Exhibit 10.6

WORKOUT AGREEMENT

            This Workout Agreement (“Agreement”) is entered into by and between
The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit
corporation (“Penn”) and Material Technologies, Inc., a Delaware corporation
(“Matech” or the “Company”) with regard to the following facts:

RECITALS

            Penn and Matech are parties to a License Agreement dated August 26,
1993, as amended by Amendment 1 dated December 17, 1997 (together, the “Amended
Licensed Agreement”).  Penn and Matech are also parties to a Sponsored Research
Agreement dated August 26, 1993 (the “SRA Agreement”), as amended by a Repayment
Agreement dated December 17, 1997 (the “Repayment Agreement”, and together with
the SRA Agreement, the “SRA/Repayment Agreement”). 

            Matech desires to reach an agreement with Penn to delay payment of
some of the principal debt owed, and interest accrued, and otherwise agree to
the terms in this Agreement; and

            Penn, in furtherance of its education and research missions and
desire to benefit society through the timely commercialization of Penn’s
invention(s), is willing to postpone, temporarily, its right to pursue legal
remedies against Matech in connection with the SRA/Repayment Agreement, receive
certain payments from Matech, and otherwise agree to the terms in this
Agreement.

            NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:

AGREEMENT

1.         Acknowledgment of Debt Owed.  Penn and Matech acknowledge and agree
that:

            (a)        as of December 31, 2004, all amounts due and owing to
Penn pursuant to the SRA/Repayment Agreement is Seven Hundred Sixty Thousand
Eight Hundred Thirty-One Dollars ($760,831.00) (the “Remaining Obligation”); and

            (b)        the maturity date, and all other dates upon which
payments are required to be made to Penn under the SRA/Repayment Agreement are
hereby modified as set forth in this Agreement.

2.         Payment Toward Obligation. 

            (a)        Upon execution of this Agreement by both parties, Matech
shall deliver to Penn via wire transfer the sum of Twenty-Five Thousand Dollars
($25,000), as a partial payment of the Remaining Obligation owed pursuant to the
SRA/Repayment Agreement (the “Partial Payment”).

            (b)        On or before each one-year anniversary of the Agreement
Effective Date (defined below), Matech shall pay Penn an additional sum equal to
Twenty Five Thousand Dollars ($25,000), which will be applied toward reducing
the then-current Remaining Obligation and Accrued Interest (defined below) owed.

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3.         Interest Rate.  Effective January 1, 2005, simple interest shall
accrue on the Remaining Obligation at the rate of one-half of one percent (0.5%)
per month of the Remaining Obligation, until paid in full.  All interest that
accrues after the Agreement Effective Date shall be referred to herein as the
“Accrued Interest”.  The Partial Payment, and all payments made pursuant to
Sections 2 and 4 of this Agreement, shall be credited first against the
Remaining Obligation, and then credited against Accrued Interest.

4.         Payments.  Beginning with Matech’s Second Quarter 2005, and
continuing for so long as any portion of the Remaining Obligation or Accrued
Interest are outstanding, Matech shall pay, or shall cause a Matech Affiliate to
pay, to Penn quarterly payments (each, the “Quarterly Payment”), toward the full
payment of the Remaining Obligation and Accrued Interest.  Such Quarterly
Payment shall be due to Penn by the earlier of:  (a) ten days following the
filing of Matech’s quarterly Form 10-Q or Form 10-K for each year that any
portion of the Remaining Obligation or Accrued Interest is outstanding; or (b)
sixty (60) days after the end of the calendar quarter for any quarter in which
any portion of the Remaining Obligation or Accrued Interest in outstanding. 
Notwithstanding the foregoing, the Quarterly Payments shall be made only out of,
and not to exceed ten percent (10%) of, Matech’s Net Income Before Extraordinary
Items and Provision for Income Taxes (“Net Income”).  For purposes of this
Section 4, “Net Income” shall have the same meaning as “Net Income Before
Extraordinary Items and Provision for Income Taxes” as set forth in Matech’s
publicly-filed quarterly and annual financial statements with the Securities and
Exchange Commission or successor regulatory authority and determined by Matech’s
accountant in accordance with generally accepted accounting principles
consistently applied, or, in the case of an Affiliate, as “net income”
determined by the Affiliate’s accountant in accordance with generally accepted
accounting principles consistently applied.  If Matech or a Matech Affiliate has
any Net Income for a quarter, Matech shall pay, or shall cause the Matech
Affiliate or Licensee to pay, some amount to Penn as a Quarterly Payment up to
the 10% of Net Income; if Matech or a Matech Affiliate does not have Net Income
for the quarter, then no Quarterly Payment shall be due.

