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                                                                    EXHIBIT 10.6

                       EXCLUSIVE DISTRIBUTORSHIP AGREEMENT

         This Exclusive Distribution Agreement ("AGREEMENT") is made as of July
1, 2002, by and between VirtGame Corp., a Delaware corporation ("VIRTGAME") and
Las Vegas Dissemination, Inc., a Nevada corporation doing business as Las Vegas
Dissemination Company ("DISTRIBUTOR").

                  WHEREAS, VirtGame is in the process of developing, and has
been marketing, ail in-house race and sports book system (currently referred to
as PrimeLineRaceBook and PrimeLine Sports Book and collectively, the "RACE &
SPORTS SYSTEM") as well as ancillary and additional products (I.E., VirtgameSP,
VirtBorderControl, VirtCasino, VirtLottery) (collectively, the Race & Sports
System and other products shall be referred to as the "PRODUCTS");

                  WHEREAS, Distributor provides pari-mutuel race hub services
and markets equipment and/or products to its customers in certain marketplaces
that are core to its business (the "TERRITORY"), as more completely set forth in
SCHEDULE B hereto and incorporated herein by this reference;

                  WHEREAS, Distributor has expertise in race and sports book
system design, and a vast network of customers that could become customers of
the Products;

                  WHEREAS, VirtGame and Distributor are desirous of entering
into an exclusive distributorship agreement for Distributor to exclusively
market the Race and Sports System and for VirtGame to license the same, on a
non-exclusive basis, to Distributor's present and prospective customers
(collectively, the "CUSTOMERS") and for the Territory, upon the terms and
conditions set forth herein;

                  WHEREAS, VirtGame further desires to compensate Distributor
based on sales and licensing of other Products to Customers;

                  NOW, THEREFORE, for and in consideration of the mutual
promises made hereafter and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties herein
agree as follows:

          1. DISTRIBUTOR APPOINTMENT. Upon the following tern-is and conditions,
VirtGame hereby appoints Distributor as its exclusive distributor in the
Territory for the Race and Sports System during the therein hereof. VirtGame
shall not market or sell the Race and Sports System in

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the Territory (except as approved by Distributor), nor shall VirtGame
intentionally or negligently enable any third party distributor to market or
sell the Race and Sports System in the Territory, during the term hereof
VirtGame also hereby permits Distributor to market and promote its other
Products, on a non-exclusive basis, to Customers.

         2. DISTRIBUTOR RESPONSIBILITIES. During the term of' this Agreement,
Distributor shall do the following:

                  2.1 Hold in the strictest confidence during the term of this
Agreement and at all times thereafter any and all information of a confidential
nature obtained regarding VirtGame's business or affairs, including, but not
limited to, customer lists and data regarding the design and/or methods of
manufacture of VirtGame's Products, and not to disclose in any manner directly
or indirectly such information to any entity, person, partnership or corporation
(which obligation shall survive termination of this Agreement) except as
required by law or court order, or as may be provided to a third party
consultant in an effort to adapt the Products to Distributor's service or system
(any such disclosure to a third party shall only be after said third party has
entered into a confidentiality agreement in substantial conformity to the form
document attached hereto as Schedule C and incorporated herein by this
reference, except for the changes needed to make sure that the form correctly
reflects the true nature of the anticipated relationship between the underlying
consultant and Distributor and/or VirtGame). In the event any party receives a
request to disclose any Confidential Information under the terms of a valid and
effective subpoena or order issued by a court of competent jurisdiction or a
governmental body, such party shall (i) immediately notify the party that
furnished such Confidential Information of the existence terms and circumstances
surrounding such request, (ii) consult with such party on the advisability of
taking legally available steps to resist or narrow such request, and (iii)
exercise reasonable best efforts, at the expense of the party subject to a
request to produce Such Confidential Information, to obtain an order or other
reliable assurance that confidential treatment will be accorded to such portion
of the Confidential Information as may be disclosed.

                  2.2 Use its reasonable efforts to assist VirtGame in
completion of the Race & Sports System, including technical, software, and race
book managerial advice on the best methods for completing and refining the Race
& Sports System.

                  2.3 Use its reasonable efforts to actively market and promote
the nonexclusive licensing of the Race & Sports System to Customers in the
Territory as well as to promote their use of the other Products. To this end,
Distributor shall provide monthly summaries of the operators contacted and the
progress of any negotiations.

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                  2.4 Use its reasonable efforts to maintain an adequate sales
organization and to provide for adequate assistance to customers that acquire
the Race and Sports System.

                  2.5 Use its reasonable efforts to maintain an adequate
technical staff and to provide for adequate maintenance of the Race and Sports
System hardware and assistance to customers that acquire the Race and Sports
System (Distributor shall not have any maintenance obligation for Products other
than the Race & Sports System).

                  2.6 Maintain at all times adequate service and repair
facilities for the Race and Sports System, including spare parts, all as agreed
to by VirtGame and Distributor.

                  2.7 Use its reasonable efforts to assist VirtGame's
representatives with regard to the Territory and how to expand VirtGame's share
of the marketplace for the Products in the Territory.

         3. VIRTGAME RESPONSIBILITIES. During the term of this Agreement,
VirtGame shall do the following:

                  3.1 Complete the Race & Sports System, with consultation and
assistance from Distributor, in as expeditious a -fashion as possible. In
performing this obligation, VirtGame shall employ adequate staff and devote
significant time to completing, the race book portion of the system, enabling
the system to communicate with a variety of terminals currently in use in the
Territory, and refining the Race and Sports System capabilities and management
screens in a mariner worked out with Distributor to reflect the demands of the
potential Customers.

                  3.2 License the Products as follows:

                           3.2.1 one copy of each Product requested by
Distributor to Distributor at no charge to be used by Distributor to market the
Products to Customers; and

                           3.2.2 to Customer(s), in connection with VirtGame
(and/or Distributor in the case of Race & Sports System) entering into an
agreement with said Customer(s), at a fee structure in accordance with Schedule
A hereto.

                  3.3 Deliver to Distributor any Products that are validly
licensed to Customers and/or Distributor pursuant to the terms of this Agreement
that Distributor is required to install or maintain in as expeditious a time
frame as is reasonable given current circumstances at VirtGame.

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                  3.4 Provide Distributor with accurate, up-to-date, and
comprehensive marketing brochures and operating manuals related to the Products,
and assist Distributor, at the request of Distributor, with any regulatory
approval that may be required within the Territory.

                  3.5 Upon request from Distributor, provide training for
Distributor's personnel relating to the operation and maintenance of the
Products. At no cost to Distributor, VirtGame shall provide training and
assistance to Distributor's technical and marketing personnel upon completion of
the Race & Sports System and during the first installation of tile Products to a
Customer. Additionally, Distributor shall have the right to have VirtGame
provide training to Distributor's personnel, upon Distributor's request and at
no charge, during the term hereof.

                  3.6 Upon the request of Distributor, cooperate with any
jurisdictional gaming, racing, or vendor licensing that Distributor shall be
required to obtain related to the Products in any portion of the Territory.

                  3.7 Upon the request of Distributor, diligently provide
upgrades and/or modifications to the Products that are being requested by
Customers. The Distributor shall receive from VirtGame the Products in their
most updated and complete form. As VirtGame develops advancements to the
Products and makes those advancements available to its customers, all said
advancements shall be made available to Distributor for its Customers at no
additional cost (but subject to the revenue distribution in Schedule A).

                  3.8 Use its reasonable efforts to enable any products
developed by or for Distributor to be made compatible with the Race & Sports
System or other Products.

