matechexh10_38.htm


    
      
        
 
Exhibit 10.38

     

    CONVERTIBLE
DEBENTURE

     

    THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH
LAWS.  THE SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH
LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM.  THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THE OFFERING MATERIALS.  ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.

     

    
      
        	ISSUANCE
      DATE 	
                July 31,
      2008

              
	CONVERTIBLE
      DEBENTURE DUE	December 31,
      2011
	AMOUNT	US$
      1’000’000.--


      

       

    

    FOR VALUE
RECEIVED, Material Technologies, Inc., a Delaware corporation (the “Company”),
hereby promises to pay KREUZFELD
LTD. or registered assigns (the “Holder”) on December 31, 2011 (the
“Maturity Date”), the original principal amount of  US$ one million
(US$ 1’000’000.--), and to pay interest on the principal amount hereof, in such
amounts, at such times and on such terms and conditions as are specified
herein.

     

    Article 1. Interest

     

    The
Company shall pay interest on the unpaid principal amount and accrued but unpaid
interest of this Convertible Debenture (the “Debenture”) in quarterly payments
of accrued interest, payable on the first day of each quarter, at the rate of
Ten Percent (10%) per annum, payable in arrears, in cash, until the principal
amount hereof is paid in full or has been converted.  Interest shall
accrue from the date of each advance, on the full amount of such
advance.  Notwithstanding the foregoing, the Company shall have the
right to defer payment of interest until the Maturity Date, provided that the
Company shall not defer any interest payments to the extent of positive Earnings
Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”).  Therefore, at the election of the Company, interest may
be paid out of, and only to the extent of, EBITDA, until the Maturity Date, at
which time all principal and accrued but unpaid interest shall be due and
payable.

     

    Article 2. Method
of Payment

     

    The
Company may SWIFT wire the payment of interest to the account designated by the
Holder of this Debenture.  Alternatively, the Company shall have the
right at any time to pay accrued but unpaid interest in shares of the Company’s
Class A Common Stock (“Common Stock”), based on a price equal to fifty percent
(50%) of the average closing price of such Common Stock for the ten trading days
prior to issuance of such Common Stock to the Holder, so long as such shares
are


    
      
         


      

      
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    actually
delivered to the Holder within seven business days of issuance.  In
the event the Company elects to pay any accrued interest by issuance of Common
Stock, then the Company shall notify the Holder in writing not less than ten
(10) business days prior to the issuance of such shares, and the Holder shall
have the right at any time before receipt of delivery of such shares to notify
the Company of the Holder’s desire not to accept payment of interest in the form
of Common Stock.  In such event, the Company shall not have the right
to pay any accrued interest in the form of Common Stock.  In such
event the Company shall have the right to continue to accrue such interest until
the Maturity Date.

     

    The
Company shall have the right at any time to prepay the Debenture in whole or in
part, upon not less than fifteen (15) days prior written notice to the Holders
(a “Prepayment Notice”).  Other than with respect to a prepayment
arising under Section 3.1(b), during the fifteen (15) days following the
Holder’s receipt of such Prepayment Notice, the Holder shall have the right to
convert this Debenture at the then applicable Conversion Price, notwithstanding
any notice provision or conversion limitation set forth in Section 3.1(a), which
shall in such event not apply and be waived.

     

    Article
3.  Conversion

     

    Section
3.1.  Conversion
Privilege

     

    (a)           The
Holder of this Debenture shall have the right, at its option, to convert this
Debenture into shares of Common Stock at any time following the date hereof, and
then only after not less than thirty (30) days prior notice to the
Company.  The number of shares of Common Stock issuable upon the
conversion of this Debenture is determined pursuant to Section 3.2 and rounding
the result to the nearest whole share.  At any time after delivery by
Holder to the Company of a Notice of Intent to Convert, the Company shall not
have the right to pre-pay the balance due on the Debenture, and the Holder shall
convert the Debenture according to the terms herein on the 30th
day following the mailing or transmission of such notice of intent (the “Notice
of Intent Date”).  In the event such notice of intent is mailed or
transmitted within 30 days of the Maturity Date, the Holder shall have the right
to extend the Maturity Date so as to allow conversion of the Debenture 30 days
after the Notice of Intent Date.

