matechexh10_41.htm


    
      
        
 
Exhibit 10.41

     

    REGISTRATION
RIGHTS AGREEMENT

     

     

    AGREEMENT
dated as of the 6th day of August, 2008 between the person whose name appears
below (the “Investor”),
and Material Technologies, Inc., a Delaware Corporation, having its principal
executive office at 11661 San Vicente Boulevard, Suite 707, Los Angeles, CA
90048 (the “Company”).

     

    WHEREAS,
the Company has issued and sold to the Investor Secured Convertible Debentures
and will issue shares of its Common Stock, as well as additional shares of the
Company, upon conversion of the Debentures of the Company for an aggregate face
amount of $1.0 million (U.S.).  The Debentures and the Shares,
issuable upon exercise thereof, are sometimes referred to herein as the “Securities”.

     

    WHEREAS,
the Company desires to grant to the Investor the registration rights set forth
herein with respect to the shares of Common Stock and the shares of Common Stock
issuable upon exercise of the Debentures issued to Investor;

     

    NOW,
THEREFORE, the parties hereto mutually agree as
follows:

     

    1.            
Registrable
Securities.  As used herein the term “Registrable
Security” means the Secured Convertible Debenture and shares of Common
Stock issued or issuable with respect to the Securities, including all shares
issued by the Company on a one (1) for one (1) basis, or issued or issuable by
virtue of any stock split, combination, stock dividend, merger, consolidation or
other similar event; provided,
however,
that with respect to any particular Registrable Security, such security shall
cease to be a Registrable Security when, as of the date of determination, (i) it
has been effectively registered under the Securities Act of 1933, as amended
(the “Securities
Act”), and disposed of pursuant thereto, or (ii) registration under the
Securities Act is no longer required by the Investor for the distribution or
disposition of all of the Registrable Securities beneficially owned by such
Investor.  The term “Registrable
Securities” means any and/or all of the securities falling within the
foregoing definition of a “Registrable Security.”

     

    2.            
Registration.  The
Company agrees to use its best efforts to file a registration statement (a
“Registration
Statement”) with the Securities and Exchange Commission (the “Commission”)
within forty-five (45) days of the closing date hereof in order to register the
resale of the Registrable Securities under the Securities Act.  Once
effective, the Company will be required to maintain the effectiveness of the
Registration Statement until the earlier of (i) the date that all of the
Registrable Securities have been sold, or (ii) the date that the Company
receives an opinion of counsel to the Investor that all of the Registrable
Securities may be freely distributed, sold or otherwise disposed of without
registration under the Securities Act pursuant to Rule 144(k) (or any
similar provision then in force) promulgated under the Securities
Act.


    
      
         


      

      
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    3.            
Covenants of the Company With Respect to Registration.

     

    The
Company covenants and agrees as follows:
 

    (a)           In
connection with any registration filed pursuant hereto, the Company shall use
its best efforts to cause the Registration Statement to become effective as
promptly as possible.  Following the effective date of a Registration
Statement, the Company shall, upon the request of the Investor, forthwith supply
such reasonable number of copies of the Registration Statement (including,
without limitation, the exhibits and schedules thereto), preliminary prospectus
and prospectus meeting the requirements of the Securities Act (including,
without limitation, any and all amendments or supplements thereto), and other
documents necessary or incidental to the public offering of the Registrable
Securities, as shall be reasonably requested by the Investor to permit the
Investor to sell, distribute or otherwise dispose of the Investor’s Registrable
Securities.  The obligations of the Company hereunder with respect to
the Investor’s beneficially owned Registrable Securities are subject to the
Investor’s furnishing to the Company such appropriate information concerning the
Investor, the Investor’s Registrable Securities and the terms of the Investor’s
offering of such Registrable Securities as the Company may reasonably request in
writing.

     

    (b)           The
Company shall provide the Investor, any underwriter participating in any
disposition pursuant to a Registration Statement, and any attorney, accountant
or other agent retained by the Investor or underwriter (each, an “Inspector”
and, collectively, the “Inspectors”),
the opportunity to review and comment (including reviewing and commenting on
relevant documents and agreements) in the preparation of such Registration
Statement, each prospectus included therein or filed with the Commission and
each amendment or supplement thereto.

