation that Beck not trade more
than 10% of the volume of Matech shares publicly traded the previous month,
which amount was to be reduced by 50% in the event that double reporting of
trades occurred in the previous
month;

          Whereas
the percentage of Beck’s one million shares in Matech to the total number of
outstanding shares on the date of issuance, i.e. 1.78% on July 15, 2002, was not
to be diluted for a period of eighteen (18) months thereafter by the issuance of
any other Matech shares, options or warrants with no
exceptions;

          Whereas
if Respondents were to issue additional shares during the eighteen-month period,
it must simultaneously issue a sufficient number of shares to Beck such that his
percent ownership in Matech as of the date of issuance of the additional shares
remained
unchanged;

          Whereas
any subsequently issued shares to Beck would be subject to the same SEC Rule 144
limitations as the original one million
shares;

          Whereas
Matech was to establish an escrow account which would contain 2,000,000 shares
of stock with an irrevocable letter of instructions in furtherance of the
anti-dilution
provision;

          Whereas
if a dispute arose regarding the settlement agreement, the prevailing party
would be entitled to attorney’s
fees;

          Whereas,
on December 20, 2002, the parties entered into a further agreement whereby Beck
was to introduce sources of capital to Respondents (herein the “December
Agreement”); and in return for said promise was to receive an initial 500,000
shares of Matech Common Shares, increasing Beck’s non-dilutable percentage
ownership of shares to 2.67
percent; 

          Whereas
the December Agreement also provided that the current anti-dilution provision on
the shares held by Beck would be extended to July 30, 2006, and that a letter to
that effect would be sent to the transfer
agent;

          Whereas
Beck did introduce sources of potential capital to
Respondents;

          Whereas,
on September 23, 2003, Respondents reverse split Matech’s shares
outstanding 1000 to 1 and subsequently issued approximately 73 million new
shares;

          Whereas
Respondents did not subsequently issue Beck the 2.67 percent of the 73 million
shares, or 1,949,100 shares that were due to him;



      
        
           

        

        
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          Whereas
as of January 31, 2006, and subsequent to the September issuance of shares,
Respondents have issued approximately 145,911,233 additional shares, of which
Beck was entitled to 2.67 percent, or 3,895,829
shares;

          Whereas
Respondents have not issued Beck anti-dilution shares under the terms of the
July and December agreements as to the additional 2.67 percent of the
145,911,233 shares, or 3,895,829
shares;

          Whereas
Beck is now owed 5,824,929 shares from the September 2003 reverse split
and the additional shares issued between September 2003 and January 31,
2006;

          Whereas
Respondents reverse split the shares 1-for 300 as part of a recapitalization
again in October 2006, issuing up to 71 million
shares;

          Whereas
Beck brought a complaint before the Los Angeles Superior Court, in a matter
entitled Beck
v. Material Technologies, Inc., Bernstein, Case No. SC088898, and that
matter is currently pending in the West District of Los
Angeles.

          Whereas,
without admitting liability, the parties desire to avoid litigation and mutually
settle the dispute on the terms set forth
below;

          Whereas
Beck and Respondents, and each of them, have engaged in extensive good faith
negotiations in an effort to settle the dispute between them for all possible
causes of action relating to the above sequence of events, and have agreed to
resolve all said causes of action against one
another;

          Whereas,
in consideration of the waiver and release of the right to seek a judicial
determination of liability for any and all causes of action that each party may
have against the other that is the subject of the above sequence of events; and
for other good and valuable consideration not herein recited, Beck and
Respondents hereby agree as follows:



      

    

    
      II
TERMS
OF AGREEMENT  AND MUTUAL GENERAL RELEASE



       

    

    
           Section
1     Based upon the foregoing Recitals,
which are incorporated herein by this reference and form a material part of this
Agreement, and upon the mutual covenants and conditions contained in this
Agreement and upon all conditions precedent being satisfied, the following shall
occur:

       

       

      
        
           

        

        
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          (i)       The
parties, and each of them, shall execute and carry out the terms of this
Agreement.

