Document:

Exhibit 10.1

 

INDEMNIFICATION AGREEMENT

 

This
Indemnification Agreement (“Agreement”) is made as of                 
    , 2008 by and between International Rectifier
Corporation, a Delaware corporation (the “Company”), and                             
(“Indemnitee”).  This Agreement
supersedes and replaces any and all previous Agreements between the Company and
Indemnitee covering the subject matter of this Agreement.

 

RECITALS

 

WHEREAS,
highly competent persons have become more reluctant to serve publicly-held
corporations as [directors] [officers] or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of
their service to and activities on behalf of the corporation;

 

WHEREAS, the
Board of Directors of the Company (the “Board”) has determined that, in order
to attract and retain qualified individuals, the Company will attempt to
maintain on an ongoing basis, at its sole expense, liability insurance to
protect persons serving the Company and its subsidiaries from certain
liabilities.  Although the furnishing of
such insurance has been a customary and widespread practice among United States-based
corporations and other business enterprises, the Company believes that, given
current market conditions and trends, such insurance may be available to it in
the future only at higher premiums and with more exclusions.  At the same time, directors, officers, and
other persons in service to corporations or business enterprises are being
increasingly subjected to expensive and time-consuming litigation relating to,
among other things, matters that traditionally would have been brought only
against the Company or business enterprise itself.  The By-laws of the Company require
indemnification of the officers and directors of the Company.  Indemnitee may also be entitled to
indemnification pursuant to the General Corporation Law of the State of
Delaware (the “DGCL”).  The By-laws and
the DGCL expressly provide that the indemnification provisions set forth
therein are not exclusive, and thereby contemplate that contracts may be
entered into between the Company and members of the board of directors,
officers and other persons with respect to indemnification;

 

WHEREAS, the
uncertainties relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons;

 

WHEREAS, the
Board has determined that the increased difficulty in attracting and retaining
such persons is detrimental to the best interests of the Company and its
stockholders and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future;

 

WHEREAS, it is
reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, such persons to the
fullest 

 

 

extent permitted by applicable law so that they will serve or continue
to serve the Company free from undue concern that they will not be so
indemnified;

 

WHEREAS, this
Agreement is a supplement to and in furtherance of the By-laws of the Company
and any resolutions adopted pursuant thereto, and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder;

 

WHEREAS,
Indemnitee does not regard the protection available under the Company’s By-laws
and insurance as adequate in the present circumstances, and may not be willing
to serve as an officer or director without adequate protection, and the Company
desires Indemnitee to serve in such capacity. 
Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Company on the condition that he be
so indemnified; and

 

NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.               Services to the
Company.   Indemnitee agrees to serve as a [director]
[officer] of the Company or, at the request of the Company, as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise.  Indemnitee may at any time and for any reason
resign from such position (subject to any other contractual obligation or any
obligation imposed by operation of law), in which event the Company shall have
no obligation under this Agreement to continue Indemnitee in such
position.  This Agreement shall not be
deemed an employment contract between the Company (or any of its subsidiaries
or any Enterprise) and Indemnitee. 
Indemnitee specifically acknowledges that Indemnitee’s employment with
the Company (or any of its subsidiaries or any Enterprise), if any, is at will,
and the Indemnitee may be discharged at any time for any reason, with or
without cause, except as may be otherwise provided in any written employment
contract between Indemnitee and the Company (or any of its subsidiaries or any
Enterprise), other applicable formal severance policies duly adopted by the
Board, or, with respect to service as a director or officer of the Company, by
the Company’s Certificate of Incorporation, the Company’s By-laws, and the
DGCL.  The foregoing notwithstanding,
this Agreement shall continue in force after Indemnitee has ceased to serve as
an [officer] [director] [employee] of the Company.

 

Section 2.               Definitions.   As
used in this Agreement:

 

(a)           References to “agent”
shall mean any person who is or was a director, officer, or employee of the
Company or a Subsidiary of the Company or other person authorized by the
Company to act for the Company, to include such person serving in such capacity
as a director, officer, employee, fiduciary or other official of another
corporation, partnership, limited liability company, joint venture, trust or
other Enterprise at the request of, for the convenience of, or to represent the
interests of the Company or a Subsidiary of the Company.

 

(b)           A “Change in Control”
shall be deemed to occur upon the earliest to occur after the date of this
Agreement of any of the following events:

 

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i.              Acquisition of Stock
by Third Party.  Any Person (as defined
below) is or becomes the Beneficial Owner (as defined below), directly or indirectly,
of securities of the Company representing twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding securities;

 

ii.             Change in Board of
Directors.  During any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in Sections
2(b)(i), 2(b)(iii) or 2(b)(iv)) whose election by the Board or nomination
for election by the Company’s stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
of the members of the Board;

 

iii.            Corporate
Transactions.  The effective date of a
merger or consolidation of the Company with any other entity, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 51% of the combined
voting power of the voting securities of the surviving entity outstanding
immediately after such merger or consolidation and with the power to elect at
least a majority of the board of directors or other governing body of such
surviving entity;

 

iv.            Liquidation.  The approval by the stockholders of the
Company of a complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the Company’s
assets; and

 

v.             Other Events.  There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A (or a response to any similar item on any similar schedule or
form) promulgated under the Exchange Act (as defined below), whether or not the
Company is then subject to such reporting requirement.

 

For purposes of this Section 2(b), the
following terms shall have the following meanings:

 

(A)          “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended from time to time.

 

(B)           “Person” shall have the meaning as set forth
in Sections 13(d) and 14(d) of the Exchange Act; provided, however,
that Person shall exclude (i) the Company, (ii) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, and
(iii) any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company.

 

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(C)            “Beneficial Owner” shall have the meaning
given to such term in Rule 13d-3 under the Exchange Act; provided,
however, that Beneficial Owner shall exclude any Person otherwise becoming a
Beneficial Owner by reason of the stockholders of the Company approving a
merger of the Company with another entity.

