Document:

Untitled Page

		
			

			

			

			Exhibit 10.9

				

			

		

		
			

			AMENDMENT DATED OCTOBER 27, 2006

					TO

					CLASS A SENIOR SECURED CONVERTIBLE DEBENTURE

				

				

			

		

		ORIGINAL ISSUANCE DATE                                                                      December 1, 2003

		CONVERTIBLE DEBENTURE DUE                                      December 31, 2008 (as amended)

		AMOUNT DUE AS OF OCTOBER 15, 2006                                                         $534,924.27

		

		            WHEREAS, Material Technologies, Inc., a Delaware corporation (the “Company”) entered and executed that certain Class A Senior Secured Convertible Debenture, dated December 1, 2003 (the “Debenture”), in favor of Livingston Investments, Ltd. or registered assigns (the “Holder”). 

		

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

		

		            NOW THEREFORE, the parties hereby agree as follows:

		

			The Maturity Date shall be extended to December 31, 2008.

				

			
	Section 3.1(a) of the Debenture is hereby amended and restated to read as follows:

		

		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 March 30, 2004.  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.  The Holder of this Debenture may not convert any portion of this Debenture only to the extent the issuance of the shares upon such conversion would cause the Holder to beneficially own more than 4.99% of the issued and outstanding common stock of the Company upon the date of such conversion.  The Company will accept and rely upon the Holder’s written representation that the issuance will not cause the holder to beneficially own more than 4.99% of the issued and outstanding common stock of the Company.

			

		

			The seventy five (75) day period referred to in Section 3.1(b) of the Debenture is hereby amended to be five (5) days after receipt of notice by the Company.

				

			
	Section 3.2(a) is hereby amended and restated to read as follows:

		

		Subject to Section 3.1, 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 the escrow agent pursuant to that certain Escrow Agreement of even date herewith to transfer to the Holder that number of shares of Common Stock into which the Debentures are convertible in accordance with the provisions regarding conversion. 

			

			

			

		

		
			1

		

		

		

		

		

		

			Section 3.2(b) is amended to add the words “or if less than the total remaining balance of the Debenture is being converted” after the word “destroyed” in the parenthetical.

				

			
	The Company has informed the Holder that it is considering completing a reverse split of its common stock.  The Company acknowledges that the conversion price of the Debenture shall not be effected by any such reverse split, and that after giving effect to such reverse split, the conversion price shall remain the lesser of (i) 50% of the averaged ten closing prices for the Company’s Common Stock for the ten (10) trading days immediately preceding the Conversion Date or (ii) $0.10.

				

			
	Section 6.3(d) is amended and restated to read: “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, except that Robert M. Bernstein’s compensation may be increased to a maximum of $250,000 per year starting with the 2007 calendar year.”

				

			
	The Company has informed the Holder that it intends to issue up to 70 million post-split shares of Class A common stock to Robert M. Bernstein, or his designees or assigns, after the effectiveness of a reverse split of its common stock, to induce Mr. Bernstein to enter into a new employment agreement with the Company and to release the Company from any claims that may be owed to Mr. Bernstein. 

		

		
	With respect to all shares issued to Mr. Bernstein, the Company agrees that the Company shall require Mr. Bernstein to execute the Stockholder Lockup Agreement attached hereto as Exhibit A, and the Company shall not waive or modify any of the provisions of the Stockholder Lockup Agreement in connection with such shares of Class A Common Stock issued to Robert M. Bernstein, or any transferee or assignee of such shares, and shall not permit any of such shares to be transferred without legend at any time prior to the date which is three years from the date thereof, except that the Company shall have the right to terminate any such Stockholder Lockup Agreement and restriction in the event this Debenture is paid in full or converted in full by the Holder. 

			

		
			The Company will place a legend on each certificate of the shares issued to Mr. Bernstein or his designees or assignees stating “this certificate may not be transferred until October 27, 2009” and such legend shall not be removed from such certificate except in accordance with the Stockholder Lockup Agreement.  In the event Mr. Bernstein transfers any of the shares represented by such certificate, such legend shall be placed on each certificate representing such shares, and any transferee, and any subsequent transferee, shall agree to be bound by such provision until the termination of the Stockholder Lockup Agreement.

				

		

			The following is added to the Debenture, after Section 6.3(g):

		

		
	(h).       Except for the stock split contemplated above, the Company will not permit any split or combination of the common stock of the Company, and shall not declare or pay any dividend (stock, cash or any other distribution) on its common or preferred stock, without the written consent of the Holder.