          (ii)       Anti-Dilution
Shares: Matech shall, no later than five (5) days after the date this
agreement is executed, establish an Anti-Dilution Escrow account as described in
the Irrevocable Escrow Instructions with Interwest Transfer contained in Exhibit
A and deposit into it 5 million shares issued to Beck as of the date of
this Settlement Agreement (the “Anti-Dilution Shares”), of which no less than
1,895,000 Matech shares, or 2.67% of the 71 million shares Matech currently has
authority to issue under the recapitalization, which represent shares earned by
Beck in the July Agreement and the December Agreement, shall be immediately
tradable.  If Beck receives an amount greater than $800,000 from the sale
of 1,263,800 of such shares (1.78% of 71 million), then the remaining
Anti-Dilution Shares shall be returned to the Company.

                    (a)     Company’s
counsel shall provide an opinion that the sale of the 1,895,000 of such shares
conforms to the requirements for the public resale of shares under SEC Rule
144.

          (iii)     Downside
Protection Guarantee: Matech guarantees that Beck will receive not
 less than $800,000 (gross amount, not taking into consideration selling
expenses including commissions) from the sale of Anti-Dilution
Shares.

                    (a)     Should
Beck sell all of the shares issued to him in (ii) above and not receive total
proceeds of $800,000, then an additional number of shares (“Additional
Anti-Dilution Shares”) shall be released to Beck from the Anti-Dilution Escrow
described in (iv) below. The number of such shares shall be calculated by
subtracting the total amount received by Beck from the sale of such
Anti-Dilution Shares from $800,000 and dividing that amount by the share price
on the date on which Beck sold his last Anti-Dilution share.  If the
proceeds from the sale of such Additional Anti-Dilution Shares are not
sufficient to bring the amount received by Beck from the sale of Anti-Dilution
Shares to $800,000, then the same procedure shall be followed until Beck
receives that amount. 

                    (b)     In
the event that Beck receives $800,000 from the sale of Anti-Dilution Shares
prior to selling the full number of any Additional Anti Dilution Shares released
to him from the escrow, then he shall return to the escrow the remaining
Additional Anti-Dilution Shares once he has received $800,000.

                    (c)     Beck’s
counsel may provide an opinion that the sale of Additional Anti-Dilution Shares
conforms to the requirements for the public resale of shares under SEC Rule
144.  The



      
        
           

        

        
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Company shall provide such
documents as reasonably necessary to support such opinion.  The Company
agrees to review and reasonably honor such a Rule 144 opinion
letter.

          (iv)     Anti-Dilution
Escrow:  The Company will add shares in the name of Beck to the
escrow to maintain 5,000,000 shares in such account at all times.  The
Company will pay the cost of the escrow.  

          (v)     “Upside
Shares:”   Beck will have anti-dilution protection for 21
months from the date of the execution of this Agreement. 

                    a)     During
this period, in each quarter that Matech issues shares for any reason (except
the issuance of shares to Beck pursuant to this agreement), it will issue Beck
1.78% of the number of such shares as of the same date such shares were issued
and the shares shall be released to Beck from escrow at the end of each quarter
in which Matech issues shares to any third party.

                    b)     The
Upside Shares shall also include 1.78% of all shares issued under the
recapitalization of the Company as described in the Company’s 8K Filing of
October 27, 2006 or any other recapitalization of the Company that may
occur. 

                    c)     The
shares described in this paragraph shall be held in the Upside Shares Escrow
until the earlier of the time when Beck has received the full $800,000 from the
sale of shares from the Anti-Dilution Escrow described in Section (ii), or on
the expiration of one year from the execution date of this agreement.  At
that time, the shares in this account will be made available to Beck, will be
subject to the Trading Limitations set forth in subsection (vi), and will be
released to Beck in accordance with the terms of this Agreement.  Proceeds
from the sale of the shares in this paragraph shall not count against the
$800,000 guarantee in (iii) above.

                    d)     Respondents
will establish an “Upside Shares Escrow” by issuing 5,000,000 shares to Beck
within five (5) days of the date of this Settlement Agreement and depositing
such shares in the “Upside Shares Escrow” account.  The Company will add
shares in the name of Beck to the escrow to maintain 5,000,000 shares in such
account at all times.  The Company will pay the cost of the
escrow. 

                    e)     The
shares issued pursuant to this Section 1(v) will be “restricted securities”
under the Securities Act of 1933, will contain an appropriate restrictive
legend, and will not be saleable for at least one (1) year from the date Beck is
entitled to receive them.



