Document:

matechexh10_32.htm

    
      
 

     

    Exhibit 10.32

    

 

    
      STOCK
OPTION AGREEMENT

MATERIAL TECHNOLOGIES, INC.,
a Delaware
corporation (the “Company”)

       

    

    
                THIS
STOCK OPTION AGREEMENT (this “Option”) is intended to certify that, pursuant to
that certain Consulting Agreement with the Company of even date herewith, Kelly
Shuster, an individual, or his assigns (collectively, the “Holder”) is entitled,
subject to the terms and conditions set forth herein, to purchase, 24,000 shares
of Class B common stock of the Company (the “Option Shares”) from Robert M.
Bernstein, an individual (the “Seller”), upon exercise at a purchase price of
$0.50 per Option Share (the “Option
Price”).

          1.       TERM. 
Subject to the terms of this Option, the Holder shall have the right, at any
time during the period commencing at 9:00 a.m., Pacific Time, on the 9th day of
April, 2008 and ending at 5:00 p.m., Pacific Time, on the 8th day of April, 2018
(the “Termination Date”), to purchase from the Seller the Option Shares upon
payment to the Seller of the Option
Price. 

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

          2.       MANNER
OF EXERCISE.  Payment of the aggregate Option Price shall be made as
described below.  The exercise shall be made no sooner than 70 days
following delivery by the
Holder to Seller of a “notice of intent” to
exercise
the Option.  No sooner than 70 days following the receipt of such “notice
of intent” and upon the payment of all or a portion of the Option Price and
delivery of the Election to Purchase, a form of which is attached hereto, the
Seller shall cause to be issued and cause to be delivered within ten business
days 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
Option Shares so purchased upon each exercise of the Option.  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 which is 61 days following surrender of
the Option (or if less than the entire Option is exercised, upon the delivery of
the new Option described below) and payment of the Option 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 Option 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 Option is exercised
in respect of less than all of the Option Shares specified therein at any time
prior to the Termination Date, a new certificate evidencing the remaining
portion of the Option shall be issued by the Company to such
Holder.

          Payment
of the Option Price may be made by either of the following, or a combination
thereof, at the election of
Holder:

          (i)       Cash
Exercise: cash, bank or cashiers check, or wire
transfer;

      
        
           

        

        
          1

          
            
 

        

        
           

        

      

      
          (ii)       Cashless
Exercise: surrender of this Option at the known address of the
Seller together with notice of cashless election, in which event the Seller
shall issue Holder a number of shares of common stock computed using the
following formula:

       

      X = Y (A-B)/A

       

      where:  X = the
number of shares of common stock to be issued to Holder.

       

      Y = the number of shares
of common stock for which this Option is being exercised.

       

      A = the Market Price of
one share of common stock (for purposes of this Section 3(ii), the “Market
Price” shall be defined as the average closing price of the common stock for the
five trading days prior to the date of exercise of this Option (the “Average
Closing Price”), as reported by the OTC Bulletin or in any over-the-counter
market, provided, however, that if the common stock is listed on a stock
exchange, the Market Price shall be the Average Closing Price on such exchange
for the five trading days prior to the date of exercise of the Options.  If
the common stock is/was not traded during the five trading days prior to the
date of exercise, then the closing price for the last publicly traded day shall
be deemed to be the closing price for any and all (if applicable) days during
such five trading day period.

       

      B = the Exercise
Price.

    

     

              For
purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the common stock issuable upon exercise of this
Option in a cashless exercise transaction shall be deemed to have been acquired
at the time this Option was issued.  Moreover, it is intended, understood
and acknowledged that the holding period for the common stock issuable upon
exercise of this Option in a cashless exercise transaction shall be deemed to
have commenced on the date this Option was
issued.

          (iii)      Promissory
Note: through a promissory note payable to the Seller, but only to
the extent authorized by the
Seller.