			

		
		

			

			

		

		
			2

		

		

		

		

		

		

		
	(i)         The Company shall not issue any shares of its common stock which are registered on a registration statement on Form S-8 (a “Form S-8”) without the written consent of the Holder, except if each and every of the following conditions are met:
		

			

		
		

	The shares are issued as compensation for bonafide consulting services, pursuant to a written consulting agreement containing each and every understanding and term of the agreement between the consultant and the Company, and such shares are lawfully issuable under the rules and regulations relating to the use of Form S-8;

						

					
	The Company has provided to its securities counsel copies of all agreements with the consultant and each and every recipient of shares that have been registered on the Form S-8, has fully explained to such counsel in writing all of the services to be provided by such consultant and any person, entity or business affiliated in any way with such consultant, and the Company has received the written opinion of such counsel that the issuance of shares registered on the Form S-8 to such consultant complies in all respects with applicable securities laws, including, without limitation, those rules and regulations relating to the use of registration statements on Form S-8 and the issuance of shares registered thereon;

						

					
	The issuance of the shares registered on the Form S-8 will not exceed an amount equal to $75,000 per month, beginning with November 2006, divided by the average closing price of the Company’s common stock for the month prior to such issuance (after giving effect to any split of the Company’s common stock (forward or reverse);

						

					
	Any person who receives such shares shall agree not to sell more than (i) 1/20th of 20% of the total volume of the Company’s shares traded during the month prior to the issuance of such shares (the “Prior Month’s Volume”) in any single trading day, non-cumulative, or (ii) 20% of the Prior Months Volume in any single thirty day period.  For example, if the Prior Month’s Volume is 1,000,000 shares, the daily trading limit would be 10,000 shares, and the monthly trading limit would be 200,000 shares.  In the event such person breaches this limitation, it will be an Event of Default under the Debenture.

				

			
		
		

			Any default under this Debenture, or any of the debentures executed on the same date as this Debenture, as amended by an amendment dated as of the same date as this Agreement, and any default under or breach of that certain Settlement Agreement and General Release dated as of the same date hereof, shall be an Event of Default under this Debenture. 
		

			

		

			

			

		

		
			3

		

		

		

		

		

		

			To induce the Holder to extend the Maturity Date of the Debenture, the Company hereby agrees to pay an extension fee of $69,773, and hereby confirms that the balance of the Debenture as of October 15, 2006, is agreed to be $534,924.27, which includes all advances, accrued interest and the above fee to date.
		

				

			

		          To further induce the Debenture Holder to enter into this Agreement, the Company shall execute and deliver to the Holder a seven-year warrant to purchase 5,500,000 shares of post-split common stock, at a purchase price of the lesser of (i) $0.001 per share, or (ii) fifty percent (50%) of market price, which warrants shall contain a cashless exercise provision and piggy-back registration rights; provided, that the maximum number of shares that the Company shall be required to register on any one registration statement shall not exceed thirty percent (30%) of the total number of shares of common stock registered for other parties on such registration statement.  All other terms of the Debenture, as amended to date, shall remain the same.

			

		

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

			

		

		MATERIAL TECHNOLOGIES, INC.                       LIVINGSTON INVESTMENTS, LTD.

		a
				Delaware
		corporation

		

		

		By:  /s/ Robert Bernstein                                              By:  /s/ Carsten Rykov                             
     Robert Bernstein                                                         Carsten Rykov
     Chairman and CEO                                                     Director

		

		

		

		

		

		

		

		

		

		

		

		

		

		
			4Untitled Page

		

		

		

		Exhibit 10.10

		

		

		
			STOCKHOLDER LOCKUP AGREEMENT

		

		          THIS  AGREEMENT (the “Agreement”) is dated October 27, 2006 (the “Effective Date”), and is made by and between the entities and individuals whose names appear on the signature pages of this Agreement (collectively the “Stockholders” or individually a “Stockholder”) and Material Technologies, Inc., a Delaware corporation (the “Company”).

		

		          The Stockholders are the holders of outstanding Shares of Common Stock and rights to acquire Common Stock of the Company (the “Shares”).  The Company is a publicly-held corporation.  The Stockholders and the Company wish to make special provisions for the relationships between and among the Stockholders and between themselves and the Company.  They have reached agreement about certain procedures about the transfer of Shares.  They believe that these provisions, as set forth in this Agreement, are necessary and desirable and serve the best interests of the Stockholders and the Company.  The Company and certain parties which have agreed to provide financial accommodations to the Company have required that the undersigned Stockholders enter into this Agreement.  In consideration of these premises and the mutual covenants expressed in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged the parties agree as follows.