    
      
         

      

      
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          (vi)     Trading
Limitations:

                    a)     Beck
will limit the number of shares traded to a non-cumulative monthly amount equal
to no more than 8% of the prior month’s volume of Matech shares as determined by
Fidelity.com., and will further limit the number of shares traded on any given
day to 1/20th
of  that amount.  The number of shares derived from the above
calculations shall be rounded up to the nearest 10 shares and that shall be the
trading limit. Rounding will be adjusted in the event the trading volume
increases in a proportionate amount as follows:  if the monthly trading
volume is at least 1 million shares for any given month, then rounding shall
increase to 100 shares; if the monthly trading volume increases to 10 million
shares for any given month, then rounding shall increase to 1,000 shares, and so
forth.  This limitation on trading shall apply to both Anti-Dilution and
Upside Shares (after they are released from escrow).  However, should the
escrow holder fail to supply Beck with the tradable shares prior to the third
trading day of the month due to their resignation or for any other reason, then
the trading volume will be raised to account for that delay.  The trading
month for purposes of this paragraph shall be from the third trading day of each
month through the second trading day of the following month.  Example 1: If
InterWest is five days late in a given month, then the volume for the remaining
days of the month will be 8% of the prior months volume divided by 15
rather than 20 (20-5=15).  Example 2:  If Interwest is two months
late, then the limit in the third month would be 8% of month one + 8% of month
two divided by 20.  In the event Beck sells more shares than he is allowed
in any given month, he will be penalized in the following month by a reduction
in the number of shares he can sell in that following month in an equal
amount.

                    b)     The
trading limitations referred to here and in other portions of this Agreement
shall be adjusted to account for any stock splits or reverse stock splits. 
For example, if in the month prior to a 100 to 1 reverse stock split the trading
volume was 30,000,000 shares, then in the month following a reverse stock split,
the monthly trading volume limit would be adjusted to 300,000 and Mr. Beck could
sell 8%, or 24,000 shares during that month with a daily limit of 1,200 per
day.  This provision shall not be interpreted to further limit the ability
of Beck to trade shares of Matech beyond the 8% limit contained in paragraph a)
above. The parties specifically acknowledge that there was a reverse stock split
in November 2006 and that the 8% calculation may need to be adjusted to account
for the reverse stock split.

                    c)     Matech
shall have the option of paying cash for any stock Mr. Beck wishes to sell
within any given month 



      
        
           

        

        
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consistent
with the other terms of the agreement by informing Mr. Beck orally and in
writing of its intent to exercise this option prior to the last day of the
previous month.  For example, if 10,000,000 shares were traded in March,
Mr. Beck could sell 8% or 800,000 shares in April.  If the stock was
selling at $.10 on April 1st, Matech would have the option of paying Mr. Beck
$80,000 cash by April 3 and Mr. Beck could not sell any stock during
April.  However, in the event that the average share price in the month in
which Matech purchases shares from Mr. Beck (as calculated by adding the closing
share price for each trading day of the month and dividing by the number of
trading days) is higher than the price paid to Mr. Beck, the Company shall pay
to Mr. Beck the difference between the amount originally paid to him and the
amount Beck would have received had he sold the shares at the average share
price for the month.  Beck will not be required to reimburse the Company in
the event that the shares price should decline below the level paid to
 Beck by the Company.

          (vii)     Waiver
of Trading Limits:  Matech may waive or increase the trading limit
for any given period of time by sending Beck a letter or email to that effect,
specifying the number of shares above the limit in (vi) above and the time
period within which such shares must be traded.

          (viii)     Failure
to Deliver Shares:  In the event that for any reason, Matech or the
escrow company has not delivered to Beck the shares to which he is entitled and
he is thereby unable to sell such shares, then the monthly trading limitation
shall be adjusted to permit Beck to sell all of the shares that he would
otherwise have been entitled to sell, calculated in accordance with (vi)(a)
above.