     

    (c)           For
a reasonable period prior to the filing of any Registration Statement pursuant
to this Agreement, the Company shall make available for inspection at the
Company’s offices and copying by the Inspectors such financial and other
information and books and records, pertinent corporate documents and properties
of the Company and its subsidiaries, and cause the officers, directors,
employees, counsel and independent certified public accountants of the Company
and its subsidiaries to respond to such inquiries, and to supply all such
information reasonably requested by any such Inspector in connection with such
Registration Statement, as shall be reasonably necessary, in the judgment of the
respective counsel of the Investor and any such underwriter, to conduct a
reasonable investigation within the meaning of the Securities Act.

     

    (d)           The
Company shall promptly notify in writing the Investor, the sales or placement
agent, if any, therefor and the managing underwriter of the securities being
sold, (i) when such Registration Statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective amendment
has been filed, and, with respect to any such Registration Statement or any
post-effective amendment, when the same has become effective, (ii) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement, (iii) of any comments (oral or written) by the
Commission and by the blue sky or securities commissioner or regulator of any
state with respect thereto or (iv) of any request by the Commission for any
amendments or supplements to such Registration Statement or the prospectus or
for additional information.


    
      
         


      

      
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    (e)           The
Company shall promptly notify in writing the Investor, the sales or placement
agent, if any, therefor and the managing underwriter of the securities being
sold pursuant to any Registration Statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act upon
discovery that, or upon the happening of any event as a result of which, any
prospectus included in such Registration Statement (or amendment or supplement
thereto) contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
and the Company shall promptly prepare a supplement or amendment to such
prospectus and file it with the Commission promptly following notice of the
occurrence of such event to the Investor, the sales or placement agent and the
managing underwriter so that after delivery of such prospectus, as so amended or
supplemented, to the purchasers of such Registrable Securities, such prospectus,
as so amended or supplemented, shall not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made.

     

    (f)           The
Company shall promptly notify in writing the Investor, the sales or placement
agent, if any, therefor and the managing underwriter of the securities being
sold of the issuance by the Commission of (i) any stop order issued or
threatened to be issued by the Commission or (ii) any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and the Company
agrees to use its commercially reasonable efforts to (x) prevent the issuance of
any such stop order, and in the event of such issuance, to obtain the withdrawal
of any such stop order and (y) obtain the withdrawal of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Securities included in such Registration Statement for sale in
any jurisdiction at the earliest practicable date.

     

    (g)           The
Company shall prepare and file with the Commission such amendments, including
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period required hereunder and, if applicable, file any Registration Statements
pursuant to Rule 462(b) (or any similar provision then in force) under the
Securities Act; cause the related prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
and comply with the provisions of the Securities Act and the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”), with respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement as so amended or in such prospectus as so supplemented.  If
the Investor so requests, the Company shall request acceleration of
effectiveness of the Registration Statement from the Commission and any
post-effective amendments thereto, if any are filed.  If the Company
wishes to further amend the Registration Statement prior to requesting
acceleration, it shall have five (5) days to so amend prior to requesting
acceleration.

     

    (h)           The
Company shall pay all costs, fees and expenses in connection with all
Registration Statements, pre-effective and post-effective amendments thereto,
including preliminary and final prospectuses contained therein and any
amendments and supplements thereto filed and


    
      
         


      

      
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    maintained
pursuant to Sections 2 and 3 hereof including, without limitation, the Company’s
legal and accounting fees, printing expenses, and blue sky fees and expenses;
provided, however, that the Investor shall be solely responsible for the fees of
any counsel retained by the Investor in connection with such registration and
any transfer taxes or underwriting discounts, commissions or fees applicable to
the Registrable Securities sold by the Investor pursuant thereto.