          In
case of the purchase of less than all the Option Shares, the Seller shall cancel
this Option upon the surrender hereof and shall execute and deliver a new Option
of like tenor for the balance of the Option Shares.  Upon the exercise of
this Option, the issuance of certificates for securities, properties or rights
underlying this Option shall be made forthwith (and in any event within five
business days thereafter) without charge to the Holder including, without
limitation, any tax that may be payable in respect of the issuance thereof, and
such certificates shall be issued in such names as may be directed by the
Holder: provided, however, that the Seller shall not be required to pay any tax
in respect of income or capital gain of the Holder or any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificates in a name other than that of the Holder (a “Transfer Tax”),
and the Seller shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Seller the amount of any such Transfer Tax or shall have established
to the satisfaction of the Seller that any such Transfer Tax has been
paid.

    
      
         

      

      
        2

        
          
 

      

      
         

      

    

    

          3.       NO
STOCKHOLDER RIGHTS.  Unless and until this Option is exercised, this
Option 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
Option.

          4.       EXCHANGE. 
This Option is exchangeable upon the surrender hereof by the Holder to the
Seller for new Options of like tenor representing in the aggregate the right to
purchase the number of securities purchasable hereunder, each of such new
Options 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 Seller of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Option, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it and
reimbursement to the Seller of all reasonable expenses incidental thereto, and
upon surrender and cancellation hereof, if mutilated, the Seller will make and
deliver a new Option of like tenor and amount, in lieu
hereof.

          5.       ELIMINATION
OF FRACTIONAL INTERESTS.  The Seller shall not be required to issue
certificates representing fractions of securities upon the exercise of this
Option, 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
Option.

          6.       RESERVATION
AND LISTING OF SECURITIES.  The Seller shall at all times reserve
and keep available out of his shares of Class B common stock, solely for the
purpose of issuance upon the exercise of this Option, such number of shares of
Class B common stock or other securities, properties or rights as shall be
issuable upon the exercise hereof.  The Seller covenants and agrees that,
upon exercise of this Option and payment of the Option 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.

          7.       ANTIDILUTION
PROTECTION.  For the entire term specified in Section 1 hereof, the
Holder (and Holder’s permitted transferees, on a pro rata basis) shall receive
additional Options, from time to time, in order to preserve Holder’s right to
purchase at least 4% of the Company’s shares of Class B common stock then
issued.

          8.       RESTRICTION
ON EXERCISE.  Holder hereby agrees that she is limited in the number
of Options that she may exercise, such that her receipt of
Option Shares will not exceed 3,000 per
month.

          9.       NOTICE. 
Any notice, request, instruction, or other document required by the terms of
this Option, 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:

     

     

     

    
      
         

      

      
        3

        
          
 

      

      
         

      

    

     

    
      	
               i.     
      

            	To:   
      “Seller” 	
              Robert M.
      Bernstein

              11661 San
      Vicente Boulevard, Suite 707

              Los Angeles, California 90049

              Fax: (310) 473-3177

            
	 	 	 
	
               ii.    
      

            	To:   
      “Holder” 	
              Kelly
      Shuster

              320 N
      30th
      St

              Camp
      Hill, Pennsylvania  17011

              Fax: (717)
      233-0852

            

    

    
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.

          10.       CONSENT
TO JURISDICTION AND SERVICE.  The parties consent to the
jurisdiction of any court of the State of California, and of any federal court
located in California, in any action or proceeding arising out of or in
connection with this Option.  Orange County, California shall be proper
venue. 

          11.       SUCCESSORS. 
All the covenants and provisions of this Option shall be binding upon and inure
to the benefit of the Seller, the Holder and their respective legal
representatives, successors and assigns. Holder may assign the Option at his
discretion.

          12.       ATTORNEYS
FEES.  If any legal action or any other proceeding, including
arbitration or action for declaratory relief is brought for the interpretation
or enforcement of this Option, 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.       GOVERNING
LAW.  This Option shall be governed, construed and interpreted under
the laws of the state of California, without giving effect to the rules
governing conflicts of law.

      
      

       

       

       

    

     

    
      
         

      

      
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          14.       NOTICE
OF RIGHT TO COUNSEL.  Each of the Parties has had the opportunity
to, and has had, this Option 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 Option and has consulted and discussed
with their independent advisors the provisions of this Option 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.

          15.       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 Option Shares offered by Seller 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
Seller or any affiliate or selling agent of Seller, 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
Option Shares offered by Seller 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 Option
Shares.

