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		Exhibit 10.1

			

		

		
			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

		

				

				

			
		
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		                      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.

			

			

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		          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                          

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

		
		
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			EXHIBIT A

					

					IRREVOCABLE ESCROW INSTRUCITONS

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

				

			16Untitled Page

		

		

		

		Exhibit 10.2

			

		

		
			IRREVOCABLE ESCROW INSTRUCTIONS

					

				

		

		

					Material Technologies, Inc. (“the Company”) and Stephen Forrest Beck (“Beck”) wish to establish two escrow accounts with Interwest Transfer Company (“Interwest” or the “Transfer Agent”) to provide for the issuance of shares to Beck.

					

				
	The Company will issue to Beck and deposit an initial 5,000,000 shares in each of two escrow accounts, the “Anti-Dilution Escrow” (ADE) and the “Upside Share Escrow” (USE).  The Company will provide appropriate Board of Directors approval for the issuance of the shares and, where necessary, a legal opinion.

					

				
	Interwest is instructed to issue shares to Beck on the following basis:
			

		
		
				Anti-Dilution Escrow:
			

		

		
			
					Interwest will, on January 2, 2007, issue to Beck a number of shares equal to 8% of the total volume of trading in the Company’s Class A common stock during the prior 30 days.  Shares issued pursuant to this 8% calculation shall be known as the “Anti-Dilution Shares.”

						

					
	An email communication from Beck’s broker containing the trading volume in the prior 30 days of the Company’s common shares as compiled by Fidelity.com and the 8% calculation will be sent on December 31, 2006, before 4:00 pm PST.  Interwest may verify this amount and calculation with the Company and via its internal calculations.  This process shall be repeated on the last day of each successive month.

						

					
	Interwest shall release to Beck that number of shares by the close of business on the day after the information is received and shall transmit the share certificates to Beck or his broker by overnight courier to arrive on the morning of the following day.

						

					
	The Company’s board of director’s resolution authorizing all such issuances shall be executed and delivered to Interwest prior to December 31, 2006, and the Company will issue resolutions as necessary for the issuance of Upside Shares.

						

					
	In each succeeding month, Beck will provide proof from his broker of the gross dollar amount received from the sale of any of the Anti-Dilution Shares to both the Company and Interwest.

						

					
	When Beck receives $800,000 from the sale of 1,263,800 of Anti-Dilution Shares (1.78% of 71 million), then the remaining shares shall be returned to the Company.  Otherwise, the issuance procedure outlined above shall be continued until Beck has received a total of $800,000 from the sale of the Anti-Dilution Shares, at which time any shares that remain in that account shall be returned to the Company. 
				

			

		

		

		

		

		
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				Upside Shares Escrow
			

		

		
			
					Upon receiving notice from the Company that it has issued shares to any party after the date hereof, in the case of Beck with proof of such issuance, Interwest is required to issue Beck 1.78% of the number of shares issued as of the date such shares were issued, promptly at the end of each quarter upon receipt of a Board of Directors resolution authorizing the issuance of the shares.  However, such shares shall be held in accordance with (v) below.  Shares issued pursuant to this Section 1(b)(i) 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.

						

					
	The Company shall quarterly inform Interwest of each occasion that it has issued shares to any party.

						

					
	A proof of share issuance by the Company provided to Interwest may be in the form of a control log maintained by the records custodian for the Company.

						

					
	The duty to issue shares under this Upside Escrow shall continue for twenty-one (21) months from the date hereof.

						

					
	Upon the earlier to occur of (i) Beck has sold all of the shares which he is entitled to sell from the Anti-Dilution Escrow, and (ii) the date which is one (1) year from the date hereof, then the Shares issued to him in the Upside Share Escrow shall be released to Beck under the same trading restrictions and using the same procedures as described in paragraph 3a (ii – iv) above.
				

			

		

			Rule 144.  Shares issued under the Anti-Dilution Escrow shall be restricted and legended for sale under Rule 144 promulgated under the Securities Act of 1933.  However, as long as any and all necessary paperwork is provided and the Company is eligible under Rule 144 (e.g., the Company is current in its filings), the Company hereby authorizes Interwest to release such shares to Mr. Beck, without legend.  However, such shares shall only be delivered in accordance with Rule 144 and upon delivery of all required Rule 144 paperwork and opinion acceptable to the transfer agent’s counsel.  Beck agrees to execute all necessary paperwork to comply with Rule 144 and reasonable requests of the Company’s counsel.
		

