EXHIBIT 10.15
SETTLEMENT AGREEMENT
AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (the "Agreement") is made as
of July 15, 2002 by and between XXXXXXX XXXXXXX XXXX, an individual with offices
at 00000 Xxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000 (hereafter "XXXX"), and MATERIAL
TECHNOLOGIES, INC., a Delaware corporation with offices at 00000 Xxx Xxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000 (hereafter "MATECH"), and XXXXXX X.
XXXXXXXXX, an individual with the same offices as MATECH (hereafter
"XXXXXXXXX"), with reference to the following facts:
WHEREAS, on April 30, 2001 MATECH filed a lawsuit in the Los Angeles Superior
Court entitled Material Technologies, Inc. v. Xxxxxxx Xxxxxxx Xxxx, LASC Civil
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No. BC249495, seeking the return of 244,427 shares of MATECH common stock, or
the reasonable value thereof, and on April 30, 2001 XXXX filed a lawsuit in said
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Court entitled Xxxxxxx Xxxxxxx Xxxx v. Xxxxxx X. Xxxxxxxxx, Material
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Technologies, Inc., et al, LASC Civil No. BC249547 seeking damages for breach of
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contract, and other claims (hereafter collectively called the "Superior Court
Actions");
WHEREAS, the consolidated Superior Court Actions are set for Trial in Department
61 of the L.A. Superior Court, 000 Xx. Xxxx Xxxxxx, Xxx Xxxxxxx, XX at 9:30 am.
on Monday, September 9, 2002, before the Xxx. Xxxxx X. Xxxxxxx; and
WHEREAS, without admitting any liability to each other, XXXX, MATECH and
XXXXXXXXX desire to avoid further litigation and mutually settle the Superior
Court Actions on the terms set forth below.
Therefore, the undersigned parties agree as follows:
1. CONSIDERATION
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(a) MATECH agrees to promptly issue to XXXX one million shares of
MATECH Class A common stock, duly legended with a restriction upon sale for one
year after issuance, subject to the U.S. Securities & Exchange Commission Rule
144 (Securities Act of 1933, as amended) holding period and documentation
requirements (hereafter the "Settlement Shares"), upon the express condition
that the parties hereto first consummate the following:
(i) XXXX executes and files a "SUBSTITUTION OF
ATTORNEY - CIVIL" appointing himself In Pro Per as his attorney-of-record (Cal.
Judicial Council Form MC-050, copy attached as EXHIBIT A), or which appoints a
licensed
2.
California attorney who reviews and signs this Agreement, in the Superior Court
Actions, and serves the same on MATECH and XXXXXXXXX and their legal counsel;
and
(ii) Subsequently, XXXX, MATECH and XXXXXXXXX execute
and file a "REQUEST FOR DISMISSAL", with Prejudice (Cal. Judicial Council Form
982(a)(5), copy attached as EXHIBIT B) as to all other parties in the Superior
Court Actions, and serves the same on the other parties and their legal counsel,
if any.
(b) XXXX'x said MATECH Settlement Shares shall be freely tradable on the
NASDAQ Bulletin Board after the one year holding period, but XXXX shall not sell
any said MATECH Settlement Shares in excess of ten percent of the volume of
MATECH shares publicly traded in the previous month. The amount of MATECH's
shares publicly and previously traded for such measurement purposes shall not be
cumulative. The calculation of trading volume shall be that which is conducted
by the investment banking firm of Wedbush Xxxxxx, which shall be reduced by 50%
to account for the double reporting of trades. In any month in which XXXX
intends to sell stock, he shall promptly provide such trading volume data to
MATECH for informational purposes only. At the end of any month in which XXXX
has sold MATECH Settlement Shares he shall promptly inform MATECH in writing of
the total number of shares he traded.
(c) The percentage of XXXX'x said MATECH Settlement Shares in
relation to the outstanding number of MATECH shares on the date of issuance of
said MATECH Settlement Shares shall not be diluted for a period of eighteen
months thereafter by the issuance of any other MATECH shares, options or
warrants to any third-party or to XXXXXXXXX, whether or not for consideration or
for any purpose whatsoever, without exception. If MATECH issues any of its
shares during this period, it shall simultaneously issue a sufficient number of
shares to XXXX so that his percent ownership in MATECH as of the date of initial
issuance of said MATECH Settlement Shares remains unchanged. Any added, MATECH
shares issued to Xxxx pursuant to this anti-dilution paragraph shall be
similarly subject to the SEC Rule 144 one-year holding period and public trading
restrictions in paragraph 1(a) above.
3.
(i) In the event that MATECH issues any stock options or stock
warrants to any third-party or XXXXXXXXX during such eighteen months period,
MATECH shall offer a pro-rata share of such options or warrants to XXXX on the
same terms and conditions as they are offered to the recipient of such options
and warrants, so that XXXX'x percentage ownership of MATECH shares, including
options and warrants, is not reduced; and
(ii) MATECH shall establish an escrow account at its own
expense to be administered by MATECH's transfer agent into which MATECH shall
subsequently transfer 2,000,000 shares of its common stock. MATECH shall
concurrently issue to such agent irrevocable instructions governing the issuance
of additional Settlement Shares to XXXX in furtherancs of this anti-dilution
provision. Such instructions shall be in the form of a letter from MATECH,
approved by its Board of Directors, which is substantially similar to that
attached hereto as EXHIBIT C.