 

(c)           “Corporate Status”
describes the status of a person who is or was a director, officer, employee or
agent of the Company or of any other corporation, limited liability company,
partnership or joint venture, trust, employee benefit plan or other enterprise
which such person is or was serving at the request of the Company.

 

(d)           “Disinterested Director”
means a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification is sought by Indemnitee.

 

(e)           “Enterprise” shall mean
the Company and any other corporation, limited liability company, partnership,
joint venture, trust, employee benefit plan or other enterprise of which
Indemnitee is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary.

 

(f)            “Expenses” shall
include all reasonable attorneys’ fees, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees,
any federal, state, local or foreign taxes imposed on Indemnitee as a result of
the actual or deemed receipt of any payments under this Agreement, ERISA excise
taxes and penalties, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding. 
Expenses also shall include (i) Expenses incurred in connection
with any appeal resulting from any Proceeding, including without limitation the
premium, security for, and other costs relating to any cost bond, supersedeas
bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 14(d) only,
Expenses incurred by Indemnitee in connection with the interpretation,
enforcement or defense of Indemnitee’s rights under this Agreement, by
litigation or otherwise.  The parties
agree that for the purposes of any advancement of Expenses for which Indemnitee
has made written demand to the Company in accordance with this Agreement, all
Expenses included in such demand that are certified by affidavit of Indemnitee’s
counsel as being reasonable shall be presumed conclusively to be
reasonable.  Expenses, however, shall not
include amounts paid in settlement by Indemnitee or the amount of judgments or
fines against Indemnitee.

 

(g)           “Independent Counsel”
means a law firm, or a member of a law firm, that is experienced in matters of
corporation law and neither presently is, nor in the past five years has been,
retained to represent:  (i) the
Company or Indemnitee in any matter material to either such party (other than
with respect to matters concerning the Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements), or (ii) any
other party to the Proceeding giving rise to a claim for indemnification
hereunder.  Notwithstanding the
foregoing, the term “Independent Counsel” shall not include any person who,
under the applicable standards 

 

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of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement. 
The Company agrees to pay the reasonable fees and expenses of the
Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.

 

(h)           The term “Proceeding”
shall include any threatened, pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether
brought in the right of the Company or otherwise and whether of a civil,
criminal, administrative legislative, or investigative (formal or informal)
nature, including any appeal therefrom, in which Indemnitee was, is or will be
involved as a party, potential party, non-party witness or otherwise by reason
of the fact that Indemnitee is or was a director or officer of the Company, by
reason of any action taken by him or of any action on his part while acting as
director or officer of the Company, or by reason of the fact that he is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, limited liability company, partnership, joint venture,
trust or other enterprise, in each case whether or not serving in such capacity
at the time any liability or expense is incurred for which indemnification,
reimbursement, or advancement of expenses can be provided under this
Agreement.  If the Indemnitee believes in
good faith that a given situation may lead to or culminate in the institution
of a Proceeding, this shall be considered a Proceeding under this paragraph.

 

(i)            Reference to “other
enterprise” shall include employee benefit plans; references to “fines” shall
include any excise tax assessed with respect to any employee benefit plan;
references to “serving at the request of the Company” shall include any service
as a director, officer, employee or agent of the Company which imposes duties
on, or involves services by, such director, officer, employee or agent with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to be in
the best interests of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in manner “not opposed to the best interests
of the Company” as referred to in this Agreement.

 

Section 3.               Indemnity in
Third-Party Proceedings.   The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 3 if Indemnitee is, or is
threatened to be made, a party to or a participant in any Proceeding, other
than a Proceeding by or in the right of the Company to procure a judgment in
its favor.  Pursuant to this Section 3,
Indemnitee shall be indemnified to the fullest extent permitted by applicable
law against all Expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee or on his behalf in connection
with such Proceeding or any claim, issue or matter therein, if Indemnitee acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company and, in the case of a criminal proceeding had
no reasonable cause to believe that his conduct was unlawful.  The parties hereto intend that this Agreement
shall provide to the fullest extent permitted by law for indemnification in
excess of that expressly permitted by statute, including, without limitation,
any indemnification provided by the 

 

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Company’s
Certificate of Incorporation, its Bylaws, vote of its stockholders or
disinterested directors or applicable law.

 

Section 4.               Indemnity in
Proceedings by or in the Right of the Company.   The
Company shall indemnify Indemnitee in accordance with the provisions of this Section 4
if Indemnitee is, or is threatened to be made, a party to or a participant in
any Proceeding by or in the right of the Company to procure a judgment in its
favor.  Pursuant to this Section 4,
Indemnitee shall be indemnified to the fullest extent permitted by applicable
law against all Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter
therein, if Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company.  No indemnification for Expenses shall be made
under this Section 4 in respect of any claim, issue or matter as to which
Indemnitee shall have been finally adjudged by a court to be liable to the
Company, unless and only to the extent that the Delaware Court of Chancery or
any court in which the Proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification.

 

Section 5.               Indemnification
for Expenses of a Party Who is Wholly or Partly Successful.   Notwithstanding any other provisions of this
Agreement, to the fullest extent permitted by applicable law and to the extent
that Indemnitee is a party to (or a participant in) and is successful, on the
merits or otherwise, in any Proceeding or in defense of any claim, issue or
matter therein, in whole or in part, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by him in connection
therewith.  If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with or related to
each successfully resolved claim, issue or matter to the fullest extent
permitted by law.  For purposes of this Section and
without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.

 

Section 6.               Indemnification
For Expenses of a Witness.   Notwithstanding any other provision of this
Agreement, to the fullest extent permitted by applicable law and to the extent
that Indemnitee is, by reason of his Corporate Status, a witness or otherwise
asked to participate in any Proceeding to which Indemnitee is not a party, he
shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith.

 

Section 7.               Partial
Indemnification.   If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of
Expenses, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee
is entitled.

 

6

 

Section 8.               Additional Indemnification.