     

    (b)           In
the event the Holder of the Debenture elects to convert all or any portion of
the Debenture into Common Stock at any time, and the then applicable Conversion
Price is less than $0.10 per share, then the Company shall have the right, at
any time during the 30 days following the date of the Holder’s Notice of
Conversion, to prepay all or any portion of the Debenture that has been
requested to be converted, and the Company will therefore not be required to
issue shares of Common Stock upon conversion so long as such Debenture is paid
with good, cleared funds prior to the date the Company is required to issue the
Common Stock.  This provision shall be waived in the event the Holder
at any time elects to convert the Debenture at a Conversion Price equal to
$0.10.

     

    (c)           Less
than all of the principal amount of this Debenture may be converted into Common
Stock if the portion converted is $1,000 or a whole multiple of $1,000 and the
provisions of this Article 3 that apply to the conversion of all of the
Debenture shall also apply to the conversion of a portion of it.  This
Debenture may not be converted, whether in whole or in part, except in
accordance with Article 3.


    
      
         


      

      
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    Section
3.2.  Conversion
Procedure.

     

    (a)           Debentures.  Subject
to Section 3.1, after having received not less than thirty (30) days prior
notice of Holder’s intent to purchase (which notice shall not in any event
obligate the Holder to convert any portion of this Debenture), upon the
Company’s receipt of a facsimile or original of Holder’s duly completed and
signed Notice of Conversion (a copy of which is attached hereto as Exhibit A),
the Company shall instruct its transfer agent to issue one or more Certificates
representing that number of shares of Common Stock into which the Debentures are
convertible in accordance with the provisions regarding
conversion.  The Company’s transfer agent or attorney shall act as
Registrar and shall maintain an appropriate ledger containing the necessary
information with respect to each Debenture.

     

    (b)           Conversion
Date.  Such conversion shall be effectuated by surrendering to
the Company, or its attorney, the Debentures (or a copy thereof if the Holder
certifies that the original has been lost or destroyed) to be converted together
with a facsimile or original of the signed Notice of Conversion.  The
date on which the Notice of Conversion is effective (“Conversion Date”) shall be
deemed to be the date on which the Holder has delivered to the Company a
facsimile or original of the signed Notice of Conversion, and so long as the
time limitations set forth in Section 3.1(a) have been satisfied.  The
Company shall deliver to the Holder, or per the Holder’s instructions, the
shares of Common Stock within seven (7) business days of receipt of the
Debentures to be converted.

     

    (c)           Common
Stock to be Issued.  Subject to the time limitations set forth
in Section 3.2(a) above, upon the conversion of any Debentures and upon receipt
by the Company or its attorney of a facsimile or original of Holder’s signed
Notice of Conversion, Company shall instruct Company’s transfer agent to issue
Stock Certificates in the name of Holder (or its nominee) and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion, as applicable.

     

    (d)           Rule
144.  If, on the Conversion Date, the Common Stock issuable
upon conversion of this Debenture is eligible to be issued without the
restrictive legend required by Rule 144, the Company will, at its own expense,
provide any and all legal opinions required for the issuance of the Common Stock
without restrictive legends and within five business days.

     

    (e)           Conversion
Rate.  Subject to the time limitations set forth in Section
3.1(a), Holder is entitled to convert this Debenture, plus accrued but unpaid
interest, into Common Stock of the Company at the lesser of (i) 50% of the
averaged ten closing prices for the Company’s Common Stock for the ten (10)
trading days immediately preceding the Conversion Date or (ii) $0.10 (the lesser
of the two being referred to as the “Conversion Price”).  No
fractional shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded up or down, as
the case may be, to the nearest whole share.

     

    (f)           Nothing
contained in this Debenture shall be deemed to establish or require the payment
of interest to the Holder at a rate in excess of the maximum rate permitted by
governing law.  In the event that the rate of interest required to be
paid exceeds the maximum rate permitted by


    
      
         


      

      
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    governing
law, the rate of interest required to be paid thereunder shall be automatically
reduced to the maximum rate permitted under the governing law and such excess
shall be returned with reasonable promptness by the Holder to the
Company.

