Document:

matechexh10_58.htm

    
      
        
          

        

      

      Exhibit
10.58

      

      SETTLEMENT
AGREEMENT

      AND
GENERAL RELEASE

      

       

      This SETTLEMENT AGREEMENT AND GENERAL RELEASE (this
“Agreement”) is effective as of June 16, 2008, by and between Material Technologies, Inc., a
Delaware corporation (the “Company”), on the one hand, and PALISADES
CAPITAL, LLC, HYDE INVESTMENTS, LTD. AND LIVINGSTON INVESTMENTS, LTD. (each a
“Debenture Holder” and collectively the “Debenture Holders”), on the other
hand.  Each of the Company and the Debenture Holders are sometimes
referred to below as a “Party” and collectively as the “Parties.”

       

      R
E C I T A L S

       

      A.        WHEREAS,
the Debenture Holders believe that Company is indebted to Debenture Holders in
the amount of Three Million Six Hundred Ninety One Thousand Three Hundred Ninety
One Dollars and 90/100 ($3,691,391.90) as of June 16, 2008 pursuant to the terms
of those certain Senior Secured Convertible Debentures issued in September 2003
(the “Debentures”), as amended to date, and including accrued interest to date;
and

       

      B.        WHEREAS,
a dispute has arisen concerning the exact amount owed to the Debenture
Holders (the “Dispute”), and the Company has requested an extension of the
maturity date of the Debentures, and consent to certain actions proposed to be
taken by the Company; and

       

      C.        WHEREAS,
the Parties wish amicably to agree on an exact amount owed under the Debentures
and to resolve and settle all disputes between them in the manner set forth
below.

       

      NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to the mutual promises
contained in this Agreement, the Parties do hereby agree as
follows:

       

      W
i t n e s s e t h :

       

      1.  The
Release.

       

      (a)    
The Company, for itself and its respective past, present and future
administrators, affiliates, agents, assigns, attorneys, directors, employees,
executors, heirs, insurers, officers, managers, parents, partners, predecessors,
representatives, servants, shareholders, subpartners, subsidiaries, successors,
transferees, underwriters, clients and customers, and all persons acting by,
through, under or in concert with any of them, and each of them, hereby releases
and discharges (i) each Debenture Holder, GCH Capital, Ltd. (“GCH”), Corporate
Legal Services, LLP and each of their respective

       

       

      
        
          
             

          

          
            1

            
              
 

          

          
             

          

        

      

      

        subsidiaries,
and their respective past, present and future administrators, affiliates,
agents, assigns, attorneys, directors, employees, executors, heirs, insurers,
officers, managers, parents, partners, predecessors, representatives, servants,
shareholders, subpartners, subsidiaries, successors, transferees and owners, and
each of them; and (ii) all persons acting by, through, under or in concert with
any of them, of and from any and all actions, causes of action, claims, costs,
damages, debts, demands, expenses, liabilities, losses and obligations, actual
or contingent, known or unknown, arising on or prior to the date hereof,
including without limitation any action based on fraud, fraudulent inducement,
usury violations, negligence, misrepresentation, breach of contract or fiduciary
duty, or any other conceivable form of legal, equitable or other claim (the
“Released Claims”).  Notwithstanding anything to the contrary herein,
the Company is not waiving any defenses it may have in a claim or action against
it by the released parties, nor will the released parties accept the assignment
of any third party claims against the Company from any third party other than
another Debenture Holder, their principals or GCH Capital, Ltd..

         

      

      (b)     The
Company acknowledges that there is a risk that subsequent to the execution of
this Agreement, one or more Parties will incur or suffer loss, damages or
injuries which are in some way caused by or related to the Released Claims, but
which are unknown and unanticipated at the time this Agreement is
signed.  The Company hereby assumes the above-mentioned risk and
understands that this Agreement SHALL APPLY TO ALL UNKNOWN OR UNANTICIPATED
RESULTS OF THE TRANSACTIONS AND OCCURRENCES DESCRIBED ABOVE, AS WELL AS THOSE
KNOWN AND ANTICIPATED, and the Company acknowledges in executing the releases
(the “Releases”) contained in this Agreement, that it does so with full
knowledge of any and all rights and benefits that it might otherwise have had
under California Civil Code Section 1542, and  upon the advice of
counsel, hereby waives and relinquishes any and all such rights and
benefits.  The Company acknowledges and agrees that this waiver is an
essential and material term hereof, without which this Agreement (including,
without limitation, the Releases) would not have been entered
into.  Section 1542 reads as follows:

       

      "A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which, if
known by him, must have materially affected his settlement with the
debtor."