(d) All parties agree to promptly sign and return any and all forms or
supplementary documents, in good faith, and take additional actions which are
necessary to give full force and effect to the basic terms and intent of this
Agreement.
(e) No party, nor their spouse or legal counsel shall disclose the
terms
of this Agreement to third parties' without the written permission of the other
parties, other than to effectuate the provisions of this Agreement; and
2. MUTUAL GENERAL RELEASE
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(a) Except for the obligations of this Agreement, each party hereto, for
itself and on behalf of their heirs, executors, successors and assigns, shall
fully and forever remise, release and discharge the other party (and their
heirs, executors, assigns, agents, servants, employees, attorneys and
investigators) of any and all claims, manner of actions or actions, cause and
causes of action, suits, debts, dues, liabilities, sums of money, accounts,
reckonings, royalties, bills, covenants, contracts, controversies, undertakings,
agreements, warranties,
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promises, trespasses, damages, obligations, judgments, executions, and demands
of any kind or nature whatsoever in law or equity, whether known or unknown,
concealed or hidden, which against the other such party he/she then has, or
which they or their successors or assigns thereafter can, shall, or may have
which arises out of or is based upon or in connection with said Superior Court
Actions, or otherwise. It is expressly understood that Section 1542 of the
Civil Code of California provides as follows:
"Section 1542 (Certain claims not affected by general release). A
general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
The provisions of said Section 1542 of the Civil Code of California, as well as
the provisions of all comparable, equivalent or similar statutes and principles
of common law of California and the other States of the United States, shall
then be expressly waived by the parties hereto under this agreement. It is
expressly understood that this conditional waiver is an essential and material
part of this Agreement, without which this Agreement would not have been
executed by the parties hereto.
(b) The parties represent to each other that they have not assigned,
pledged or transferred any of their rights in the Superior Court Actions to
third parties, and they are unaware of the existence of any claims or liens of
third parties relating to the Superior Court Actions.
(c) The parties hereto further covenant and agree that the terms of this
full and complete mutual release of all claims are contractual, and not a mere
recital, and further, that no promise of inducement not otherwise herein
expressed has been made to the parties as part of the settlement of these
claims. The parties acknowledge that the possible unforeseen and unanticipated
loss and damage may have already occurred, or may in the future occur, which are
not presently contemplated or foreseen, but that nevertheless, in view of the
parties' intention and agreement to compromise all claims, both known and
unknown, foreseen and unforeseen, the parties hereby
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expressly assume the risk of any and all other and additional damage, whatever
such damage might be, as well as the amount thereof, if any.
(d) The parties hereto covenant and agree that they are currently
represented by legal counsel, or they will retain counsel to read each and every
page of this full and complete mutual release of all claims, or have had each
and every page read to them, and that they understand same, and by the signing
of this instrument, agree to the terms and provisions herein set forth.
3. NO ADMISSIONS
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Each of the parties hereto acknowledges and agrees that the above Mutual General
Release is not in any respect, nor for any purpose, to be deemed or construed to
be any admission or concession of any liability or damages whatever on the part
of any of them, and is being entered into in the spirit of compromise, and for
the purpose of buying peace between and among the parties hereto.
4. COSTS
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The parties agree that each shall bear their own costs, including their
attorney's fees, which may have been incurred as a result of this matter.
5. ENTIRE AGREEMENT
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The parties acknowledge that they have had sufficient opportunity to make
diligent inquiry into and consult with independent counsel concerning this
Agreement. This Agreement contains the entire Agreement between the parties as
to the above subject matter.
6. INVALID PROVISIONS
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If, after the date hereof, any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the terms of this Agreement, such provision shall be fully severable. In lieu
thereof, there shall be added a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
7. CONSTRUCTION UNDER CALIFORNIA LAW
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This Agreement is entered into in the State of California, and shall be
construed and interpreted in accordance with its laws, except for its choice
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of law principles. In any action to interpret or enforce the terms of this
Agreement the prevailing party shall be reimbursed its costs, including
reasonable attorneys fees, by the other party.
8. EFFECTIVENESS
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This Agreement shall become effective as of the date first stated above upon
mutual execution by the parties, and may be executed in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same Agreement.
Approval as to form and content: XXXX
/s/ Xxxxxxx Xxxxxxx Xxxx
_________________________ By_______________________
Attorney-At-Law (if any) Xxxxxxx Xxxxxxx Xxxx
Name:
Approval as to form and content: XXXXXXXXX
/s/ Xxxxxx X. Xxxxxxxxx
XXXXXX X. BRUNETTE By_______________________
Attorney-At-Law Xxxxxx X. Xxxxxxxxx
Individually
/s/ Xxxxxx X. Brunette
By ______________________________
Xxxxxx X. Brunette, Esq.
XXXXXX XXXX, XX. MATECH (corporate seal)
Attorney-At-Law
/s/ Xxxxxx Xxxx, Xx. /s/ Xxxxxx X. Xxxxxxxxx
By _______________________ By _______________________
Xxxxxx Xxxx, Xx. Xxxxxx X. Xxxxxxxxx
President