     

    (g)           It
shall be the Company’s responsibility to take all necessary actions and to bear
all such costs to issue certificates for the Common Stock as provided herein,
including the responsibility and cost for delivery of an opinion letter to the
transfer agent, if so required.  The person in whose name the
certificate of Common Stock is to be registered shall be treated as a
shareholder of record on and after the conversion date. Upon surrender of any
Debentures that are to be converted in part, the Company shall issue to the
Holder new Debentures representing the unconverted amount, if so requested by
Holder.

     

    (h)           Payment
of Taxes.  The Company shall pay all documentary stamp taxes,
if any, attributable to the initial issuance of the Common Stock; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable, (i) with respect to any secondary transfer of the Debentures or
the Common Stock issuable upon exercise hereof or (ii) as a result of the
issuance of the Common Stock to any person other than the Holder, and the
Company shall not be required to issue or deliver any certificate for any Common
Stock unless and until the person requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have produced evidence that
such tax has been paid to the appropriate taxing authority.

     

    (i)           Conversion
Default.  If, at any time Holder submits a Notice of Conversion
and the Company does not have sufficient authorized but unissued shares of
Common Stock available to effect, in full, a conversion of the Debentures (a
“Conversion Default”), the Company shall promptly issue so many of its
authorized shares as are then available, and then use its best efforts to take
such action as may be required to increase the authorized shares of the Company
in order to provide for the issuance of all required shares upon
Conversion.

     

    Section
3.3.  Company
to Reserve Stock.  The Company shall reserve the number of
shares of Common Stock required pursuant to and upon the terms set forth in the
Subscription Agreement, to permit the conversion of this
Debenture.  All shares of Common Stock which may be issued upon the
conversion hereof shall upon issuance be validly issued,  fully paid
and non-assessable and free from all taxes, liens and charges with respect to
the issuance thereof.

     

    Section
3.4.  Restrictions
on Transfer.  This Debenture has not been registered under the
Securities Act of 1933, as amended, (the “Act”) and is being issued under
Section 4(2) of the Act and Rule 506 of Regulation D promulgated under the
Act.  This Debenture and the Common Stock issuable upon the conversion
thereof may only be offered or sold pursuant to registration under or an
exemption from the Act.  In the event the Company shall file a
registration statement with the Securities and Exchange Commission, on any form
other than a Form S-8, then the Company shall register the shares issuable upon
conversion of this Debenture, as well as any other shares requested to be
registered by the Holder.

     

    Section
3.5.  Mergers,
Etc.  If the Company merges or consolidates with another
corporation or sells or transfers all or substantially all of its assets to
another person and the holders of the Common Stock are entitled to receive
stock, securities or property in respect of or in exchange
for


    
      
         


      

      
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    Common
Stock, then as a condition of such merger, consolidation, sale or transfer, the
Company and any such successor, purchaser or transferee shall amend this
Debenture to provide that it may thereafter be converted on the terms and
subject to the conditions set forth above into the kind and amount of stock,
securities or property receivable upon such merger, consolidation, sale or
transfer by a holder of the number of shares of Common Stock into which this
Debenture might have been converted immediately before such merger,
consolidation, sale or transfer, subject to adjustments which shall be as nearly
equivalent as may be practicable to adjustments provided for in this Article
3.

     

    Article
4.  Mergers

     

    Any reference herein to
the Company shall refer to such surviving or transferee corporation and the
obligations of the Company shall terminate upon such written
assumption.

     

    Article
5.  Reports

     

    The Company will mail to
the Holder hereof at its address as shown on the Register a copy of any annual,
quarterly or other report or proxy statement that it gives to its shareholders
generally at the time such report or statement is sent to shareholders, unless
such report is timely filed with the United States Securities and Exchange
Commission.