     

    (i)           
The Company will take all necessary action which may be required in qualifying
or registering the Registrable Securities included in a Registration Statement
for offering and sale under the securities or blue sky laws of such states as
are reasonably requested by the Investors of such securities; provided,
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.

     

    (j)          
 The Company shall cooperate with the Investor to facilitate the timely
preparation and delivery of certificates representing the securities to be sold
pursuant to the Registration Statement free of any restrictive legends and in
such denominations and registered in such names as the Investor may request a
reasonable period of time prior to sales of the securities pursuant to such
Registration Statement.

     

    (k)           
The Company agrees generally to cooperate with Investors in effecting compliant
resale of the Registrable Securities, including comfort and other customary
broker agreements and documentations and certificates

     

    4.            
Additional
Terms.

     

    (a)           
To the extent permitted by law, the Company will indemnify and hold harmless the
Investor, its agents, trustees and beneficiaries, partners, officers,
directors,  shareholders and members of the Investor, legal counsel
and accountants for the Investor, and each person who controls the Investor
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a “Violation”):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities laws or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities laws; and the Company will reimburse the indemnified party under this
Section 4(a), for any reasonable legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; provided,
however,
that the indemnity described herein shall not apply any loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
the Investor; provided
further,
however,
that the foregoing indemnity agreement with respect to any
preliminary


    
      
         


      

      
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    prospectus
shall not inure to the benefit of the Investor, from whom the person asserting
any such losses, claims, damages or liabilities purchased shares in the
offering, if a copy of the prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Investor to such person, if required by law so
to have been delivered, at or prior to the written confirmation of the sale of
the shares to such person, and if the prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability.

     

    (b)           To
the extent permitted by law, the Investor will severally, and not jointly,
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act and legal counsel and accountants for the Company, against any losses,
claims, damages or liabilities to which any of the foregoing persons may become
subject, under the Securities Act, the Exchange Act or any state securities
laws, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information specifically furnished by the
Investor expressly for use in connection with such registration which consists
solely of the information specified in Section 4(d); and the Investor will
reimburse any person intended to be indemnified pursuant to the foregoing, for
any legal or other expenses reasonably incurred by such person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided,
however,
that the indemnity obligation of the Investor hereunder shall not in any event
exceed the net proceeds received by the Investor from the offering giving rise
to such liability.

     

    (c)           Promptly
after receipt by an indemnified party of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party, deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel reasonably
satisfactory to each party; provided,
however,
that an indemnified party (together with all other indemnified parties that may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the reasonable fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding.  The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this paragraph.  After notice
from an indemnifying party to such indemnified party of its election to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of this paragraph for any legal or
other expense subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the first
sentence of this paragraph or (ii) the indemnifying party has authorized the
employment of counsel for the


    
      
         


      

      
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    indemnified
party at the expense of the indemnifying party. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent.  No
indemnifying party shall, without the prior written consent of the indemnified
party, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.  Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the indemnified party with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made.

     

    (d)           The
Investor confirms, and the Company acknowledges, that the information to appear
in the table in the section entitled “Principal and Selling Shareholders” or
equivalently named section in the Registration Statement under the headings
“Name of Beneficial Owner,” “Shares Beneficially Owned Prior to Offering –
Number of Shares,” “Maximum Number of Shares Offered in this Offering,” or
equivalently named headings in the Registration Statement and in the footnote
related to such information pertaining to the Investor constitute the only
information concerning the Investor that will be furnished in writing to the
Company by or on behalf of the Investor for inclusion in the Registration
Statement.

     

    (e)         
  If the indemnification provided for above is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, liability, claim, damage or expense referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage or
expense, as well as any other relevant equitable considerations.  The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.  No
person guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent
misrepresentation.  Notwithstanding any other provision of this
Section, the Investor shall not be required to contribute any amount in excess
of the amount by which the net proceeds received by such Investor from the sale
of the shares of the Common Stock and Debentures in each case, pursuant to a
Registration Statement, exceeds the amount of damages which the Investor has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or alleged omission.  The obligation of the Investor obliged
to make contribution pursuant to this Section shall be several and not
joint.