         4. PAYMENT TERMS; SECURITY INTEREST; RESALE. All fees for the Products
set forth in SCHEDULE A hereto or otherwise shall be based on a net thirty (30)
days from the date of receipt by VirtGame and/or Distributor as the collector
for VirtGame of payment from a Customer, Any fee payments due and payable from
VirtGame to Distributor and not paid within ten (10) days after the date due,
shall bear interest from the due date at an annual rate equal to the lesser of:
(a) eighteen percent (18%); or, (b) the highest rate permissible under the law.
VirtGame shall bear the risk of loss from any cause whatsoever until the
Products are delivered to Distributor at its location. Distributor may determine
the non-exclusive licensing fees, but VirtGame, in accordance with applicable
law, reserves the right, at any time, to set suggested licensing fees for the
non-exclusive licensing of the Products.

         The parties agree that for all contracts/license agreements with
Customers that Distributor is entitled to share in the revenue pursuant to
Schedule A hereof or otherwise, all billings to Customers shall be made payable
jointly to VirtGame and Distributor and shall be remitted to Distributor at its
location. Distributor shall endorse all Customer payments over to VirtGame upon
receipt of payment from VirtGame to Distributor in an amount equal to

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Distributor's share in the revenue attributable to the Customer payment. In the
event VirtGame receives a payment, it shall immediately forward the same to
Distributor, and follow the procedures in the preceding sentence. Distributor
agrees that it shall review this payment policy with VirtGame upon the one-year
anniversary of this Agreement.

         5. TERM. This Agreement shall be for a term commencing on July 1. 2002
and continuing in full force and effect through and including December 31, 2007,
unless earlier terminated pursuant to the terms hereof Distributor shall have
the option of extending this Agreement for and additional five (5) year term
upon written notice to VirtGame prior to the expiration of the initial term so
long as (i) total revenue from Customers for the Products exceeds $5,000,000
during the initial term, or (ii) Products are placed in at least 25 separate
Customer locations (each casino being deemed a separate location, even if
commonly owned) during the initial term. Notwithstanding the foregoing, VirtGame
shall have the option to terminate this Agreement (a) on the date that is
eighteen months from the date that VirtGame and Distributor agree that the Race
& Sports System is completed and ready for distribution to Customers if total
revenue from Customers for the Products does not exceed $1,000,000, or Products
are not placed in at least 6 separate Customer locations, and (b) on the date
that is thirty months from the date that VirtGame and Distributor agree that the
Race & Sports System is completed and ready for distribution to Customers if
total revenue from Customers for the Products does not exceed $2,000,000, or
Products are not placed in at least 11 separate Customer locations. Distributor
shall have the right to terminate this Agreement in the event (1) it determines,
in its reasonable discretion, that VirtGame cannot complete the Race & Sports
System in either a satisfactory time frame or at a quality standard acceptable
to its Customers, or (2) the parties do not complete and execute agreements for
a development license, consulting for outside tile Territory, and stock options
on or before August 15, 2002. Upon the termination of this Agreement and for
three (3) years thereafter, VirtGame shall not extend service, market, or
otherwise make the Race and Sports System available, except through Distributor,
to any Customer that has licensed the Race and Sports System in accordance with
the terms hereof.

         6. PROPRIETARY RIGHTS AND CONFIDENTIALITY. Except as properly in the
possession of Distributor prior to the date of this Agreement or as otherwise
contained herein, all information, know-how, programming, software, trademarks,
trade secrets, plans, drawings, specifications, designs and patterns furnished
or created by VirtGame or by agents or contractors of VirtGame (other than
Distributor) and any and all property rights embodied therein are and shall
remain the sole property of VirtGame and neither Distributor nor any other party
shall have or acquire any interest therein except as required by law or pursuant
to a court order. Distributor shall at all times, whether during the term of
this Agreement or subsequent thereto, honor, maintain and protect the
confidentiality and secrecy of any confidential information related to the
Products that VirtGame may disclose to Distributor or its agents in writing. The
above clauses shall apply to confidential information received by Distributor

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and designated by VirtGame in writing at the time of disclosure as confidential.
Obligations of confidentiality shall not apply to information in the public
domain, rightfully acquired from a third party, already known or internally
developed without breach of this Agreement. To the extent Distributor shall
supply VirtGame with Proprietary Information, VirtGame shall comply with the
same rules of confidentiality being applied to Distributor hereunder.

         7. WARRANTIES; INDEMNIFICATION.

                  7.1 VirtGame represents, warrants and covenants, to the best
of its knowledge, that: (i) it is the creator of the Products described in this
agreement (ii) it owns and shall own the Products, including all intellectual
property rights therein under copyright, patent, trademark, trade secret, and
other applicable law; (iii) to the extent that any third parties shall have any
rights with respect to any portion of the Products, VirtGame has obtained any
and all such third party rights and permissions which are required for the use
of the Products; and (iv) it has not received as of the date of this Agreement,
actual notice of any claim that the Products or the use thereof infringes any
intellectual property right of any third party anywhere in the world or that any
third party has any proprietary interest in or to the Products.

                  7.2 VirtGame shall indemnify and hold Distributor harmless
from and against all claims, suits, demands, actions, judgments, penalties,
damages, costs and expenses (including reasonable attorney's fees and costs),
losses or liabilities of any kind arising from (i) a claim that the Products
infringe a patent, copyright or other intellectual property tight of any other
person anywhere in the world or (ii) a breach by VirtGame of the representations
or warranties set forth in Section 7.1 of this Agreement; provided that
Distributor shall (i) promptly notify VirtGame in writing of and keep VirtGame
advised with respect to any such claim of infringement; (ii) provide to VirtGame
all available information, assistance and authority to defend, and (iii) give
sole control of the defense to VirtGame (including the right to select counsel)
and the reasonable right to compromise and settle such suit or proceeding,
except that Distributor shall have the right to approve any settlement offer
made by or to VirtGame that would impose hardship on Distributor hereunder.

                  7.3 VirtGame does not warrant that the software will meet any
Customer's needs, or that the operation of the software will be uninterrupted.
VirtGame does represent that it shall diligently work to fix any defects to the
Products that are reported to VirtGame.

                  7.4 Intentionally Deleted.

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         8. USE AND LICENSING OF TRADEMARKS. VirtGame hereby grants to
Distributor a non-exclusive, royalty free, limited license to use VirtGame's
trademarks, copyrights and name (collectively, the "TRADEMARKS") used in
connection with Distributor's performance hereunder solely for the purpose of
this Agreement as is customary and necessary in the trade, which shall only be
transferable to Customers who obtain rights in the Products pursuant to the
terms of this Agreement. All use Distributor makes of the Trademarks shall inure
to VirtGame's benefit. Distributor shall not use, or permit others to use, the
Trademarks in any way other than the manner permitted herein. Distributor agrees
that the level of quality of all Products and services offered by Distributor
under the Trademarks and all related advertising, promotional and other uses of
the Trademarks should be similar to the level of quality currently being
rendered by VirtGame.

          9. INDEPENDENT CONTRACTOR. Notwithstanding any expressed or implied
provision in this Agreement to the contrary, in no event is Distributor the
agent or legal representative of VirtGame for any purpose whatsoever, and
Distributor is expressly prohibited from acting in a manner that would allow any
reasonable third-party to draw a conclusion to the contrary. Except as expressly
set forth herein, Distributor is not granted any right or authority to assume or
to create any obligation or responsibility, express or implied, on behalf of or
in the name of VirtGame or to bind VirtGame in any manner or thing whatsoever.