       

       

      
        
          
             

          

          
            2

            
              
 

          

          
             

          

        

      

       

      The
Company certifies that it has read the foregoing recitation of Section 1542 and
understands the meaning of such section and such fact is indicated by the
signing of such Party’s initials hereto:

       

      _____________

      Company's

      Initials

       

      The
Company further acknowledges that it may hereafter discover facts different from
or in addition to those known or believed to be true with respect to the
Released Claims.  The Company agrees that the Releases shall be and
shall remain effective in all respects, notwithstanding any such different or
additional facts, or any facts which are intentionally concealed from either by
the other.  In this regard, and without limitation, the Company
declares that it realizes that it may have damages it presently knows nothing
about and that, as to them, they have been released pursuant to the
Releases.  The Company further declares that it understands that the
parties being released would not have agreed to compromise their respective
claims if the Releases did not cover damages and their results which may not yet
have manifested themselves or which may be unknown or not anticipated at the
present time.

       

      (c)     The
Releases shall not be deemed an admission by the Company of any
sort.  No right shall inure to any third party (other than third
parties described in subparagraph (a) above) from the obligations,
representations and agreements made or reflected
herein.

       

      (d)     The
Company represents and warrants that it alone is the owner of the Released
Claims, that it has not heretofore assigned or transferred, nor purported to
assign or transfer to any third party, and is not aware of any third party, who
might assert some interest in any of the Released Claims.  The Company
further agrees to indemnify, defend and hold harmless the Debenture Holders from
all liability, claims, demands, damages, costs, expenses and attorneys’ fees
incurred by the Debenture  Holders as a result of any third party
asserting any such assignment or transfer of any such interest, right or
claim.

       

      (e)     The
Company represents and warrants that none of the Released Claims is subject to
any purported or actual lien, security interest, encumbrance or other
contractual right of any third party.  The Company further agrees to
indemnify, defend and hold harmless the Debenture Holders from all liability,
claims, demands, damages, costs, expenses and attorneys’ fees incurred by the
Debenture Holders as a result of any third party asserting the existence of any
of the foregoing.

       

      (f)      The
Company acknowledges that it has read this Agreement, has been, or has had the
opportunity to be, represented by independent counsel of their its choice in
connection with the circumstances leading up to the execution of the Releases,
understands the terms, conditions and consequences of the Releases, and is
freely and voluntarily entering into the Releases.

       

      
        
           

        

        
          3

          
            
 

        

        
           

        

      

       

      2. 
Representations
and Warranties.  Each of the Parties hereby represents and
warrants to the other as follows:

       

      (a)     It
has full power and authority to execute, deliver and perform this Agreement
(including, without limitation, as applicable, the Releases) and to do any and
all other things reasonably required hereunder.

       

      (b)    The
execution, delivery and performance of this Agreement are not in contravention
of or in conflict with any other agreement, indenture or undertaking to which it
is a party or by which it, or any of its property, may be bound or
affected.

       

      (c)    Other
than as set forth in this Agreement, the Releases are not conditioned upon the
occurrence or nonoccurrence of any event or the granting of any consent or
approval or related to or dependent upon any other event or any agreement or
business transaction between the Parties.

       

      (d)    All
covenants, representations and warranties contained in this Agreement
(including, without limitation, the Releases) shall survive the execution and
delivery of this Agreement.

       

      3.  Payments
and Deliveries.

       

      (a)    As
consideration and as a condition for the obligations of the Debenture Holders
under this Agreement, the Company agrees to do the
following:

       

      (i)        The
Company will issue seven-year warrants to purchase 35,000,000 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 as set forth in
Exhibits
A-D; provided, that the maximum number of shares that the Company shall
be required to register on any one registration statement shall not exceed 30%
of the total number of shares of common stock registered for other parties on
such registration statement.