     

    (f)         
  Neither the filing of a Registration Statement by the Company
pursuant to this Agreement nor the making of any request for prospectuses by the
Investor shall impose upon the Investor any obligation to sell the Investor’s
beneficially owned Registrable Securities.


    
      
         


      

      
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    (g)           The
Investor, upon receipt of notice from the Company that an event has occurred
which requires a Post-Effective Amendment to the Registration Statement or a
supplement to the prospectus included therein, shall promptly discontinue the
sale of Registrable Securities until the Investor receives a copy of a
supplemented or amended prospectus from the Company, which the Company shall
provide as soon as practicable after such notice.

     

    (h)           If
the Company fails to keep the Registration Statement referred to above
continuously effective during the requisite period, then the Company shall,
promptly upon the request of the Investor, use its best efforts to update the
Registration Statement or file a new registration statement covering the
Registrable Securities remaining unsold, subject to the terms and provisions
hereof.

     

    (i)           
The Investor agrees to provide the Company with any information or undertakings
reasonably requested by the Company in order for the Company to include any
appropriate information concerning the Issuer in the Registration Statement or
in order to promote compliance by the Company or the Issuers with the Securities
Act.

     

    (j)           
With a view to making available to the Investor the benefits of Rule 144 and
Rule 144A promulgated under the Securities Act and other rules and regulations
of the Commission that may at any time permit the Investor to sell securities of
the Company to the public without registration, the Company covenants that it
shall use commercially reasonable efforts to (i) file in a timely manner all
reports and other documents required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the Commission
thereunder and (ii) take such further action as the Investor may reasonably
request (including providing any information necessary to comply with Rule 144
and Rule 144A, if available with respect to resales of the Registrable
Securities under the Securities Act), at all times, all to the extent required
from time to time to enable the Investor to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (x) Rule 144 and Rule 144A (if available with respect to resales of
the Registrable Securities) under the Securities Act, as such rules may be
amended from time to time, or (y) any other rules or regulations now existing or
hereafter adopted by the Commission.

     

    (k)           The
Company agrees to pay all legal fees and expenses of Company’s counsel in
connection with the review of all Securities and Exchange Commission (“SEC”)
filings and exhibits, and all amendments with respect to said filings, and that
Investor’s counsel will have a reasonable opportunity to review all
filings.

     

    5.            
Governing
Law.  This
Agreement shall be deemed to have been made and delivered in the State of New
York and shall be governed as to validity, interpretation, construction, effect
and in all other respects by the internal substantive laws of the State of New
York, without giving effect to the choice of law rules thereof.

     

    6.            
Amendment.  This
Agreement may only be amended by a written instrument executed by the Company
and the Investor.


    
      
         


      

      
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    7.           
 Entire
Agreement.  This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.

     

    8.           
 Execution
in Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.

     

    9.           
 Notices.  All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed duly given when delivered by hand or mailed by
registered or certified mail, postage prepaid, return receipt requested, as set
forth in the Warrant.

     

    10.           Binding
Effect; Benefits.  The Investor may assign his, her or its
rights hereunder as set forth in the Warrant.  This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, legal representatives and successors. Nothing herein
contained, express or implied, is intended to confer upon any person other than
the parties hereto and their respective heirs, legal representatives, successors
and assigns, any rights or remedies under or by reason of this
Agreement.

     

    11.           Transfer
of Registration Rights. The
rights of the Investor under this Agreement may be transferred or assigned in
connection with a transfer of Registrable Securities to any transferee or
assignee.  Notwithstanding the foregoing, such rights may only be
transferred or assigned if all of the following additional conditions are
satisfied:  (a) such transfer or assignment is effected in accordance
with applicable securities laws; (b) such transferee or assignee agrees in
writing to become subject to the terms of this Agreement; and (c) the Company is
given written notice by the Investor of such transfer or assignment, stating the
name and address of the transferee or assignee and identifying the Registrable
Securities with respect to which such rights are being transferred or
assigned.