                     (c)       Holder
is acquiring the Option 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 Option
Shares.

                    (d)       Holder
will not sell or otherwise transfer the Option 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 Option 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. 

    

    
      (SIGNATURE
PAGE IMMEDIATELY FOLLOWS)

       

       

      
        
           

        

        
          5

          
            
 

        

        
           

        

        
          IN
WITNESS WHEREOF, intending to be legally bound, the Parties hereto have
executed this Stock Option Agreement on the 9th day of April, 2008.

         

         

        
          
            	SELLER: 	 	 	HOLDER:	 
	 	 	 	
                     

                  	 
	
                    ROBERT
      M. BERNSTEIN

                    an
      individual

                  	 	 	
                    KELLY
      SHUSTER

                    an
      individual

                  	 
	 	 	 	 	 
	 	 	 	 	 
	
                    /s/
      Robert M. Bernstein

                  	 	 	
                    /s/
      Kelly Shuster 

                  	 
	
                    By:
      Robert M. Bernstein

                  	 	 	
                    By:
      Kelly Shuster

                  	 

          

      

    

     

     

    
      
         

      

      
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      FORM
OF ELECTION TO PURCHASE

    

    
                The
undersigned, a Holder of the attached Option, hereby irrevocably elects to
exercise the purchase right represented by the attached Option 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 Option
      Certificate)

                	 
	 	 	 
	 	 	 
	 	
                  (Insert
      Social Security or Other

                  Identifying Number
      of Holder)

                	 

        

      
        
           

        

        
          7matechexh10_33.htm

    
      

    

    Exhibit
10.33

    

    LICENSE
AGREEMENT

    

    THIS
LICENSE AGREEMENT (the “Agreement”) is entered into as of May 21, 2008 (the
“Effective Date”) by and between Material Technologies, Inc., a Delaware
corporation (“Licensor”), and Fatigue Solutions Corp., a California corporation
(“Licensee”) (individually, a “Party”; collectively, the
“Parties”).

     

    RECITALS

    

    WHEREAS, Licensor is the owner
of all right, title, and interest in the (i) Fatigue Fuse, and (ii)
Borescope  intellectual property (collectively, the “Intellectual
Property”); and

    

    WHEREAS, Licensor desires to
grant to Licensee, and Licensee desires to receive from Licensor, a
non-exclusive license to use, distribute, and sell the Intellectual Property in
accordance with the terms and conditions contained in this Agreement (the
“License”).

    

    NOW THEREFORE, in
consideration of the foregoing recitals and mutual covenants contained herein,
the Parties agree as follows:

     

    ARTICLE
1

    GRANT
OF LICENSE

     

    1.1          
Grant of
License.  Subject to the terms and conditions herein, and on
the basis of the representations, warranties and agreements herein contained,
Licensee agrees to receive from Licensor, and Licensor agrees to grant to
Licensee, a non-exclusive License to make, have made, use and sell use,
distribute, and sell the Intellectual Property.

    

    1.2          
Time and
Place.  The closing of the transactions contemplated by this
Agreement shall take place at the offices of Licensor, located at 11661 San
Vicente Boulevard, Suite 707, Los Angeles, California 90049, immediately upon
the full execution of this Agreement, the satisfaction of all conditions, and
the delivery of all required documents, or at such other time and place as the
Parties mutually agree upon (which time and place are hereinafter referred to as
the “Closing”).

    

    1.3         
 Royalty.  In
consideration for the License, Licensee shall pay to Licensor a royalty of 10%
of all “Net Sales.”  Royalties payable under this Agreement shall be
paid within 90 days following the last calendar quarter in which the royalties
accrue.  For purposes of this Agreement, “Net Sales” shall mean
Licensee’s gross receipts for the sale, use and transfer of Intellectual
Property, as well as Licensee’s gross receipts for services performed by using
the Intellectual Property, less the sum of (a) discounts allowed in amounts
customary in the trade; (b) sales, tariff duties, or use taxes directly
imposed and with reference to particular sales; (c) outbound transportation
prepaid or allowed; and (d) amounts allowed or credited on
returns.