         10. CORPORATE REPRESENTATIONS AND WARRANTIES.

                  10.1 In addition to the representations and warranties
otherwise provided for in this Agreement. Distributor represents, warrants and
covenants to VirtGame as follows:

                            10.1.1 That Distributor is a corporation duly
organized, validly existing, and in good standing wider the laws of the state of
Nevada.

                           10.1.2 The execution of this Agreement and the
consummation of all transactions contemplated hereunder on its part to be
performed, (i) are within the authorized powers of Distributor; (ii) have been
duly authorized by appropriate corporate action, (iii) will not conflict with,
result in any breach of any of the provisions of, or constitute a default (or an
event which upon the giving of any required notice or lapse of time would
constitute a default) under Distributor's bylaws or the provisions of any
agreement, court or administrative order, consent, decree or other instrument to
which Distributor is a party, or violate the rights of any third party, and (iv)
the person executing this Agreement on behalf of Distributor has full right and
power and authority to execute and deliver this Agreement as provided herein.

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                           10.1.3 This Agreement constitutes a legal, valid and
binding obligation of Distributor enforceable in accordance with its terms
except as (i) the enforceability thereof may be limited by Bankruptcy,
insolvency or similar laws affecting creditors' rights generally, and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability or by statute.

                           10.1.4 There are no contracts of employment,
management, maintenance, service, supply or rental or other contracts or
agreements, written or oral, to which Distributor is a party or which are
binding on Distributor that is in conflict with this Agreement.

                           10.1.5 All representations of Distributor appearing
in other Sections of this Agreement are true and correct.

                           10.1.6 Distributor is in compliance with all legally
significant applicable federal, state and local laws and regulations and has
obtained all necessary governmental approvals to enter into this Agreement and
perform its obligations hereunder.

         10.2 In addition to the representations and warranties otherwise
provided for in this Agreement, VirtGame represents, warrants and covenants to
Distributor as follows:

                           10.2.1 That VirtGame is a corporation duly organized,
validly existing, and in good standing under the laws of the state of
Delaware.

                           10.2.2 The execution of this Agreement and the
consummation of all transactions contemplated hereunder on its part to be
performed, (i) are within the authorized powers of VirtGame, (ii) have been duly
authorized by appropriate corporate action, (iii) will not conflict with, result
in any breach of any of the provisions of, or constitute a default or an event
which upon the giving of any required notice or lapse of time would constitute a
default) under VirtGame's bylaws or the provisions of any agreement, court or
administrative order, consent, decree or other instrument to which VirtGame is a
party, or violate the rights of any third party, and (iv) the person executing
this Agreement on behalf of VirtGame has full right and power and authority to
execute and deliver this Agreement as provided herein.

                           10.2.3 This Agreement constitutes a legal, valid and
binding obligation of VirtGame enforceable in accordance with its terms
except as (i) the enforceability thereof may be limited by Bankruptcy,
insolvency or similar laws affecting creditors' rights generally, and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability or by statute.

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                           10.2.4 There are no contracts of employment,
management, maintenance, service, supply or rental or other contracts or
agreements, written or oral, to which VirtGame is a party or which are binding
on VirtGame that is in conflict with this Agreement.

                           10.2.5 All representations of VirtGame appearing in
other Sections of this Agreement are true and correct.

                           10.2.6 VirtGame is in compliance with all legally
significant applicable federal, state and local laws and regulations and has
obtained all necessary governmental approvals to enter into this Agreement and
perform its obligations hereunder.

         11. DEFAULT; TERMINATION.

                  11.1 In addition and without prejudice to the rights and
remedies available to the parties, either party (the "NON DEFAULTING PARTY") may
terminate this Agreement upon the occurrence of any of the following events of
default by the other party (the "DEFAULTING PARTY"), provided the Defaulting
Party has been given written notice of such default ("NOTICE OF DEFAULT"):

                           11.1.1 If the Defaulting Party violates any material
obligation or covenant under the terms of this Agreement and has failed to
cure the same to the reasonable satisfaction of the Non-Defaulting Party within
thirty (30) days of first learning of such violation:

                           11.1.2 If the Defaulting Party becomes insolvent or
bankrupt or admits in writing its inability to pay its debts as they mature,
or makes an assignment for the benefit of its creditor, or bankruptcy,
reorganization, arrangement or insolvency proceedings or other relief of debtors
are instituted by or against Defaulting Party (and. if commenced on an
involuntary basis, are not dismissed within 60 days);

                           11.1.3 If the Defaulting Party is informed that a
gaming regulatory authority within the United States having authority over
either party shall require this Agreement to be terminated (and. upon which
terms and conditions this Agreement shall be terminated as required by law or
regulation or conditions imposed by the applicable gaming regulatory authority
requiring such termination); or

                           11.1.4 If the Defaulting Party, or any officer,
director, or agent thereof, is charged, arraigned or convicted of violating any
local, state, federal, international or other laws that would pose a threat to
the Non Defaulting Party's ability to continue its gaming related operations, or
in any other reasonable way poses a threat to the Non Defaulting Party's ability
to continue its gaming-related operations.

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                  11.2 Upon the termination of this Agreement for a default of
Distributor pursuant to this Section:

                           11.2.1 All amounts owing by Distributor to VirtGame,
notwithstanding prior terms of sale, shall become immediately due and payable on
or before the effective date of termination, subject to Distributor's right of
setoff,

                           11.2.2 Distributor shall not engage in any activity,
which might imply or represent that it is an authorized VirtGame Distributor,
and shall, at its sole expense, take all steps necessary to remove any listing
in any telephone directory or other publication that it is an authorized
VirtGame Distributor;

                           11.2.3 Distributor shall, at its sole expense,
discontinue the use of VirtGame's trademarks, trade names, labels, materials
and signs beating the VirtGame name or any other trademark, service mark, or
trade name of VirtGame and will remove such names and trademarks from
letterheads, stationery and other forms used by Distributor and

                           11.2.4 Distributor shall discontinue all reference to
VirtGame in all of its marketing activities.

                           1.1.2.5 Notwithstanding anything herein to the
contrary, Distributor shall have the right to continue to service any Customers
that are under contract for the Products at the time this Agreement is
terminated for the remaining term of those Customer contracts. VirtGame shall
continue to perform its obligations hereunder as it relates to those Customer
contracts. In no event shall Distributor provide for a Customer contract beyond
the term of this Agreement unless approved in writing by VirtGame.

                  11.3 Upon a default of the bankruptcy provisions of this
Agreement by VirtGame, Distributor's license rights hereunder shall convert to a
perpetual, Worldwide, irrevocable, paid-up, transferable, royalty-free license:
(i) to use, modify, enhance, and revise the Product software (including Source
and object code), documentation and materials for providing race and/or sports
services to Customers; (ii) to distribute Products to customers; and (iii) to
prepare and have prepared derivative works of the Products and/or Product
software for use in providing services to customers.

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         12. DISPUTES.

                  12.1 The parties agree that in the event of any claim.
litigation or dispute arising under or out of this Agreement, or otherwise
relating hereto or to the Products or Territory, or arising hereunder, by or
between or affecting the parties hereto or any of said parties, any party hereto
shall submit such claim, litigation, dispute or matter to binding arbitration in
accordance with the provisions of this paragraph. The pat-ties agree that all
matters shall be subject to binding arbitration pursuant to the rules of the
American Arbitration Association. All parties expressly consent to such binding
arbitration and further agree that any award of the arbitrator may be submitted
to any federal district court having competent jurisdiction (the parties hereby
consenting to the jurisdiction of the United States federal courts) to compel or
enforce such arbitration award. In the event the Federal District Court denies
jurisdiction after each party has aggressively sought such jurisdiction, all
parties agree to submit to the state courts of Nevada for the sole purpose of
enforcing the arbitration award.