		

		

		

		

		
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			Irrevocable Instructions.  The instructions contained in this Agreement shall be irrevocable and may only be canceled in writing executed by Mr. Beck and the Company.

				

			
	Termination.  This Agreement shall terminate at such time as all shares held beneficially by Mr. Beck have been distributed to him in accordance with Section 3 of this Agreement. 

				

			
	Non-Contact.  Any, and all, communications regarding the issuance and delivery of shares shall be between the Company and Interwest, or between Interwest and Mr. Beck’s authorized representatives, i.e. his attorney(s) and/or his broker.

				

			
	Duties of Interwest.  Interwest undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions:
		

		
				The statements of fact and recitals contained herein shall be taken as statements of the Company and Mr. Beck, and Interwest assumes no responsibility for the correctness of action taken or to be taken by it.

					

				
	Interwest shall not be responsible for any failure of the Company or Mr. Beck to comply with any of the covenants contained in this Agreement.

					

				
	Interwest may consult at any time with counsel satisfactory to it (who may be counsel for the Company) and Interwest shall incur no liability or responsibility to the Company or to any holder of any shares in respect of any action taken, suffered, or omitted by it hereunder in good faith and in accordance with the opinion or the advice of such counsel.

					

				
	Interwest shall incur no liability or responsibility to the Company or to Mr. Beck for any action taken in reliance on any notice, resolution, waiver, consent, order, certificate, or other paper, document or instrument believed by it to be genuine and to have been signed, sent or presented by the proper party or parties.

					

				
	The Company agrees to pay to Interwest reasonable compensation for all services rendered by Interwest in the execution of this Agreement, to reimburse Interwest for all expenses, taxes and governmental charges and other charges of any kind and nature incurred by Interwest in the execution of this Agreement and to indemnify Interwest and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by Interwest in the execution of this Agreement except as a result of Interwest’s gross negligence, willful misconduct, or bad faith. 

					

				
	Interwest shall be under no obligation to institute any action, suit or legal proceeding or to take any action likely to involve expense unless the Company or one or more registered holders of common stock shall furnish Interwest in
			

		

		

		

		

		
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				advance with reasonable security and indemnity for any costs and expenses which may be incurred, but this provision shall not affect the power of Interwest to take such action as Interwest may consider proper, whether with or without any such security or indemnity.

			

		

		
				Interwest and any shareholder, director, officer, partner or employee of Interwest may buy, sell or deal in any of the common shares or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to or otherwise act as fully and freely as though it were not Interwest under this Agreement.  Nothing herein shall preclude Interwest from acting in any other capacity for the Company or for any other legal entity.
		

					

				
	Interwest shall act hereunder solely as agent and not in a ministerial capacity, and its duties shall be determined solely by the provisions hereof.  Interwest shall not be liable for anything which it may do or refrain from doing in connection with this Agreement except for its own gross negligence, willful misconduct or bad faith.

					

				
	Interwest may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees, and Interwest shall not be answerable or accountable for any act, default, neglect or misconduct provided reasonable care had been exercised in the selection and continued employment thereof.

					

				
	Any request, direction, election, order or demand of the Company shall be sufficiently evidenced by an instrument signed in the name of the Company by its President or a Vice President or its Secretary or an Assistant Secretary or its Treasurer or an Assistant Treasurer (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to Interwest by a copy thereof certified by the Secretary or Assistant Secretary of the Company.  Any request, direction, election, order or demand of Mr. Beck shall be sufficiently evidenced by an instrument signed by him or his authorized representative.

					

				
	Interwest is executing this Agreement in the capacity of an Escrow Agent only and in no other capacity.  It assigns no responsibilities to either Mr. Beck or the Company by this Agreement except for those as an Escrow Agent.
			