          (ix)     Disputes
over Trading Limits:  Beck will, no later than the fifth of each
month, provide a trading report showing the date, price, and amount of shares
sold on each day during the previous month.  This report shall be generated
by Beck’s broker.  Any dispute over Trading Limits shall not be grounds for
the Company to refuse to issue shares to Beck that are otherwise due but any
such dispute shall be resolved informally through discussion by the parties or
if this is not successful then it shall be resolved through mediation or
arbitration under the rules of the American Arbitration
Association. 

          (x)     Escrow
Instructions:  Company and Beck will send irrevocable escrow
Instructions as contained in Exhibit
A to InterWest Transfer within five (5) days of execution of this
agreement.

          (xi)     Cash
Payment: 

                    (a)     Company
shall pay the sum of $44,000 to the client trust account of Beck’s attorneys on
the date of execution of this Settlement Agreement.



        
          
             

          

          
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                    (b)     Company
will also pay Beck 7.5% (net of any expenses incurred by the company, including
finders fees and other commissions) of any cash raised from the sale of equity
(e.g. common or preferred stock, exercise of warrants or options for common or
preferred stock) by the Company beginning on December 1, 2006 until such time as
Beck has reached the $800,000 guarantee set forth in Section II.1.iii
above. 

          (xii)     Date
of Trading:  In no event shall Beck trade any shares prior to
January 1, 2007. 

          (xiii)    No
Personal Guarantee:    Bernstein shall not be personally
liable for any amounts owed to Beck.

          (xiv)    Dismissal: 
   Upon receipt of a fully executed copy of this Agreement, the
Anti-Dilution Shares, the cash payment as well as notification that the Upside
Escrow Shares have been delivered to the escrow company, Beck will dismiss the
matter that is currently before the Los Angeles Superior Court, entitled Beck
v. Matech, Case No. SC088898, subject to the court retaining jurisdiction
to enforce this settlement agreement under CCP 664.6.

     Section
2     Material
Representations   This agreement is contingent upon
the following material representation made by the Company to Beck: (1) that the
company has the intent to continue to exist and does not foresee being delisted
within at least the next nine (9) months, and (2)  that the Company has the
intent to seek additional capital after that date.

     Section
3     Release of All
Claims

          (i)     Upon
receipt of a fully executed copy of this Agreement, as well as notification that
the five (5) million Anti-Dilution Shares and the five (5) million Upside Escrow
Shares have been delivered to the escrow company, Beck, for himself and for any
and all of his alter egos, dba’s, predecessors-in-interest,
successors-in-interest, assigns, heirs, executors, past and present owners,
officers, directors, managing directors, agents, employees, attorneys, parent
companies, subsidiaries, affiliates, administrators,


           

          
            
               

            

            
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principals,
shareholders, representatives, insurers, partners (of any kind), joint
venturers, trusts, trustors, trustees, beneficiaries and all others who may take
any interest in the matter herein, hereby generally releases, acquits and
discharges Respondents, and each of them, and any and all of their respective
alter egos, dba’s, predecessors-in-interest, successors-in-interest, assigns,
heirs, executors, past and present owners, officers, directors, managing
directors, agents, employees, attorneys, parent companies, subsidiaries,
affiliates, administrators, principals, shareholders, representatives, insurers,
partners (of any kind), joint venturers, trusts, trustors, trustees,
beneficiaries, LLC members and all others who may take any interest in the
matter herein, from all claims, counterclaims, causes of actions, demands,
losses or damages of any kind, rights of offset, obligations, debts, damages,
sums of money, actions, rights, losses and expenses (including, but not limited
to, attorneys’ fees, expert fees and costs), obligations and liabilities of any
character, nature or kind, whether based in law or in equity, whether based on
contract, tort, statutory or other legal or equitable theory of recovery,
arising out of or in connection with any errors, omissions, facts, events or
matters occurring or existing at any time up to the effective date of this
Agreement, including all claims which were asserted and/or could have been
asserted in by Beck. 