                  12.2 In the event the arbitration provisions of this Agreement
are invoked, each party shall choose one arbitrator within twenty (20) days from
the date either party shall elect under this provision, and the two arbitrators
so chosen shall choose a third arbitrator within twenty (20) days after the
second of the two arbitrators has been chosen. The arbitrators shall be
disinterested, impartial persons, and shall agree to be bound by the tern-is of
the Agreement. The decision and/or ruling of a majority of the arbitrators shall
be deemed the ruling of the arbitration.

                  12.3 The arbitrators shall hold an arbitration hearing within
sixty (60) days after such appointment. The parties shall submit briefs and
evidence in advance of the hearing as ordered by the arbitrators, and be
entitled to take reasonable discovery on an expedited basis. The arbitrators
shall allow each party to present that party's case, evidence and witnesses, if
any, in the presence of the other party, and shall render an award within thirty
(30) days of the hearing, including a provision for payment of costs and
expenses of arbitration to be paid by one or both of the parties to this
Agreement, as the arbitrators deem just. The award of the arbitrators shall be
binding on the parties to this Agreement and judgment may be entered on such
award in any court having as provided above. The arbitrators sitting in any
arbitration arising under and pursuant to this Agreement shall not have the
authority or power to modify or alter any express condition or provision of this
Agreement or to render an award that by its terms has the effect of altering or
modifying any express condition or provision of this Agreement. The parties
further agree that the arbitrators, if the arbitrators deem it necessary, shall
be authorized to select and hire a certified public accountant to assist the
arbitrators in receiving and examining the books and accounts of the parties to
this Agreement, and the fees and costs of such certified public accountant shall
be borne as the arbitrators may direct in the arbitrators' award.

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         13. MISCELLANEOUS.

                  13.1 ASSIGNMENT: This Agreement may not be transferred or
assigned by either party without written consent of the other party, which
consent shall not be unreasonable withheld. This Agreement shall inure to the
benefit of the parties and their respective authorized legal representatives,
successors and assigns and shall be binding upon VirtGame and Distributor and
their authorized successors and assigns.

                  13.2 AMENDMENT: No provision of this Agreement may be amended
or varied except by an agreement in writing signed by the parties hereto.

                  13.3 NO FIDUCIARY RELATIONSHIP CREATED HEREBY: It is
understood and agreed by the parties hereto that this Agreement does not create
any fiduciary relationship between Distributor and VirtGame and that nothing in
this Agreement is intended to make any party related to this Agreement a general
or special agent, legal representative, subsidiary, joint venturer, partner,
employee or servant of any other party, for any purpose. Distributor's services
are provided as an independent contractor to VirtGame, and VirtGame 's services
are provided as an independent contractor of Distributor.

                  13.4 THIRD PARTIES: Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies on any person other
than the parties hereto and their respective successors and permitted
transferees and assigns, nor is anything in this Agreement intended to relieve
or discharge the obligation of any third person to any of the parties hereto,
nor shall any provision of this Agreement confer on any third person a right of
subrogation or action over or against any of the parties hereto.

                  13.5 NOTICES: Any and all notices and demands to the parties
hereto required or desired to be given hereunder shall be in writing and shall
be given either (i) by delivery in person to the addresses set forth below, (ii)
by delivery by a courier service keeping records of deliveries and attempted
deliveries to such address as set forth below and, in either case, promptly
confirmed, or (iii) by telecopy or similar facsimile transmission to the numbers
set forth below. The names, addresses and telecopy numbers of the parties
required to receive such notices and/or demands are:

         Distributor:           Las Vegas Dissemination, Inc.
                                3555 W. Reno Ave. Suite C
                                Las Vegas, Nevada 89118
                                Attn: Vice President and General Counsel
                                Telecopy No.: (702) 739-8137
                                Telephone No.: (702) 739-8781

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         VirtGame:              VirtGame Corp.
                                2980 South Rainbow Blvd., 9200-J
                                Las Vegas, Nevada 89146
                                Attention: President
                                Telecopy No.: (702) 318-2701
                                Telephone No.: (702) 318-2700

         Confirmation copies delivered by facsimile shall be deemed given upon
confirmed transmission. Any party hereto may change its address and/or number
for the purpose of receiving notices or demands as herein provided by a written
notice given in the manner aforesaid to the other party hereto, which notice of
change of address shall not become effective, however, until the actual receipt
thereof by the other party.

                  13.6 NON-WAIVER: The failure of either party to insist, in any
one or more instances, upon performance of any of the provisions of this
Agreement, or to take advantage of any of its rights hereunder, shall not
operate as a waiver thereof or preclude any other or further exercise thereof or
the exercise of any other right or power. Any waiver of any breach of this
Agreement shall be limited to the particular instance and shall not operate to
be deemed to waive any future breach nor shall any delay on the part of either
party to act upon any breach be deemed a waiver thereof.

                  13.7 NO PARTY DEEMED DRAFTER: The parties acknowledge that
they substantially and materially have contributed to the preparation of this
Agreement and agree that neither of them shall be deemed the drafter of this
Agreement, and that in the event this Agreement is ever construed by a court of
competent jurisdiction, such court shall not construe this Agreement or any of
its provisions against either of the parties as the drafter.

                  13.8 CAPTIONS: The captions and section headings contained
herein are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.

                  13.9 SEVERABILITY: If any term, provision or condition of this
Agreement, or any application thereof, should be held by a court of competent
jurisdiction to be invalid, void or unenforceable, all provisions and conditions
of this Agreement and all applications thereof not held invalid, void or
unenforceable, shall continue in full force and effect and shall in no way be
affected, impaired or invalidated thereby.

                                       13
<PAGE>

                  13.10 ENTIRE AGREEMENT: This Agreement contains the entire
agreement between the parties hereto. No verbal agreement or implied covenant
shall be held to vary tile provisions hereof, any statements, law or custom to
the contrary notwithstanding. No promise, representation, warranty or covenant
not included in this Agreement has been or is relied upon by either party. Each
party has relied upon its own examination of this Agreement and the counsel of
its own advisors. The failure or refusal of either party to read this entire
Agreement or other related document, or to obtain legal or other advice relevant
to this Agreement, constitutes a waiver of any objection or claim that might
have been based upon such inspection or advice. This Agreement shall be governed
by, and construed in accordance with, the internal laws of the State of Nevada.

                  13.11 TIME OF ESSENCE: Time is of the essence of this
Agreement and all of the terms, provisions and conditions hereof.

                  13.12 COUNTERPARTS: This Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be an
original, but all such counterparts shall constitute one and the same Agreement.

                  13.13 TIME OF PERFORMANCE: If the day specified in this
Agreement for the performance of any obligation is not a business day, the day
of performance of such obligation shall be extended until the next business day.

                  13.14 LEGAL FEES: If any dispute arising in connection with
the transactions described in this Agreement leads either to litigation or
arbitration, the prevailing party shall, in connection therewith, receive an
award for the recovery of its reasonable and necessary legal fees and expenses
from the non-prevailing, party.

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

VIRTGAME CORP.                               LAS VEGAS DISSEMINATION, INC.