5.         Repayment Agreement Amendments.

            (a)        Sections 5, 6 and 10 of the Repayment Agreement are
hereby deleted.

            (b)        In Section 8 of the Repayment Agreement, the amount
“$150,000” is hereby amended to state “$300,000” and the following sentence is
inserted at the end of Section 8: “In the event Mr. Bernstein’s cash salary
exceeds the sum of $250,000 (excluding for this purpose any noncash benefits,
options, warrants which may otherwise be reportable as salary) in any calendar
year Penn shall receive, on a dollar for dollar basis, an amount equal to any
cash salary received by Mr. Bernstein in excess of $250,000. For example, if Mr.
Bernstein’s annual cash salary is $275,000 for 2005, in the year ending 2005
Penn shall receive the sum of $25,000 to be credited to the Remaining
Obligation.” This shall cease when the debt in Section 1(a) has been paid off.

6.         New Equity Issuance and Other Equity Issues. 

            (a)        Within ten business days following the Agreement
Effective Date (defined below), Matech shall issue and deliver in the name of
“The Trustees of the University of Pennsylvania”, that number of shares of
Matech’s Class A Common Stock as will cause Penn to own and hold of record three
and three-quarters percent (3.75%) of the issued and outstanding shares
(excluding any and all unexercised: i) options, ii) warrants, iii) convertible
debentures, or

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iv) convertible securities in any form) of Matech’s Class A Common Stock as set
forth on Matech’s December 31, 2004 Form 10-K (the “Penn Settlement Shares”). 
Within ten business days after receiving such representations and warranties as
shall be agreed upon between Matech and Dr. Campbell Laird in his individual
capacity (“Laird”), Matech shall issue and deliver in the name of Dr. Campbell
Laird that number of shares of Matech’s Class A Common Stock as will cause Laird
to own and hold of record three-quarters of a percent (0.75%) of the issued and
outstanding shares (excluding any and all unexercised: (i) options, (ii)
warrants, (iii) convertible debentures, or (iv) convertible securities in any
form) of Matech’s Class A Common Stock as set forth on Matech’s December 31,
2004 Form 10-K (the “Laird Settlement Shares”).  Within ten business days after
receiving such representations and warranties as shall be agreed upon between
Matech and Dr. Li Yuan Feng in his individual capacity (“Li”), Matech shall
issue and deliver in the name of Dr. Li Yuan Feng that number of shares of
Matech’s Class A Common Stock as will cause Li to own and hold of record
three-quarters of a percent (0.75%) of the issued and outstanding shares
(excluding any and all unexercised: (i) options, (ii) warrants, (iii)
convertible debentures, or (iv) convertible securities in any form) of Matech’s
Class A Common Stock as set forth on Matech’s December 31, 2004 Form 10-K (the
“Li Settlement Shares”).The Penn Settlement Shares, Laird Settlement Shares, and
Li Settlement Shares collectively shall be defined to be the “Settlement
Shares”. 

            (b)        Within ten business days following the Agreement
Effective Date, Matech shall deliver to Penn an updated capitalization table
setting forth the capital stock Matech is authorized to issue, the beneficial
ownership of the shares of each class and series thereof and of the securities
convertible, exercisable or exchangeable therefor, that are outstanding as of
the Agreement Effective Date.