 

(a)           Notwithstanding any
limitation in Sections 3, 4, or 5, the Company shall indemnify Indemnitee to
the fullest extent permitted by applicable law if Indemnitee is a party to or
threatened to be made a party to any Proceeding (including a Proceeding by or
in the right of the Company to procure a judgment in its favor) against all
Expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee in connection with the Proceeding.

 

(b)           For purposes of Section 8(a),
the meaning of the phrase “to the fullest extent permitted by applicable law”
shall include, but not be limited to:

 

i. to the fullest extent permitted
by the provision of the DGCL that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision of any amendment
to or replacement of the DGCL, and

 

ii.                to the fullest
extent authorized or permitted by any amendments to or replacements of the DGCL
adopted after the date of this Agreement that increase the extent to which a
corporation may indemnify its officers and directors.

 

Section 9.               Exclusions.   Notwithstanding any provision in this
Agreement, the Company shall not be obligated under this Agreement to make any
indemnity in connection with any claim made against Indemnitee:

 

(a)           for which payment has
actually been made to or on behalf of Indemnitee under any insurance policy or
other indemnity provision, except with respect to any excess beyond the amount
paid under any insurance policy or other indemnity provision; or

 

(b)           for (i) an
accounting of profits made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of Section 16(b) of
the Exchange Act (as defined in Section 2(b) hereof) or similar provisions
of state statutory law or common law, or (ii) any reimbursement of the
Company by the Indemnitee of any bonus or other incentive-based or equity-based
compensation or of any profits realized by the Indemnitee from the sale of
securities of the Company, as required in each case under the Exchange Act
(including any such reimbursements that arise from an accounting restatement of
the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”), or the payment to the Company of profits arising from
the purchase and sale by Indemnitee of securities in violation of Section 306
of the Sarbanes-Oxley Act); or

 

(c)           except as provided in Section 14(d) of
this Agreement, in connection with any Proceeding (or any part of any Proceeding)
initiated by Indemnitee, including any Proceeding (or any part of any
Proceeding) initiated by Indemnitee against the Company or its directors,
officers, employees or other indemnitees, unless (i) the Board authorized
the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the
Company provides the indemnification, in its sole discretion, pursuant to the
powers vested in the Company under applicable law.

 

7

 

Section 10.             Advances of Expenses.   In
accordance with the pre-existing requirement of Section 1 of Article VII
of the By-laws of the Company, and notwithstanding any provision of this
Agreement to the contrary, the Company shall advance, to the extent not
prohibited by law, the Expenses incurred by Indemnitee in connection with any
Proceeding, and such advancement shall be made within thirty (30) days after
the receipt by the Company of a statement or statements requesting such
advances from time to time, whether prior to or after final disposition of any
Proceeding.  Advances shall be unsecured
and interest free.  Advances shall be
made without regard to Indemnitee’s ability to repay the Expenses and without
regard to Indemnitee’s ultimate entitlement to indemnification under the other
provisions of this Agreement.  Advances
shall include any and all reasonable Expenses incurred pursuing an action to
enforce this right of advancement, including Expenses incurred preparing and
forwarding statements to the Company to support the advances claimed.  The Indemnitee shall qualify for advances
upon the execution and delivery to the Company of this Agreement, which shall
constitute an undertaking providing that the Indemnitee undertakes to repay the
amounts advanced (without interest) to the extent that it is ultimately
determined that Indemnitee is not entitled to be indemnified by the
Company.  No other form of undertaking
shall be required other than the execution of this Agreement.  This Section 10 shall not apply to any
claim made by Indemnitee for which indemnity is excluded pursuant to Section 9.

 

Section 11.             Procedure for
Notification and Defense of Claim.

 

(a)           Indemnitee shall notify
the Company in writing of any matter with respect to which Indemnitee intends
to seek indemnification or advancement of Expenses hereunder as soon as
reasonably practicable following the receipt by Indemnitee of written notice
thereof.  The written notification to the
Company shall include a description of the nature of the Proceeding and the
facts underlying the Proceeding.  To
obtain indemnification under this Agreement, Indemnitee shall submit to the
Company a written request, including therein or therewith such documentation
and information as is reasonably available to Indemnitee and is reasonably necessary
to determine whether and to what extent Indemnitee is entitled to
indemnification following the final disposition of such action, suit or
proceeding.  The omission by Indemnitee
to notify the Company hereunder will not relieve the Company from any liability
which it may have to Indemnitee hereunder or otherwise than under this
Agreement, and any delay in so notifying the Company shall not constitute a
waiver by Indemnitee of any rights under this Agreement.  The Secretary of the Company shall, promptly
upon receipt of such a request for indemnification, advise the Board in writing
that Indemnitee has requested indemnification.

 

(b)           The Company will be
entitled to participate in the Proceeding at its own expense.

 

Section 12.             Procedure Upon
Application for Indemnification.

 

(a)           Upon written request by
Indemnitee for indemnification pursuant to the Section 11(a), a
determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall be made in the specific case:  (i) if a Change in Control shall have
occurred, by Independent Counsel in a written opinion to the Board, a copy of
which shall be 

 

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delivered to
Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by
a majority vote of the Disinterested Directors, even though less than a quorum
of the Board, (B) by a committee of Disinterested Directors designated by
a majority vote of the Disinterested Directors, even though less than a quorum
of the Board, (C) if there are no such Disinterested Directors or, if such
Disinterested Directors so direct, by Independent Counsel in a written opinion
to the Board, a copy of which shall be delivered to Indemnitee or (D) if
so directed by the Board, by the stockholders of the Company; and, if it is so
determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within ten (10) days after such
determination.  Indemnitee shall
cooperate with the person, persons or entity making such determination with
respect to Indemnitee’s entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination.  Any
costs or Expenses (including attorneys’ fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee’s entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.