By:                    /S/                   By:                  /S/
         ------------------------------             ----------------------------

Name:         SCOTT A. WALKER                 Name:      JOHN M. SULLIVAN
         -------------------------------            ----------------------------

Title:        PRESIDENT & CEO                 Title:     V.P. & GENERAL COUNSEL
         -------------------------------            ----------------------------

                                       14
<PAGE>

                           SCHEDULE A ("LICENSE FEES")

         Of the modified gross revenues (as defined below) derived from Products
within the Territory, VirtGame shall pay to Distributor the following:

         (i)               for all contracts/license Agreements for a Race &
                           Sports Systems (or any portion thereof), as well as
                           all additional revenues derived from said contracts
                           or agreements, forty percent (40%) of the modified
                           gross revenues;
         (ii)              for all contracts/license Agreements for Products
                           that relate to the race and/or sports system industry
                           (i.e., delivery systems, distribution systems.
                           communication systems, etc.), as well as all
                           additional revenues derived from said contracts or
                           agreements, twenty-five percent (25%) of the modified
                           gross revenues; and
         (iii)             for all other contracts/license agreements, as well
                           as all additional revenues derived from said
                           contracts or agreements:

                           1.       twenty-five percent (25%) of the modified
                                    gross revenues in instances where
                                    Distributor provided the sales lead, made
                                    contact with Customer on behalf of
                                    VirtGame., or otherwise assisted in
                                    procuring the deal;
                           2.       ten percent (10%) of the modified gross
                                    revenues for all matters that do not fall
                                    within (iii) (1) above from the date total
                                    revenue from Customers for the Products
                                    exceeds $1.000,000, or Products are placed
                                    in at least 6 separate Customer locations
                                    and thereafter; and
                           3.       zero percent (0%) of the modified gross
                                    revenues for all matters that do not fall
                                    within (iii) (1) above prior to the date
                                    total revenue from Customers for the
                                    Products exceeds $1,000,000, or Products are
                                    placed in at least 6 separate Customer
                                    locations.

         The parties agree that modified gross revenues shall equal gross
revenues less the direct expenses for third party hardware and commercial
software (i.e., SQL Server) licensing. The parties further agree that VirtGame
should be allowed a reasonable direct software cost deduction for custom
modifications that are requested by Customers in the calculation of modified
gross revenues for those modifications. Finally, the parties agree that each
transaction may bring unforeseen, exorbitant, or unusual charges to be borne by
VirtGame or Distributor. The parties agree to discuss these matters on a
case-by-case basis to determine if any of said costs should be included as
reductions in the computation of modified gross revenues.

                                       15
<PAGE>

          VirtGame shall be obligated to supply, at its sole cost and expense,
all hardware and software required for each Customer contract. Distributor shall
assist in the installation of the Race & Sports System, and shall serve as the
primary maintenance provider (both hardware and software) for cacti Race &
Sports System.

          The distribution of revenues set forth above shall be inclusive of all
revenues derived from each contract and/or license governed by this Agreement.

          VirtGame may develop additional products over time that benefit the
pari-mutuel industry. VirtGame agrees to make available to Distributor, at the
1ee structure set forth herein, all future developed products, but subject to
all of the applicable terms and conditions set forth in this Agreement. VirtGame
shall timely notify Distributor of any such new product(s) and agrees to discuss
Distributor's interest in marketing the same.

                                       16
<PAGE>

                            SCHEDULE B ("TERRITORY")

         1.       All entities and facilities in Nevada.

         2.       The Distributor's current customers based outside of the State
                  of Nevada

         3.       Any entity entering into a pari-mutuel related agreement with
                  Distributor in the future for so long as that entity maintains
                  a current agreement with Distributor.

                                       17
<PAGE>

                   SCHEDULE C (FORM CONFIDENTIALITY AGREEMENT)

                            CONFIDENTIALITY AGREEMENT

         Agreement dated the ____ day of ______________, 20___ between
___________________ ________________________________("Company") and Las Vegas
Dissemination. Inc. and/or any affiliate ("LVDC").

         I. BACKGROUND. LVDC and Company intend to engage in discussions and
negotiations concerning the establishment of a business relationship between
them. In the course of such discussions and negotiations it is anticipated that
either party may disclose or deliver to the other party certain of its trade
secrets or confidential or proprietary information for the purpose of enabling
the other party to evaluate the feasibility of such business relationship. The
parties have entered into this Agreement in order to assure the confidentiality
of such trade secrets and confidential or proprietary information in accordance
with the terms of this Agreement. As used in this Agreement, the party
disclosing Proprietary information (as defined below) is referred to as the
Disclosing Party" and the party receiving such information as the "Recipient."

         II. PROPRIETARY INFORMATION. As used in this Agreement, the term
Proprietary Information shall mean all trade secrets or confidential or
proprietary information designated as such in writing by the Disclosing Party,
whether by letter or by use of an appropriate stamp or legend, prior to or at
the time any such trade secret or confidential or proprietary information is
disclosed by the Disclosing Party to the Recipient, or which is disclosed in
circumstances of confidence or which would be understood by the parties
exercising reasonable business judgment at the time of disclosure to be
proprietary. Notwithstanding the foregoing, information that is orally or
visually disclosed to the Recipient by the Disclosing Party, or is disclosed in
writing without an appropriate letter, proprietary stamp or legend, shall
constitute Proprietary Information if the Disclosing Party within thirty (30)
days after such disclosure delivers to the Recipient a written document or
documents describing such Proprietary Information and referencing the place and
date of such oral or visual or written disclosure and the names of the employees
or officers of the Recipient to whom such disclosure was made.

                                       18
<PAGE>

         III. DISCLOSURE OF PROPRIETARY INFORMATION. Without prior written
authorization of the Disclosing Party, the Recipient will:

         Use such Proprietary Information only for the purpose for which it was
         disclosed and shall not use or exploit such Proprietary Information for
         its own benefit or for the benefit of another;

         Protect the Proprietary Information against disclosure to third parties
         in the same manner and with the same degree of care, but not less than
         a reasonable degree of care, with which it protects its confidential
         information of similar importance;

         Limit disclosure of Proprietary Information received under this
         Agreement to persons within its organization who have a need TO know
         such Proprietary information in the course of the performance of their
         duties and who are bound to protect the confidentiality of such
         Proprietary information.

         IV. LIMIT OF OBLIGATION. The obligations of the Recipient specified in
paragraph III above shall not apply, and the Recipient shall have no further
obligations, with respect to any Proprietary Information to the extent that such
Proprietary Information.

                  A. Is generally known to the public at the time of disclosure
         (which recipient can prove by written evidence), or becomes generally
         known through no wrongful act of the Recipient.

                  B. Is in the Recipient's possession at the time of disclosure
         (which recipient can prove by written evidence), otherwise than as a
         result of the Recipient's breach of a legal obligation;

                   C. Becomes known to the Recipient through disclosure by
         sources other than the Disclosing Party (which recipient can prove by
         written evidence) having the legal right TO disclose such Proprietary
         Information;

                  D. Is independently developed by the Recipient without
         reference to or reliance upon the Proprietary Information; or

                  E. Is required to be disclosed by the Recipient to comply with
         applicable laws or government regulations, provided the Recipient
         provides prior written notice of such disclosure to the Disclosing
         Party and takes reasonable and lawful actions to avoid and/or minimize
         the extent of such disclosure.

                                       19
<PAGE>

         Specific information disclosed in connection with the transaction
described herein shall not be deemed to be within the public domain merely
because it is in the scope of more general information in the public domain.
Further, a combination of features shall not be deemed to be within the public
domain merely because individual features are within the public domain.

         V. OWNERSHIP OF PROPRIETARY INFORMATION. The Recipient agrees that the
Disclosing Party is and shall remain the exclusive owner of its Proprietary
Information and all patent, copyright, trade secret, trademark and other
intellectual property rights therein. No license or conveyance of any such
rights to the Recipient is granted or implied Linder this Agreement. Nothing
herein contained shall be constructed as a grant by implication, estoppel, or
otherwise, of a license by either party to the other to make, have made, use or
sell any product using Proprietary Information or as a license under any patent,
patent application, utility model, copyright, maskwork right, or any other
industrial or intellectual property right covering same.