       

      (ii)       
The
warrants will be issued as follows:

       

      (a)           10,000,000
warrants to Palisades Capital, LLC;

      (b)           15,000,000
warrants to London Finance Group, Ltd.;

      (c)           8,000,000
warrants to Hyde Investments, Ltd.; and

      (d)           2,000,000
warrants to Livingston Investments, Ltd.

       

      (iii)       The
Company shall execute an Amendment to each of the Debentures as set forth in
Exhibits
E-G (the “Debenture Amendments”).

       

      (iv)       All
share amounts referred to herein are deemed to be after the effect of an
anticipated one for one-thousand reverse split of the Class A Common Stock of
the Company.

       

       

      
        
          
             

          

          
            4

            
              
 

          

          
             

          

        

      

       

      (b)     The Debenture Holders consent to the
Company’s issuance to Mr. Bernstein warrants to purchase up to 30 million
post-split shares of its Class A Common Stock at an exercise price of $0.01 per
share; provided, however, that Mr. Bernstein and any other person or entity
receiving any of the shares issuable upon exercise of such warrants shall
execute the Shareholder Lockup Agreement attached hereto as Exhibit
H, and the Company shall not waive or amend any of the provisions of such
Agreement, or otherwise release or remove the restrictive legend from any shares
under such Agreement, at any time prior to the earlier of June 30, 2011 or the
date of full repayment or conversion of the Debentures, without the written
consent of all of the then-Debenture Holders.  Notwithstanding the
foregoing, this provision shall not apply to up to $2,500,000 worth of shares
that may be sold by Mr. Bernstein personally as provided in the Debenture
Amendments.

       

      (c)     In
the event the Company issues any common stock for cash consideration of less
than fifty percent (50%) of closing price reported for the Company’s common
stock on the date of such issuance, then any person or entity (other than the
Debenture Holders, GCH or London Finance Group, Ltd. (“LFG”)) receiving any of
such shares shall execute the Shareholder Lockup Agreement attached hereto as
Exhibit
H, and the Company shall not waive or amend any of the provisions of such
Agreement, or otherwise release or remove the restrictive legend from any shares
under such Agreement, at any time prior to the date which is three years from
the date of issuance of such certificate, without the written consent of all of
the then-Debenture Holders.

       

      (d)     In
the event the Debenture Holders elect to exercise or convert any convertible
security held by such Debenture Holder, the Company shall deliver the common
stock issuable upon such exercise or conversion, without restrictive legend if
legally permitted, within five calendar days of the Company’s receipt of a
notice of exercise or conversion.

       

      (e)     The
Company shall execute an escrow agreement as set forth in Exhibit
I (the “Escrow Agreement”).

       

      (f)      As
consideration and as a condition for the obligations of the Company under this
Agreement, the Debenture Holders, and each of them, agrees to do the
following:

       

      (i)         The
Debenture Holders shall execute the Amendments.

       

      (ii)        The
Debenture Holders shall execute the Escrow Agreement.

       

      (iii)       The
Debenture Holders hereby consent to an amendment to the Articles of
Incorporation of the Company to change its name to Matech Corp., and to effect a
reverse split of the common stock of the Company such that each one thousand
shares are combined into one share.

       

      (g)     Palisades
Capital, LLC, Hyde Investments, Ltd., Livingston Investments, Ltd., GCH Capital,
Ltd., London Finance Group, Ltd., and their
respective

       

       

      
        
          
             

          

          
            5

            
              
 

          

          
             

          

        

      

      affiliates
(the “Anti-Dilution Rights Holders” shall be entitled to maintain their
respective percentage ownership in the Company at all times, except for
reductions in holdings arising from the sale or transfer of shares by such
Anti-Dilution Rights Holders.

       

      (i)        
Stock Issuances.  In the event the Company, one time or from time to
time, issues any shares of its Class A Common Stock (“Common Stock”) after the
date hereof, then the Anti-Dilution Rights Holders shall receive shares of
Common Stock equal to the result of the following formula: (shares issued in new
issuance divided by total shares of Common Stock issued and outstanding on the
date of such issuance) multiplied by total shares of Common Stock held by such
Anti-Dilution Rights Holder on the date of such issuance plus shares issuable to
such Anti-Dilution Rights Holder upon exercise of any warrants held by such
holder.  Notwithstanding the foregoing, the Anti-Dilution Rights
Holder’s shall not receive additional shares of Common Stock pursuant to the
anti-dilution formula set forth above for shares issuable upon conversion of the
Debentures.