 

(b)           In the event the
determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 12(a) hereof, the Independent Counsel
shall be selected as provided in this Section 12(b).  If a Change in Control shall not have
occurred, the Independent Counsel shall be selected by the Board, and the
Company shall give written notice to Indemnitee advising him of the identity of
the Independent Counsel so selected.  If
a Change in Control shall have occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be
made by the Board, in which event the preceding sentence shall apply), and
Indemnitee shall give written notice to the Company advising it of the identity
of the Independent Counsel so selected. 
In either event, Indemnitee or the Company, as the case may be, may,
within ten (10) days after such written notice of selection shall have
been given, deliver to the Company or to Indemnitee, as the case may be, a
written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of “Independent Counsel” as defined in Section 2
of this Agreement, and the objection shall set forth with particularity the
factual basis of such assertion.  Absent
a proper and timely objection, the person so selected shall act as Independent
Counsel.  If such written objection is so
made and substantiated, the Independent Counsel so selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit.  If, within twenty (20) days after the later
of submission by Indemnitee of a written request for indemnification pursuant
to Section 11(a) hereof and the final disposition of the Proceeding,
no Independent Counsel shall have been selected and not objected to, either the
Company or Indemnitee may petition a court of competent jurisdiction for
resolution of any objection which shall have been made by the Company or
Indemnitee to the other’s selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Court or by such
other person as the Court shall designate, and the person with respect to whom
all objections are so resolved or the person so appointed shall act as
Independent Counsel under Section 12(a) hereof.  Upon the due commencement of any judicial
proceeding or arbitration 

 

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pursuant to Section 14(a) of
this Agreement, Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).

 

Section 13.             Presumptions and
Effect of Certain Proceedings.

 

(a)           In making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall, to the fullest
extent not prohibited by law, presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 11(a) of this Agreement,
and the Company shall, to the fullest extent not prohibited by law, have the
burden of proof to overcome that presumption in connection with the making by
any person, persons or entity of any determination contrary to that
presumption.  Neither the failure of the
Company (including by its directors or independent legal counsel) to have made
a determination prior to the commencement of any action pursuant to this
Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or independent legal counsel)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct.

 

(b)           Subject to Section 14(e),
if the person, persons or entity empowered or selected under Section 12 of
this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within sixty (60) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall, to the fullest extent not prohibited by law, be deemed
to have been made and Indemnitee shall be entitled to such indemnification,
absent (i) a misstatement by Indemnitee of a material fact, or an omission
of a material fact necessary to make Indemnitee’s statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law; provided, however,
that such 60-day period may be extended for a reasonable time, not to exceed an
additional thirty (30) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating of documentation
and/or information relating thereto; and provided, further, that the foregoing
provisions of this Section 13(b) shall not apply (i) if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 12(a) of this Agreement and if (A) within
fifteen (15) days after receipt by the Company of the request for such
determination the Board has resolved to submit such determination to the
stockholders for their consideration at an annual meeting thereof to be held
within seventy-five (75) days after such receipt and such determination is made
thereat, or (B) a special meeting of stockholders is called within fifteen
(15) days after such receipt for the purpose of making such determination, such
meeting is held for such purpose within sixty (60) days after having been so
called and such determination is made thereat, or (ii) if the
determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 12(a) of this Agreement.

 

10

 

(c)           The termination of any
Proceeding or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo  contendere or
its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to the
best interests of the Company or, with respect to any criminal Proceeding, that
Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

(d)           Reliance as Safe
Harbor.  For purposes of any
determination of good faith, Indemnitee shall be deemed to have acted in good
faith if Indemnitee’s action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected with the reasonable care
by the Enterprise.  The provisions of
this Section 13(d) shall not be deemed to be exclusive or to limit in
any way the other circumstances in which the Indemnitee may be deemed to have
met the applicable standard of conduct set forth in this Agreement.

 

(e)           Actions of Others.  The knowledge and/or actions, or failure to
act, of any director, officer, agent or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.

 

Section 14.             Remedies of
Indemnitee.

 

(a)           Subject to Section 14(e),
in the event that (i) a determination is made pursuant to Section 12
of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 10
of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 12(a) of
this Agreement within ninety (90) days after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 5, 6 or 7 or the last sentence of Section 12(a) of
this Agreement within ten (10) days after receipt by the Company of a
written request therefor, (v) payment of indemnification pursuant to Section 3,
4 or 8 of this Agreement is not made within ten (10) days after a
determination has been made that Indemnitee is entitled to indemnification, or (vi) in
the event that the Company or any other person takes or threatens to take any
action to declare this Agreement void or unenforceable, or institutes any
litigation or other action or Proceeding designed to deny, or to recover from,
the Indemnitee the benefits provided or intended to be provided to the
Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a
court of his entitlement to such indemnification or advancement of
Expenses.  Alternatively, Indemnitee, at
his option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association.  Indemnitee
shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has
the right to commence such proceeding pursuant to this Section 14(a); provided,
however, that the foregoing clause shall not 

 

11

 

apply in
respect of a proceeding brought by Indemnitee to enforce his rights under Section 5
of this Agreement.  The Company shall not
oppose Indemnitee’s right to seek any such adjudication or award in
arbitration.

 

(b)           In the event that a
determination shall have been made pursuant to Section 12(a) of this
Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding
or arbitration commenced pursuant to this Section 14 shall be conducted in
all respects as a de  novo trial, or arbitration, on the merits
and Indemnitee shall not be prejudiced by reason of that adverse
determination.  In any judicial
proceeding or arbitration commenced pursuant to this Section 14 the
Company shall have the burden of proving Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.

 

(c)           If a determination
shall have been made pursuant to Section 12(a) of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 14, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law.

