matechexh10_61.htm


    
      
 


    Exhibit
10.61

     

    AMENDMENT
DATED JUNE 16, 2008

    TO

    CLASS A
SENIOR SECURED CONVERTIBLE DEBENTURE

     

    
      	
              ORIGINAL
      ISSUANCE DATE

            	
              September
      23, 2003

            
	
              CONVERTIBLE
      DEBENTURE DUE

            	
              December
      31, 2009 (as amended)

            
	
              AMOUNT
      DUE AS OF APRIL 30, 2008

            	
              $1,174,201.28

            


    

     

    WHEREAS, Material
Technologies, Inc., a Delaware corporation (the “Company”) entered and executed
that certain Class A Senior Secured Convertible Debenture, dated September 23,
2003 (the “Debenture”), in favor of Palisades
Capital, LLC, a Nevada limited liability company or registered assigns
(the “Holder”);

     

    WHEREAS, the Company has
entered into that certain Escrow Agreement, dates as of the date hereof, between
the Company and the Holder, among others (the “Escrow Agreement”), and that
certain Settlement Agreement, dated as of the date hereof, between the Company
and the Holder, among others (the “Settlement Agreement”);
and

     

    WHEREAS, the Company and
Holder have agreed to amend the Debenture as set forth herein, with all other
terms remaining in full force and effect.  Capitalized terms used
herein shall have the same meaning as in the Debenture.

     

    NOW THEREFORE, the parties
hereby agree as follows:

     

    
      	
               
      

            	
              1.

            	
              The
      Maturity Date shall be extended to December 31,
  2009.

            


    

     

    
      	
               
      

            	
              2.

            	
              Article
      1 of the Debenture is hereby amended and restated to read as
      follows:

            


    

     

    The
Company shall pay interest on the unpaid principal amount and accrued but unpaid
interest of this Class A Senior Secured Convertible Debenture (the “Debenture”)
in monthly payments of accrued interest, payable on the first day of each month,
at the rate of Ten Percent (10%) per annum, payable in arrears, in cash, until
the entire balance of this Debenture has been paid in full or has been
converted.  Interest shall accrue from the date of each advance, on
the full amount of such advance.  If an Event of Default occurs
hereunder and, if such Event of Default is curable, such Event of Default
continues for a period of 30 days without being cured, then the interest rate
set forth herein shall be increased to a Default Interest Rate of 18% per annum,
and the total principal and accrued interest balance of this Debenture shall
bear interest at the Default Interest Rate from the date of the occurrence of
such Event of Default.

     

    Notwithstanding
the foregoing, the Company shall be required to make minimum monthly interest
payments of $4,500.  From the date hereof until the Maturity Date, any
interest due and payable hereunder in excess of $4,500 per month shall be
accrued and


    
      
         


      

      
        1

        
          
 

      

      
         


      

    


    added to
the principal balance of this Debenture on a daily basis, and shall be due and
payable on the Maturity Date.

     

    
      	
               
      

            	
              3.

            	
              The
      first paragraph of Article 2 of the Debenture is hereby amended and
      restated to read as follows:

            


    

     

    The
Company shall pay amounts due hereunder by business check or cashier’s check
payable to the order of Corporate Legal Services, LLP, at 2224 Main Street,
Santa Monica, CA 90405, or by wire transfer to the attorney-client trust account
of Corporate Legal Services, LLP.

     

    
      	
               
      

            	
              4.

            	
              The
      following is hereby added to the end of Section 6.1: “Any Event of
      Default, or other default or breach of the terms, conditions or covenants
      of (i) any debenture, promissory note or warrant agreement issued as of
      the date hereof pursuant to the Settlement Agreement, (ii) the Escrow
      Agreement or (iii) the Settlement Agreement, shall be deemed an Event of
      Default under this Debenture.  In addition, the entry of any
      judgment against the Company in excess of $150,000, regardless of where,
      how, to whom or under what agreement such liability arises, shall be an
      Event of Default under this Debenture, unless (i) the Company pays such
      judgment within 60 days, or (ii) the Company duly files an appeal of such
      judgment and execution of such judgment is stayed.  Finally, the
      entry of any order or judgment in favor of any judgment creditor or other
      creditor attaching the assets of the Company shall be an Event of Default
      under this Debenture.  The conversion price of this Debenture
      shall not be at any time more than $0.10 per share, regardless of any
      combination of shares of the Common Stock of the Company by reverse split
      or otherwise.”

            


    

     

    
      	
               
      

            	
              5.

            	
              In
      Section 6.1, clause (b), the words “required hereunder” are hereby added
      after the words “the Company does not make a
  payment.”

