Document:

Exhibit 10.1

 

Code of Ethics for

Senior Financial Officers

 

Cornell Companies, Inc.
and its subsidiaries (the “Company”) intend to conduct its business in
accordance with the highest standards of integrity.  In furtherance of this policy, the Company
believes that senior financial officers should abide by a code of ethics to
ensure that the Company maintains the highest integrity with respect to the
preparation of financial information related to the Company.  This Code of Ethics for Senior
Financial Officers (the “Policy”), is an addition to the Company’s
Policy Concerning Business Conduct and shall apply to the following:

 

·                  Chief Executive Officer,

·                  Senior Vice President, Treasurer and Chief Financial Officer,

·                  Corporate Controller,

·                  Director, Financial Operations (Adult Secure Division),

·                  Director, Financial Operations (Adult Community-Based Division),

·                  Director, Financial Operations (Abraxas Youth & Family
Services),

·                  Managing Director, Internal Audit, and

·                  others so designated by the Chief Executive Officer.

 

As evidenced by their
signature below, the above designated employees certify that they will adhere
to the following principles and responsibilities governing their professional
and ethical conduct:

 

·                  Act ethically and with honesty and integrity, avoiding actual or
apparent conflicts of interest in personal and professional relationships.

·                  Provide constituents with information that is accurate, complete,
objective, relevant timely and understandable.

·                  Take all actions reasonably available to see that the disclosures in
reports and documents filed with, or submitted to, the Securities and Exchange
Commission and in all other public communications made by the Company are full,
fair, accurate, timely and understandable.

·                  Comply with rules and regulations of federal, state, provincial
and local governments, and other appropriate private and public regulatory
agencies.

·                  Respect the confidentiality of information acquired in the course of
work except when authorized or otherwise legally obligated to disclose.  Confidential information acquired in the
course of work will not be used for personal advantage.

·                  Promptly report to the Chair of the Audit Committee of the Board of
Directors any known violations of this Code.

 

By signing the Code of
Ethics for Senior Financial Officers, I acknowledge that I have read and
understand the Policy and that violations of the policy may result in
disciplinary action up to and including dismissal and civil action as
warranted.

 

[Note:  This Code of Conduct will be signed and dated
by each of the above designated employees]matechexh10_1.htm

    
      
        

      

      Exhibit 10.1

       

       

      SETTLEMENT
AGREEMENT

       

      IT IS
HEREBY STIPULATED by and between Plaintiff and Cross-Defendant MATERIAL
TECHNOLOGIES, INC., a Delaware Corporation ("Matech"), and Defendant and
Cross-Complainant STEPHEN FORREST BECK ("Beck"), an individual, and
Cross-Defendant ROBERT M. BERNSTEIN ("Bernstein"), an individual, that Matech's
Complaint and Beck's with
reference to the following facts:

       

      On
December 27, 2006, the parties signed a settlement agreement which was the
subject of this action;

       

      This case
involves a dispute over the terms and obligations of the parties under such
agreement;

       

      On
September 21, 2007, Plaintiff filed the above-captioned complaint in this Court,
commencing Case No. BC 377371;

       

      On March
6, 2008, Beck filed a Cross-Complaint against Matech and Robert M.
Bernstein;

       

      In order
to avoid significant legal expense, time, and judicial resources required to
resolve the legal issues in this case, the parties hereby agree to compromise
and settle their dispute under the terms and conditions set forth
below.

       

      NOW,
THEREFORE, IT IS
HEREBY STIPULATED AND AGREED AS FOLLOWS:

    

     

    A.   In
consideration of Beck's agreements herein, except as such rights or claims as
may be created by this Stipulation, Matech and Bernstein hereby release and
forever discharge Beck, including his agents, servants, employees,
representatives, assigns, heirs, successors-in-­interest,
predecessors-in-interest, attorneys, and insurers from any and all claims,
demands, causes of action, obligations, damages, and liabilities, if any,
between the parties hereto, whether heretofore or hereafter arising out of,
connected with, or incidental to those claims, demands, and causes of actions in
the above-captioned case or any other claim of any type of
nature.

     

    B.   In
consideration of Matech's and Robert M. Bernstein's agreements herein, except
as such
rights or claims as
may be created by this Stipulation, Beck hereby releases and forever
discharges Matech and Robert M. Bernstein, including their agents, servants,
employees, representatives, assigns, heirs, successors-in-interest,
predecessors-in-interest, attorneys, and insurers from any and all claims,
demands, causes of action, obligations, damages, and liabilities, if any,
between the parties hereto, whether heretofore or hereafter arising out of,
connected with,

     

     

    
      
        
        

      

      
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      or
incidental to those claims, demands, and causes of actions in the
above-captioned case or any other claim of any type of nature.

