matechexh10_62.htm


    
      
 


    Exhibit
10.62

     

    ESCROW
AGREEMENT

     

    This Escrow Agreement
(this “Agreement”) is dated as of June 16, 2008, by and between Material
Technologies, Inc., a Delaware corporation (“MaTech”), on the one hand,
Palisades Capital, LLC (“Palisades”), Hyde Investments, Ltd. (“Hyde”), and
Livingston Investments, Ltd. (“Livingston” and together with Palisades and Hyde,
the “Debenture Holders”), on the other hand, and Corporate Legal Services, LLP
(the “Agent”), as escrow agent.  Each of MaTech and the Debenture
Holders shall be referred to as a “Party” and collectively as the
“Parties.”

     

    I.           Escrow

     

    1.01           Appointment
and Acknowledgment of Escrow Agent.

     

    MaTech and the Debenture
Holders hereby appoint the Agent, and the Agent hereby agrees to serve, as
Escrow Agent pursuant to the terms of this Agreement.  The Agent
acknowledges, or upon its receipt will acknowledge, the
following:

     

    (a)           MaTech
will deposit a number of shares equal to 9.99% of its issued and outstanding
Class A Common Stock (the “Shares”) into a brokerage account in the name of
Agent at a firm to be determined from time to time by Agent.  If at
any time the number of Shares held by the Agent pursuant to this Agreement
represents less than 9.99% of the MaTech issued and outstanding common stock,
then within ten (10) calendar days MaTech will deposit more shares with the
Agent so that the number of shares held by Agent pursuant to this Agreement is
approximately 9.99% of MaTech’s issued and outstanding Class A Common
Stock.

     

    (b)           MaTech
and the Debenture Holders will deposit with the Agent a signed copy of those
certain Class A Senior Secured Convertible Debentures, as amended (the
“Debentures”).

     

    The properties described
in Sections 1.01(a) and 1.01(b) collectively are referred to as the “Escrowed
Property.”  If the Escrowed Property includes property on which
dividends are paid, on which interest is earned, or to which other accretions
are added, then the Escrowed Property shall include such dividends, interest, or
accretions.  If the Escrowed Property consists of stock, the stock
shall not be considered issued and outstanding until such time as it is released
pursuant to this Agreement.

     

    1.02           Operation
of Escrow.

     

    The Parties hereto agree
that the escrow created by this Agreement (the “Escrow”) shall operate as
follows:


    
      
         


      

      
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    (a)           Upon
receipt of a notice of conversion executed by any of the Debenture Holders, or
its duly authorized representative, which converts all or a portion of any of
the Debentures (a “Conversion Notice”), the Agent shall (i) confirm the accuracy
of the numbers contained in the Conversion Notice, (ii) provide a copy of the
Conversion Notice to MaTech within two (2) business days of receipt, and (iii)
cause that number of Shares so issuable as set forth in the Conversion Notice to
be electronically transferred or journaled to the recipient designated in such
Conversion Notice within three (3) business days of receipt.

     

    (b)           Upon
the repayment or conversion in full of the Debentures, the Agent shall return
any Shares then in its possession to MaTech for cancellation.  Until
such shares are either transferred to a Debenture Holder upon conversion, or
returned to MaTech for cancellation, such shares shall be deemed to be the
property of Matech, shall not have voting rights, shall not be deemed
outstanding, and shall not be transferable other than as set forth
herein.

     

    (c)           Any
holder of the Debentures may cancel this Agreement, solely as it pertains to
those Debentures held by the cancelling Debenture Holder, by providing written
notice to the Agent.  Upon such cancellation, the Agent shall return
to such Debenture Holder or its designated representative the copy of the
Debenture owned by such Debenture Holder.  Upon the cancellation of
this Agreement by all Debenture Holders, Agent shall return any remaining shares
deposited pursuant hereto to Matech.

     

    1.03           Further
Provisions Relating to the Escrow.

     

    (a)           Distributions
by the Agent in accordance with the terms of this Agreement shall operate to
divest all right, title, interest, claim, and demand, either at law or in
equity, of any party to this Agreement (other than the distributee) in and to
the Escrowed Property distributed and shall be a perpetual bar both at law and
in equity with respect to such distributed Escrowed Property against the parties
to this Agreement and against any person claiming or attempting to claim such
distributed escrowed property from, through, or under such
party.