     

    Article
6.  Defaults
and Remedies

     

    Section
6.1.  Events
of Default.  An “Event of Default” occurs if (a) the Company
does not make the payment of the principal of this Debenture when the same
becomes due and payable at maturity, upon redemption or otherwise, (b) the
Company does not make a payment, other than a payment of principal, for a period
of five (5) business days after its due date, (c) any of the Company’s
representations or warranties contained in this Debenture were false when made
or the Company fails to comply with any of its other agreements in this
Debenture and such failure continues for the period and after the notice
specified below, (d) the Company shall violate or breach any of the covenants
contained in this Agreement, or (e) the Company pursuant to or within the
meaning of any Bankruptcy Law (as hereinafter defined):  (i) commences
a voluntary petition under Bankruptcy Law; (ii) consents to the entry of an
order for relief against it in an involuntary bankruptcy petition; (iii)
consents to the appointment of a Custodian (as hereinafter defined) of it or for
all or substantially all of its property or (iv) makes a general assignment for
the benefit of its creditors or (v) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:  (A) is for relief
against the Company in an involuntary bankruptcy petition; (B) appoints a
Custodian of the Company or for all or substantially all of its property or (C)
orders the liquidation of the Company, and the order or decree remains unstayed
and in effect for 60 days.  As used in this Section 6.1, the term
“Bankruptcy Law” means Title 11 of the United States Code or any similar federal
or state law for the relief of debtors.  The term “Custodian” means
any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

     

    Section
6.2.  Acceleration.  If
an Event of Default occurs and is continuing, the Holder hereof by notice to the
Company, may declare the remaining principal amount of this Debenture, together
with all accrued interest, to be due and payable.  Upon such
declaration, the remaining principal amount as well as any accrued but unpaid
interest shall be due and payable immediately.


    
      
         


      

      
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    Section
6.3.  Covenants.  The
Company hereby agrees to comply with each of the following covenants, the breach
or violation of which shall be deemed an Event of Default
hereunder.  Without the prior written consent of the Holders of at
least a majority of the outstanding Debentures:

     

    
      a.            
The
Company shall not increase the compensation paid or payable to any of its
officers or directors by more than five percent (5%) in any one calendar
year;

       

      b.           
The
Company shall at all times comply in all respects with the reporting
requirements of the Securities and Exchange Act of 1934, as amended (the
“Exchange Act”), and shall take such action as is required from time to time to
continue and maintain the eligibility of the Company’s stockholders to transfer
securities without registration under the exemption provided by Rule 144
promulgated under the Act.

    

     

    Article
7.  Record
Ownership

     

    Section
7.1.  Record
Ownership.  The Company, or its attorney, shall maintain a
register of the holders of the Debentures (the “Register”) showing their names
and addresses and the serial numbers and principal amounts of Debentures issued
to or transferred of record by them from time to time.  The Register
may be maintained in electronic, magnetic or other computerized
form.  The Company may treat the person named as the Holder of this
Debenture in the Register as the sole owner of this Debenture.  The
Holder of this Debenture is the person exclusively entitled to receive payments
of interest on this Debenture, receive notifications with respect to this
Debenture, convert it into Common Stock and otherwise exercise all of the rights
and powers as the absolute owner hereof.

     

    Section
7.2.  Registration
of Transfer.  Transfers of this Debenture may be registered on
the books of the Company maintained for such purpose pursuant to Section 7.2
above (i.e., the Register).  Transfers shall be registered when this
Debenture is presented to the Company with a request to register the transfer
hereof and the Debenture is duly endorsed by the appropriate person, reasonable
assurances are given that the endorsements are genuine and effective, and the
Company has received evidence satisfactory to it that such transfer is rightful
and in compliance with all applicable laws, including tax laws and state and
federal securities laws.  When this Debenture is presented for
transfer and duly transferred hereunder, it shall be canceled and a new
Debenture showing the name of the transferee as the record holder thereof shall
be issued in lieu hereof.  When this Debenture is presented to the
Company with a reasonable request to exchange it for an equal principal amount
of Debentures of other denominations, the Company shall make such exchange and
shall cancel this Debenture and issue in lieu thereof Debentures having a total
principal amount equal to this Debenture in such denominations as agreed to by
the Company and Holder.