       

      (ii)        Warrant
Issuances.  In the event the Company, one time or from time to time,
issues any warrants or options to purchase capital stock of the Company after
the date hereof (the “New Warrants”), then the Company shall issue to the
Anti-Dilution Rights Holders a number of Warrants or options, on identical terms
to the New Warrants, equal to the result of the following formula: number of
shares issuable upon exercise of such warrants or options issued in such
issuance, multiplied by (total shares of Common Stock and warrants owned by such
Anti-Dilution Rights Holder on the date of such issuance divided by total shares
of Common Stock outstanding on the date of such
issuance).  Notwithstanding anything herein to the contrary, in the
event by operation of this paragraph an issuance would cause the Anti-Dilution
Rights Holder to hold five percent (5%) or more of the issued and outstanding
Common Stock of the Company, then a provision shall be added to any warrants or
options issued providing that the warrant or option may not be exercised to the
extent such exercise would cause the holder of such warrant or option to
beneficially own five percent or more of the outstanding common stock of the
Company; provided further, that the expiration date of any such warrant or
option would be extended to the date which is ten business days after the
exercise of the entire warrant or option would not cause such holder to
beneficially own five percent or more of the outstanding common stock of the
Company.

       

      (h)         The
Company hereby conclusively agrees that the balance of the Debentures as of June
16, 2008 are $1,189,669.30 held by Palisades Capital, LLC, $650,755.42 held by
Livingston Investments, Ltd., and $1,858,967.19 held by Hyde Investments,
Ltd.  Each of the Debentures shall be increased by an extension fee
equal to fifteen percent (15%) of the above amounts, which shall be added to the
Debentures as of June 16, 2008 as reflected on the attached
amendments.

       

      (i)          The
Company shall pay to LFG or its assignees the sum of Twenty Thousand Dollars
($20,000) per month, on the first day of each month, starting July 1, 2008 and
continuing until July 1, 2011; provided, however, Palisades Capital, LLC shall
pay this amount directly to LFG as an additional advance under its
Debenture,

       

       

      
        
          
             

          

          
            6

            
              
 

          

          
             

          

        

      

       

      and such
amount shall be added to the principal balance of the debenture held by
Palisades Capital on the first day of each month commencing June 1,
2008.

       

      (j)      The
Company shall execute that certain Consulting Agreement, dated June 16, 2008, by
and between the Company and LFG.

       

      (k)   
  In the event the Company issues any shares to any shareholder of the
Company, for less than ten percent of the market price of such shares on the
date of issuance, or for no consideration, or pursuant to any shareholder
loyalty program, such shares shall be issued with a legend stating that such
shares may not be sold, hypothecated, alienated or otherwise transferred until
three years from the date of issuance of such certificate, and the Company shall
place a stop-transfer order with the Company’s transfer agent with respect to
such certificate in order to fully enforce such restriction.  The
Company shall not waive such restriction, or remove such stop transfer order,
without the written consent of the holder of a majority of the outstanding
Debentures.

       

      4. 
Successors.  This
Agreement shall be binding upon and shall inure to the benefit of the Parties
and their respective heirs, successors, representatives, assigns, affiliates,
agents, shareholders, directors, employees and attorneys, past and present, and
each of them.

       

      5. 
Integration.  This
Agreement and the schedules and exhibits attached hereto compromise the entire
understanding of the Parties concerning the subject matter hereof, and may only
be modified or amended by an agreement in writing executed by each of the
Parties which specifically refers to this Agreement.  The rights,
duties and obligations of the Parties under this Agreement shall operate
independently of any other relationship, contractual or otherwise, between the
Parties.