          (ii)     Upon
receipt of a fully executed copy of this Agreement and Entry of Dismissal as set
forth above, Respondents, and each of them, for themselves individually and/or
collectively, and for any and all of their respective and/or collective alter
egos, dba’s, predecessors-in-interest, successors-in-interest, assigns, heirs,
executors, past and present owners, officers, directors, managing directors,
agents, employees, attorneys, parent companies, subsidiaries, affiliates,
administrators, principals, shareholders, representatives, insurers, partners
(of any kind), joint venturers, trusts, trustors, trustees, beneficiaries and
all others who may take any interest in the matter herein, hereby generally
release, acquit and discharge Beck, and any and all of its alter egos, dba’s,
predecessors-in-interest, successors-in-interest, assigns, heirs, executors,
past and present owners, officers, directors, managing directors, agents,
employees, attorneys, parent companies, subsidiaries, affiliates,
administrators, principals, shareholders, representatives, insurers, partners
(of any kind), joint venturers, trusts, trustors, trustees, beneficiaries and
all others who may take any interest in the matter herein, from all claims,
counterclaims, causes of actions, demands, losses or damages of any kind, rights
of offset, obligations, debts, damages, sums of money, actions, rights, losses
and expenses (including, but not limited to, attorneys’ fees, expert fees and
costs), obligations and liabilities of any character, nature or kind, whether
based in law or in equity, whether based on contract, tort, statutory or other
legal or equitable theory of recovery, arising out of or in connection with any
errors, omissions, facts, events or matters occurring or existing at any time up
to the effective date of this Agreement, including all claims which were
asserted and/or could have been asserted by
Respondents.  


            
              
                 

              

              
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     Section
4     Effectiveness of
Release   The parties, and each of them, hereby
acknowledge and agree that the releases contained herein by all parties to this
Agreement shall be effective when, and only when, this Agreement has been signed
by the parties hereto, and each of them.

     Section
5     Independent Legal
Advice   The parties, and each of them, hereby
acknowledge and represent that they have received independent legal advice from
attorneys of their own choosing with respect to the advisability of making the
settlement provided for in this Agreement, and with respect to the advisability
of executing this Agreement, and that they have read this Agreement in its
entirety and fully understand its contents.  Further, the parties hereto
acknowledge that this Agreement is executed voluntarily by each of them, without
any duress or undue influence on the part or on behalf of any of
them.

     Section
6     No default   The
parties, and each of them, represent and warrant that the execution, delivery
and performance of this Agreement does not contravene or constitute a default
under any agreement, contract (either implied, oral or written), judgment,
injunction, order, decree or any other binding instrument.

     Section
7     Waiver of unknown
claims   The parties, and each of them, hereby
acknowledge that they are familiar with California Civil Code 1542, which
provides as follows:

            

          

        

      

    

    
      A general
  release does not extend to claims which the creditor does not know or suspect
  to exist in his or her favor at the time of executing the release, which if
  known by him or her, must have materially affected his or her settlement with
  the debtor.

    

    With respect to
this Agreement, the parties, and each of them, hereby voluntarily waive the
provisions of California Civil Code Section 1542.

     Section
8     No other
Representations   The parties, and each of them,
hereby acknowledge that no other party or agent or attorney of any other party
has made a promise, representation, or warranty whatsoever, express or implied,
not contained herein concerning this Agreement. The parties, and each of them,
hereby acknowledge that they have not executed this Agreement in reliance upon
any promise, representation or warranty not contained
herein.



    
      
         

      

      
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     Section
9     Fully Integrated
Agreement   The parties, and each of them, hereby
acknowledge that this Agreement is an integrated agreement, and that it is the
entire agreement by, among and between the parties, and each of them, with
respect to the subject hereof and supersedes all prior and/or contemporaneous
oral and/or written agreements and discussions, if any. This Agreement may be
modified or amended only in writing, and signed by the party whose rights are
thereby affected.

     Section
10     No oral waiver   No
provisions of this Agreement may be waived unless in writing and signed by the
party whose rights are thereby waived. Waiver of any one provision of this
Agreement shall not he deemed to be a waiver of any other provision
herein.

     Section
11     No Admission   This
Agreement is a compromise of the claims between the Parties hereto, and each of
them, arising out of, among other things, the above-mentioned sequence of events
any other matters or disputes as provided for herein, which are being settled to
avoid the cost, expense and disruption of litigation related thereto. This
Agreement is the product of arms-length negotiations, and is, therefore, not to
be construed either as an admission for any purpose whatsoever on the part of
any of the parties, or any of them, other than as is necessary to enforce the
terms of this Agreement.

