matechexh10_56.htm


    
      
        

      
Exhibit
10.56

    


    THE
SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”), OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

     

    WARRANT
AGREEMENT

     

    MATERIAL
TECHNOLOGIES, INC.,

    a
Delaware corporation (the “Company”)

     

    THIS IS
TO CERTIFY that, for value received, Continental Advisors, or its assigns (the
“Holder”) is entitled, subject to the terms and conditions set forth herein, to
purchase, 6,000,000 shares of Class A common stock of the Company (the “Warrant
Shares”) upon exercise at a purchase price of $0.10 per Warrant Share (the
“Warrant Price”).

     

    1.      TERM.  Subject to the terms of
this Warrant, the Holder shall have the right, at any time during the period
commencing at 9:00 a.m., Pacific Time, on the 15th day of September, 2008 and
ending at 5:00 p.m., Pacific Time, on the 15th day of September, 2009 (the
“Termination Date”), to purchase from the Seller the Warrant Shares upon payment
to the Seller of the Warrant Price.

     

    Notwithstanding
anything to the contrary contained in this Warrant or otherwise, the Holder
shall not be required, although it shall have the right, to exercise this
Warrant.

     

    2.      MANNER OF EXERCISE.  Payment of
the aggregate Warrant Price shall be made as described below. Upon the payment
of all or a portion of the Warrant Price and delivery of the Election to
Purchase, a form of which is attached hereto, the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of the
Holder, and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon each
exercise of the Warrant. Such certificate or certificates shall be deemed to
have been issued and any person so designated to be named therein shall be
deemed to have become a holder of record of such securities as of the date of
surrender of the Warrant (or if less than the entire Warrant is exercised, upon
the delivery of the new Warrant described below) and payment of the Warrant
Price, as aforesaid, notwithstanding that the certificate or certificates
representing such securities shall not actually have been delivered or that the
stock transfer books of the Company shall then be closed. The Warrant shall be
exercisable, at the election of each Holder, either in full or from time to time
in part and, in the event that a certificate evidencing the Warrant is exercised
in respect of less than all of the

    


    
      
        
           


        

        
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    Warrant
Shares specified therein at any time prior to the Termination Date, a new
certificate evidencing the remaining portion of the Warrant shall be issued by
the Company to such Holder.

     

    Payment
of the Warrant Price may be made by either of the following forms, or a
combination thereof:

     

    (i)         Cash
Exercise:  cash, bank or cashiers check, or wire transfer payable to
the Company; or

     

    (ii)         Promissory
Note:  through a promissory note payable to the Company, but only to
the extent authorized by the Company, and which authorization may be withheld
for any reason whatsoever.

     

    (iii)        Exercise
Price.  The price per share at which the Warrant Shares shall be
purchasable upon exercise of the Warrant shall be $0.10 per share of Common
Stock.

     

    Cashless/Net
Exercise.  In lieu of exercising the Warrant or any portion thereof
for cash, the Holder shall have the right to convert the Warrant, or any portion
thereof, into Warrant Shares by executing and delivering to the Company, at its
principal executive office, a duly executed Subscription Form, specifying the
number of Warrant Shares as to which the Warrant is being exercised, and
accompanied by the surrender of the Warrant. The number of Warrant Shares to be
issued shall be computed using the following formula:

     

    X =
[y●(A-B)]/A

    X = the
number of Warrant Shares to be issued to such Holder

    Y = the
total number of Warrant Shares then issuable upon exercise of the Warrant in
full

    A = the
Fair Value (as defined below) of one Warrant Share

    B = the
Exercise Price (as adjusted) on the date of conversion

     

    Fair Value
Defined.  Fair Value as of a particular date shall mean the closing
price for the day before the day in question. The closing price shall be the
last reported sale price on the day in question or, in case no such reported
sale takes place on such day, on the most recent reported sale prior to such day
in question, in each case on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, the last trade price as reported
by the National Association of Securities Dealers Automated Quotation System,
(the “NASDAQ”), Over the Counter or Bulletin Board market, or the “pink sheets,”
whichever is applicable. If such quotations are unavailable, or with respect to
other appropriate security, property, assets, business or entity, “Fair Value”
shall mean the fair value of such item as determined by mutual agreement reached
by the Company and the Holder of Common Stock issuable under the Warrant or, in
the event the parties are unable to agree, an opinion of an independent
nationally recognized investment banking, accounting or appraisal firm or firms
retainCompany’s expense, to determine such Fair Value.