       

    

    C.   In
further consideration, Matech, Beck and Bernstein each hereby agree, represent,
and warrant that the matters released herein are not limited to matters which
are known or disclosed, and they hereby waive any and all rights and benefits
which they may now have, or in the future may have, conferred upon them by
virtue of law or equity, including but not limited to the provisions of Section
1542 of the Civil Code of the State of California 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.

     

    D.   In
consideration of Beck's, Matech's and Robert M. Bernstein's agreements recited
herein, the parties agree to terms set forth below.

     

    1.  
Number of Shares:   Beck shall
be issued by Matech, and will own outright, 2.67%
Matech shares outstanding as of the date of this Agreement and such shares shall
be freely tradable shares ("Freely Tradeable Shares"). For example, the number
of shares outstanding as stated in Matech's S-1 as of Nov 13, 2008 was
27,459,213. Based on this number Beck would be issued 733,161 shares. The
parties agree that the 2.67% represents shares previously earned by Beck.
Matech's transfer agent will accept an opinion letter promptly issued by Shaub
& Williams that those shares may be issued as freely tradable, and Matech
will not object to same.

     

    a)  
If Beck receives $1.75 million or more from the sale of all of 1.78% of
Matech
shares outstanding as of the date of the signing of this Agreement (Section D.1
herein), including the percentage of capital raised (Section D.5 herein) and
cash received (Section D.6 herein), then upon receipt of said $1.75 million, any
Anti-Dilution shares issued to Beck hereunder may be exchanged by Beck on a one
for one basis for any remaining unsold Freely Tradable Shares of Beck (the
difference between, for example,

     

    
      
        
        

      

      
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    733,161 and 488,774) in
order to maximize the number of Beck's shares which would be freely
tradeable.

     

    b)  
If Beck
does not receive at least $1.75 million from the sale of all of 1.78% of Matech
shares outstanding as of the date of the signing of this Agreement (Section D.1
herein), including the percentage of capital raised (Section D.5 herein) and
cash received (Section D.6 herein), then Beck has the right to sell the
remaining of Beck's Freely Tradable Shares until he has received a total of
$1.75 million from the sale of shares in Matech (Section D.1 herein), including
the percentage of capital raised (Section D.5 herein) and cash received (Section
D.6 herein). Upon receipt of said $1.75 million, any Anti-Dilution shares issued
to Beck hereunder may be exchanged by Beck on a one for one basis for any
remaining unsold Freely Tradable Shares of Beck (the difference between, for
example, 733,161 and 488,774) in order to maximize the number of Beck's shares
which would be freely tradeable.

     

    c)  
If Beck
does not receive $1.75 million after the sale of all of his Freely Tradable
Shares, then Beck shall receive shares daily from the 5 million shares to be
held in escrow until he has received $1.75 million from the sale of shares in
Matech (Section D.1 herein), including the percentage of capital raised (Section
D.5 herein) and cash received (Section D.6 herein).

     

    d)  
There is no cap on the proceeds that Beck can receive from the sale of
1.78%
shares of Matech's outstanding shares as of the date of the signing of this
Agreement or from the sale of any Anti-Dilution shares due to Beck. These shares
are owned outright by Beck and Beck is permitted to sell all of such
shares.

     

    2.  
Limit on Sale of Shares:  
Notwithstanding the above, the following limit on Beck's
trading of Matech shares will apply.

     

    a.  
No trading of shares by Beck will take place until the first to occur of two
conditions
as follows: the date of June 3, 2009, or Matech has raised $7.5 million dollars
as described in Section D.5 herein ("Conditions to Trade"). However, if Matech's
stock

     

    
      
        
        

      

      
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    trades at
a volume of at least 250,000 shares in a given week, then at the end of such
week, and each subsequent week meeting the 250,000 threshold until one of the
Conditions to Trade occur, Matech shall release directly to Beck from his Freely
Tradable Shares, 8% of Matech trading volume for that week to trade the
following week at rate per day determined by dividing the number of trading days
during the trading week by the number shares to be traded;

     

    b.  
After one
of the Conditions to Trade occur, Beck will be permitted to sell up to 8% of the
prior day's volume of Matech shares, or 8% of the present day's volume as of 10
am Pacific time, whichever is greater.

     

    c.  
Unsold
shares may be carried over to future days, subject to the 8% trading volume
limit.

     

    d.  
At the end of each month, if there are any unsold shares, then the number of
unsold
shares shall be totaled and divided by 20. The trading limit for the following
month
will be adjusted to 8% of the prior day's volume or the current day's volume as
of 10 am,
whichever is greater, plus 1/20 of the number of unsold shares in the prior
month.