     Section
12     Indemnification for
Assignment   The parties, and each of them, hereby
represent and warrant that they have not previously assigned, reassigned or
transferred, or purported to assign, reassign or transfer, any claim, demand,
action, cause of action or other right released or discharged herein. The
parties, and each of them, hereby agree to indemnify one another, and to hold
the others harmless, of, from, and against any and all rights, claims, demands,
damages, debts, liabilities, obligations, accounts, reckonings, costs
(including, but not limited to, the payment of reasonable attorneys’ fees,
expert fees and costs), expenses, liens, actions, or causes of action, related
to or otherwise attributable to, any such actual or purported assignment,
reassignment or transfer, whether or not litigation is commenced.

     Section
13     Parties Will Do all that is Reasonably
Necessary   The parties, and each of them, hereby
represent and warrant that they will do all acts and execute and deliver all
documents reasonably necessary to effect all provisions of this
Agreement.

     Section
14     Prevailing Party’s Attorney’s
Fees   If litigation and/or any proceeding of any
kind or nature (e.g.,
motion, petition, etc.) is instituted to interpret or enforce this Agreement, or
any


     

    
      
         

      

      
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term
hereof, the party prevailing in that litigation or proceeding as determined by
the Court or other tribunal hearing that litigation or proceeding, shall be
entitled to recover from the non-prevailing party or parties in addition to any
other relief granted, their reasonable attorneys’ fees, costs and expenses
incurred in connection with any and all such proceedings, including without
limitation, expert witness fees incurred therein, the latter regardless of
whether a California
Code of Civil Procedure Section 998 offer or similar offer under
applicable law is or has been made.

     Section
15     Court Retains
Jurisdiction   This Agreement shall be subject to,
governed by and enforced pursuant to the laws of the State of California without
regard to conflicts of laws. Further, the parties, and each of them, hereby
agree to submit exclusively to the jurisdiction of the Los Angeles County
Superior Court in any action to interpret or enforce this Agreement or any term
hereof, which Court shall retain jurisdiction to enforce the provisions of this
Agreement or any term hereof, pursuant to, among other provisions, California
Code of Civil Procedure Section 664.6.

     Section
16     Authority to Enter into
Agreement   The parties, and each of them, hereby
represent and warrant that they have the right, power, legal capacity and
authority to enter into and satisfy the terms of this Agreement, and that no
further approval or consent of any person or entity is necessary to enter into
and satisfy the terms of this Agreement.  The parties further hereby
represent and warrant that they are the true and correct parties to the causes
of action
in the Action and that
there are no other affiliates, partnerships, corporations, joint ventures
or other entities that are the subject of this lawsuit.

     Section
17     Authorized
Representatives   The parties, and each of them,
hereby represent and warrant that the undersigned individual representatives of
each entity party  are fully authorized to execute this Agreement and to
give the releases and other promises contained herein.

     Section
18     Binding
Effect   This Agreement shall be binding upon and
inure to the benefit of each of the parties hereto and their respective alter
egos, dba’s, corporations, predecessors-in-interest, successors-in-interest,
assigns, heirs, executors, past and present owners, officers, directors,
managing directors, agents, employees, attorneys, parent companies,
subsidiaries, affiliates, administrators, principals, shareholders,
representatives, insurers, partners (of any kind), joint venturers, trusts,
trustors, trustees, beneficiaries and all others who may take any interest in
the matter herein.


      
        
           

        

        
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     Section
19     Equal Drafting
Power   This Agreement shall be construed without
regard to its drafter, and shall be construed as though the parties, and each of
them, participated equally in the drafting of this Agreement.

     Section
20     Divisibility   The
provisions of this Agreement are divisible. If any provision of this Agreement
shall be deemed invalid or unenforceable, that finding shall not affect the
applicability, validity and/or enforceability of any other provision of this
Agreement. Rather, if possible, such invalid or unenforceable provision shall be
amended to the extent necessary to render it valid and enforceable.