		

		Section 1.  Share Transfer Restrictions

		

		          Section 1.01.  Prohibition Against Any Transfers Except as Authorized in This Agreement.  Except as otherwise provided in Section 1.02 of this Agreement, an interest in the Shares of the Company may not be voluntarily or involuntarily transferred, assigned, hypothecated or sold, by operation of law or otherwise, by any Stockholder for a period of three years from the Effective Date of this Agreement.  Notwithstanding the foregoing, in the event the Company shall pay or convert in full its Class A Senior Secured Convertible Debentures, then this Agreement shall be terminated at the option of the Company.

		

		          All Stockholders signing this Agreement shall be subject to the restrictions on the sale or transfer of their Common Stock regarding the Stockholders of the Company whether or not any other stockholder of the Company signed this Agreement.

		

		          Section 1.02.  Exempted Transfers.  The prohibition in Section 1.01 shall not apply to a transfer of an interest in the Shares of the Company, with restrictive legends, so long as the transferee of such Shares agrees to be bound by this Agreement, and executes an Agreement substantially identical to this Agreement:  (i) to the Company; (ii) to any other holder of Shares; (iii) to members of a Stockholder’s immediate family, which immediate family for the purposes of this section shall mean a Stockholder’s spouse, parents, lineal descendants (including adopted children and stepchildren) and the spouse of any lineal descendant and brothers and sisters; (iv) to a trust treated as owned by a grantor who is a person listed in Section 1.02(iii) above under Sections 671-679 of the Internal Revenue Code, 

			

			

			

		

		
			1

		

		

		

		

		

		

		(v) that has been approved in writing by the Company; (vi) to any executor or administrator upon the death of a Stockholder; or (vii) by merger or share exchange or an exchange of existing Shares for other Shares of the same or a different class or series in the Company; or (viii) the sale, transfer or pledge of Shares by a Stockholder to a bank or other financial institution or person for the purpose of obtaining funds to be loaned to the Company.  Notwithstanding anything contained herein to the contrary, an interest in the Shares of the Company may not be voluntarily or involuntarily transferred, by operation of law or otherwise, if such transfer would result in a violation of the Securities Act of 1933, as amended (the “Act”), as may be applicable.

		

		          Notwithstanding the foregoing, after the Company has successfully raised at least $2.5 million in financing, the Stockholder may sell up to $2,500,000 worth of Shares in an arm’s length transaction with a third-party, at a discount of no more than fifty percent (50%) of the lowest closing bid price for the ten (10) prior trading days, without restriction and without the necessity of the buyer thereof becoming subject to this Agreement.

		

		          Section 1.03.  Attempted Transfers in Violation of Share Transfer Restrictions.  An attempt to transfer an interest in the Shares of the Company in violation of Section 1 shall be void and the Company shall refuse to register the Shares in question in the name of the transferee on the books of the Company.  The Company shall place stop transfer instructions on the Shares in an effort to monitor compliance with this Agreement.

		

		Section 2.  Miscellaneous

		

		          Section 2.01.  Binding Effect.  This Agreement shall be binding upon the parties and their heirs, executors, administrators, successors, assigns and any other transferee and the spouse of any individual Stockholder.  Each transferee and the spouse each transferee shall sign the form in Exhibit A evidencing their consent to be bound by the terms of this Agreement as a prerequisite to registration of any Shares in the name of the transferee.  Failure to sign shall not, however, in any way prevent this Agreement from being binding on the transferee and the transferee’s spouse.

			

		

		          Section 2.02.  Shares Covered by this Agreement.  This Agreement shall apply to all Shares that are now or hereafter registered in the Company’s records in the name of a Stockholder and to all Shares now or hereafter beneficially owned by a Stockholder pursuant to a trust under which the Stockholder is a beneficiary, other than shares purchased by a Stockholder in an open-market transaction through a broker/dealer, in a transaction that was not pre-arranged with another Stockholder that has executed an Agreement similar to this Agreement.  It shall also apply to any stock options and any warrants, stock conversion privileges or any other Share rights actually or beneficially now or hereafter owned by a Stockholder in the Company and all Shares or rights to Shares of any other corporation into which such Shares may be changed, or for which they may be exchanged, whether through reorganization recapitalization, stock split-up, combinations of Shares, merger or consolidation.  Any Shares acquired by means of stock options, warrants, conversion privilege or other right exercised subsequent to any sale pursuant to this Agreement shall be offered for sale at the same price and on the 

			

			

			

			

		
			2

		

		

		

		

		

		

			identical other terms as the Shares owned or previously owned by the Stockholder acquiring such Shares.