     

    3.     
NO STOCKHOLDER RIGHTS. 
Unless and until this Warrant is exercised, this Warrant shall not entitle the
Holder hereof to any voting rights or other rights as a stockholder of the
Company, or to any other rights whatsoever except the rights herein expressed,
and, no dividends shall be payable or accrue in respect of this
Warrant.

    


    
      
        
           


        

        
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    4.      EXCHANGE. This Warrant is exchangeable
upon the surrender hereof by the Holder to the Company for new Warrants of like
tenor representing in the aggregate the right to purchase the number of
securities purchasable hereunder, each of such new Warrants to represent the
right to purchase such number of securities as shall be designated by the Holder
at the time of such surrender.

     

    Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it and
reimbursement to the company of all reasonable expenses incidental thereto, and
upon surrender and cancellation hereof, if mutilated, the Company will make and
deliver a new warrant of like tenor and amount, in lieu hereof.

     

    5.      ELIMINATION OF FRACTIONAL
INTERESTS.  The Company shall not be required to issue certificates
representing fractions of securities upon the exercise of this Warrant, nor
shall it be required to issue scrip or pay cash in lieu of fractional interests.
All fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of securities, properties or rights receivable upon
exercise of this Warrant.

     

    6.     
RESERVATION AND LISTING OF
SECURITIES.  The Company shall at all times reserve and keep
available out of its authorized shares of common stock or other securities,
solely for the purpose of issuance upon the exercise of this Warrant, such
number of shares of common stock or other securities, properties or rights as
shall be issuable upon the exercise hereof. The Company covenants and agrees
that, upon exercise of this Warrant and payment of the Warrant Price, all shares
of common stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid, non -assessable and not subject to the
preemptive rights of any stockholder.

     

    8.      NOTICE. Any notice, request,
instruction, or other document required by the terms of
this Warrant, or deemed by any of the Parties hereto to be desirable, to be
given to any other party hereto shall be in writing and shall be given by
personal delivery, overnight delivery, mailed by registered or certified mail,
postage prepaid, with return receipt requested, or sent by facsimile
transmission to the addresses of the Parties as follows:

     

    
      	 	i. 	To:	“Company”	
              Material
      Technologies, Inc.

              Attn:
      Robert M. Bernstein, Chief Executive Officer

              11661
      San Vicente Boulevard, Suite 707

              Los
      Angeles, California 90049

              Fax:
      (310) 473-3177

            
	 	 	 	 	 
	 	ii. 	To: 	 	
              “Holder”Continental
      Advisors

              _____________________________________

              _____________________________________

              _____________________________________

              Fax:__________________________________

            


    

    
 

    
      
        
           


        

        
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    The
persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. If notice is given by personal delivery or overnight
delivery in accordance with the provisions of this Section, such notice shall be
conclusively deemed given at the time of such delivery provided a receipt is
obtained from the recipient. If notice is given by mail in accordance with the
provisions of this Section, such notice shall be conclusively deemed given upon
receipt and delivery or refusal. If notice is given by facsimile transmission in
accordance with the provisions of this Section, such notice shall be
conclusively deemed given at the time of delivery if during business hours and
if not during business hours, at the next business day after delivery, provided
a confirmation is obtained by the sender.

     

    9.      GOVERNING LAW.  This Warrant
shall be governed, construed and interpreted under the laws of the state of
California, without giving effect to the rules governing conflicts of
law.

     

    10.    EXCLUSIVE JURISDICTION AND
VENUE.  The Parties agree that the Courts of the County of Orange,
State of California shall have sole and exclusive jurisdiction and venue for the
resolution of all disputes arising under the terms of this Agreement and the
transactions contemplated herein.

     

    11.    SUCCESSORS.  All the covenants
and provisions of this Warrant shall be binding upon and inure to the benefit of
the Company, the Holder and their respective legal representatives, successors
and assigns.

     

    12.    ATTORNEYS’ FEES.  If any legal
action or any other proceeding, including any action for declaratory relief, is
brought for the interpretation or enforcement of this Warrant , the prevailing
party shall be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled. “Prevailing Party” shall include without limitation (a) a
Party who dismisses an action in exchange for sums allegedly due; (b) the Party
who receives performance from the other Party of an alleged breach or a desired
remedy that is substantially equivalent to the relief sought in an action or
proceeding; or (c) the Party determined to be the prevailing Party by an
arbitrator or a court of law.

