SETTLEMENTAGREEMENT

 

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,

 

 

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:

 

 

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,

 

 

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

 

 

 

 

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.

 

 

 

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).

 

 

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

 

 

 

 

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.