    

    1.4          
Sub-License.  Licensee
may sublicense the rights granted pursuant to this Agreement without Licensor’s
prior written consent.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    ARTICLE
2

    LICENSOR’S
REPRESENTATIONS AND WARRANTIES

    

    2.1          
Representations and
Warranties of the Licensor.  The Licensor represents and
warrant to the Licensee, as of the Closing, that:

    

    
      	
               
      

            	
              2.1.1

            	
              Licensor
      has full right, power and authority to enter into this Agreement and to
      perform all of its obligations
hereunder;

            

    

    

    
      	
               
      

            	
              2.1.2

            	
              Licensor
      has full power and authority to license all of the rights, title and
      interests contained in this Agreement;
and

            

    

    

    
      	
               
      

            	
              2.1.3

            	
              no
      provision of law and no contract to which Licensor is a party prevents
      Licensor from performing the obligations
  hereunder.

            

    

    

    2.2         
 Disclosure.  No
representation or warranty made by the Licensor in this Agreement, nor any
document, written information, statement, financial statement, certificate, or
exhibit prepared and furnished or to be prepared and furnished by the Licensor
or its representatives pursuant hereto or in connection with the transactions
contemplated hereby, when taken together, contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished, to the best of Licensor’s
knowledge and belief.

    

    2.3         
 Reliance.  The
foregoing representations and warranties are made by the Licensor with the
knowledge and expectation that the Licensee is placing reliance
thereon.

    

    ARTICLE
3

    LICENSEE’S
REPRESENTATIONS AND WARRANTIES

    

    3.1          
Representations and
Warranties of the Licensee.  The Licensee represents and
warrant to the Licensor, as of the Closing, that:

    

    
      	
               
      

            	
              3.1.1

            	
              Licensee
      has full right, power and authority to enter into this Agreement and to
      perform all of its obligations hereunder;
and

            

    

    

    
      	
               
      

            	
              3.1.2

            	
              no
      provision of law and no contract to which Licensee is a party prevents
      Licensee from performing the obligations
  hereunder.

            

    

    

    3.2          
Disclosure.  No
representation or warranty made by the Licensee in this Agreement, nor any
document, written information, statement, financial statement, certificate, or
exhibit prepared and furnished or to be prepared and furnished by the Licensee
or its representatives pursuant hereto or in connection with the transactions
contemplated hereby, when taken together, contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished, to the best of Licensee’s
knowledge and belief.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    3.3          
Reliance.  The
foregoing representations and warranties are made by the Licensee with the
knowledge and expectation that the Licensor is placing reliance
thereon.

    

    ARTICLE
4

    CONFIDENTIALITY
& NONDISCLOSURE

     

    4.1          
Obligations.  Each
Party (the “Receiving Party”) acknowledges and agrees that any business and
technical information provided to the Receiving Party by the other Party (the
“Disclosing Party”) hereunder constitutes the confidential and proprietary
information of the Disclosing Party, and that the Receiving Party's protection
thereof is essential to this Agreement and a condition to the Receiving Party's
use and possession thereof.  The Receiving Party shall retain in
strict confidence and not disclose to any third party (except as authorized by
this Agreement) without the Disclosing Party's express written consent, any and
all such information.  Licensee acknowledges and agrees that the
Intellectual Property is confidential and proprietary information of
Licensor.

    

    4.2         
 Exceptions.  The
receiving Party shall be relieved of this obligation of confidentiality to the
extent any such information:

    

                          
 (i)   was in the public domain at the time it was disclosed
or has become in the public domain through no fault of the Receiving
Party;

    

                         
  (ii)  the Receiving Party can prove was known to the
Receiving Party, without restriction, at the time of disclosure as shown by the
files of the Receiving Party in existence at the time of
disclosure;

    

                         
  (iii) is disclosed by the Receiving Party with the prior written
approval of the Disclosing Party;

    

                         
  (iv)  the Receiving Party can prove was independently
developed by the Receiving Party without any use of the Disclosing Party's
confidential information and by employees or other agents of the Receiving Party
who have not had access to any of the Disclosing Party's confidential
information; or

    

                           
(v)   becomes known to the Receiving Party, without restriction,
from a source other than the Disclosing Party without breach of this Agreement
by the Receiving Party and otherwise not in violation of the Disclosing Party's
rights.

