Document:

matechexh10_11.htm

    
      
        
 
Exhibit 10.11

      

      CLASS A
SENIOR SECURED CONVERTIBLE DEBENTURE

       

      THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH
LAWS.  THE SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH
LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM.  THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THE OFFERING MATERIALS.  ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.

       

      
        	
                ISSUANCE
      DATE

              	
                September
      __, 2003

              
	
                CONVERTIBLE
      DEBENTURE DUE

              	
                December
      31, 2006

              
	
                AMOUNT

              	
                Up
      to $1,500,000.00

              

      

       

      FOR VALUE
RECEIVED, Material Technologies, Inc., a Delaware corporation (the “Company”),
hereby promises to pay Palisades
Capital, LLC or registered assigns (the “Holder”) on December 31, 2006
(the “Maturity Date”), a principal amount equal to the amount set forth on the
Schedule of Advances attached hereto and signed by the Company, and to pay
interest on the principal amount hereof, in such amounts, at such times and on
such terms and conditions as are specified herein.

       

      Article 1. Interest

       

      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 principal amount hereof is paid in full or has been converted. Interest
shall accrue from the date of each advance, on the full amount of such
advance.  Notwithstanding the foregoing, the Company shall have the
right to defer payment of interest until the Maturity Date, provided that the
Company shall not defer any interest payments to the extent of positive Earnings
Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”).  Therefore, at the election of the Company, interest may
be paid out of, and only to the extent of, EBITDA.

       

      Article 2. Method
of Payment

       

      The
Company may draw a check for the payment of interest to the order of the Holder
of this Debenture and mail it to the Holder's address as shown on the Register
(as defined in Section 7.2 below).   Alternatively, the Company
shall have the right at any time to pay accrued but unpaid interest in
restricted shares of the Company’s Class A Common Stock (“Common Stock”), based
on a price equal to fifty percent (50%) of the average closing price of such
Common Stock for the ten trading days prior to issuance of such Common Stock to
the Holder, so long as such shares are actually delivered to the Holder within
seven business days of issuance.  In the event the
Company

      
        
           

        

        
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      elects to
pay any accrued interest by issuance of Common Stock, then the Company shall
notify the Holder in writing not less than seven business days prior to the
issuance of such shares, and the Holder shall have the right at any time before
receipt of delivery of such shares to notify the Company of the Holder’s desire
not to accept payment of interest in the form of Common Stock.  In
such event, the Company shall not have the right to pay any accrued interest in
the form of Common Stock.  In such event the Company shall have the
right to continue to accrue such interest until the Maturity Date.

       

      The
Company shall have the right at any time to prepay the Debenture in whole or in
part, upon not less than ten (10) days prior written notice to the Holders (a
“Prepayment Notice”).  Other than with respect to a prepayment arising
under Section 3.1(b), during the ten (10) days following the Holder’s receipt of
such Prepayment Notice, the Holder shall have the right to convert this
Debenture at the then applicable Conversion Price, notwithstanding any notice
provision or conversion limitation set forth in Section 3.1(a), which shall in
such event not apply and be waived.

       

      Article
3.  Conversion

       

      Section
3.1.  Conversion
Privilege

       

      (a)           The
Holder of this Debenture shall have the right, at its option, to convert this
Debenture into shares of Common Stock at any time following March 30, 2004, and
then only after not less than seventy-five (75) days prior notice to the
Company.  The number of shares of Common Stock issuable upon the
conversion of this Debenture is determined pursuant to Section 3.2 and rounding
the result to the nearest whole share.  At any time after delivery by
Holder to the Company of a Notice of Intent to Convert, the Company shall not
have the right to pre-pay the balance due on the Debenture, and the Holder shall
convert the Debenture according to the terms herein on the 75th
day following the mailing or transmission of such notice of intent (the “Notice
of Intent Date”).  In the event such notice of intent is mailed or
transmitted within 75 days of the Maturity Date, the Holder shall have the right
to extend the Maturity Date so as to allow conversion of the Debenture 75 days
after the Notice of Intent Date.

       

      (b)           In
the event the Holder of the Debenture elects to convert all or any portion of
the Debenture into Common Stock at any time, and the then applicable Conversion
Price is less than $0.10 per share, then the Company shall have the right, at
any time during the 75 days following the date of the Holder’s Notice of
Conversion, to prepay all or any portion of the Debenture that has been
requested to be converted, and the Company will therefore not be required to
issue shares of Common Stock upon conversion so long as such Debenture is paid
with good, cleared funds prior to the date the Company is required to issue the
Common Stock.  This provision shall be waived in the event the Holder
at any time elects to convert the Debenture at a Conversion Price equal to
$0.10.

       

      (c)           Less
than all of the principal amount of this Debenture may be converted into Common
Stock if the portion converted is $1,000 or a whole multiple of $1,000 and the
provisions of this Article 3 that apply to the conversion of all of the
Debenture shall also apply to the conversion of a portion of it.  This
Debenture may not be converted, whether in whole or in part, except in
accordance with Article 3.