     

    (b)           MaTech
agrees to reimburse the Agent for the Agent’s reasonable fees and other expenses
(including brokerage fees and expenses, postage and mailing costs, legal fees
and expenses) incurred by the Agent in connection with its duties
hereunder.

     

    (c)           MaTech
and the Debenture Holders, jointly and severally, agree to indemnify and hold
harmless the Agent against and in respect of any and all claims, suits, actions,
proceedings (formal or informal), investigations, judgments, deficiencies,
damages, settlements, liabilities, and legal and other expenses (including legal
counsel fees and expenses of attorneys chosen by the Agent) as and when incurred
and whether or not involving a third party arising out of or based upon any act,
omissions, alleged act, or alleged omission by the Agent or any other cause, in
any case in connection with the acceptance of, or the performance or
nonperformance by the Agent of, any of the Agent’s


    
      
         


      

      
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    duties
under this Agreement.  The Agent shall be fully protected by acting in
reliance upon any notice, advice, direction, other document, or signature
believed by the Agent to be genuine, by assuming that any person purporting to
give the Agent any notice, advice, direction, or other document in accordance
with the provisions hereof, in connection with this Agreement, or in connection
with the Agent’s duties under this Agreement, has been duly authorized so to do,
or by acting or failing to act in good faith on the advice of any counsel
retained by the Agent, which may be Corporate Legal Services,
LLP.  The Agent shall not be liable for any mistake of fact or of law
or any error of judgment, or for any act or any omission, except as a result of
the Agent’s knowing, intentional and deliberate bad faith.  If any of
the Escrowed Property is represented by stock certificates, the Agent shall not
be liable if the Agent submits all or a portion of the Escrowed Property to be
broken into smaller denominations to the appropriate transfer agent, and such
transfer agent fails to return properly that portion of the Escrowed Property to
the Agent which such transfer agent was instructed to return.  The
Agent shall not have any fiduciary duty to any of the parties hereunder, and
shall not be deemed to be providing legal services to any party hereunder by
reason of this Agreement.

     

    (d)           The
Agent makes no representation as to the validity, value, genuineness, or the
collectibility of any security or other document or instrument held by or
delivered to the Agent.

     

    (e)           The
Agent shall have no duties or responsibilities except those expressly set forth
herein.  The Parties hereto agree that the Agent will not be called
upon to construe any contract or instrument.  The Agent shall not be
bound by any notice of a claim, or demand with respect thereto, or any waiver,
modification, amendment, termination, cancellation, or revision of this
Agreement, unless in writing and signed by the other Parties hereto and received
by the Agent and, if the Agent’s duties as Escrow Agent hereunder are affected,
unless the Agent shall have given its prior written consent
thereto.  The Agent shall not be bound by any assignment by MaTech or
the Debenture Holders of its rights hereunder unless the Agent shall have
received written notice thereof from the assignor.  The Agent is
authorized to comply with and obey laws, rules, regulations, orders, judgments,
and decrees of any governmental authority, court, or other
tribunal.  If the Agent complies with any such law, rule, regulation,
order, judgment, or decree, the Agent shall not be liable to any of the Parties
hereto or to any other person even if such law, rule, order, regulation,
judgment, or decree is subsequently reversed, modified, annulled, set aside,
vacated, found to have been entered without jurisdiction, or found to be in
violation of or beyond the scope of a constitution or a law.

     

    (f)           If
the Agent shall be uncertain as to the Agent’s duties or rights hereunder, shall
receive any notice, advice, direction, or other document from any other party
with respect to the Escrowed Property which, in the Agent’s opinion, is in
conflict with any of the provisions of this Agreement, or should be advised that
a dispute has arisen with respect to the payment, ownership, or right of
possession of the Escrowed Property or any part thereof, or the property to be
exchanged for the Escrowed Property (or as to the delivery, non-delivery, or
content of any notice, advice, direction, or other document), the Agent shall be
entitled, without liability to anyone, to refrain from
taking


    
      
         


      

      
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    any
action other than to use the Agent’s reasonable efforts to keep safely the
Escrowed Property until the Agent shall be directed otherwise in writing by both
other parties hereto or by an order, decree, or judgment of a court of competent
jurisdiction which has been finally affirmed on appeal or which by lapse of time
or otherwise is no longer subject to appeal (a “Final Judgment”), but the Agent
shall be  under no duty to institute or to defend any proceeding,
although the Agent may, in the Agent’s discretion and at the expense of MaTech
as provided in Section 1.03(c), institute or defend such
proceedings.