    

    4.3         
 Notification of
Security Breach.  The Receiving Party agrees to notify the
Disclosing Party promptly in the event of any breach of its security under
conditions in which it would appear that the trade secrets contained in the
Intellectual Property were prejudiced or exposed to loss.  The
Receiving Party shall, upon request of the Disclosing Party, take all other
reasonable steps necessary to recover any compromised trade secrets disclosed to
or placed in the possession of the Receiving Party by virtue of this
Agreement.  The cost of taking such steps shall be borne solely by the
Receiving Party.

     

    4.4       
   Injunctive
Relief.  Each Receiving Party acknowledges that any breach of
any of

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    its
obligations with respect to confidentiality or use of the Disclosing Party's
confidential information hereunder is likely to cause or threaten irreparable
harm to the Disclosing Party, and, accordingly, the Receiving Party agrees that
in the event of such breach the Disclosing Party shall be entitled to seek
equitable relief to protect its interest therein, including but not limited to
preliminary and permanent injunctive relief, as well as money
damages.

     

    ARTICLE
5

    INDEMNIFICATION

     

    Each Party (the “Indemnifying Party”)
agrees to indemnify, defend, and hold harmless the other Party (the “Indemnified
Party”) from and against any and all claims, damages, and liabilities, including
any and all expense and costs, legal or otherwise, caused by the negligent act
or omission of the Indemnifying Party, its subcontractors, agents, or employees,
incurred by the Indemnified Party in the investigation and defense of any claim,
demand, or action arising out of the work performed under this Agreement;
including breach of the Indemnifying Party of this Agreement.  The
Indemnifying Party shall not be liable for any claims, damages, or liabilities
caused by the sole negligence of the Indemnified Party, its subcontractors,
agents, or employees.

    

    The
Indemnified Party shall notify promptly the Indemnifying Party of the existence
of any claim, demand, or other matter to which the Indemnifying Party’s
indemnification obligations would apply, and shall give them a reasonable
opportunity to settle or defend the same at their own expense and with counsel
of their own selection, provided that the Indemnified Party shall at all times
also have the right to fully participate in the defense.  If the
Indemnifying Party, within a reasonable time after this notice, fails to take
appropriate steps to settle or defend the claim, demand, or the matter, the
Indemnified Party shall, upon written notice, have the right, but not the
obligation, to undertake such settlement or defense and to compromise or settle
the claim, demand, or other matter on behalf, for the account, and at the risk,
of the Indemnifying Party.

    

    The
rights and obligations of the Parties under this Article shall be binding upon
and inure to the benefit of any successors, assigns, and heirs of the
Parties.

    

    ARTICLE
5

    TERM
AND TERMINATION

     

    6.1         
  Term.  Unless
this Agreement is terminated pursuant to Article 6.2 hereof or a Party gives at
least 60 days written notice to the other Party of its intent to terminate, the
License granted hereunder shall remain in effect for a term of three years
beginning on the date hereof.  Moreover, this Agreement shall
automatically renew for succeeding terms of one year each unless either Party
gives notice to the other of its intention not to renew no later than 30 days
prior to the end of the then current term.  Licensee understands that
after the termination of this Agreement for any reason, it shall have no right
whatsoever to continue as a Licensee regardless of any undocumented continuation
of the relationship with Licensor.

    

    6.2        
   Cause.  This
Agreement may be terminated by either Party for cause immediately upon the
occurrence of any of the following events:

     

     (i)  If
the other Party ceases to do business, or otherwise terminates its business
operations;

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    (ii)  If
the other Party shall fail to promptly secure or renew any license,
registration, permit, authorization or approval necessary for the conduct of its
business in the manner contemplated by this Agreement, or if any such license,
registration, permit, authorization or approval is revoked or suspended and not
reinstated within 60 days;

    

    (iii)  If
the other Party materially breaches any material provision of this Agreement
(including, but not limited to, Article 2 hereof) and fails to cure such breach
within 30 days (ten days in the case of a failure to pay and immediately in the
case of a breach of Article 3 hereof) of written notice describing the breach;
or

    

    (iv)  If
the other Party shall seek protection under any bankruptcy, receivership, trust
deed, creditors arrangement, composition or comparable proceeding, or if any
such proceeding is instituted against the other (and not dismissed within 120
days).