       

      6. 
Governing
Law.  This Agreement shall be construed in all respects in
accordance with the internal laws of the State of California applicable to
agreements made and to be performed entirely within California. Any dispute
which relates to the subject matter hereof, or arises herefrom, shall be
resolved in Los Angeles County, California.  Each of the Parties
hereby submits to the exclusive jurisdiction of such court, and agrees that this
Agreement shall be deemed to have been entered into, and performance is required
in, Santa Monica, California.  The Parties hereby agree to waive trial
by jury with respect to any such dispute, and shall permit such dispute to be
resolved by bench trial at the Superior Court sitting in Santa Monica,
California.

       

      7. 
Further
Assurances.  Each of the Parties agrees to cooperate with the
other Party to execute, acknowledge and deliver any and all additional
agreements, certificates, instruments, dismissals and documents and to take any
and all such further actions, all at the Company’s expense and all as may
reasonably be deemed necessary or appropriate by the Parties to effectuate this
Agreement.

       

       

      
        
           

        

        
          7

          
            
 

        

        
           

        

      

       

      8. 
Agreement
Not Drafted by Either Party.  In the event of any disagreement
hereunder, this Agreement shall not be construed as having been drafted by
either Party.

       

      9.  Counterparts.  This
Agreement may be signed in one or more counterparts, each of which shall
constitute an original but all of which, when taken together, shall constitute
one and the same agreement.  If this Agreement is executed in
counterparts, then each Party shall execute sufficient counterpart signature
pages for each Party, ultimately, to be provided with an originally executed
counterpart signature page from each Party.

       

      10.  Gender.  Each
gender shall include the other genders whenever the context may require in this
Agreement.

       

      11.  Authority
to Sign.  Each of the individuals whose signature appears below
hereby represents and warrants that he or she has actual authority to enter into
this Agreement on behalf of the entity on whose behalf he or she signs this
Agreement and does so to the fullest extent of his or her authority, whether as
an individual, officer, director, shareholder, partner, joint venturer or
otherwise.

       

      12.  Captions.
The headings of the sections of this Agreement are intended solely for
convenience of reference and are not intended and will not be deemed for any
purpose whatever to modify or explain or place any construction upon any of the
provisions of this Agreement.

       

      13.  Attorneys'
Fees. In the event any party hereto will institute an action to enforce
any rights hereunder, the prevailing party in such action will be entitled, in
addition to any other relief granted, to reasonable attorneys' fees and
costs.

       

      14.  Confidentiality.  Except
as required by law (including the Company’s obligations under the Securities
Exchange Act of 1934), the Parties shall hold all information pertaining to, or
relating to the Company and all parties released under this Agreement and all
arrangements, agreements and conduct between the Parties, strictly confidential,
and shall not disclose any information regarding any such parties, including
without limitation the Company and/or its principals, to any third party, for
any reason whatsoever.

       

      IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first written above.

       

      "Company"

       

      Material
Technologies, Inc.

      a
Delaware corporation

       

       

      By:  /s/
Robert M.
Bernstein                                                                                     

            
Robert M. Bernstein

            
Its:  President and Chief Executive

       

      
        
           

        

        
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      "DEBENTURE
HOLDERS"

       

       

      
        
          	PALISADES
      CAPITAL, LLC    	 	 	HYDE
      INVESTMENTS, LTD.	 
	 	 	 	 	 
	
                  By:                                                                                              

                	 	 	
                  By:

                	 
	
                  Name:

                	 	 	
                  Name:

                	 
	
                  Title:

                	 	 	
                  Title:

                	 
	 	 	 	 	 
	 	 	 	 	 
	 LIVINGSTON
      INVESTMENTS, LTD.	 	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	Name:	 	 	 	 
	Title:	 	 	 	 

        

      

       

       

       

       

       

       

       

       

      
        
          
             

          

          
            9

            
              
 

          

          
             

          

        

      

       

      Exhibits
A – D

       

      Warrant
Agreements

       

    

     

     

     

     

     

     

     

     

     

     

     

     

     

    
       

      
        
          
             

          

          
            10

            
              
 

          

          
             

          

        

      

       

      Exhibits
E - G

       

      Debenture
Amendments

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
             

          

          
            11

            
              
 

          

          
             

          

        

      

       

      Exhibit
H

       

      Shareholder
Lockup Agreement

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
             

          