 

(d)           The Company shall, to the
fullest extent not prohibited by law, be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 14
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this
Agreement.  It is the intent of the
Company that, to the fullest extent permitted by law, the Indemnitee not be
required to incur legal fees or other Expenses associated with the
interpretation, enforcement or defense of Indemnitee’s rights under this
Agreement by litigation or otherwise because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Indemnitee hereunder.  The Company shall,
to the fullest extent permitted by law, indemnify Indemnitee against any and
all Expenses and, if requested by Indemnitee, shall (within ten (10) days
after receipt by the Company of a written request therefor) advance, to the
extent not prohibited by law, such Expenses to Indemnitee, which are incurred
by Indemnitee in connection with any action brought by Indemnitee for
indemnification or advance of Expenses from the Company under this Agreement or
under any directors’ and officers’ liability insurance policies maintained by
the Company if Indemnitee is wholly successful on the underlying claims; if
Indemnittee is not wholly successful on the underlying claims, then such
indemnification and advancement shall be only to the extent Indemnitee is
successful on such underlying claims or otherwise as permitted by law,
whichever is greater.

 

(e)           Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement
of Indemnitee to indemnification under this Agreement shall be required to be
made prior to the final disposition of the Proceeding.

 

12

 

Section 15.             Non-exclusivity;
Survival of Rights; Insurance; Subrogation.

 

(a)           The rights of indemnification
and to receive advancement of Expenses as provided by this Agreement shall not
be deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Company’s Certificate of Incorporation, the
Company’s By-laws, any agreement, a vote of stockholders or a resolution of
directors, or otherwise.  No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit
or restrict any right of Indemnitee under this Agreement in respect of any
action taken or omitted by such Indemnitee in his Corporate Status prior to
such amendment, alteration or repeal.  To
the extent that a change in Delaware law, whether by statute or judicial
decision, permits greater indemnification or advancement of Expenses than would
be afforded currently under the Company’s By-laws and this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement the
greater benefits so afforded by such change. 
No right or remedy herein conferred is intended to be exclusive of any
other right or remedy, and every other right and remedy shall be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. 
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other right or remedy.

 

(b)           To the extent that the
Company maintains an insurance policy or policies providing liability insurance
for directors, officers, employees, or agents of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves at the request of the Company, Indemnitee
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage available for any such director,
officer, employee or agent under such policy or policies.  If, at the time of the receipt of a notice of
a claim pursuant to the terms hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of such
claim or of the commencement of a proceeding, as the case may be, to the
insurers in accordance with the procedures set forth in the respective
policies.  The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies.

 

(c)           In the event of any
payment under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of Indemnitee, who shall execute
all papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring
suit to enforce such rights.

 

(d)           The Company shall not
be liable under this Agreement to make any payment of amounts otherwise
indemnifiable (or for which advancement is provided hereunder) hereunder if and
to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.

 

(e)           The Company’s
obligation to indemnify or advance Expenses hereunder to Indemnitee who is or
was serving at the request of the Company as a director, officer, employee or
agent of any other corporation, limited liability company, partnership, joint
venture, trust, 

 

13

 

employee benefit
plan or other enterprise shall be reduced by any amount Indemnitee has actually
received as indemnification or advancement of Expenses from such other
corporation, limited liability company, partnership, joint venture, trust,
employee benefit plan or other enterprise.

 

Section 16.             Duration of
Agreement.   This Agreement shall continue until and
terminate upon the later of: (a) ten (10) years after the date that
Indemnitee shall have ceased to serve [as a [director] [officer] [employee]
[agent] of the Company] [,at the request of the Company, as a [director]
[officer] [employee] [agent] [fiduciary] of [another corporation, partnership,
joint venture, trust employee benefit plan or other enterprise] or (b) one
(1) year after the final termination of any Proceeding then pending in
respect of which Indemnitee is granted rights of indemnification or advancement
of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to
Section 14 of this Agreement relating thereto.  This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of
Indemnitee and his heirs, executors and administrators.

 

Section 17.             Severability.   If any
provision or provisions of this Agreement shall be held to be invalid, illegal
or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including without
limitation, each portion of any Section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby and shall remain enforceable to the fullest extent permitted by law; (b) such
provision or provisions shall be deemed reformed to the extent necessary to
conform to applicable law and to give the maximum effect to the intent of the
parties hereto; and (c) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, each portion of any Section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.

 

Section 18.             Enforcement.

 

(a)           The Company expressly
confirms and agrees that it has entered into this Agreement and assumed the
obligations imposed on it hereby in order to induce Indemnitee to serve as a
director or officer of the Company, and the Company acknowledges that Indemnitee
is relying upon this Agreement in serving as a director or officer of the
Company.

 

(b)           This Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral, written and implied, between the parties hereto with respect to the
subject matter hereof; provided, however, that this Agreement is a supplement
to and in furtherance of the Certificate of Incorporation of the Company, the
By-laws of the Company and applicable law, and shall not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

Section 19.             Modification and
Waiver.  No supplement, modification
or amendment of this Agreement shall be binding unless executed in writing by
the parties thereto.  No waiver of 

 

14

 

any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions of this Agreement nor shall any waiver constitute a
continuing waiver.

 

Section 20.             Notice by
Indemnitee.   Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.  The failure of
Indemnitee to so notify the Company shall not relieve the Company of any
obligation which it may have to the Indemnitee under this Agreement or
otherwise.

 

Section 21.             Notices.   All notices, requests, demands and
other communications under this Agreement shall be in writing and shall be
deemed to have been duly given if (a) delivered by hand and receipted for
by the party to whom said notice or other communication shall have been
directed, (b) mailed by certified or registered mail with postage prepaid,
on the third business day after the date on which it is so mailed, (c) mailed
by reputable overnight courier and receipted for by the party to whom said
notice or other communication shall have been directed or (d) sent by
facsimile transmission, with receipt of oral confirmation that such
transmission has been received:

 

(a)           If to Indemnitee, at
the address indicated on the signature page of this Agreement, or such
other address as Indemnitee shall provide to the Company.

 

(b)           If to the Company to

 

International Rectifier Corporation

101 Sepulveda Boulevard

El Segundo, California 90245

 

Attention:  Vice President and
Secretary

 

or to any other address as may have been
furnished to Indemnitee by the Company.