    

    6.3          
 Absolute Rights
of Termination.  Each Party understands that the rights of
termination hereunder are absolute.  Neither Party shall incur any
liability or compensation obligation whatsoever for any damage (including,
without limitation, damage to or loss of goodwill or investment), loss or
expenses of any kind suffered or incurred by the other (or for any compensation
to the other) arising from or incident to any termination of this Agreement by
such Party that complies with the terms of the Agreement whether or not such
Party is aware of any such damage, loss or expenses.

    

    6.4          
 Disposition of
Property.  Upon termination of this Agreement by either Party
or naturally at the end of the term, all rights of Licensee hereunder shall
terminate, and Licensee shall immediately return to Licensor, or destroy, at
Licensor's option, all confidential information and any other related materials
in its possession, custody or control, in whichever form held (including all
copies or embodiments thereof), and will cease using any trademarks, service
marks and other designations of Licensor.  Licensee shall certify to
Licensor that the return or destruction of information has been completed within
15 days of termination.

    

    6.5        
   Survival.  The
provisions of Articles 4, 5, and 8 shall survive expiration or termination of
this Agreement for any reason.

    

    ARTICLE
7

    INFRINGEMENT
AGAINST THIRD PARTIES

    

    In the
event that either Party learns of imitations or infringements of the
Intellectual Property, that Party shall notify the other in writing of the
infringements or imitations.  Licensor shall have the right to
commence lawsuits against third persons arising from infringement of the
Intellectual Property.  In the event that Licensor does not commence a
lawsuit against an alleged infringer within 60 days of notification by Licensee,
Licensee may commence a lawsuit against the third party.  Before
filing suit, Licensee shall obtain the written consent of Licensor to do so and
such consent shall not be unreasonably withheld.  Licensor will
cooperate fully and in good faith with Licensee for the purpose of securing and
preserving Licensee’s rights to the Intellectual Property.  Any
recovery (including, but not limited to, a judgment, settlement or licensing
agreement included as a resolution of an infringement dispute) shall be divided
equally between

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    the
Parties after deduction and payment of reasonable attorneys’ fees to the party
bringing the lawsuit.

    

    ARTICLE
8

    GENERAL
PROVISIONS

     

    8.1        
  Incorporation by
Reference.  The recitals, schedules, exhibits, and all
documents (including, without limitation, all financial statements) delivered as
part hereof or incident hereto are incorporated as a part of this Agreement by
reference.

    

    8.2        
  Relationship of the
Parties.  The sole relationship between the Parties shall be
that of independent contractors.  Nothing herein shall be construed to
constitute the Parties as legal partners, joint ventures, franchisees, or agents
of each other, or impute any obligations, fiduciary or otherwise, express or
implied, in any way whatsoever, on either of the Parties.  Neither
Party shall make any warranties or representations, or assume or create any
obligations on the other Party's behalf except as may be expressly permitted
hereby and none have been made except as set forth herein.  Each Party
shall be solely responsible for the actions of its respective employees, agents,
and representatives.

    

    8.3        
  Third
Party Beneficiaries.  Nothing expressed or implied herein is
intended to confer, nor shall anything herein confer, upon any entity other than
the Parties and their respective successors and assigns any rights, remedies,
obligations or liabilities whatsoever.

    

    8.4         
 Assignment.  The
benefits and obligations of this Agreement shall inure to and be binding upon
the Parties and their respective successors and permitted
assigns.  Neither Party shall transfer or assign any of its rights or
delegate any of its obligations hereunder, in whole or in part, whether
voluntarily or by operation of law, without the prior written consent of the
other Party.  Any assignment or purported assignment in violation of
this Article shall be null and void.

     

    8.5         
 Choice of
Law.  This Agreement and the rights of the Parties hereunder
shall be governed by and construed in accordance with the laws of the State of
California including all matters of construction, validity, performance, and
enforcement and without giving effect to the principles of conflict of
laws.