     Section
21     Headers Not Part of Agreement   Any
headers used are for descriptive purposes only and are not to be used in
interpreting this Agreement.

     Section
22     Notice   Any notice
that the parties are required or may desire to deliver, shall be delivered by
email and facsimile transmission, with a confirming copy sent by Federal Express
or United States mail, proper postage prepaid to the other party at the address
set forth herein below.  Such notice shall be deemed delivered on the day
that the email and facsimile transmission is made, if made during normal
business hours Pacific Standard Time (or the next business day if not sent
during normal business hours PST), provided that the sender can reasonably
demonstrate that the transmission was made or attempted.  Either party may
change its address for purposes of this Notice provision by giving notice as
provided herein.

     The
initial address for notice is as follows:

         

        
          	 	To the
      Company:	
                  Robert M.
      Bernstein, President

                  Material
      Technologies, Inc.

                  11661 San
      Vicente Blvd., Suite 707

                  Los Angeles,
      CA 90049

                  Fax: (310)
      473-3177

                  email: 
      matech@att.net

                
	 	 	 
	 	Copy
      to:	
                  Hassel Hill,
      Jr.

                  Law Offices
      of Hassel Hill, Jr.

                  220 North
      Glendale Ave.

                  Glendale, CA
      91206

                  Tel: (818)
      247-0770 Fax: (818) 247-0872

                  email:  hasselhilljr@yahoo.com

                


        

         

         

        
          
             

          

          
            13

            
              

            

          

          
             

          

        

      

      
         

        
          	 	Additional
      copy to: 	
                  Brian A.
      Lebrecht, Esq.

                  The Lebrecht
      Group, APLC

                  9900 Research
      Drive

                  Irvine,
      CA  92618

                  Tel:
      (949) 635-1240 Fax (949) 635-1244 

                  email: 
      blebrecht@thelebrechtgroup.com

                
	 	 	 
	 	To Stephen F.
      Beck: 	
                  Stephen
      Forrest Beck

                  489 Pimiento
      Lane

                  Santa
      Barbara, CA 93109

                  Fax: (805)
      969-1567

                  email: 
      SForestB@aol.com

                
	 	 	 
	 	Copy
      to: 	
                  David
      Shaub

                  Shaub &
      Williams, LLP 

                  12121
      Wilshire Blvd., Suite 205 

                  Los Angeles,
      CA 90025

                  Tel: (310)
      826-6678 Fax: (310) 826-8042

                  email: 
      admin@sw-law.com

                


        

         

        THE
PARTIES HERETO, AND EACH OF THEM, HEREBY ACKNOWLEDGE THAT THEY HAVE READ THIS
SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS AND THAT THEY FULLY KNOW, UNDERSTAND
AND APPRECIATE ITS CONTENTS AND THAT THEY SIGN THIS AGREEMENT AND MAKE THE
SETTLEMENT PROVIDED FOR HEREIN VOLUNTARILY AND OF THEIR OWN FREE
WILL.


[signature page to follow]




        
          
             

          

          
            14

            
              
 

          

          
             

          

          
          IN
WITNESS WHEREOF, the parties hereto have executed this Agreement in
multiple counterparts:



            
              	 Date: December
      27, 2006	ROBERT M.
      BERNSTEIN, an individual	 
	 	 	 
	
                       

                    	
                      /s/ Robert M.
      Bernstein

                    	 
	
                       

                    	
                       

                    	 
	
                      Date: December 27, 2006

                    	
                      MATERIAL TECHNOLOGIES, INC.,

                      a Delaware corporation

                    	 
	 	 	 
	 	/s/ Robert M.
      Bernstein	 
	 	By:       Robert M.
      Bernstein	 
	 	Its:       
      President	 
	 - and
      -	 	 
	 	 	 
	Date: December
      27, 2006    	STEPHEN
      FORREST BECK, an individual	 
	 	 	 
	 	/s/ Stephen
      F. Beck 	 


            

             

             

             

             

             

          

        

        
          



          
            
               

            

            
              15

              
                
 

            

            
               

            

          

        

      

    

     

    
      EXHIBIT
A

IRREVOCABLE ESCROW
INSTRUCITONS

















       

       

       

       

      
        
        

        
          
             

          

          
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