		

			Change of Escrow Agent.   Interwest may resign and be discharged from its duties under this Agreement by giving notice in writing to the Company and Mr. Beck, that it intends to resign, specifying the effective date of its resignation.  Such date shall be at least fifteen (15) days from the date of the Notice, and Interwest shall remain as escrow agent and continue its duties hereunder until the effective date of the resignation.  In the event of such resignation, Mr. Beck and MaTech shall mutually
		

		

		

		

		
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			and within ten (10) days select a substitute escrow agent and these Irrevocable Instructions shall then be Irrevocable Instructions to the substitute escrow agent.  At such time as a substitute escrow agent is put into place, Interwest shall have no further responsibility to undertake any act in connection with this escrow, other than to retain possession of the materials in escrow until transferred to a substitute escrow agent.

				

				In the event that Beck and MaTech cannot mutually agree on a substitute escrow agent within the ten (10) day limit set forth above, then a substitute escrow agent shall be chosen by a mediator, chosen by Beck and Bernstein, with the cost split equally by MaTech and Beck, from the American Arbitration Association or similar mediation service.  In the event that Beck and Bernstein cannot agree on a mediator, AAA or another similar mediation service shall select a mediator at random.

		

			Indemnity of Transfer Agent.  Forthwith upon the appointment of any Transfer Agent for the Common Stock or of any subsequent transfer agent for Common Stock or other shares of the Company’s Capital stock issuable upon the exercise of the rights of purchase represented by the Escrow Shares, the Company will file with Interwest a statement setting forth the name and address of such Transfer Agent.
		

				

			
	Further Indemnity of Interwest.  The Company and Mr. Beck hereby Indemnify Interwest against any claim, action, or other proceeding, against Interwest solely as a result of its being the escrow agent under this Agreement, except in the event of gross negligence or intentional wrongful conduct of Interwest.  Such indemnity shall include attorney’s fees.

				

			
	Supplements and Amendments.  This Agreement and the Settlement Agreement constitute the entire understanding among the parties with respect to the subject matter of the escrow for Mr. Beck.  There are no other promises, covenants, conditions, or agreements which are not contained herein.  This Agreement may only be amended, supplemented, or cancelled by an agreement signed by each of the parties hereto.  In the event that the rights and obligations of Beck and/or the Company in this letter are inconsistent with the rights and obligations spelled out in the Settlement Agreement, as between Beck and the Company, the Settlement Agreement prevails.  This includes Beck’s right to terminate the services of Interwest upon the proper procedures outlined in the Settlement Agreement.

				

			
	Successors.  All the covenants, agreements, representations and warranties contained in this Agreement shall bind the parties hereto and their respective heirs, executors, administrators, distributees, successors and assigns.

				

			
	Change: Waiver.  Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.

		

		

		

		

		
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			Headlines.  The section headings in this Agreement shall for all purposes be construed and enforced in accordance with, and governed by, the internal laws of the State of Utah, without giving effect to principles of conflict of laws. 
		

				

			
	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 it made during normal business hours Pacific Standard Time (or the next business day if not send 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

					
           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

				

			

		

		

		

		

		
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				                       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

					

					To Interwest:                 Interwest Transfer Company, Inc.

					                                     1981 East 4800 South, Suite 100

					                                     Salt Lake City, UT 84117

					                                     Tel: (801) 272-9294     Fax: (801) 277-3147

					                                     Attn: Melinda Orth

					                                     email:  melinda@interwesttc.com

			

		

		          BY THEIR SIGNATURES BELOW, THE UNDERSIGNED REPRESENT THAT THEY HAVE READ THE FOREGOING AND FULLY UNDERSTAND AND AGREE TO EACH AND ALL OF THE TERMS AND CONDITIONS SET FORTH THEREIN.

			

			

			Dated:           December 27, 2006                                     Material Technologies, Inc.

			

			                                                                                         By:   /s/ Robert M. Bernstein             

			                                                                                         Robert M. Bernstein, President

			

			

			Dated:           December 27, 2006                                     Interwest Transfer Co., Inc.

			

			                                                                                         By:                                                       

				

			                                                                                         Title:                                                     

				

				

			Dated:           December 27, 2006                                         /s/ Stephen F. Beck                           

			                                                                                          Stephen Forrest Beck

			

			

			

			

			

			

			

			

			

			

			

		

		
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