            


    

     

    
      	
               
      

            	
              6.

            	
              The
      following Section 6.4 is hereby added to the Debenture:  If an
      Event of Default occurs which is not cured within its applicable cure
      period, if it is curable, the conversion price of this Debenture after
      such cure period has expired shall be reduced to half of the pre-Event of
      Default conversion price.  For clarification, if the conversion
      price before an Event of Default were the lesser of 50% of market price or
      $0.10, then the new conversion price would be the lesser of 25% of market
      price or $0.05.

            


    

     

    
      	
               
      

            	
              7.

            	
              Section
      6.3(i) is hereby deleted and the following provisions are added to the end
      of Section 6.3. Covenants:

            
	 	 	 


    

    
      	
               
      

            	
              n.

            	
              The
      Company shall not issue any shares of its Class A Common Stock without a
      legend stating that such shares may not be sold, transferred, pledged,
      assigned or alienated for a period of at least one year following the date
      of the issuance of such certificate, other than shares issued to or with
      the written consent of the Holder.  Notwithstanding the
      foregoing,

            


    


    
      
         


      

      
        2

        
          
 

      

      
         


      

    


    
      	
               
      

            	
              this
      provision shall not apply to (i) any shares issued to purchasers in a
      financing where the Company receives net proceeds of at least Five Hundred
      Thousand Dollars ($500,000) and the shares are sold for not less than
      fifty percent (50%) of the closing price of the Company’s common stock
      reported as of the closing date of such financing, and (ii) any shares
      issued in connection with an acquisition of assets by the Company where
      (a) the Company provides to the Holder a fairness opinion as to the value
      of the acquired assets, and (b) the Company receives assets that are worth
      at least fifty percent (50%) of the closing price per share of the
      Company’s common stock as of the closing date of the
      acquisition.

            


    

    
      	
               
      

            	
              o.

            	
              The
      Company shall not into any agreement pursuant to which any party other
      than the Holder has pre-emptive rights, the right to receive shares of any
      class of securities of the Company for no additional consideration, the
      right to receive a set, pre-determined percentage of the outstanding
      shares of the Company for any period of time, or any other similar right
      that has the effect of maintaining a set percentage of the issued and/or
      outstanding shares of any class or classes of the capital stock of the
      Company.

            


    

    
      	
               
      

            	
              p.

            	
              The
      Company shall not enter into any agreement giving another party
      anti-dilution protection unless (1) all shares received pursuant to such
      provision are subject to a two-year lock-up from the date of issuance, and
      (2) all such shares received are subject to a “dribble-out,” following the
      two-year lock-up, restricting their sale to not more than 1/20th
      of 5% of the previous month’s total trading volume in any single trading
      day.

            


    

    
      	
               
      

            	
              q.

            	
              The
      Company will not file any Registration Statement on Form S-8 nor issue any
      shares registered on Form S-8, exclusive of shares currently registered on
      Form S-8.  However, when the total capital in the Company’s cash
      account drops below $500,000, the Company may issue up to $30,000 worth of
      securities registered on Form S-8, valued at the market price of the
      common stock on the date of issuance, per month,
      non-cumulative.  Any issuance of S-8 shares will be supported by
      an opinion of the Company’s counsel that such issuance complies in all
      respects with federal securities laws.  This opinion will be
      provided to the legal representative of the Holder upon
      request.  Further, the Company will ensure that every entity or
      individual that receives S-8 shares will be subject to a “dribble-out”
      restricting their sale to not more than 1/20th
      of 2%
      of the previous month’s total trading volume in any single trading day,
      non-cumulative.  The above described dribble-out is not an
      aggregate sale restriction for all entities and individuals receiving S-8
      shares;

            


    

    
      	
               
      

            	
              r.

            	
              The
      Company shall not provide material non-public information to the Holder or
      its representatives.

            


    

     

    
      	
               
      

            	
              8.

            	
              Section
      6.4 is hereby added to the Debenture, and reads as follows:  The
      Company shall comply with each of the following covenants, and the failure
      of the Company to comply with such covenants shall be an Event of
      Default:

            
	 	 	 


    

    
      	
               
      

            	
              a.

            	
              If
      the Company inadvertently provides material non-public information to the
      Holder or its representatives, the Company shall issue a press
      release

            


    


    
      
         


      

      
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              or
      file a current report on Form 8-K, or take such other action as may be
      required to render such information no longer “non-public” as soon as
      possible after discovery, but no later than five business days following
      written request by the Holder or its counsel that the Company file such
      report or issue such press release.