 

Section 22.             Contribution.   To the
fullest extent permissible under applicable law, if the indemnification
provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute
to the amount incurred by Indemnitee, whether for judgments, fines, penalties,
excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in
connection with any claim relating to an indemnifiable event under this
Agreement, in such proportion as is deemed fair and reasonable in light of all
of the circumstances of such Proceeding in order to reflect (i) the
relative benefits received by the Company and Indemnitee as a result of the
event(s) and/or transaction(s) giving cause to such Proceeding;
and/or (ii) the relative fault of the Company (and its directors,
officers, employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).

 

Section 23.             Applicable Law and
Consent to Jurisdiction.   This Agreement and the legal relations among
the parties shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware, without regard to its conflict of laws
rules. Except with 

 

15

 

respect to any
arbitration commenced by Indemnitee pursuant to Section 14(a) of this
Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree
that any action or proceeding arising out of or in connection with this
Agreement shall be brought only in the Chancery Court of the State of Delaware
(the “Delaware Court”), and not in any other state or federal court in the
United States of America or any court in any other country, (ii) consent
to submit to the exclusive jurisdiction of the Delaware Court for purposes of
any action or proceeding arising out of or in connection with this Agreement, (iii) appoint,
to the extent such party is not otherwise subject to service of process in the
State of Delaware, irrevocably RL&F Service Corp., One Rodney Square, 10th
Floor, 10th and King Streets, Wilmington, Delaware 19801 as its agent in the
State of Delaware as such party’s agent for acceptance of legal process in
connection with any such action or proceeding against such party with the same
legal force and validity as if served upon such party personally within the
State of Delaware, (iv) waive any objection to the laying of venue of any
such action or proceeding in the Delaware Court, and (v) waive, and agree
not to plead or to make, any claim that any such action or proceeding brought
in the Delaware Court has been brought in an improper or inconvenient forum.

 

Section 24.             Identical
Counterparts.   This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party
against whom enforceability is sought needs to be produced to evidence the
existence of this Agreement.

 

Section 25.             Miscellaneous.   Use
of the masculine pronoun shall be deemed to include usage of the feminine
pronoun where appropriate.  The headings
of this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.

 

IN WITNESS
WHEREOF, the parties have caused this Agreement to be signed as of the day and
year first above written.

 

	
  INTERNATIONAL RECTIFIER

  	
   

  	
  INDEMNITEE

  
	
  CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
  Office:

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

16matechexh10_1.htm

    
      
 

    Exhibit 10.1

     

    SETTLEMENT
AGREEMENT AND MUTUAL GENERAL RELEASE

     

    This
Settlement Agreement and Mutual General Release (hereinafter, the “Agreement”)
is made and entered into as of August 27, 2008 by and between La Jolla Cove
Investors, Inc., a California corporation (“LJCI”), Material Technologies, Inc.,
a Delaware corporation (the “Company”), Robert A. Brunette (“Brunette”), Hassel
(Bud) Hill, Jr. (“Hill”) and Barry Mitchell (“Mitchell,” together with Brunette
and Hill, the “Sellers,” and individually a “Seller”).  LJCI, the
Company, Brunette, Hill and Mitchell will sometimes be referred to individually
as a “Party” and collectively as the “Parties” throughout this
Agreement.

     

    RECITALS

     

    A.       WHEREAS,
LJCI and the Sellers entered into that certain Stock Sale Agreement dated as of
March 29, 2006, as amended (the “Sale Agreement”);

     

    B.        WHEREAS,
LJCI currently owes to the Sellers $50,000 (the “Outstanding Stock Payment”)
under the terms of the Sale Agreement;

     

    C.        WHEREAS,
LJCI and the Company are parties to that certain Securities Purchase Agreement
dated as of May 30, 2006 (the “Purchase Agreement”);

     

    D.        WHEREAS,
LJCI and the Company are also parties to that certain Warrant to Purchase Common
Stock issued as of May 30, 2006, as amended by that certain Addendum to Warrant
to Purchase Common Stock dated as of June 9, 2006 (the “Addendum”)
(collectively, the “Warrant”, together with the Purchase Agreement, the
“Transaction Documents”);

     

    E.        WHEREAS,
LJCI advanced an aggregate of $50,000 (the “Warrant Payment”) to the Company
under the Transaction Documents, the entire portion of which remains
outstanding;

     

    F.        WHEREAS,
a dispute has arisen regarding the disposition of the Outstanding Stock Payment
and the Warrant Payment; and

     

    G.        WHEREAS,
the Parties now wish to reach a final resolution of the obligations, rights and
duties between them.

     

    NOW,
THEREFORE, in consideration of the mutual promises made herein, the Parties
agree as follows:

     

    AGREEMENT

     

    1.           Recitals:  
The Recitals set forth above are an integral part of this Agreement, and shall
be used in any interpretation of this Agreement.

     

    2.           Consideration:  As
satisfaction of the obligations remaining between the Parties under the Sale
Agreement, the Transaction Documents and related transactions and in exchange
for the releases granted herein, the Sellers hereby jointly and severally
unconditionally, and

    
      
         

      

      
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    without
representation or warranty, relinquish and terminate any claim, right, title and
interest to the Outstanding Stock Payment or any other claim, right, title or
interest whatsoever pursuant to the Sale Agreement and related transactions and
LJCI hereby unconditionally, and without representation or warranty,
relinquishes and terminates any claim, right, title and interest to the Warrant
Payment or any other claim, right, title or interest whatsoever pursuant to the
Sale Agreement, Transaction Documents, and related transactions.

     

    3.           Mutual
Releases:

     

    (a)         Effective
upon execution of this Agreement and except as to obligations created herein,
LJCI, for itself and its past and present shareholders, officers, employees,
predecessors-in-interest, successors in-interest, assigns, administrators,
parent company, sister-company, and representatives, hereby fully releases,
remises, acquits and forever discharges each Seller, each of such Seller’s
predecessors, assigns, heirs, executors, administrators and representatives,
from any and all claims, demands, actions, losses, judgments, debts, covenants,
executions, liabilities, obligations and expenses of any kind or nature arising
out of any acts, omissions, liabilities, transactions, transfers, happenings,
violations, promises, facts or circumstances arising out of, related to or
described in the Sale Agreement, the Transaction Documents and the underlying
related transactions, whether or not now known or suspected or claimed, whether
in law, admiralty, arbitration, administrative, equity or otherwise, and whether
accrued or hereafter maturing.