     

    Section
7.3.  Lost
Debentures.  If this Debenture becomes defaced or mutilated but
is still substantially intact and recognizable, the Company or its agent may
issue a new Debenture in lieu hereof upon its surrender.  Where the
Holder of this Debenture claims that the Debenture has been lost, destroyed or
wrongfully taken, the Company shall issue a new Debenture in place of the
original Debenture if the Holder so requests by written notice to the Company
actually received by the Company before it is notified that the Debenture has
been acquired by a bona fide purchaser and the Holder has delivered to the
Company an indemnity bond in such amount and issued by such surety
as


    
      
         


      

      
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    the
Company deems satisfactory together with an affidavit of the Holder setting
forth the facts concerning such loss, destruction or wrongful taking and such
other information in such form with such proof or verification as the Company
may request.

     

    Sectin
7.4.  Indemnification
for Transfers.  In the event any Holder transfers all or any
portion of the Debenture, the Holder hereby assumes liability for, and hereby
agree to pay, protect, defend (at trial and appellate levels and with attorneys,
consultants and experts reasonably acceptable to Company), and save Company
harmless from and against, and hereby indemnify Company from and against any and
all liens, damages, (including, without limitation, punitive or exemplary
damages) losses, liabilities, obligations, settlement payments, penalties,
fines, assessments, citations, directives, claims, litigation, demands,
defenses, judgments, suits, proceedings, costs, disbursements and expenses of
any kind or of any nature whatsoever (including, without limitation, reasonable
attorneys’, consultants’ and experts’ fees and disbursements actually incurred
in investigating, defending, settling or prosecuting any claim, litigation or
proceeding) (collectively “Costs”)
which may at any time be imposed upon, incurred by or asserted or awarded
against Company, and arising and proximately caused directly from or out of the
subsequent transfer, conveyance or other disposition of the any warrant, Common
Stock or debenture of the Company which results in a violation of, or otherwise
disqualifies the issuance of the such security from any federal and state
exemptions from registration which the Company relied on in issuing the such
security.

     

    Article
8.  Dilution.

     

    The number of shares of
Common Stock issuable upon conversion of the Debentures shall be
dilutive.  The Company’s executive officers and directors have studied
and fully understand the nature of the transactions contemplated by this
Debenture and recognize that the Debenture, if excercised will have a dilutive
effect on existing shareholders.  The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company.  The Company specifically
acknowledges that its obligation to issue additional shares of Common Stock is
binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company.

     

    Article
9.  Notices

     

    Any notice which is
required or convenient under the terms of this Debenture shall be duly given if
it is in writing and delivered in person or mailed by first class mail, postage
prepaid and directed to the Holder of the Debenture at its address as it appears
on the Register or if to the Company to its principal executive offices. The
time when such notice is sent shall be the time of the giving of the
notice.

     

    Article
10.  Time

     

    Where this Debenture
authorizes or requires the payment of money or the performance of a condition or
obligation on a Saturday or Sunday or a public holiday, or authorizes or
requires the payment of money or the performance of a condition or obligation
within, before or after a period of time computed from a certain date, and such
period of time ends on a Saturday or a Sunday or a public holiday, such payment
may be made or condition or obligation performed on the
next


    
      
         


      

      
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    succeeding
business day, and if the period ends at a specified hour, such payment may be
made or condition performed, at or before the same hour of such next succeeding
business day, with the same force and effect as if made or performed in
accordance with the terms of this Debenture.  A “business day” shall
mean a day on which the banks in California are not required or allowed to be
closed.

     

    Article
11.  Waivers

     

    The holders of a majority
in principal amount of the Debentures may waive a default or rescind the
declaration of an Event of Default and its consequences except for a default in
the payment of principal or conversion into Common Stock.

     

    Article
12.  Rules
of Construction

     

    In this Debenture, unless
the context otherwise requires, words in the singular number include the plural,
and in the plural include the singular, and words of the masculine gender
include the feminine and the neuter, and when the sense so indicates, words of
the neuter gender may refer to any gender.  The numbers and titles of
sections contained in the Debenture are inserted for convenience of reference
only, and they neither form a part of this Debenture nor are they to be used in
the construction or interpretation hereof.  Wherever, in this
Debenture, a determination of the Company is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Debenture.