         VI. RETURN OF DOCUMENTS. The Recipient shall, upon the request of the
Disclosing Party, return to the Disclosing Party all drawings, documents and
other tangible manifestations of Proprietary Information received by the
Recipient Pursuant to this Agreement (and all copies and reproductions thereof.)

         VII. COMMUNICATIONS. Written communications requesting or transferring
Proprietary Information under this Agreement shall be addressed only to the
respective designees as follows (or to such designees as the parties may from
time to time designate in writing):

[Company Name]                  LVDC
[Address]                       3555 West Reno Ave., Suite C
[City. State, ZIP]              Las Vegas, Nevada  89118
Attention:                      Attention: Vice President and General Counsel

         VIII. MISCELLANEOUS. This Agreement, with respect to the subject matter
hereof, constitutes the entire agreement of the Parties and supersedes all prior
agreements, written of oral, between the Disclosing Party and the Recipient.
This Agreement may not be modified, changed or discharged, in whole or in part,
except by an Agreement in writing signed by the Disclosing Party and the
Recipient. This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and assigns. The
provisions of this Agreement are necessary for the protection of the business
and goodwill of the parties and are considered by the parties to be reasonable
for such purposes. The Recipient agrees that any breach of this Agreement will
cause the Disclosing Party substantial and irreparable damages and, therefore,
in the event of any such breach, in addition to other remedies that may be
available, the Disclosing Party shall have the right to seek specific
performance and other injunctive and equitable relief. This Agreement shall be
construed and interpreted in accordance with the internal laws of the State of
Nevada.

                                       20
<PAGE>

   (Company Entity Name)                        LAS VEGAS DISSEMINATION, INC

   By:                                          By:

   Name:                                        Name:

   Title:                                       Title:

                                       21<PAGE>

                                                                    Exhibit 10.1

                           MATERIAL TECHNOLOGIES, INC.
             2003 STOCK OPTION, SAR AND STOCK BONUS CONSULTANT PLAN

                                    ARTICLE 1

                               GENERAL PROVISIONS

1.1 PURPOSE. The purpose of the Material Technologies, Inc.'s 2003 Stock Option,
SAR and Stock Bonus Consultant Plan (the "Plan") shall be to retain and
compensate independent consultants (the "Participants") of Material
Technologies, Inc. (the "Company") and its subsidiaries, if any, by way of
granting (i) non-qualified stock options ("Stock Options"), (ii) non-qualified
stock options with stock appreciation rights attached ("Stock Option SARs"), and
(v) stock bonuses. Directors, officers and employees of the Company are not
eligible to participate in this Plan. In addition, no person shall be a
Participant in this Plan in consideration for consulting or other services
related to capital raising activities for the Company or related to any stock
promotion activities for the Company. For the purpose of this Plan, Stock Option
SARs are sometimes collectively herein called "SARs;" and Stock Options. The
Stock Options to be granted are intended to be "non-qualified stock options" as
described in Sections 83 and 421 of the Code. Furthermore, under the Plan, the
terms "parent" and "subsidiary" shall have the same meaning as set forth in
Subsections (e) and (f) of Section 425 of the Code unless the context herein
clearly indicates to the contrary.

1.2 GENERAL. The terms and provisions of this Article I shall be applicable to
Stock Options and SARs unless the context herein clearly indicates to the
contrary.

1.3 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Stock Plan
Committee (the "Committee") appointed by the Board of Directors (the "Board") of
the Company and consisting of at least one member from the Board. The members of
the Committee shall serve at the pleasure of the Board. The Committee shall have
the power where consistent with the general purpose and intent of the Plan to
(i) modify the requirements of the Plan to conform with the law or to meet
special circumstances not anticipated or covered in the Plan, (ii) suspend or
discontinue the Plan, (iii) establish policies and (iv) adopt rules and
regulations and prescribe forms for carrying out the purposes and provisions of
the Plan including the form of any "stock option agreements" ("Stock Option
Agreements"). Unless otherwise provided in the Plan, the Committee shall have
the authority to interpret and construe the Plan, and determine all questions
arising under the Plan and any agreement made pursuant to the Plan. Any
interpretation, decision or determination made by the Committee shall be final,
binding and conclusive. A majority of the Committee shall constitute a quorum,
and an act of the majority of the members present at any meeting at which a
quorum is present shall be the act of the Committee.

1.4 SHARES SUBJECT TO THE PLAN. Shares of stock ("Stock") covered by Stock
Options, SARs, and stock bonuses shall consist of 10,000,000 shares
(post-split)of the Common Stock, $.001 par value, of the Company. Either
authorized and unissued shares or treasury shares may be delivered pursuant to
the Plan. If any Option for shares of Stock, granted to a Participant lapses, or
is otherwise terminated, the Committee may grant Stock Options, SARs and stock
bonuses for such shares of Stock to other Participants. However, neither Stock
Options nor SARs shall be granted again for shares of Stock which have been
subject to SARs which are surrendered in exchange for cash or shares of Stock
issued pursuant to the exercise of SARs as provided in Article II hereof.

1.5 PARTICIPATION IN THE PLAN. The Committee shall determine from time to time
those Participants who are to be granted Stock Options, SARs and stock bonuses
and the number of shares of Stock covered thereby.

1.6 DETERMINATION OF FAIR MARKET VALUE. As used in the Plan, "fair market value"
shall mean on any particular day (i) if the Stock is listed or admitted for
trading on any national securities exchange or the National Market System

<PAGE>

of the National Association of Securities Dealers, Inc. Automated Quotation
System, the last sale price, or if no sale occurred, the mean between the
closing high bid and low asked quotations, for such day of the Stock on the
principal securities exchange on which shares of Stock are listed, (ii) if Stock
is not traded on any national securities exchange but is quoted on the National
Association of Securities Dealers, Inc., Automated Quotation System, the NASD
electronic bulletin board, or any similar system of automated dissemination of
quotations or securities prices in common use, the mean between the closing high
bid and low asked quotations for such day of the Stock on such system, (iii) if
neither clause (i) nor (ii) is applicable, the mean between the high bid and low
asked quotations for the Stock as reported by the National Quotation Bureau,
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for shares of the Stock on at least five (5) of the ten (10)
preceding days, (iv) in lieu of the above, if actual transactions in the shares
of Stock are reported on a consolidated transaction reporting system, the last
sale price of the shares of Stock on such system or, (v) if none of the
conditions set forth above is met, the fair market value of shares of Stock as
determined by the Board. Provided, for purposes of determining "fair market
value" of the Common Stock of the Company, such value shall be determined
without regard to any restriction other than a restriction which will never
lapse.

1.7 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number of shares
of Stock under Stock Options granted under the Plan, the Option Price and the
total number of shares of Stock which may be purchased by a Participant on
exercise of a Stock Option shall be approximately adjusted by the Committee to
reflect any recapitalization, stock split, merger, consolidation,
reorganization, combination, liquidation, stock dividend or similar transaction
involving the Company except that a dissolution or liquidation of the Company or
a merger or consolidation in which the Company is not the surviving or the
resulting corporation, shall cause the Plan and any Stock Option, or SAR granted
thereunder, to terminate upon the effective date of such dissolution,
liquidation, merger or consolidation. Provided, that for the purposes of this
Section 1.7, if any merger, consolidation or combination occurs in which the
Company is not the surviving corporation and is the result of a mere change in
the identity, form or place of organization of the Company accomplished in
accordance with Section 368(a)(1)(F) of the Code, then, such event will not
cause a termination. Appropriate adjustment may also be made by the Committee in
the terms of a SAR to reflect any of the foregoing changes.