     

    (b)         Effective
upon execution of this Agreement and except as to obligations created herein,
LJCI, for itself and its past and present shareholders, officers, employees,
predecessors-in-interest, successors in-interest, assigns, administrators,
parent company, sister-company, and representatives, hereby fully releases,
remises, acquits and forever discharges the Company, and its affiliates,
predecessors and successors, together with its past and present officers,
directors, shareholders, representatives, employees, consultants, attorneys,
fiduciaries, and assigns, from any and all claims, demands, actions, losses,
judgments, debts, covenants, executions, liabilities, obligations and expenses
of any kind or nature arising out of any acts, omissions, liabilities,
transactions, transfers, happenings, violations, promises, facts or
circumstances arising out of, related to or described in the Sale Agreement, the
Transaction Documents and the underlying related transactions, whether or not
now known or suspected or claimed, whether in law, admiralty, arbitration,
administrative, equity or otherwise, and whether accrued or hereafter
maturing.

     

    (c)         Effective
upon execution of this Agreement and except as to obligations created herein,
each of the Sellers, for themselves and their respective predecessors, assigns,
heirs, executors, administrators and representatives, hereby fully releases,
remises, acquits and forever discharges LJCI and its affiliates, predecessors
and successors, together with its past and present officers, directors,
shareholders, representatives, employees, consultants, attorneys, fiduciaries,
and assigns from any and all claims, demands, actions, losses, judgments, debts,
covenants, executions, liabilities, obligations and expenses of any kind or
nature arising out of any acts, omissions, liabilities, transactions, transfers,
happenings, violations, promises, facts or circumstances arising out of, related
to or described in the Sale Agreement, the Transaction Documents and the
underlying related transactions, whether or not now known or suspected
or

    
      
         

      

      
        - 2
-

        
          
 

      

      
         

      

    

     

    claimed,
whether in law, admiralty, arbitration, administrative, equity or otherwise, and
whether accrued or hereafter maturing.

     

    (d)     
   Effective upon execution of this Agreement and except as to
obligations created herein, the Company, for itself and its past and present
shareholders, officers, employees, predecessors-in-interest, successors
in-interest, assigns, administrators, parent company, sister-company, and
representatives, hereby fully releases, remises, acquits and forever discharges
LJCI and its affiliates, predecessors and successors, together with its past and
present officers, directors, shareholders, representatives, employees,
consultants, attorneys, fiduciaries, and assigns, from any and all claims,
demands, actions, losses, judgments, debts, covenants, executions, liabilities,
obligations and expenses of any kind or nature arising out of any acts,
omissions, liabilities, transactions, transfers, happenings, violations,
promises, facts or circumstances arising out of, related to or described in the
Sale Agreement, the Transaction Documents and the underlying related
transactions, whether or not now known or suspected or claimed, whether in law,
admiralty, arbitration, administrative, equity or otherwise, and whether accrued
or hereafter maturing.

     

    4.           Section
1542 Waiver:  Each Party to this Agreement acknowledges and
affirms that it is familiar with Section 1542 of the California Civil Code,
which provides that:

     

    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.

     

    Each
Party knowingly and voluntarily waives the provisions of Section 1542 of the
California Civil Code, as against each Party released hereby, and acknowledges
and agrees that this waiver is an essential and material term of this settlement
which led to this Agreement, and that without such waiver, the settlement
reflected in this Agreement would not have been entered into.  Each
Party acknowledges that such Party may have sustained damages, losses, costs or
expenses that are presently unknown or unsuspected, arising out of, or relating
to, or otherwise in connection with the action, and that such damages, losses,
costs, or expenses as may have been sustained may give rise to additional
damages, losses, costs or expenses in the future that are each being released
under this Agreement.  Each Party further acknowledges the
significance and consequence of the release and the specific waiver of Section
1542 of the California Civil Code.

     

    5.           No
Admission of Liability: The Parties understand and acknowledge that this
Agreement constitutes a compromise and settlement of disputed claims and is made
to buy peace and for no other reason.  No action taken by the Parties
hereto either previously or in connection with this Agreement shall be deemed or
construed to be an admission of the truth or falsity of any claims heretofore
made, or an acknowledgement or admission by any Party of any fault or liability
whatsoever to the other Parties or third parties.

     

     

    
      
         

      

      
        - 3
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    6.           Authority:  The
Parties represent and warrant that the undersigned individuals have the
authority to act on behalf of the signing Party and have the authority to bind
that Party, and all that may claim through it, to the terms and conditions of
this Agreement.  Each Party warrants and represents that there are no
liens or claims of lien or assignment or equity or otherwise of or against any
of the claims or causes of action released herein.

     

    7.           Representation:  The
Parties represent and warrant that they have each had an opportunity to consult
with an attorney, and have carefully read and understand the scope and effect of
the provisions of this Agreement.  No Party has relied upon any
representations or statements made by any other Party, which are not
specifically set forth in this Agreement.  Each of the Parties warrant
and represent that in executing this Agreement, such Party has relied on legal
advice from the attorney of its choice, that the terms of this release and its
consequences have been completely read and explained to such Party by that
attorney, and that such Party fully understands the terms of this
Agreement.

     

    8.           No
Prior Assignment Indemnity.  The Parties represent and warrant
that they are the sole and lawful owner of all right, title and interest in and
to every claim and other matter which each purports to release herein, and that
such Party has not hereto assigned or transferred, or purported to assign or
transfer, to any person or entity any right, title or interest in any such claim
or other matter herein released.  In the event that any Party shall
have assigned and transferred, or purported to assign or transfer, any claim or
other matter herein released, such Party shall indemnify, defend and hold
harmless the other Parties from and against any loss, cost, or claim or expense
(including, but not limited to, all costs related to defense of any action
including reasonable attorneys’ fees) based upon, arising out of or occurring as
a result of any such claim or assignment to transfer.