		          Section 2.03.  Remedies.  Any controversy or claim arising out of or related to this Agreement or other documents or agreements between the Company and one or more of the Stockholders, or the governance of the Company shall be settled, except as may otherwise be provided herein, by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association in a proceeding to be held in Los Angeles, California.  Any dispute as to whether a controversy or claim is subject to arbitration shall be submitted as part of the arbitration proceeding.  The arbitration shall be conducted by a single arbitrator selected by the American Arbitration Association.  The arbitrator shall take evidence directly from witnesses and documents as presented by the parties; all witnesses shall be made available for cross examination. The arbitrator shall render a written decision, stating his reason for it, and shall render an award within six months of the request for arbitration or fifteen days following the arbitration hearing, and such an award shall be final and binding upon both parties.  The award may include any legal or equitable relief that could be ordered by a court of general jurisdiction.  Judgment upon the award may be entered in any court of record of competent jurisdiction, or application may be made to such court for judicial acceptance of the award and an order of enforcement, as the law of such jurisdiction may require or allow. 

		

		          Section 2.04.  Waiver.  A party’s failure to insist on compliance or enforcement of any provision of this Agreement, shall not effect the validity or enforceability or constitute a waiver of future enforcement of that provision or of any other provision of this Agreement by that party or any other party.

		

		          Section 2.05.  Governing Law.  This Agreement shall in all respects be subject to, and governed by, the laws of the State of California.

		

		          Section 2.06.  Severability.  The invalidity or unenforceability of any provision in this Agreement shall not in any way affect the validity or enforceability of any other provision and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had never been in the Agreement.

		

		          Section 2.07.  Entire Agreement.  The parties expressly acknowledge that this Agreement, and the Company’s Articles of Incorporation, as amended, and its Bylaws, as amended, constitute the entire contract between the parties concerning the subject matter contained herein, and that unless otherwise provided in this Agreement, any other agreements or understandings, oral or written, of any nature concerning such matters are superseded and revoked.

		

		          Section 2.08.  Amendment.  This Agreement shall not be modified or amended except by means of a writing signed by each Stockholder and one or more officers duly authorized to act on behalf of the Company.

		

		          Section 2.09.  Termination.  This Agreement shall terminate upon the earlier of three years from the date hereof, or the date upon which the Company has repaid 

			

			

		

		
			3

		

		

		

		

		

		

			or converted in full all of its Class A Senior Secured Convertible Debentures (as may be extended, amended or modified at any time by the Company and the holder of the Debentures).
		          Section 2.10.  Compliance with Securities Laws.

		

			     (a)     Investment Representation.  Each Stockholder represents to all other Stockholders and to the Company that all Shares have been acquired for investment and not with a view to the sale or distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”); and that he, she or it has no present intention of selling or otherwise disposing of any of the Shares for their own account and no one else has or will have a beneficial ownership in any of his, her or its Shares; and that he, she or it has been advised that the Shares have not been registered with the Securities and Exchange Commission and may not be offered, sold or otherwise transferred except in compliance with the Securities Act.

				

			
	     (b)     Restricted Securities; Legend Requirement.  Each Stockholder acknowledges and understands that the Shares are restricted, that they are being issued to him, her or it in a private transaction in reliance upon Regulation D under the Securities Act, and that the Shares have not been registered under the Act or the securities laws of any states in reliance on exemptions from the registration requirements of the Act and state securities laws.  The Shares are subject to restrictions on transferability and may not be transferred or resold except as permitted under the Securities Act and applicable state laws pursuant to registration or exemption therefrom.  In addition, this Agreement contains additional restrictions on the transferability of the Shares.  The Shares have not been approved or disapproved by the U. S. Securities and Exchange Commission or any other regulatory authority.  Each Stockholder further acknowledges and understands that each certificate evidencing the Shares will bear substantially the following legend:

				

					“The Shares represented by this Certificate have not been registered under the Securities Act of 1933 (the "Act") and are “restricted securities” as that term is defined in Rule 144 under the Act.  The Shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company.  In addition, the rights and obligations of the holder of this Certificate, and the ability of the holder to transfer the Shares represented by this Certificate, are subject to the terms and conditions of a Stockholder Lock-Up Agreement, a copy of which can be obtained from the Company upon written request.”

						

				

			
	     (c)     If the Board of Directors so requests, the Stockholder shall deliver an opinion of counsel satisfactory to the Company and its counsel, to the effect that the proposed transfer at such time will not violate the Securities Act or applicable state securities laws.