     

    3.  
Anti-Dilution:   1.78% of
outstanding Matech shares as of the date of signing of this
Agreement described in Section D.1 above will not be subject to dilution until
the date on which Beck has received $1.75 million in total proceeds from the
sale of shares in Matech (Section D.1 herein), including the percentage of
capital raised (Section D.5 herein) and cash received (Section D.6 herein),
after which there will be no anti-dilution protection. Matech will issue to Beck
1.78% of all stock issued by Matech each month for any reason after the date of
signing of this Agreement (except the issuance of shares to Beck pursuant to
this Agreement) ("Anti-Dilution Shares") until the date on which Beck has
received total proceeds of $1.75 million. Anti-dilution Shares will be issued to
Beck within five days after the end of each month. The value of the
Anti-Dilution Shares owned or due to be paid to Beck will be established at the
end of the anti-dilution protection term using either the price of Matech shares
on such date or the average price for Matech shares over the last twelve months,
whichever is greater, and

     

    
      
        
        

      

      
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    Matech
will continue to issue shares to Beck until that value is received. The
Anti-Dilution Shares shall also be subject to the trading limitations of this
Agreement (Section D.2 herein).

     

    4.  
Escrow:   The
parties have selected RNC Genter as an escrow company. Beck and
Matech
hereby agree that the parties will make good faith efforts to enter into an
Escrow Agreement providing for RNC Genter to carry out the terms of this
Agreement; and the parties agreement to such Escrow Agreement will not be
unreasonably withheld. In the event that no Escrow Agreement is entered into
between the parties by the date on which Beck is first entitled to trade shares,
on such date and each following month until the parties have entered into an
Escrow Agreement, Matech will release directly to Beck 8% of the Matech shares
traded in the previous month from his Freely Tradeable Shares, then from the
remaining 5 million shares intended to be held in escrow, and then from the
Anti-Dilution Shares. Beck agrees to abide by the above trading limitations in
trading such shares. Matech's failure to timely deliver such shares shall
constitute a material breach under Section D.7 herein entitled "Stipulated
Judgment". At the end of each week, the daily trading volume will be reviewed
and Matech shall release directly to Beck additional shares so that he has
received the equivalent of 8% of the daily trading volume for each day of the
given trading month.

     

    The costs
of the escrow will be borne by Matech up until $10,000. Any additional amounts
after $10,000 will be borne equally by both parties.

     

    Within 5
days of the execution of the Escrow Agreement, Matech will transfer 5,000,000
Matech shares issued in the name of Beck to the escrow, of which 2.67% of the
Matech shares outstanding at the time of the signing the Agreement, minus any
freely tradable shares already released to Beck after the signing of this
Agreement, shall be freely tradable. Matech will maintain 5 million shares in
escrow at all times until Beck has received proceeds equal to the value of his
Anti-Dilution Shares as described in Section D.3 above.

     

    If for
any reason RNC Genter is unwilling or unable to enter into an agreement
acceptable to the parties, than Beck shall select a different company to act as
escrow agent, subject to the approval of Matech which shall not be unreasonably
withheld.

     

    
      
        
        

      

      
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      5.  
Percentage of Capital Raised:  
Matech will pay Beck, within 10 days of receipt, 7.5% (net of any
expenses incurred by Matech, including finders fees and other commissions) of
any cash raised from the sale of Matech equity (i.e. common or preferred stock,
exercise of warrants or options for common or preferred stock) by Matech until
Beck has received $1.75 million in total proceeds from the sale of his shares in
Matech (Section D.1 herein), plus the percentage of capital raised (Section D.5
herein), plus cash received (Section D.6 herein).

       

      6.  
Cash
on Signing:   In addition to any other amounts received by Beck
from the sale of his shares in Matech (Section D.1 herein) and the percentage of
capital raised (Section D.5 herein), a cash payment of $100,000 is due upon the
execution of this Agreement, but will be deferred approximately 180 days until
August 1, 2009. However, such payment will be further deferred until such time
as Matech has at least $750,000 cash on hand. This amount paid to Beck will
apply to $1.75 million in total proceeds referred to in Sections D.1 and D.3
above.