1.8 AMENDMENT AND TERMINATION OF THE PLAN. The Plan shall terminate at midnight,
March 6, 2006, but prior thereto may be altered, changed, modified, amended or
terminated by written amendment approved by the Board. Provided, that no action
of the Board may, without the approval of the Board of Directors, increase the
aggregate number of shares of Stock which may be purchased under Stock Options,
SARs or stock bonuses granted under the Plan; or withdraw the administration of
the Plan from the Committee. Except as provided in this Article I, no amendment,
modification or termination of the Plan shall in any manner adversely affect any
Stock Option or SAR theretofore granted under the Plan without the consent of
the affected Participant.

1.9 EFFECTIVE DATE. The Plan shall be effective September 24, 2003. The Plan
shall terminate at midnight on September 24, 2006.

1.10 SECURITIES LAW REQUIREMENTS. The Company shall have no liability to issue
any Stock hereunder unless the issuance of such shares would comply with any
applicable federal or state securities laws or any other applicable law or
regulations thereunder.

1.11 SEPARATE CERTIFICATES. Separate certificates representing the Common Stock
of the Company to be delivered to a Participant upon the exercise of any Stock
Option, or SAR will be issued to such Participant.

1.12     PAYMENT FOR STOCK; RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT.

         (a) PAYMENT FOR STOCK. Payment for shares of Stock acquired under this
Plan shall be made in full and in cash or check made payable to the Company.
Provided, payment for shares of Stock purchased under this Plan may also be made
in Common Stock of the Company or a combination of cash and Common Stock of the
Company in the event that the purchase of shares is pursuant to the exercise of
rights under an SAR attached to the Option and which is exercisable on the date
of exercise of the Option. In the event that Common Stock of the Company is
utilized in consideration for the purchase of Stock upon the exercise of a Stock
Option, then, such Common Stock shall be valued at the "fair market value" as
defined in Section 1.6 of the Plan.

<PAGE>

         (b) RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT. Furthermore, a
Participant may exercise an Option without payment of the Option Price in the
event that the exercise is pursuant to rights under an SAR attached to the
Option and which is exercisable on the date of exercise of the Option. In the
event an Option with an SAR attached is exercised without payment of the Option
Price, the Participant shall be entitled to receive either (i) a cash payment
from the Company equal to the excess of the total fair market value of the
shares of Stock on such date as determined with respect to which the Option is
being exercised over the total cash Option Price of such shares of Stock as set
forth in the Option or (ii) that number of whole shares of Stock as is
determined by dividing (A) an amount equal to the fair market value per share of
Stock on the date of exercise into (B) an amount equal to the excess of the
total fair market value of the shares of Stock on such date with respect to
which the Option is being exercised over the total cash Option Price of such
shares of Stock as set forth in the Option, and fractional shares will be
rounded to the next lowest number and the Participant will receive cash in lieu
thereof.

1.13 INCURRENCE OF DISABILITY. A Participant shall be deemed to have terminated
consulting and incurred a disability ("Disability") if such Participant suffers
a physical or mental condition which, in the judgment of the Committee, totally
and permanently prevents a Participant from engaging in any substantial gainful
consulting with the Company or a subsidiary.

1.14 GRANTS OF OPTIONS AND STOCK OPTION AGREEMENT. Each Stock Option and/or SAR
granted under this Plan shall be evidenced by the minutes of a meeting of the
Committee or by the written consent of the Committee and by a written Stock
Option Agreement effective on the date of grant and executed by the Company and
the Participant. Each Option granted hereunder shall contain such terms,
restrictions and conditions as the Committee may determine, which terms,
restrictions and conditions may or may not be the same in each case.

1.15 USE OF PROCEEDS. The proceeds received by the Company from the sale of
Stock pursuant to the exercise of Options granted under the Plan shall be added
to the Company's general funds and used for general corporate purposes.

1.16 NON-TRANSFERABILITY OF OPTIONS. Except as otherwise herein provided, any
Option or SAR granted shall not be transferable otherwise than by will or the
laws of descent and distribution, and the Option may be exercised, during the
lifetime of the Participant, only by him or her. More particularly (but without
limiting the generality of the foregoing), the Option and/or SAR may not be
assigned, transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law and shall not be subject to
execution, attachment, or similar process. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Option and/or SAR contrary to
the provisions hereof shall be null and void and without effect.

1.17 ADDITIONAL DOCUMENTS ON DEATH OF PARTICIPANT. No transfer of an Option
and/or SAR by the Participant by will or the laws of descent and distribution
shall be effective to bind the Company unless the Company shall have been
furnished with written notice and an unauthenticated copy of the will and/or
such other evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the successor to the Option
and/or SAR of the terms and conditions of such Option and/or SAR.

1.18 CHANGES IN CONSULTANT RELATIONSHIPS. So long as the Participant shall
continue to be a consultant of the Company or any one of its subsidiaries, any
Option granted to him or her shall not be affected by any change of duties or
position. Nothing in the Plan or in any Stock Option Agreement which relates to
the Plan shall confer upon any Participant any right to continue as a consultant
of the Company or of any of its subsidiaries, or interfere in any way with the
right of the Company or any of its subsidiaries to terminate the consulting
arrangement at any time.

1.19 SHAREHOLDER RIGHTS. No Participant shall have a right as a shareholder with
respect to any shares of Stock subject to an Option prior to the purchase of
such shares of Stock by exercise of the Option.

1.20 RIGHT TO EXERCISE UPON COMPANY CEASING TO EXIST. Where dissolution or
liquidation of the Company or any merger consolidation or combination in which
the Company is not the surviving corporation occurs, the Participant shall have
the right immediately prior to such dissolution, liquidation, merger,
consolidation or combination, as the case may be, to exercise, in whole or in
part, his or her then remaining Options whether or not then exercisable, but
limited to that number of shares that can be acquired without causing the
Participant to have an "excess parachute payment" as determined under Section
280G of the Code determined by taking into account all of Participant's

<PAGE>

"parachute payments" determined under Section 280G of the Code. Provided, the
foregoing notwithstanding, after the Participant has been afforded the
opportunity to exercise his or her then remaining Options as provided in this
Section 1.21, and to the extent such Options are not timely exercised as
provided in this Section 1.21, then, the terms and provisions of this Plan and
any Stock Option Agreement will thereafter continue in effect, and the
Participant will be entitled to exercise any such remaining and unexercised
Options in accordance with the terms and provisions of this Plan and such Stock
Option Agreement as such Options thereafter become exercisable. Provided
further, that for the purposes of this Section 1.21, if any merger,
consolidation or combination occurs in which the Company is not the surviving
corporation and is the result of a mere change in the identity, form, or place
of organization of the Company accomplished in accordance with Section
368(a)(1)(F) of the Code, then, such event shall not cause an acceleration of
the exercisability of any such Options granted hereunder.

1.21 ASSUMPTION OF OUTSTANDING OPTIONS AND SARS. To the extent permitted by the
then applicable provisions of the Code, any successor to the Company succeeding
to, or assigned the business of, the Company as the result of or in connection
with a corporate merger, consolidation, combination, reorganization or
liquidation transaction shall assume Options and SARs outstanding under the Plan
or issue new Options and/or SARs in place of outstanding Options and/or SARs
under the Plan, as determined in its sole discretion.