          
            12

            
              
 

          

          
             

          

        

      

       

      Exhibit
I

       

      Escrow
A

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
             

          

          
            13matechexh10_59.htm

    
      
 

    Exhibit
10.59

     

    AMENDMENT
DATED JUNE 16, 2008

    TO

     

    CLASS A
SENIOR SECURED CONVERTIBLE DEBENTURE

     

     

     

     

       

      
        	ORIGINAL ISSUANCE
      DATE	September 23,
      2003
	 	 
	CONVERTIBLE
      DEBENTURE DUE	December 31, 2009
      (as amended) 
	AMOUNT DUE AS OF
      APRIL 30, 2008	$2,110,041.75 

      

    

     

    WHEREAS, Material
Technologies, Inc., a Delaware corporation (the “Company”) entered and executed
that certain Class A Senior Secured Convertible Debenture, dated September 23,
2003 (the “Debenture”), in favor of Hyde
Investments, Ltd. or registered assigns (the
“Holder”);

     

    WHEREAS, the Company has
entered into that certain Escrow Agreement, dates as of the date hereof, between
the Company and the Holder, among others (the “Escrow Agreement”), and that
certain Settlement Agreement, dated as of the date hereof, between the Company
and the Holder, among others (the “Settlement Agreement”);
and

     

    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:

     

    
      	
               
      

            	
              1.

            	
              The
      Maturity Date shall be extended to December 31,
  2009.

            

    

     

    
      	
               
      

            	
              2.

            	
              Article
      1 of the Debenture is hereby amended and restated to read as
      follows:

            

    

     

    The
Company shall pay interest on the unpaid principal amount and accrued but unpaid
interest of this Class A Senior Secured Convertible Debenture (the “Debenture”)
in monthly payments of accrued interest, payable on the first day of each month,
at the rate of Ten Percent (10%) per annum, payable in arrears, in cash, until
the entire balance of this Debenture has been paid in full or has been
converted.  Interest shall accrue from the date of each advance, on
the full amount of such advance.  If an Event of Default occurs
hereunder and, if such Event of Default is curable, such Event of Default
continues for a period of 30 days without being cured, then the interest rate
set forth herein shall be increased to a Default Interest Rate of 18% per annum,
and the total principal and accrued interest balance of this Debenture shall
bear interest at the Default Interest Rate from the date of the occurrence of
such Event of Default.

    
      
         

      

      
        1

        
          
 

      

      
         

      

    

    Notwithstanding
the foregoing, the Company shall be required to make minimum monthly interest
payments of $4,000.  From the date hereof until the Maturity Date, any
interest due and payable hereunder in excess of $4,000 per month shall be
accrued and added to the principal balance of this Debenture on a daily basis,
and shall be due and payable on the Maturity Date.

     

    3.           The
first paragraph of Article 2 of the Debenture is hereby amended and restated to
read as follows:

     

      
The Company shall pay amounts due hereunder by business check or cashier’s check
payable to the order of Corporate Legal Services, LLP, at 2224 Main Street,
Santa Monica, CA 90405, or by wire transfer to the attorney-client trust account
of Corporate Legal Services, LLP.

     

    4.           The
following is hereby added to the end of Section 6.1: “Any Event of Default, or
other default or breach of the terms, conditions or covenants of (i) any
debenture, promissory note or warrant agreement issued as of the date hereof
pursuant to the Settlement Agreement, (ii) the Escrow Agreement or (iii) the
Settlement Agreement, shall be deemed an Event of Default under this
Debenture.  In addition, the entry of any judgment against the Company
in excess of $150,000, regardless of where, how, to whom or under what agreement
such liability arises, shall be an Event of Default under this Debenture, unless
(i) the Company pays such judgment within 60 days, or (ii) the Company duly
files an appeal of such judgment and execution of such judgment is
stayed.  Finally, the entry of any order or judgment in favor of any
judgment creditor or other creditor attaching the assets of the Company shall be
an Event of Default under this Debenture.  The conversion price of
this Debenture shall not be at any time more than $0.10 per share, regardless of
any combination of shares of the Common Stock of the Company by reverse split or
otherwise.”