     

    12.           Headings.  The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of this Agreement.

     

    13.           Severability.  Any
provision of this Agreement which is held by a court of competent jurisdiction
to be prohibited or unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.


     

    IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.

     

    
      
         

      

      
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    MATERIAL
TECHNOLOGIES, INC.

     


    By: /s/
Robert M.
Bernstein                                                                                                           

    Name: 
Robert M. Bernstein

    Title:   
CEO

     

     

    INVESTOR:

    
 

    By:                                                                 

    Name:

    Title:

     

     

     

     

    
 

    
      
         


      

      
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    INFORMATION
TO BE PROVIDED UPON EFFECTIVE DATE OF REGISTRATION STATEMENT OF THE SHARES
UNDERLYING THE CONVERTIBLE DEBENTURE AND THE SHARES ISSUED BY THE COMPANY IN
ACCORDANCE WITH THE CONVERTIBLE DEBENTURE.

     

     

    PLAN
OF DISTRIBUTION

     

    The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions.  These sales
may be at fixed or negotiated prices.  The Selling Stockholders may
use any one or more of the following methods when selling shares:

     

    
      	
               
      

            	
              ·

            	
              ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits Investors;

            


    

     

    
      	
               
      

            	
              ·

            	
              block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            


    

     

    
      	
               
      

            	
              ·

            	
              purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

            


    

     

    
      	
               
      

            	
              ·

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            


    

     

    
      	
               
      

            	
              ·

            	
              privately
      negotiated transactions;

            


    

     

    
      	
               
      

            	
              ·

            	
              to
      cover short sales made after the date that this Registration Statement is
      declared effective by the
Commission;

            


    

     

    
      	
               
      

            	
              ·

            	
              broker-dealers
      may agree with the Selling Stockholders to sell a specified number of such
      shares at a stipulated price per
share;

            


    

     

    
      	
               
      

            	
              ·

            	
              a
      combination of any such methods of sale;
and

            


    

     

    
      	
               
      

            	
              ·

            	
              any
      other method permitted pursuant to applicable
  law.

            


    

     

    The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.

     

    Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may receive commissions or
discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be
negotiated.  The Selling Stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved.

     

    The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of Common Stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable

     

    
      
        
           


        

        
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    provision
of the Securities Act of 1933 amending the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus.

     

    Upon the
Company being notified in writing by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common
Stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Stockholder and of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such shares of Common Stock were sold, (iv) the commissions
paid or discounts or concessions allowed to such broker-dealer(s), where
applicable, (v) that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this prospectus,
and (vi) other facts material to the transaction.  In addition, upon
the Company being notified in writing by a Selling Stockholder that a donee or
pledge intends to sell more than 500 shares of Common Stock, a supplement to
this prospectus will be filed if then required in accordance with applicable
securities law.

     

    The
Selling Stockholders also may transfer the shares of Common Stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this
prospectus.

     

    The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales.  In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.  Discounts,
concessions, commissions and similar selling expenses, if any, that can be
attributed to the sale of Securities will be paid by the Selling Stockholder
and/or the purchasers.  Each Selling Stockholder has represented and
warranted to the Company that it acquired the securities subject to this
registration statement in the ordinary course of such Selling Stockholder’s
business and, at the time of its purchase of such securities such Selling
Stockholder had no agreements or understandings, directly or indirectly, with
any person to distribute any such securities.

     

    If a
Selling Stockholder uses this prospectus for any sale of the Common Stock, it
will be subject to the prospectus delivery requirements of the Securities
Act.  The Selling Stockholders will be responsible to comply with the
applicable provisions of the Securities Act and Exchange Act, and the rules and
regulations thereunder promulgated, including, without limitation, Regulation M,
as applicable to such Selling Stockholders in connection with resales of their
respective shares under this Registration Statement.

     

    The
Company is required to pay all fees and expenses incident to the registration of
the shares, but the Company will not receive any proceeds from the sale of the
Common Stock.  The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.  If the Selling Stockholders use
this prospectus for any sale of the Common Stock, they will be subject to the
prospectus delivery requirements of the Securities Act.

