Exhibit 10.1
SETTLEMENT AGREEMENT
AND GENERAL RELEASE
This
SETTLEMENT AGREEMENT AND GENERAL RELEASE (this
“Agreement”) is effective as of October 27, 2006, by
and between Material Technologies, Inc., a Delaware
corporation (the “Company”), on the one hand, and
PALISADES CAPITAL, LLC, HYDE INVESTMENTS, LTD. AND LIVINGSTON
INVESTMENTS, LTD. (each a “Debenture Holder” and
collectively the “Debenture Holders”), on the other
hand. Each of the Company and the Debenture Holders are
sometimes referred to below as a “Party” and
collectively as the “Parties.”
R E C I T A L S
A.
WHEREAS , the Debenture Holders believe that Company is
indebted to Debenture Holders in the amount of $2,108,290.13 as of
October 15, 2006 pursuant to the terms of those certain Senior
Secured Convertible Debentures issued in September 2003 (the
“Debentures”), as set forth in Schedule A
attached hereto and made a part hereof; and
B.
WHEREAS, a dispute has arisen concerning the exact amount
owed to the Debenture Holders (the “Dispute”), and the
Company has requested an extension of the maturity date of the
Debentures, which is currently December 31, 2006; and
C.
WHEREAS , the Parties wish amicably to agree on an exact
amount owed under the Debentures and to resolve and settle all
disputes between them in the manner set forth below.
NOW, THEREFORE , for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and
subject to the mutual promises contained in this Agreement, the
Parties do hereby agree as follows:
W I T N E S S E T H :
1.
The Release .
(a) The
Company, for itself and its respective past, present and future
administrators, affiliates, agents, assigns, attorneys, directors,
employees, executors, heirs, insurers, officers, managers, parents,
partners, predecessors, representatives, servants, shareholders,
subpartners, subsidiaries, successors, transferees, underwriters,
clients and customers, and all persons acting by, through, under or
in concert with any of them, and each of them, hereby releases and
discharges (i) each Debenture Holder, GCH Capital, Ltd., and each
of their respective subsidiaries, and their respective past,
present and future administrators, affiliates, agents, assigns,
attorneys, directors, employees, executors, heirs, insurers,
officers, managers, parents, partners, predecessors,
representatives, servants, shareholders, subpartners, subsidiaries,
successors, transferees, underwriters, clients, customers, and each
of them; and (ii) all persons acting by, through,
under or in concert with any of them, of and from any and all
actions, causes of action, claims, costs, damages, debts, demands,
expenses, liabilities, losses and obligations, actual or
contingent, known or unknown, arising on or prior to the date
hereof (the “Released Claims”).
(b) The
Company acknowledges that there is a risk that subsequent to the
execution of this Agreement, one or more Parties will incur or
suffer loss, damages or injuries which are in some way caused by or
related to the Released Claims, but which are unknown and
unanticipated at the time this Agreement is signed. The
Company hereby assumes the above-mentioned risk and understands
that this Agreement SHALL APPLY TO ALL UNKNOWN OR UNANTICIPATED
RESULTS OF THE TRANSACTIONS AND OCCURRENCES DESCRIBED ABOVE, AS
WELL AS THOSE KNOWN AND ANTICIPATED, and the Company acknowledges
in executing the releases (the “Releases”) contained in
this Agreement, that it does so with full knowledge of any and all
rights and benefits that it might otherwise have had under
California Civil Code Section 1542, and upon the advice of
counsel, hereby waives and relinquishes any and all such rights and
benefits. The Company acknowledges and agrees that this
waiver is an essential and material term hereof, without which this
Agreement (including, without limitation, the Releases) would not
have been entered into. Section 1542 reads as follows:
"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 Company certifies that it has
read the foregoing recitation of Section 1542 and understands the
meaning of such section and such fact is indicated by the signing
of such Party’s initials hereto:
_____________
Company's
Initials
The Company further acknowledges that it may hereafter discover
facts different from or in addition to those known or believed to
be true with respect to the Released Claims. The Company
agrees that the Releases shall be and shall remain effective in all
respects, notwithstanding any such different or additional facts,
or any facts which are intentionally concealed from either by
the other. In this regard, and without limitation, the
Company declares that it realizes that it may have damages it
presently knows nothing about and that, as to them, they have been
released pursuant to the Releases. The Company further
declares that it understands that the parties being released would
not have agreed to compromise their respective claims if the
Releases did not cover damages and their results which may not yet
have manifested themselves or which may be unknown or not
anticipated at the present time.
2
(c) The
Releases shall not be deemed an admission by the Company of any
sort. No right shall inure to any third party (other than
third parties described in subparagraph (a) above) from the
obligations, representations and agreements made or reflected
herein.
(d) The
Company represents and warrants that it alone is the owner of the
Released Claims, that it has not heretofore assigned or
transferred, nor purported to assign or transfer to any third
party, and is not aware of any third party, who might assert some
interest in any of the Released Claims. The Company further
agrees to indemnify, defend and hold harmless the Debenture Holders
from all liability, claims, demands, damages, costs, expenses and
attorneys’ fees incurred by the Debenture Holders as a
result of any third party asserting any such assignment or transfer
of any such interest, right or claim.
(e) The
Company represents and warrants that none of the Released Claims is
subject to any purported or actual lien, security interest,
encumbrance or other contractual right of any third
party.