            (c)        The Penn Settlement Shares and all shares of Matech
common stock owned and held of record on the Agreement Effective Date by Penn
(collectively, the “Matech Shares”) shall be subject to a shareholder lock-up
agreement as follows: 

>               (1)  Except as otherwise provided in Section 6(c)(2) of this
> Agreement, any interest in the  Matech Shares may not be voluntarily or
> involuntarily transferred, by operation of law or otherwise, by Penn for a
> period of eighteen (18) months from the Agreement Effective Date (the “Lock Up
> Period”).
> 
>               (2)  The prohibition in Section 6(c)(1) shall not apply to a
> transfer of an interest in the Matech Shares, held by Penn for the benefit of
> and with the restrictive legends referred to in Section 6(c)(1) above, to Dr.
> Campbell Laird, Dr. Li Yuan Feng or to any employee of Penn who has developed
> or assisted in the development of the intellectual property described in the
> Amended License Agreement. Notwithstanding anything contained herein to the
> contrary, an interest in the Matech Shares may not be voluntarily or
> involuntarily transferred, by operation of law or otherwise, if such transfer
> would result in a violation of the Securities Act of 1933, as amended (the
> “Act”), as may be applicable.
> 
>               (3)  An attempt to transfer an interest in the Matech Shares in
> violation of this Section 6 shall be void and Matech shall refuse to register
> the Matech Shares in question in the name of the transferee on the books of
> Matech.
> 
>               (4)  After expiration of the Lock-Up Period, Matech shall not
> object to transferring the owner of record for any of the Matech Shares from
> Penn to a new owner or holder of record, and shall transfer such shares on its
> books and records if/when Penn

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> sells or transfers any or all of such shares in accordance with applicable
> federal and state securities laws.  In the event of any dispute regarding
> whether any particular sale or transfer would result in a violation of the Act
> or otherwise not be in accordance with applicable federal or state securities
> laws, Matech and Penn shall obtain an opinion of counsel from an attorney who
> otherwise does not represent either Matech or Penn and who is acceptable to
> both Matech and Penn, and Matech shall comply with the opinion of counsel from
> such attorney regarding such proposed sale or transfer of such shares on its
> books and records.

7.         Waiver. Penn hereby waives any and all defaults of Matech under the
SRA/Repayment Agreement between the parties existing on or prior to the
Agreement Effective Date, it being understood that this is a waiver of the
default, and not a waiver of any amounts owed as set forth in this Agreement or
a waiver of the clause itself.  The parties acknowledge and agree that Penn
shall have no preemptive or anti-dilution rights of any kind after the date by
which Penn receives the Penn Settlement Shares in accordance with Section 6(a)
of this Agreement.

8.         Matech Representations and Warranties.  Matech hereby represents and
warrants to Penn:

            (a)        that Matech and its Affiliates (as defined in the License
Agreement) are duly organized, validly existing and in good standing under
Delaware law, and Matech has all requisite power and authority to enter into
this Agreement and perform its obligations hereunder;

            (b)        that the execution, delivery and performance of this
Agreement by Matech, and the consummation by Matech of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of Matech, and that this Agreement, upon execution thereof, will
constitute a valid and legally binding obligation of Matech, enforceable against
it in accordance with its terms;

            (c)        the execution, delivery and performance of this Agreement
by Matech, and the consummation by Matech of the transactions contemplated
hereby, will not: (1) conflict with or result in a breach of any provision of
the charter or bylaws of Matech; (2) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
authority (except as disclosed in writing to Penn prior to execution of this
Agreement by Matech); (3) require notice to, or the consent or approval of, any
person (other than a governmental authority) that has not been obtained; (4)
violate or conflict with, or result in a breach of any provision of, or
constitute a default under, or give to any third party any right of termination,
cancellation, amendment or acceleration under, any of the terms, conditions or
provisions of any contract to which Matech or an Affiliate is a party or by
which it or its assets, equity, debt or property are bound;

            (d)        the Penn Settlement Shares, when issued and delivered in
accordance with the terms of this Agreement, have been duly and validly issued,
fully paid and nonassessable; are free of any liens, options, encumbrances, and
adverse claims or restrictions; and, assuming the accuracy of Penn’s
representations and warranties in this Agreement, are issued in compliance with
Regulation D, Rule 506 under the Securities Act of 1933, as amended and the
regulations promulgated thereunder (the “1933 Act”);

            (e)        there are no restrictions on the transfer of the Penn
Settlement Shares imposed by Matech’s charter documents, any agreement to which
Matech is a party, or any court or government order, other than restrictions
imposed by relevant federal and state securities laws and this agreement; and

            (f)        with a view to making available the benefits of certain
SEC rules permitting certain sales of the Penn Settlement Shares to the public
without registration, Matech will make and keep public information available (as
those terms are understood in Rule 144 under the 1933

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Act); and use reasonable efforts to file in a timely manner any reports required
to be filed with the SEC.