     

    5.           In
Section 6.1, clause (b), the words “required hereunder” are hereby added after
the words “the Company does not make a payment.”

     

    6.           The
following Section 6.4 is hereby added to the Debenture:  If an Event
of Default occurs which is not cured within its applicable cure period, if it is
curable, the conversion price of this Debenture after such cure period has
expired shall be reduced to half of the pre-Event of Default conversion
price.  For clarification, if the conversion price before an Event of
Default were the lesser of 50% of market price or $0.10, then the new conversion
price would be the lesser of 25% of market price or $0.05.

     

    7.           Section
6.3(i) is hereby deleted and the following provisions are added to the end of
Section 6.3. Covenants:

     

    
      	
               
      

            	
              i.

            	
              The
      Company shall not issue any shares of its Class A Common Stock without a
      legend stating that such shares may not be sold, transferred, pledged,
      assigned or alienated for a period of at least one year following the date
      of the issuance of such certificate, other than shares issued to or with
      the written consent of the Holder.  Notwithstanding the
      foregoing,

            

    

    
      
         

      

      
        2

        
          
 

      

      
         

      

    

    
      	
               
      

            	
              this
      provision shall not apply to (i) any shares issued to purchasers in a
      financing where the Company receives net proceeds of at least Five Hundred
      Thousand Dollars ($500,000) and the shares are sold for not less than
      fifty percent (50%) of the closing price of the Company’s common stock
      reported as of the closing date of such financing, and (ii) any shares
      issued in connection with an acquisition of assets by the Company where
      (a) the Company provides to the Holder a fairness opinion as to the value
      of the acquired assets, and (b) the Company receives assets that are worth
      at least fifty percent (50%) of the closing price per share of the
      Company’s common stock as of the closing date of the
      acquisition.

            

    

    
      	
               
      

            	
              j.

            	
              The
      Company shall not into any agreement pursuant to which any party other
      than the Holder has pre-emptive rights, the right to receive shares of any
      class of securities of the Company for no additional consideration, the
      right to receive a set, pre-determined percentage of the outstanding
      shares of the Company for any period of time, or any other similar right
      that has the effect of maintaining a set percentage of the issued and/or
      outstanding shares of any class or classes of the capital stock of the
      Company.

            

    

    
      	
               
      

            	
              k.

            	
              The
      Company shall not enter into any agreement giving another party
      anti-dilution protection unless (1) all shares received pursuant to such
      provision are subject to a two-year lock-up from the date of issuance, and
      (2) all such shares received are subject to a “dribble-out,” following the
      two-year lock-up, restricting their sale to not more than 1/20th
      of 5% of the previous month’s total trading volume in any single trading
      day.

            

    

    
      	
               
      

            	
              l.

            	
              The
      Company will not file any Registration Statement on Form S-8 nor issue any
      shares registered on Form S-8, exclusive of shares currently registered on
      Form S-8.  However, when the total capital in the Company’s cash
      account drops below $500,000, the Company may issue up to $30,000 worth of
      securities registered on Form S-8, valued at the market price of the
      common stock on the date of issuance, per month,
      non-cumulative.  Any issuance of S-8 shares will be supported by
      an opinion of the Company’s counsel that such issuance complies in all
      respects with federal securities laws.  This opinion will be
      provided to the legal representative of the Holder upon
      request.  Further, the Company will ensure that every entity or
      individual that receives S-8 shares will be subject to a “dribble-out”
      restricting their sale to not more than 1/20th
      of 2%
      of the previous month’s total trading volume in any single trading day,
      non-cumulative.  The above described dribble-out is not an
      aggregate sale restriction for all entities and individuals receiving S-8
      shares;

            
	 	m.	The
      Company shall not provide material non-public information to the Holder or
      its representatives.

    

    
    

     

    8.           Section
6.4 is hereby added to the Debenture, and reads as
follows:  The Company shall comply with each of the following
covenants, and the failure of the Company to comply with such covenants shall be
an Event of Default:

     

    
      	
               
      

            	
              a.