                                   ARTICLE II

                       TERMS OF STOCK OPTIONS AND EXERCISE

2.1      GENERAL TERMS.

         (a) GRANT AND TERMS FOR STOCK OPTIONS. Stock Options shall be granted
by the Committee on the following terms and conditions: No Stock Option shall be
exercisable within six months from the date of grant (except as specifically
provided in Subsection 2.l(c) hereof, with regard to the death or Disability of
a Participant), nor more than five years after the date of grant. Subject to
such limitation, the Committee shall have the discretion to fix the period (the
"Option Period") during which any Stock Option may be exercised. Stock Options
granted shall not be transferable except by will or by the laws of descent and
distribution, Stock Options shall be exercisable only by the Participant while
actively retained as a consultant by the Company or a subsidiary, except that
(i) any such Stock Option granted and which is otherwise exercisable, may be
exercised by the personal representative of a deceased Participant within 12
months after the death of such Participant (but not beyond the Option Period of
such Stock Option), (ii) if a Participant terminates his position as a
consultant with the Company or a subsidiary on account of Retirement, such
Participant may exercise any Stock Option which is otherwise exercisable at any
time within three months of such date of termination and (iii) if a Participant
terminates his position as a consultant with the Company or a subsidiary on
account of incurring a Disability, such Participant may exercise any Stock
Option which is otherwise exercisable at any time within 12 months of such date
of termination. If a Participant should die during the applicable three-month or
12-month period following the date of such Participant's termination on account
of Disability, the rights of the personal representative of such deceased
Participant as such relate to any Stock Options granted to such deceased
Participant shall be governed in accordance with Subsection 2.1(a)(i) of this
Article II.

         (b) OPTION PRICE. The option price ("Option Price") for shares of Stock
subject to a Stock Option shall be determined by the Committee, but in no event
shall the Option Price of Stock Options be less than 85% of the "fair market
value" of the Stock on the date of grant.

         (c) ACCELERATION OF OTHERWISE UNEXERCISABLE STOCK OPTION ON DEATH,
DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole
discretion, may permit (i) a Participant who terminates his position as a
consultant due to a Disability, (ii) the personal representative of a deceased
Participant, or (iii) any other Participant who terminates his position as a
consultant upon the occurrence of special circumstances (as determined by the
Committee) to exercise and purchase (within three months of such date of
termination of consulting arrangement, or 12 months in the case of a deceased or
disabled Participant; all or any part of the shares subject to Stock Option on
the date of the Participant's Disability, death, or as the Committee otherwise
so determines, notwithstanding that all installments, if any, with respect to
such Stock Option, had not accrued on such date. Provided, such discretionary
authority of the Committee shall not be exercised with respect to any Stock
Option (or portion thereof) if the applicable six-month waiting period for
exercise had not expired except in the event of the death or disability of the
Participant when the personal representative of the deceased Participant or the

<PAGE>

disabled Participant may, with the consent of the Committee, exercise such Stock
Option notwithstanding the fact that the applicable six-month waiting period had
not yet expired.

         (d) NUMBER OF STOCK OPTIONS GRANTED. Participants may be granted more
than one Stock Option. In making any such determination, the Committee shall
obtain the advice and recommendation of the officers of the Company or a
subsidiary which have supervisory authority over such Participants. The granting
of a Stock Option under the Plan shall not affect any outstanding Stock Option
previously granted to a Participant under the Plan.

         (e) NOTICE OF EXERCISE STOCK OPTION. Upon exercise of a stock option, a
Participant shall give written notice to the Secretary of the Company, or other
officer designated by the Committee, at the Company's main office in Los
Angeles, California. No Stock shall be issued to any Participant until the
Company receives full payment for the Stock purchased, if applicable, and any
required state and federal withholding taxes.

                                   ARTICLE III

                                      SARS

3.1      GENERAL TERMS.

         (a) GRANT AND TERMS OF SARS. The Committee may grant SARs to
Participants in connection with Stock Options granted under the Plan. SARs shall
not be exercisable (i) earlier than six months from the date of grant except as
specifically provided in Subsection 3.l(b) hereof in the case of the death or
Disability of a Participant, and (ii) shall terminate at such time as the
Committee determines and shall be exercised only upon surrender of the related
Stock Option and only to the extent that the related Stock Option (or the
portion thereof as to which the SAR is exercisable) is exercised. SARs may be
exercised only by the Participant while actively engaged as a consultant by the
Company or a subsidiary except that (i) any SARs previously granted to a
Participant which are otherwise exercisable may be exercised, with the approval
of the Committee, by the personal representative of a deceased Participant, even
if such death should occur within six months of the date of grant (but not
beyond the expiration date of such SAR), and (ii) if a Participant terminates
his position as a consultant with the Company or a subsidiary, as the case may
be, on account of incurring a Disability, such Participant may exercise any SARs
which are otherwise exercisable, with the approval of the Committee, anytime
within 12 months of termination by Disability. If a Participant should die
during the applicable three-month period following the applicable 12 month
period following the date of termination on account of Disability, the rights of
the personal representative of such deceased Participant as such relate to any
SARs granted to such deceased Participant shall be governed in accordance with
(i) of the second sentence of this Subsection 3.l(a) of this Article III. The
applicable SAR shall (i) terminate upon the termination of the underlying Stock
Option, as the case may be, (ii) only be transferable at the same time and under
the same conditions as the underlying Stock Option is transferable, (iii) only
be exercised when the underlying Stock Option is exercised, and (iv) may be
exercised only if there is a positive spread between the Option Price, as
applicable and the "fair market value" of the Stock for which the SAR is
exercised.

         (b) ACCELERATION OF OTHERWISE UNEXERCISABLE SARS UPON DEATH, DISABILITY
OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole discretion, may
permit (i) a Participant who terminates his position as a consultant with the
Company or a subsidiary due to a Disability, (ii) the personal representative of
such deceased Participant, or (iii) any other Participant who terminates
employment as a consultant with the Company or a subsidiary upon the occurrence
of special circumstances (as determined by the Committee) to exercise (within 12
months in the case of a disabled or deceased Participant) all or any part of any
such SARs previously granted to such Participant as of the date of such
Participant's Disability, death, or as the Committee otherwise so determines,
notwithstanding that all installments, if any with respect to such SARs, had not
accrued on such date. Provided, such discretionary authority of the Committee
may not be exercised with respect to any SAR (or portion thereof if the
applicable six-month waiting period for exercise had not expired as of such
date, except (i) in the event of the Disability of the Participant or (ii) the
death of the Participant, when such disabled Participant or the personal
representative of such deceased Participant may, with the consent of the
Committee, exercise such SARs notwithstanding the fact that the applicable
six-month waiting period had not yet expired.

<PAGE>

         (c) FORM OF PAYMENT OF SARS. The Participant may request the method and
combination of payment upon the exercise of a SAR; however, the Committee has
the final authority to determine whether the value of the SAR shall be paid in
cash or shares of Stock or both. Upon exercise of a SAR, the holder is entitled
to receive the excess amount of the "fair market value" of the Stock (as of the
date of exercise) for which the SAR is exercised over the Option Price, as
applicable, under the related Stock Option, as the case may be. All applicable
federal and state withholding taxes will be paid by the Participant to the
Company upon the exercise of a SAR since the excess amount described above will
be required to be included within taxable income in accordance with Sections 61
and 83 of the Code.

                                           Material Technologies, Inc.

                                      By:  /S/ ROBERT M. BERNSTEIN
                                           -------------------------------------
                                           Robert M. Bernstein, Chief Executive
                                           Officer and President

                                           Date Plan adopted and approved by the
                                           Board of Directors:
                                           September 24, 2003

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