9.         Penn’s Representations and Warranties.  Penn hereby represents and
warrants to Matech:

            (a)        that Penn and its Affiliates (as defined in the License
Agreement) are duly organized, validly existing and in good standing under
Pennsylvania law, and Penn has all requisite power and authority to enter into
this Agreement and perform its obligations hereunder;

            (b)        that the execution, delivery and performance of this
Agreement by Penn, and the consummation by Penn of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action on the part
of Penn, and that this Agreement, upon execution thereof, will constitute a
valid and legally binding obligation of Penn, enforceable against it in
accordance with its terms;

            (c)        the execution, delivery and performance of this Agreement
by Penn, and the consummation by Penn of the transactions contemplated hereby,
will not: (1) conflict with or result in a breach of any provision of the
charter or bylaws of Penn; (2) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental authority (except
as disclosed in writing to Matech prior to execution of this Agreement by Penn);
(3) require notice to, or the consent or approval of, any person (other than a
governmental authority, Laird and Li) that has not been obtained; (4) violate or
conflict with, or result in a breach of any provision of, or constitute a
default under, or give to any third party any right of termination,
cancellation, amendment or acceleration under, any of the terms, conditions or
provisions of any contract to which Penn or an Affiliate is a party or by which
it or its assets, equity, debt or property are bound.

            (d)        Penn has such knowledge and experience in financial and
business matters so as to be capable of evaluating and understanding, and has
evaluated and understood, the merits and risks of an investment in the Company
and the acquisition of the Penn Settlement Shares, and Penn has been given the
opportunity to (1) obtain information and to examine documents relating to the
Company and the Company’s business, to (2) ask questions of, and to receive
answers from, the Company concerning the Company, the Company’s business and the
terms and conditions of an investment in the Company, and to (3) obtain any
additional information, to the extent the Company possesses such information or
could acquire such information without unreasonable effort or expense, necessary
to verify the accuracy of any information previously furnished.  All information
and documents, records and books pertaining to an investment in the Company
which Penn has requested have been made available to Penn.

            (e)        The Penn Settlement Shares are being acquired by Penn for
Penn’s own account, for investment and not with a view to, or in connection
with, any public offering or distribution of the same and without any present
intention to sell the same at any particular event or circumstances.  Penn has
no agreement or other arrangement with any person to sell, transfer or pledge
any part of the Penn Settlement Shares which would guarantee Penn any profit or
provide any guarantee to Penn against any loss with respect to the Penn
Settlement Shares.

            (f)        Penn understands that no federal, state or other
governmental agency of the United States or any other territory or nation has
passed on or made any recommendation or endorsement of an investment in
securities of the Company.

            (g)        Penn understands that the Penn Settlement Shares have not
been registered under the United States Securities Act of 1933, as amended (the
“Act”) or applicable state or other securities laws, and the Penn Settlement
Shares are offered and sold under an exemption from registration provided by
such laws and the rules and regulations thereunder; further, Penn understands
that the Company is under no obligation to register the Penn Settlement Shares
or to comply with any applicable exemption under any applicable securities laws
with respect to the Penn Settlement Shares.  Penn also understands that the
exemption provided by Rule 144 under

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the Act may not be available because of the conditions and limitations of such
Rule, and that in the absence of the availability of such Rule, any disposition
by Penn of any portion of the Penn Settlement Shares may require compliance with
some other exemption under the Act.

            (h)        Penn has been informed that legends referring to the
restrictions indicated herein are placed on the certificate(s) evidencing the
Penn Settlement Shares held by Penn.

            (i)         Penn agrees that the foregoing representations and
warranties will survive the transfer of the Penn Settlement Shares to Penn, as
well as any investigation made by any party relying on same.

            (j)         Penn is an “accredited investor” as such term is defined
in Regulation D promulgated under the Act.