     

    (g)           The
Agent (and any successor escrow agent or agents) reserves the right to resign as
the Escrow Agent at any time, provided fifteen (15) days’ prior written notice
is given to the other parties hereto, and provided further that a mutually
acceptable successor Escrow Agent(s) is named within such fifteen (15) day
period.  The Agent may, but is not obligated to, petition any court in
the State of California having jurisdiction to designate a successor Escrow
Agent.  The resignation of the Agent (and any successor escrow agent
or agents) shall be effective only upon delivery of the Escrowed Property to the
successor escrow agent(s).  The Parties reserve the right to jointly
remove the Escrow Agent at any time, provided fifteen (15) days’ prior written
notice is given to the Escrow Agent.  If no successor Escrow Agent has
been appointed and has accepted the Escrowed Property within fifteen (15) days
after the Notice is sent, all responsibilities of the Agent hereunder shall,
nevertheless, case.  The Agent’s sole responsibility thereafter shall
be to use the Agent’s reasonable efforts to keep safely the Escrowed Property
and to deliver the Escrowed Property as may be directed in writing by both of
the other parties hereto or by a Final Judgment.  Except as set forth
in this Section 1.03(g), this Agreement shall not otherwise be assignable by the
Agent without the prior written consent of the other parties
hereto.

     

    (h)           MaTech
and the Debenture Holders authorize the Agent, if the Agent is threatened with
litigation or is sued, to interplead all interested parties in any court of
competent jurisdiction and to deposit the Escrowed Property with the clerk of
that court.

     

    (i)           The
Agent’s responsibilities and liabilities hereunder, except as a result of the
Agent’s own intentional, knowing and deliberate bad faith or gross negligence,
will terminate upon the delivery by the Agent of al the Escrowed Property under
any provision of this Agreement.

     

    (j)           As
consideration for acting as escrow agent hereunder, MaTech shall pay, in advance
and as a condition precedent to the establishment of the Escrow pursuant to the
terms of this Agreement, a fee to the Agent equal to $5,000.00.  This
fee shall be deemed to have been earned in full by the Agent upon establishment
of the Escrow, and shall not be subject to pro-ration or other setoff in the
event the Escrow is terminated by any party.

     

    (k)           Notwithstanding
anything in this Agreement to the contrary, Agent shall not have the right to
transfer all or any portion of the Debentures to any third
party,


    
      
         


      

      
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    or to
Matech, for any reason without the written consent of the Holder of such
Debenture to be transferred.

     

    II.           Miscellaneous

     

    2.01           Further
Action.

     

    At any time and from time
to time, MaTech and the Debenture Holders each agrees, at its own expense, to
take such actions and to execute and deliver such documents as may be reasonably
necessary to effectuate the purposes of this Agreement.  If any
portion of the Escrowed Property consists of stock certificates, MaTech shall
pay any transfer tax arising out of the placing of the Escrowed Property into
the Escrow, the delivery of the Escrowed Property out of the Escrow, or the
transfer of the Escrowed Property into the name of any person or entity pursuant
to the terms of this Agreement.  The Agent shall have no liability
regarding transfer taxes even if one or both of the Parties hereto fails to
comply with the obligations set forth in the prior sentence.

     

    2.02           Survival.

     

    Subject to Section
1.03(i), the covenants, agreements, representations, and warranties contained in
or made pursuant to this Agreement shall survive the delivery by the Agent of
the Escrowed Property, irrespective of any investigation made by or on behalf of
any party.

     

    2.03           Modification.

     

    This Agreement sets forth
the entire understanding of the parties with respect to the subject matter
hereof, supersedes all existing agreements among them concerning such subject
matter, and (subject to Section 1.03(e)) may be modified only by a written
instrument duly executed by each party.

     

    2.04           Notices.

     

    Any notice, advice,
direction, or other document or communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or by Federal Express, Express Mail, or similar overnight
delivery or courier service or delivered (in person or by facsimile) against
receipt to the party to whom it is to be given at address of such party set
forth below (or to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 2.04) with a copy to
each of the other parties hereto:

     

    
      	 	If to
      MaTech: 	
              Material
      Technologies, Inc.