     

    9.           Survival
of Warranties.  The representations and warranties contained in
this Agreement are deemed to and do survive the execution hereof.

     

    10.         No
Right to Rescission:  The Parties represent and warrant that
they have conducted all necessary investigations and have consulted with counsel
and are not relying on any representations, except those contained in this
Agreement and the Parties assume the risk of any untruths regarding any matters
upon which they have relied and forever waive any rights to rescind this
Agreement and the sole remedy for the Parties is to enforce the terms of this
Agreement.

     

    11.         Severability:  In
the event that any provision hereof becomes declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said illegal provision.

     

    12.         Entire
Agreement: This Agreement represents the entire agreement and
understanding between the Parties, and represents the complete, final and
exclusive embodiment of their agreement concerning the matters set forth in the
Recitals.  Further, this Agreement shall supersede and replace any and
all prior and contemporaneous agreements, representations and understandings
regarding the subject of this Agreement.  Notwithstanding the
provisions of

     

     

    
      
         

      

      
        - 4
-

        
          
 

      

      
         

      

    

    California
Evidence Code Section 1152, this Agreement is admissible for purposes of
enforcement.

     

    13.         Modifications.  This
Agreement may not be amended, canceled, revoked or otherwise modified except by
written agreement subscribed by the Parties to be charged with such
modification.

     

    14.         Governing
Law, Exclusive Jurisdiction:  This Agreement shall be governed
by the laws of the State of California, including all matters of construction,
validity, performance, and enforcement and without giving effect to the
principles of conflict of laws. By signing this Agreement, the Parties hereby
agree and submit to the jurisdiction of the courts in the downtown branch of the
courts of San Diego County, California.  Each of the Parties consents
to the exclusive jurisdiction of the federal courts whose districts encompass
any part of the City of San Diego or the state courts of the State of California
sitting in the City of San Diego in connection with any dispute arising under
the terms of this Agreement and the transactions contemplated
herein.  Each Party hereby irrevocably and unconditionally waives, to
the fullest extent it may effectively do so, any defense of an inconvenient
forum or improper venue to the maintenance of such action or proceeding in any
such court and any right of jurisdiction on account of its place of residence or
domicile.  Each Party irrevocably and unconditionally consents to the
service of any and all process in any such action or proceeding in such courts
by the mailing of copies of such process by registered or certified mail (return
receipt requested), postage prepaid, at its address specified in Section 15 of
this Agreement.  Each Party agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.

     

    15.         Notices.  Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
confirmation of receipt, when sent by facsimile; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv) one (1) day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the Party to receive the same. The addresses and
facsimile numbers for such communications shall be:

     

    If to the
Company, to:

     

    Material
Technologies, Inc.

    11661 San
Vicente Blvd., Suite 707

    Los
Angeles, CA  90049

    Telephone:   
(310) 208-5589

    Facsimile:      
(310) 473-3177

     

    If to
Brunette, to:

     

    Robert A.
Brunette

    ____________________________

    ____________________________

    Telephone:   
 ____________________________

    Facsimile:       ____________________________

     

     

    
      
         

      

      
        - 5
-

        
          
 

      

      
         

      

    

     

    If to
Hill, to:

     

    Hassel
(Bud) Hill, Jr.

    ____________________________

    ____________________________

    Telephone:     ____________________________

    Facsimile:       ____________________________

     

    If to
Mitchell, to:

     

    Barry
Mitchell

    ____________________________

    ____________________________

    Telephone:     ____________________________

    Facsimile:       ____________________________

     

    If to
LJCI, to:

     

    La Jolla
Cove Investors, Inc.

    1150
Silverado Street, Suite 220

    La Jolla,
California 92037

    Telephone:     858-551-8789

    Facsimile:       
858-551-8779

     

    Each of
the Parties may change its foregoing address by notice given pursuant to this
Section 15.

     

    16.         Counterparts:  This
Agreement may be executed in counterparts each counterpart shall have the same
force and effect as an original and constitute an effective, binding agreement
on the part of each of the undersigned.  This Agreement may be
transmitted by facsimile or otherwise.

     

    17.         No
Construction Against the Drafter:  This Agreement shall be
deemed jointly drafted and written by all parties to it and shall not be
construed or interpreted against any particular Party, regardless of which Party
or counsel originated or drafted any portion of it.

     

    18.         Enforcement
of Settlement:  In the event of any litigation to enforce the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys’ fees, as well as to such costs as may be awardable to the prevailing
party by rule or statute in the court in which the action is
brought.

     

    19.         No
Implied Waiver:  No action or failure to act shall constitute a
waiver of any right or duty afforded under this Agreement, nor shall any action
or failure to act constitute an approval of, or acquiescence in, any breach,
except as may be specifically agreed in writing.  Waiver of any on
provision herein shall not be deemed to be a waiver of any other provision
herein.

     

     

    
      
         

      

      
        - 6
-

        
          
 

      

      
         

      

    

    IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
set forth above.

     

    La Jolla
Cove Investors, Inc.

     

    By:  /s/
Travis W.
Huff                           

    Name:
Travis W. Huff

    Title:
Portfolio Manager

     

     

    Material
Technologies, Inc.

     

    By:  /s/
Robert M.
Bernstein                 

    Name:  Robert
M. Bernstein

    Title:  Chief
Executive Officer

     

     

    /s/
Robert A.
Brunette                           

    Robert A.
Brunette

     

     

    /s/
Hassel Hill
Jr,                                     

    Hassel
(Bud) Hill, Jr.

     

     

    /s/
Barry
Mitchell                                   

    Barry
Mitchell

     

     

     

     

     

     

     

    
      
         

      

      
        - 7
-

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