       

      7.  
Stipulated
Judgment:   In the event of any material breach of this
Agreement by Matech with respect to the issuance of shares, monies to be paid,
or the execution of any agreement pursuant to the terms of this Agreement, a
stipulated judgment for (1)
$1.75 million, minus any
amount already received by Mr. Beck from the sale of his shares in
Matech, including the percentage of capital raised and cash received, and (2) an
order directing the issuance and release of any shares still due to Beck,
including but not limited to any Anti-Dilution Shares, has been executed by
Matech, a copy of which is attached hereto ("the Stipulated Judgment") and shall
be held by Beck's attorneys. Such stipulated judgment may only be filed by Beck
with the Los Angeles County Superior Court 10 business days after notice is
received by Matech and Matech fails to cure said breach within that time period.
Request for entry of judgment can be made with ex parte notice by 10 am the day
prior to the hearing.

       

      8.  
Breach
by Beck.   In the event of a breach
of the
trading limitations by Beck, Mr. Beck will be barred from trading for
twice the total of time it would have taken to trade the amount improperly
traded.

       

      9.  
Accounting:  
Matech will provide within 5 days of the end of each month
an

    

     

    
      
        
        

      

      
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    accounting
of capital raised by Matech, expenses related to capital raise, the number of
shares issued by Matech in the preceding month, and Matech's cash balance; and,
in turn, Beck will provide to Matech within 5 days of the end of each month an
accounting of his Matech shares sold on a daily basis for the prior month
including a copy of his broker's record of the sales.

     

    10.  
Dismissal:  
The parties agree to dismissal with prejudice all claims in this
action.  The Court
shall retain jurisdiction under CCP 664.6 to enforce the terms of this
Agreement. 

     

    E.  
Miscellaneous
Provisions

     

    1.  
Any
notices hereunder shall be delivered by email and facsimile transmission with a
conforming copy sent by Federal Express or United States mail at the address set
forth below. Such notice shall be deemed delivered on the day that the e-mail
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).

     

    
      
        	To Matech:	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
	 	 
	 With a Copy
      to:	Robert A. Brunette,
      Attorney
	 	431 North Brand
      Blvd., Suite 300 Glendale, CA 91203
	 	Fax: (818)
      502-9178
	 	Email: bumetlaw@aol.com
	 	 
	 To Stephen F.
      Beck:	Stephen Forrest
      Beck
	 	489 Pimiento
      Lane
	 	Santa Barbara, CA
      93109 Fax: (805) 969-1567
	 	Email: sforestb@aol.com
	 	 
	 With a Copy
      to:	David
  Shaub
	 	Shaub & Williams
      LLP
	 	12121 Wilshire Blvd.
      Ste. 205 Los Angeles, CA 90025
	 	Fax: (310)
      826-8042
	 	Email: lawfirm@sw-law.com

      

    

     

    2.  
Any
headers used are for descriptive purpose only and are not to be used in
interpreting this Agreement.

     

     

    
      
        
        

      

      
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      3.  
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 term hereof,
and/or the final settlement agreement and/or the Escrow Agreement, or any term
thereof, 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.

       

      4.  
The
parties hereby agree that his is a fully integrated agreement and is the entire
agreement by and among the parties and supersedes all prior 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.

       

      5.  
The
parties, and each of them, hereby acknowledge and represent that they have
received independent legal advice from attorney 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 by each of them without any duress or undue influence on the part or on
behalf of any of them.

       

      6.  
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

    

     

     

    
      
        
        

      

      
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    attributable
to, any such actual or purported assignment, reassignment or transfer, whether
or not litigation is commenced.

     

    7.  
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.

     

    8.  
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 in the above captioned case and that there are no other
affiliates, partnerships, corporations, joint ventures or other entitles that
are subject to this lawsuit.

     

    9. 
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 give the releases and other promises contained
herein.

     

    10.  
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.

     

    11.  
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.

     

    12.  
The
provisions of this Agreement are divisible. If any provision of
this

     

    
      
        
        

      

      
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      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.

       

      13.  
This Agreement may be signed in counterparts and e-mail copies shall
be the
equivalent of originals.

       

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              	DATED:
      February 12, 2009	MATERIAL
      TECHNOLOGIES,
      INC.	 
	 	 	 	 
	 	 	 	 
	
                                                                       

                                                                    	
                                                                      By:

                                                                    	/s/ Robert
      M. Bernstein	 
	 	 	Robert
      M. Bernstein,
      CEO	 
	 	 	 	 
	 	 	 	 
	DATED:
      February 12, 2009	 	/s/ Robert
      M. Bernstein	 
	 	By:
      	Robert
      M. Bernstein, an individual	 
	 	 	 	 
	 	 	 	 
	DATED:
      February 12, 2009	 	/s/
      Stephen Forrest Beck	 
	 	By:
      	Stephen
      Forrest
    Beck	 
	 	 	 	 
	IT
      IS SO ORDERED.	 	 	 
	 	 	 	 
	DATED:	 	 	 
	 	 	Judge,
      Superior
      Court	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
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