            	
              If
      the Company inadvertently provides material non-public information to the
      Holder or its representatives, the Company shall issue a press
      release

            

    

    
      
         

      

      
        3

        
          
 

      

      
         

      

    

    
      	
               
      

            	
              or
      file a current report on Form 8-K, or take such other action as may be
      required to render such information no longer “non-public” as soon as
      possible after discovery, but no later than five business days following
      written request by the Holder or its counsel that the Company file such
      report or issue such press release.

            

    

    
      	
               
      

            	
              b.

            	
              The
      Company shall irrevocably instruct its transfer agent to provide notice to
      counsel for the Holder of any issuance of any security of the Company
      where the certificate representing such security does not contain a
      restrictive legend.

            

    

    
      	
               
      

            	
              c.

            	
              The
      Company shall not issue any shares of its capital stock which are deemed
      to be issued, but not outstanding, other than pursuant to the Escrow
      Agreement.

            

    

     

    9.      
The
Company has informed the Holder that it is considering completing a
one-for-one-thousand reverse split of its common stock, as described in an
Information Statement filed by the Company on or about April 25,
2008.  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 trading days immediately preceding the Conversion Date or (ii)
$0.10.  The Holder consents to this action.  The parties
acknowledge that the Company is not obligated to complete this reverse-split, or
any reverse split.

    10.         The
Company shall not enter into any agreements giving any other party any
pre-emptive rights.  The Company shall not enter into any agreement
giving another party anti-dilution protection unless (1) all shares received
pursuant to such provision are subject to a two-year lock-up from the date of
issuance, and (2) all such shares received are subject to a “dribble-out,”
following the two-year lock-up, restricting their sale to not more than
1/20th
of 5% of the previous month’s total trading volume in any single trading
day.

     

    11.         The
shareholder lockup provisions will not apply to up to any shares held by Mr.
Robert Bernstein, and sold by him personally in a bona-fide sale to an
unrelated, unaffiliated third party; provided, that (i) the number of shares
sold under this Paragraph 11 shall not exceed Two Million Five Hundred Thousand
Dollars ($2,500,000) worth of stock, calculated based on the number of shares
sold multiplied by the closing price of the stock on the date such shares are
sold (if a market trade) or transferred on the books of the transfer agent (if a
private transfer).  Once Two Million Five Hundred Thousand Dollars
($2,500,000) worth of stock has been sold as calculated above, the lockup on
whatever remains of the shares owned by Mr. Bernstein (if any) goes back
into effect.  In this regard, if Mr. Bernstein sells any of his shares
without legend, then he may only sell up to 1/20th of 5% of the previous month’s
total trading volume in any single trading day, and he may not sell more than 1%
of the issued and outstanding shares of Matech during any 90 day period. 
Further, if Mr. Bernstein sells any of his shares, he must
have

    
      
         

      

      
        4

        
          
 

      

      
         

      

    

    such
shares transferred on the books of the transfer agent within five business days
of the sale.  Mr. Bernstein shall comply with all reporting
requirements under Section 16 of the Securities Exchange Act of 1934, as
amended.  The Company shall take such action as is required to ensure
compliance with the provisions of this Paragraph 11.

     

    12.         To
induce the Holder to extend the Maturity Date of the Debenture and/or enter into
this Agreement and the Settlement Agreement of even date hereof, the Company
hereby agrees to pay an extension fee and a settlement fee of an aggregate of
$278,845.08, which shall be added to the balance of this Debenture as of June
16, 2008.  The balance of the Debenture as of June 16, 2008, is
confirmed and agreed to be $2,137,812.27, which includes all advances, accrued
interest and the above fee to date.

     

    All other
terms of the Debenture, as amended to date, shall remain the same.

     

    IN
WITNESS WHEREOF, the Company has duly executed this Amendment dated June 16,
2008 to Class A Senior Secured Convertible Debenture as of the date first
written above.

     

     

    
      	
              MATERIAL
      TECHNOLOGIES, INC.

              a
      Delaware corporation

            	 	
              HYDE
      INVESTMENTS, LTD.

            
	 	 	 
	 	 	 
	By
      /s/ Robert M. Bernstein	 	By
	    
      Robert M. Bernstein	 	    
      Carsten Rykov
	    
      Chairman and CEO	 	    
      Managing Director

    

     

     

     

     

     

     

     

     

     

    

      
        
           

        

        
          5

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