     


    
      
         


      

      
        11

        
          
 

      

      
         


      

    

     

    MATERIAL
TECHNOLOGIES, INC.

     

    Selling
Securityholder Notice and Questionnaire

     

    The
undersigned beneficial owner of common stock (the “Common
Stock”), of Material Technologies, Inc. (the “Company”)
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”)
a Registration Statement for the registration and resale of the Registrable
Securities, in accordance with the terms of the Registration Rights Agreement,
dated as of _________________ (the “Registration
Rights Agreement”), among the Company and the Investors named
therein.  A copy of the Registration Rights Agreement is available
from the Company upon request at the address set forth below.  All
capitalized terms used and not otherwise defined herein shall have the meanings
ascribed thereto in the Registration Rights Agreement.

     

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

    
      1.  Name.

       

    

    
      	
               
      

            	
              (a)

            	
              Full
      Legal Name of Selling Securityholder

            
	 	 	 
	 	 	 


    

     

    
      	
               
      

            	
              (b)

            	
              Full
      Legal Name of Registered Holder (if not the same as (a) above) through
      which Registrable Securities Listed in Item 3 below are
    held:

            
	 	 	 
	 	 	 


    

     

    
      	
               
      

            	
              (c)

            	
              Full
      Legal Name of Natural Control Person (which means a natural person who
      directly you indirectly alone or with others has power to vote or dispose
      of the securities covered by the questionnaire):

            
	 	 	 
	 	 	 


    

     

    2.  Address
for Notices to Selling Securityholder:

     

    
      	 	
              Telephone:

            	 
	 	
              Fax:

            	 
	 	
              Contact
      Person:

            	 


    

     


    
      
         


      

      
        12

        
          
 

      

      
         


      

    


    3.  Beneficial
Ownership of Registrable Securities:

     

    
      
        	
                 
      

              	
                (a)

              	
                Type
      and Number of Registrable Securities beneficially
  owned:

              


      

       

      
        	 	 
      
	 	 
      
	 	 
      
	 	 
      


      

       

      4.  Broker-Dealer
Status:

    

     

    
      	
               
      

            	
              (a)

            	
              Are
      you a broker-dealer?

            


    

     

    Yes                         No   

     

    
      	 	
              Note:

            	
              If
      yes, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

            


    

     

    
      	
               
      

            	
              (b)

            	
              Are
      you an affiliate of a
broker-dealer?

            


    

     

    Yes                         No   

     

    
      	
               
      

            	
              (c)

            	
              If
      you are an affiliate of a broker-dealer, do you certify that you bought
      the Registrable Securities in the ordinary course of business, and at the
      time of the purchase of the Registrable Securities to be resold, you had
      no agreements or understandings, directly or indirectly, with any person
      to distribute the Registrable
Securities?

            


    

     

    Yes                         No   

     

    
      	 	
              Note:

            	
              If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

            


    

     

    5.  Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Securityholder.

     

    Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.

     

    
      	
               
      

            	
              (a)

            	
              Type
      and Amount of Other Securities beneficially owned by the Selling
      Securityholder:

            


    

     

    
      	 	 
      
	 	 
      
	 	 
      


    

     

    
      
         

      

      
        13

        
          
 

      

      
         

      

    

     

    6.  Relationships
with the Company:

     

    Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

     

    
      	
               
      

            	
              State
      any exceptions here:

            


    

     

    
      	 	 
      
	 	 
      
	 	 
      


    

     

     

    The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the Effective Date for the Registration Statement.

     

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related
prospectus.  The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of
the Registration Statement and the related prospectus.

     

    IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

     

    Dated:                                                      Beneficial
Owner:                                                                         

     

     
By:                                                                                     
            

                
Name:

                
Title:

     

    PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL,

    TO:         BARATTA,
BARATTA & AIDALA LLP

    546 Fifth
Avenue

    New
York, NY 10036

    (T)
212-750-9700

    (F)
212-750-8297

     

     

     

     

    
 


      
        
           


        

        
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