    

    8.6       
   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.

    

    8.7      
    Attorneys’
Fees.  In the event any Party hereto shall commence legal
proceedings against the other to enforce the terms hereof, or to declare rights
hereunder, as the result of a breach of any covenant or condition of this
Agreement, the prevailing Party in any such proceeding shall be entitled to
recover from the losing Party its costs of suit, including reasonable attorneys'
fees, as may be fixed by the court.

     

    8.8       
   Notices.  Any
notice, request, instruction, or other document required by the terms of this
Agreement, 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:

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              i.

            	
              To
      Licensor:

            	
              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
      Licensee:

            	
              Fatigue
      Solutions Corp.

              Attn:
      Robert M. Bernstein, President

              11661
      San Vicente Boulevard, Suite 707

              Los
      Angeles, California 90049

              Fax:
      (310) 473-3177

            

    

    

    
      	
               
      

            	
              iii.

            	
              With
      Copy To:

            	
              Oswald
      & Yap

              Attn:
      Zach Reeves, Esq.

              16148
      Sand Canyon Avenue

              Irvine,
      CA  92618

              Fax:
      (949) 788-8980

            

    

    
    

     

    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 Article, 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 Article, 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 Article, 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.

    

    8.9        
  Amendment.  This
Agreement shall not be amended, modified, or supplemented by the Parties in any
manner, by course of conduct or otherwise, except by an instrument in writing
signed on behalf of each Party.

     

    8.10      
  Waiver.  Neither
Party shall be deemed, by any act or omission, course of conduct or otherwise,
to have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by the waiving Party, and then only to the extent
specifically set forth in such writing.  A waiver with reference to
one event shall not be construed as continuing or as a bar to or waiver of any
right or remedy as to a subsequent event.

     

    8.11       
 Headings.  The
headings and captions used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.

     

    8.12       
 Construction.  This
Agreement has been negotiated by the Parties and their respective legal counsel
at arm’s length and thus shall be interpreted fairly in accordance with its
terms and without any strict construction in favor of or against either
Party.

     

    8.13        
Severability.  In
the event that any of the covenants herein contained shall be held

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    unenforceable
or declared invalid for any reason whatsoever, such unenforceability or
invalidity shall not affect the enforceability or validity of the remaining
provisions of this Agreement and such unenforceable or invalid portion shall be
severable from the remainder of this Agreement.

     

    8.14        
Counterparts;
Facsimile Signatures.  This Agreement may be executed
simul­taneously in one or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.  The Parties agree that facsimile signatures of this
Agreement shall be deemed a valid and binding execution of this
Agreement.

     

    8.15       
 Basis of
Bargain.  EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY
DISCLAIMERS AND LIABILITY AND REMEDY LIMITATIONS IN THIS AGREEMENT ARE MATERIAL,
BARGAINED FOR BASES OF THIS AGREEMENT AND THAT THEY HAVE BEEN TAKEN INTO ACCOUNT
AND REFLECTED IN DETERMINING THE CONSIDERATION TO BE GIVEN BY EACH PARTY UNDER
THIS AGREEMENT AND IN THE DECISION BY EACH PARTY TO ENTER INTO THIS
AGREEMENT.

    

    8.16       
 Complete
Agreement.  This Agreement and all exhibits hereto, all of
which are hereby incorporated herein by reference, constitute the entire
Agreement between the Parties with respect to the subject matter hereof, and
hereby supersedes all prior and contemporaneous, written or oral agreements and
understandings between the Parties with respect to such subject
matter.

    

    

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

    

    LICENSOR:

    

    MATERIAL
TECHNOLOGIES, INC.,

    a
Delaware corporation

    

    

     /s/ Robert M.
Bernstein                                                                           

    By:
Robert M. Bernstein

    Its:
Chief Executive Officer

    

    LICENSEE:

    

    FATIGUE
SOLUTIONS CORP.,

    a
California corporation

    

    

     /s/ William
Berks                                                                           

    By:
William Berks

    Its:
Secretary

    
      
         

      

      
        8

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