10.       Material Breach.  In the event Matech fails to remit, or fails to
cause its Affiliate or Licensee to remit, any payment due under Section 2 or 4,
Penn shall deliver a written notice to Matech, demanding payment.  If such
payment is not paid to Penn within sixty (60) days after the date of such
written notice (the “Due Date”), in addition to any other rights and remedies
Penn may have at law or in equity:

            (a)        Penn shall have the right to immediately file suit to
enforce the terms of this Agreement; and

            (b)        Penn shall have the right, but not the obligation, to
terminate the Amended License Agreement, effective as of a date selected by Penn
at least sixty (60) days after the Due Date, by delivering a notice of
termination of the Amended License Agreement to Matech at least thirty (30) days
prior to the selected effective date of such termination of the Amended License
Agreement.

11.       Miscellaneous. 

            (a)  Capitalized terms not defined in this Agreement shall have the
meaning set forth in the SRA/Repayment Agreement or the Amended License
Agreement, as the case may be.  In particular, and not in limitation of the
generality of the foregoing sentence, when used in this Agreement, the
capitalized terms “Licensee” and “Affiliate” shall have the same definition and
meaning as that set forth in the Amended License Agreement.

            (b)        Except as expressly set forth in this Agreement, none of
the terms of the SRA/Repayment Agreement shall be deemed amended hereby, and
each of the Amended License Agreement and SRA/Repayment Agreement shall remain
in full force and effect, except as expressly amended by this Agreement.

            (c)        There are no express or intended third party
beneficiaries pursuant to this Agreement.

            (d)        This Agreement may only be modified by a written
amendment that is executed by an authorized representative of each party.  Any
waiver must be express and in writing.  No waiver by either party of a breach by
the other party will constitute a waiver of any different or succeeding breach. 
Unless otherwise specified, all remedies are cumulative.

            (e)        This Agreement, and any of the rights or obligations
hereunder, shall not be assigned or transferred, either directly or by merger or
operation of law, without the prior written consent of the other party hereto. 
Any purported assignment or transfer without such prior written consent of the
other party hereto shall be null and void.  Any permitted assignee must agree in
writing to be legally bound by this Agreement as one, but not the only,
condition of any consent granted for such assignment.

            (f)        Any notice or other required communication (each, a
“Notice”) must be in writing, addressed to the party’s respective Address for
Notices listed below the signatures on this

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Agreement, and delivered: (1) by recognized overnight courier service, charges
prepaid; (2) by U.S. mail with postage prepaid and a return receipt requested;
or (3) by facsimile with delivery acknowledged.  The addresses for Notices
pursuant to the Amended License Agreement and the SRA/Repayment Agreement are
hereby amended to reflect the Notice information listed below the signatures on
this Agreement.

            (g)        If any provision of this Agreement is held to be invalid
or unenforceable by a court of competent jurisdiction, then the remaining
provisions of this Agreement will remain in full force and effect, and such
invalid or unenforceable provision will be automatically revised to be a valid
or enforceable provision that comes as close as permitted by law to the parties’
original intent.

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            IN WITNESS WHEREOF, the parties have executed this Agreement,
through duly authorized representatives, as of this 15th day of August, 2005
(the “Agreement Effective Date”).

“PENN”                                                                                
“MATECH”
THE TRUSTEES OF THE
UNIVERSITY OF PENNSYLVANIA                                    MATERIAL
TECHNOLOGIES, INC.

_______________________________________                 
________________________________
By:       Perry B.
Molinoff                                                         By:      
Robert M. Bernstein
Vice Provost for Research                                                      
President and Chief Executive
                                                                                              
Officer

Address for Notices:

University of
Pennsylvania                                                        11661 San
Vicente Blvd., Suite 707
Center for Technology Transfer                                               
Los Angeles, CA  90049
3160 Chestnut Street, Suite 200                                              
Attn.:  President and Chief Executive
Philadelphia, PA  19104-6283                                                
Officer
Attn.:  Managing Director

With a copy to:
            University of Pennsylvania
            Office of the General Counsel
            133 South 36th Street, Suite 300
            Philadelphia, PA  19104-3246
            Attn.:  Associate General Counsel--CTT

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