     

    13.    NOTICE OF RIGHT TO COUNSEL.  Each
of the Parties has had the opportunity to, and has had, this Warrant reviewed by
their respective attorney. Each of the Parties affirms to the other that they
have apprised themselves of all relevant information giving rise to this Warrant
and has consulted and discussed with their independent advisors the provisions
of this Warrant and fully understands the legal consequences of each provision.
Each Party further affirms to the other that they have not, and do not, rely
upon any representation of advice from the other or from the other Parties’
counsel.

     

     

    


    
      
        
           


        

        
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    14.    REPRESENTATIONS
OF HOLDER.

     

    (a)           Holder
has adequate means of providing for current needs and contingencies, has no need
for liquidity in the investment, and is able to bear the economic risk of an
investment in the Warrant Shares offered by Company of the size contemplated.
Holder represents that Holder is able to bear the economic risk of the
investment and at the present time could afford a complete loss of such
investment. Holder has had a full opportunity to inspect the books and records
of the Company and to make any and all inquiries of Company officers and
directors regarding the Company and its business as Holder has deemed
appropriate.

     

    (b)           Holder
is an “Accredited Investor” as defined in Regulation D of the Securities Act of
1933 (the “Act”) or Holder, either alone or with Holder’s professional advisers
who are unaffiliated with, have no equity interest in and are not compensated by
Company or any affiliate or selling agent of Company, directly or indirectly,
has sufficient knowledge and experience in financial and business matters that
Holder is capable of evaluating the merits and risks of an investment in the
Warrant Shares offered by Company and of making an informed investment decision
with respect thereto and has the capacity to protect Holder’s own interests in
connection with Holder’s proposed investment in the Warrant Shares.

     

    (c)           Holder
is acquiring the Warrant Shares solely for Holder’s own account as principal,
for investment purposes only and not with a view to the resale or distribution
thereof, in whole or in part, and no other person or entity has a direct or
indirect beneficial interest in such Warrant Shares.

     

    (d)           Holder
will not sell or otherwise transfer the Warrant Shares without registration
under the Act or an exemption therefrom and fully understands and agrees that
Holder must bear the economic risk of Holder's purchase for an indefinite period
of time because, among other reasons, the Warrant Shares have not been
registered under the Act or under the securities laws of any state and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of unless
they are subsequently registered under the Act and under the applicable
securities laws of such states or unless an exemption from such registration is
available.

     

    IN
WITNESS WHEREOF, intending to be legally bound, the Parties hereto have
executed this Warrant Agreement on the 29th day of August,
2008.

     

     

    
      
        	COMPANY: 	 	 	HOLDER:	 
	 	 	 	 	 
	
                MATERIAL
      TECHNOLOGIES, INC., 

                a
      Delaware corporation

              	 	 	CONTINENTAL
      ADVISORS, SA	 
	 	 	 	 	 
	
                /s/
      Robert M. Bernstein

              	 	 	
                /s/
      

              	 
	
                By:
      Robert M. Bernstein

              	 	 	
                By:

              	 
	
                Its:
      Chief Executive Officer

              	 	 	
                Its:

              	 


      

    

     

     

     

     

     

     

     

     

    
      
        
           


        

        
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    FORM
OF ELECTION TO PURCHASE

     

    The
undersigned, a Holder of the attached Warrant, hereby irrevocably elects to
exercise the purchase right represented by the attached Warrant Agreement for,
and to purchase shares of common stock of Material Technologies, Inc., a
Delaware corporation and herewith makes payment of $__________ therefor, and
requests that the certificates for such securities be issued in
the name of, and delivered to ________________________,

    whose
address is _______________________________________.

     

     

    
      
        	Dated:
      ____________________	Signature	 
	 	 	 
	
                 

              	 	 
	 	(Signature
      must conform in all respects to name	 
	 	
                of
      Holder of such partial interest as specified on the 

                face
      of the Warrant Certificate)

              	 
	 	 	 
	 	 	 
	 	(Insert
      Social Security or Other 	 
	 	Identifying
      Number of Holder)	 


      

       

       

       

       

       

       

       

       

    

    


    
      
        
           


        

        
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