     

    Article
13.  Governing
Law

     

    The validity, terms,
performance and enforcement of this Debenture shall be governed and construed by
the provisions hereof and in accordance with the laws of the State of California
applicable to agreements that are negotiated, executed, delivered and performed
solely in the State of California.  The prevailing party in any
dispute arising hereunder shall be entitled to recover all of its reasonable
attorney’s fees and costs of defense, prosecution or
litigation.

     

    Article 14.  Litigation

     

     (a)           Forum
Selection and Consent to Jurisdiction.  Any litigation based
thereon, or arising out of, under, or in connection with, this agreement or any
course of conduct, course of dealing, statements (whether oral or written) or
actions of the Company or Holder shall be brought and maintained exclusively in
the state or federal courts of the State of California, city of Los
Angeles.  The Company hereby expressly and irrevocably submits to the
jurisdiction of the state and federal courts of the State of California, city of
Los Angeles, for the purpose of any such litigation as set forth above and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with such litigation.  The Company further irrevocably
consents to the service of process by registered mail, postage prepaid, or by
personal service within or without the State of California.  The
Company hereby expressly and irrevocably waives, to the fullest extent permitted
by law, any objection which it may have or hereafter may have to the laying of
venue of any such litigation brought in any such court referred to above and any
claim that any such litigation has been brought in any inconvenient
forum.  To the extent that the Company has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice,


    
      
         


      

      
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    attachment
prior to judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, the Company hereby irrevocably waives such immunity in
respect of its obligations under this agreement and the other loan
documents.

     

     (b)           Waiver
of Jury Trial.  The Holder and the Company hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this agreement, or any course of conduct, course of dealing,
statements (whether oral or written) or actions of the Holder or the
Company.  The Company acknowledges and agrees that it has received
full and sufficient consideration for this provision and that this provision is
a material inducement for the Holder entering into this agreement.

     

     (c)           Submission
To Jurisdiction.  Any legal action or proceeding in connection
with this Debenture or the performance hereof must be brought in the federal
courts located in the State of California and the parties hereby irrevocably
submit to the exclusive jurisdiction of such courts for the purpose of any such
action or proceeding.

     

     IN
WITNESS WHEREOF, the Company has duly executed this Debenture as of the date
first written above.

     


    
      	
              

                

                  MATERIAL
      TECHNOLOGIES, INC.

                  a
      Delaware corporation

                   
By:
      /s/ Robert Bernstein
Robert
      Bernstein

              Chairman
      and CEO

            	
              

                KREUZFELD
      LTD.

                a
      Swiss corporation

                 

                By:____________________
      

                  
                  


                  Markus
      Winkler

                

              


              sole
      officer

            


    

                                                                                                 

     

     

    [Signature
Page to Convertible Debenture]

     

     

     

    
 

    
      
         


      

      
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    Exhibit
A

     

    NOTICE
OF CONVERSION

     

    (To be
Executed by the Registered Holder upon Conversion.)

     

    The
undersigned hereby irrevocably elects, as of ______________, 200 
to convert $_________________ of the Debentures into Shares of Common Stock (the
“Shares”) of Material Technologies, Inc., a Delaware corporation (the
“Company”).

     

    Date of
Conversion_________________________________________

     

    Applicable
Conversion Price_________________________________

     

    Number of
Shares Issuable upon this conversion______________

     

    Signature___________________________________________________

    [Name]

    Address_____________________________________________________

     

    ____________________________________________________________

     

    Phone______________________   Fax___________________________

     

     

     

     

    
 


    
      
         


      

      
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    Assignment
of Debenture

     

    The
undersigned hereby sell(s) and assign(s) and transfer(s) unto

     

     

    (name,
address and SSN or EIN of assignee)

     

    Dollars
($                                )      
           

    (principal
amount of Debenture, $1,000 or integral multiples of $1,000)

     

    of
principal amount of this Debenture together with all accrued and unpaid interest
hereon.

     

    Date:                                  Signed:                                                                                    
  

                                                                        
(Signature
must conform in all

                                                                         respects
to name of Holder shown

                                                                         of
face of Debenture)

     

     

     

     

     

    
 


    
      
         


      

      
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