		

		

			

			

		

		
			4

		

		

		

		

		

		

		          Section 2.11.  Counterparts/Facsimile.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.  A facsimile or other reproduction of this Agreement may be executed by one or more of the parties, and an executed copy of this Agreement may be delivered by one or more of the parties by facsimile or similar instantaneous electronic transmission device pursuant to which the signature of, or on behalf of, such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes.  At the request of a party, the other parties agree to execute an original of this Agreement as well as any facsimile or other reproduction of this Agreement.

		          Section 2.12.  Notices.  Any and all offers, acceptances, consents, waivers and other notices required by this Agreement shall be deemed to be sent or delivered when personally delivered to the recipient as follows:  in the case of the Company, at its registered office located at 11661 San Vicente Blvd., Suite 707, Los Angeles, California 90049, and in the case of a Stockholder or his, her or its successor in interest, at the Stockholder’s address appearing on the books of the Company or at such other address as may be designated by the Stockholder (or his, her or its successor in interest).  Any notice required to be made within a stated period of time shall be considered timely mailed if deposited before midnight of the last day of the stated period.

		

		          Section 2.13.  “Days” Defined.  Any reference in this Agreement to “days” means all calendar days, exclusive of Saturdays, Sundays and days which are legal holidays under the laws of the State of California.

		

		          Section 2.14.  References to Gender and Number Terms.  In construing this Agreement, feminine or neuter pronouns shall be substituted for those masculine in form and visa versa, and plural terms shall be substituted for singular and singular for plural in any place in which the context so requires.

		

		          Section 2.15.  Headings.  The section headings in this Agreement are inserted for convenience only and are not part of the Agreement.

		

		          Section 2.16.  References to the Internal Revenue Code and Other Statutes.

		

		          Any reference to any other statute in this Agreement includes any amendment, replacement or recodification of such statute.

		

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

			

			

			

			

			

			

			

			

		

		
			5

		

		

		

		

		

		

		          IN WITNESS WHEREOF, the parties hereto have executed this Stockholder Agreement as of the Effective Date.

		COMPANY:                                                   Material Technologies, Inc.

			

		

		                                                                        By:  /s/ Robert M. Bernstein                  

		                                                                        Robert M. Bernstein, Chairman and CEO

		

		

		STOCKHOLDER:

		                                                                        Entity:                                                   

			

		                                                                        By:                                                       

			

		
		

		

		                                                                        Printed Name:                                      
		
			

			

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

			

		
			6

		

		
			

			

			

			

			

			SPOUSAL CONSENT

				

			

			          Each of the undersigned, being the spouse of a Stockholder who has signed this Agreement, hereby acknowledges that he or she has read and is familiar with its provisions and agrees to be bound thereby and to join therein to the extent, if any, that his or her joinder may be necessary.  The undersigned hereby agrees that his or her spouse may join in any future amendment or modification of this Agreement without any further signature, acknowledgment, agreement or consent on his or her part; and further agrees that any interest which he or she may have in the Shares of stock in the Company owned directly or beneficially by his or her spouse shall be subject to the provisions of this Agreement.

				

				

				

			

			By:____________________________________________

				

				Printed Name:____________________________________

				

			

			

		

		
			

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

			

		

		
			7

		

		
			

			

			

				

				

				

			
			

			EXHIBIT A

			

			           Signatures by Transferees and Spouses of Transferees

				

			

			          A. Transferees.  The undersigned, as a transferee of Shares of the Company pursuant to the Stockholder Agreement dated October 27, 2006, hereby acknowledges and agrees that he or she has read and is familiar with this Agreement and that he and his heirs, executors, administrators, successors, assigns and any other transferee of any interest in the Company’s Shares actually or beneficially owned by him or her are bound by all of its provisions.

			

			

			Name of Transferee:___________________________________

			

			Printed Name:________________________________________

			

			Date of Transfer:______________________________________

			

			

			          B. Spouses of Transferees.  Each of the undersigned, being the spouse of a  who has signed Paragraph A of this Exhibit A, hereby acknowledges that he or she has read and is familiar with the provisions of the Stockholder Agreement dated October 27, 2006, and agrees to be bound thereby and to join therein to the extent, if any, that his or her joinder may be necessary.  The undersigned hereby agrees that his or her spouse may join in any future amendment or modification of this Agreement without any future signature, acknowledgment agreement or consent on his or her part; and further agrees that any interest which he or she may have in the Shares of stock in the Company owned directly or beneficially by his or her spouse shall be subject to the provisions of this Agreement.

			

			Name of Spouse:______________________________

			

			Printed Name:________________________________

			

			Date:_______________________________________

			

		

		

			

			

			

			

			

			

			

			

			

			

			

		

		
			8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]