              11661 San
      Vicente Boulevard, Suite 707

              Los
      Angeles, CA  90049

              Attn:  Robert
      M. Bernstein, President

              Facsimile
      (310) 473-3177

            


    

     

     

    

      
        
           


        

        
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              If
      to the Debenture

              Holders: 

            	c/o Corporate Legal
      Services, LLP
	 	 	
               2224 Main
      Street

              Santa
      Monica, California 90405

              Facsimile: (310)
      396-3290

            
	 	 	 
	 	If to
    Agent:	
              Corporate
      Legal Services, LLP

              2224
      Main Street

              Santa
      Monica, California 90405

              Facsimile:
      (310) 396-3290

            


    

     

    Any notice, advice,
direction, or other document or communication given by certified mail shall be
deemed given at the time of receipt thereof.  Any notice given by
other means permitted by this Section 2.04 shall be deemed given at the time of
receipt thereof.

     

    2.05           Waiver.

     

    Any waiver by any party of
a breach of any provision of this Agreement shall not operate as or be construed
to be a waiver of any other breach of that provision or of any breach of any
other provision of this Agreement.  The failure of a party to insist
upon strict adherence to any term of this Agreement on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.  Any waiver must be in writing.

     

    2.06           Binding
Effect.

     

    Subject to Section
1.03(g), the provisions of this Agreement shall be binding upon and inure to the
benefit of MaTech and the Debenture Holders and their respective assigns, heirs,
and personal representatives, and shall be binding upon and insure to the
benefit of the Agent and the Agent’s successors and assigns.

     

    2.07           No
Third Party Beneficiaries.

     

    This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement (except as provided in Section
2.06).

     

    2.08           Jurisdiction.

     

    The parties hereby
irrevocably consent to the jurisdiction of the courts of the State of California
and of any federal court located in such State in connection with any action or
proceeding arising out of or relating to this Agreement, and document or
instrument delivered pursuant to, in connection with, or simultaneously with
this Agreement, a


    
      
         


      

      
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    breach of
this Agreement or of any such document or instrument, or the Escrowed
Property.

     

    2.09           Separability.

     

    This entire Agreement
shall be void if any provision of this Agreement other than the second and third
sentences of Section 2.11 is invalid, illegal, unenforceable, or inapplicable to
any person or circumstance to which it is intended to be applicable, except that
the provisions of Section 1.03 shall survive.

     

    2.10           Headings.

     

    The headings in this
Agreement are solely for convenience of reference and shall be given no effect
in the construction or interpretation of this Agreement.

     

    2.11           Counterparts;
Governing Law.

     

    This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  It shall be governed by and construed in accordance with
the laws of the State of California without giving effect to conflict of
laws.  Any action, suit, or proceeding arising out of, based on, or in
connection with this Agreement , any document or instrument delivered pursuant
to, in connection with, or simultaneously with this Agreement, any breach of
this Agreement or any such document or instrument, or any transaction
contemplated hereby or thereby may be brought only in the appropriate court in
Orange County, California, and each party covenants and agrees not to assert, by
way of motion, as a defense, or otherwise, in any such action, suit, or
proceeding, any claim that such party is not subject personally to the
jurisdiction of such court, that such party’s property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum, that the venue of the action, suit, or proceeding is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court.

     

     

    [remainder
of page intentionally left blank; signature page to follow]

     

     

     

     

     

     


    
      
         


      

      
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    IN WITNESS WHEREOF, the
Parties have duly executed this Agreement as of the date first written
above.

     

    
      	
              “MaTech”

            	 	
              “Debenture
      Holders”

            
	 
      	 	 
      
	
              Material
      Technologies, Inc.

            	 	
              Palisades
      Capital, LLC

            
	 
      	 	 
      
	 
      	 	 
      
	
                /s/
      Robert M.
      Bernstein                                                                

            	 	 
      
	
              By:           Robert
      M. Bernstein

            	 	
              By:           Reid
      Breitman

            
	
              Its:           President

            	 	
              Its:           President

            
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	
              “Agent”

            	 	
              Hyde
      Investments, Ltd.

            
	 
      	 	 
      
	
              Corporate
      Legal Services, LLP

            	 	 
      
	 
      	 	 
      
	 
      	 	
              By:           C.
      Rykov

            
	 
      	 	
              Its:           Managing
      Director

            
	
              By:           Reid
      Breitman, Esq.

            	 	 
      
	
              Its:           Managing
      Partner

            	 	 
      
	 
      	 	 
      
	 
      	 	
              Livingston
      Investments, Ltd.

            
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	
              By:           C.
      Rykov

            
	 
      	 	
              Its:           Managing
      Director

            


    

     

     

     


    
      
         


      

      
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