            


    

    
      	
               
      

            	
              b.

            	
              The
      Company shall irrevocably instruct its transfer agent to provide notice to
      counsel for the Holder of any issuance of any security of the Company
      where the certificate representing such security does not contain a
      restrictive legend.

            


    

    
      	
               
      

            	
              c.

            	
              The
      Company shall not issue any shares of its capital stock which are deemed
      to be issued, but not outstanding, other than pursuant to the Escrow
      Agreement.

            


    

     

    
      	
               
      

            	
              9.

            	
              The
      Company has informed the Holder that it is considering completing a
      one-for-one-thousand reverse split of its common stock, as described in an
      Information Statement filed by the Company on or about April 25,
      2008.  The Company acknowledges that the conversion price of the
      Debenture shall not be effected by any such reverse split, and that after
      giving effect to such reverse split, the conversion price shall remain the
      lesser of (i) 50% of the averaged ten closing prices for the Company’s
      Common Stock for the ten trading days immediately preceding the Conversion
      Date or (ii) $0.10.  The Holder consents to this
      action.  The parties acknowledge that the Company is not
      obligated to complete this reverse-split, or any reverse
      split.

            


    

     

    
      	
               
      

            	
              10.

            	
              The
      Company shall not enter into any agreements giving any other party any
      pre-emptive rights.  The Company shall not enter into any
      agreement giving another party anti-dilution protection unless (1) all
      shares received pursuant to such provision are subject to a two-year
      lock-up from the date of issuance, and (2) all such shares received are
      subject to a “dribble-out,” following the two-year lock-up, restricting
      their sale to not more than 1/20th
      of 5% of the previous month’s total trading volume in any single trading
      day.

            
	 	 	 
	 	11.	The
      shareholder lockup provisions will not apply to up to any shares held by
      Mr. Robert Bernstein, and sold by him personally in a bona-fide sale to an
      unrelated, unaffiliated third party; provided, that (i) the number of
      shares sold under this Paragraph 11 shall not exceed Two Million Five
      Hundred Thousand Dollars ($2,500,000) worth of stock, calculated based on
      the number of shares sold multiplied by the closing price of the stock on
      the date such shares are sold (if a market trade) or transferred on the
      books of the transfer agent (if a private transfer).  Once Two
      Million Five Hundred Thousand Dollars ($2,500,000) worth of stock has been
      sold as calculated above, the lockup on whatever remains of the shares
      owned by Mr. Bernstein (if any) goes back into effect.  In this
      regard, if Mr. Bernstein sells any of his shares without legend, then he
      may only sell up to 1/20th of 5% of the previous month’s total trading
      volume in any single trading day, and he
may


    

    

      
        
           


        

        
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              not
      sell more than 1% of the issued and outstanding shares of Matech during
      any 90 day period.  Further, if Mr. Bernstein sells any of his
      shares, he must have such shares transferred on the books of the transfer
      agent within five business days of the sale.  Mr. Bernstein
      shall comply with all reporting requirements under Section 16 of the
      Securities Exchange Act of 1934, as amended.  The Company shall
      take such action as is required to ensure compliance with the provisions
      of this Paragraph 11.

            


    

     

    
      	
               
      

            	
              12.

            	
              To
      induce the Holder to extend the Maturity Date of the Debenture and/or
      enter into this Agreement and the Settlement Agreement of even date
      hereof, the Company hereby agrees to pay an extension fee and a settlement
      fee of an aggregate of $178,450.39, which shall be added to the balance of
      this Debenture as of June 16, 2008.  The balance of the
      Debenture as of June 16, 2008, is confirmed and agreed to be
      $1,189,669.30, which includes all advances, accrued interest and the above
      fee to date.

            


    

     

    All other
terms of the Debenture, as amended to date, shall remain the same.

     

    IN
WITNESS WHEREOF, the Company has duly executed this Amendment dated June 16,
2008 to Class A Senior Secured Convertible Debenture as of the date first
written above.

     

     

    
      
        	
                MATERIAL
      TECHNOLOGIES, INC.

                a
      Delaware corporation

              	 	 	
                PALISADES
      CAPITAL, LLC

                a
      Nevada limited liability company

              	 
	 	 	 	 	 
	 	 	 	 	 
	
                By 
      /s/ Robert M. Bernstein

              	 	 	
                By

              	 
	
                    
      Robert M. Bernstein

              	 	 	
                    
      Reid Breitman

              	 
	
                    
      Chairman and CEO

              	 	 	
                    
      President

              	 


      

    

                                                                                         

     

     

     

     

     

    
      
        
           


        

        
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