      
        
           

        

        
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      Section
3.2.  Conversion
Procedure.

       

      (a)           Debentures.  Subject
to Section 3.1, after having received not less than seventy-five (75) days prior
notice of Holder's intent to purchase (which notice shall not in any event
obligate the Holder to convert any portion of this Debenture), upon the
Company's receipt of a facsimile or original of Holder's duly completed and
signed Notice of Conversion (a copy of which is attached hereto as Exhibit A),
the Company shall instruct its transfer agent to issue one or more Certificates
representing that number of shares of Common Stock into which the Debentures are
convertible in accordance with the provisions regarding
conversion.  The Company's transfer agent or attorney shall act as
Registrar and shall maintain an appropriate ledger containing the necessary
information with respect to each Debenture.

       

      (b)           Conversion
Date.  Such conversion shall be effectuated by surrendering to
the Company, or its attorney, the Debentures (or a copy thereof if the Holder
certifies that the original has been lost or destroyed) to be converted together
with a facsimile or original of the signed Notice of Conversion.  The
date on which the Notice of Conversion is effective (“Conversion Date”) shall be
deemed to be the date on which the Holder has delivered to the Company a
facsimile or original of the signed Notice of Conversion, and so long as the
time limitations set forth in Section 3.1(a) have been satisfied.  The
Company shall deliver to the Holder, or per the Holder's instructions, the
shares of Common Stock within seven (7) business days of receipt of the
Debentures to be converted.

       

      (c)           Common
Stock to be Issued.  Subject to the time limitations set forth
in Section 3.2(a) above, upon the conversion of any Debentures and upon receipt
by the Company or its attorney of a facsimile or original of Holder's signed
Notice of Conversion, Company shall instruct Company's transfer agent to issue
Stock Certificates in the name of Holder (or its nominee) and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion, as applicable.

       

      (d)           Conversion
Rate.  Subject to the time limitations set forth in Section
3.1(a), Holder is entitled to convert this Debenture, plus accrued interest,
into Common Stock of the Company at the lesser of (i) 50% of the averaged ten
closing prices for the Company's Common Stock for the ten (10) trading days
immediately preceding the Conversion Date or (ii) $0.10 (the lesser of the two
being referred to as the “Conversion Price”).  No fractional shares or
scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded up or down, as the case may be, to
the nearest whole share.

       

      (e)           Nothing
contained in this Debenture shall be deemed to establish or require the payment
of interest to the Holder at a rate in excess of the maximum rate permitted by
governing law.  In the event that the rate of interest required to be
paid exceeds the maximum rate permitted by governing law, the rate of interest
required to be paid thereunder shall be automatically reduced to the maximum
rate permitted under the governing law and such excess shall be returned with
reasonable promptness by the Holder to the Company.

      
        
           

        

        
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      (f)           It
shall be the Company's responsibility to take all necessary actions and to bear
all such costs to issue certificates for the Common Stock as provided herein,
including the responsibility and cost for delivery of an opinion letter to the
transfer agent, if so required.  The person in whose name the
certificate of Common Stock is to be registered shall be treated as a
shareholder of record on and after the conversion date. Upon surrender of any
Debentures that are to be converted in part, the Company shall issue to the
Holder new Debentures representing the unconverted amount, if so requested by
Holder.

       

      (g)           Payment
of Taxes.  The Company shall pay all documentary stamp taxes,
if any, attributable to the initial issuance of the Common Stock; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable, (i) with respect to any secondary transfer of the Debentures or
the Common Stock issuable upon exercise hereof or (ii) as a result of the
issuance of the Common Stock to any person other than the Holder, and the
Company shall not be required to issue or deliver any certificate for any Common
Stock unless and until the person requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have produced evidence that
such tax has been paid to the appropriate taxing authority.

       

      (h)           Conversion
Default.  If, at any time Holder submits a Notice of Conversion
and the Company does not have sufficient authorized but unissued shares of
Common Stock available to effect, in full, a conversion of the Debentures (a
“Conversion Default”), the Company shall promptly issue so many of its
authorized shares as are then available, and then use its best efforts to take
such action as may be required to increase the authorized shares of the Company
in order to provide for the issuance of all required shares upon
Conversion.

       

      Section
3.3.  Company
to Reserve Stock.  The Company shall reserve the number of
shares of Common Stock required pursuant to and upon the terms set forth in the
Subscription Agreement, to permit the conversion of this
Debenture.  All shares of Common Stock which may be issued upon the
conversion hereof shall upon issuance be validly issued,  fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof.

       

      Section
3.4.  Restrictions
on Transfer.  This Debenture has not been registered under the
Securities Act of 1933, as amended, (the “Act”) and is being issued under
Section 4(2) of the Act and Rule 506 of Regulation D promulgated under the
Act.  This Debenture and the Common Stock issuable upon the conversion
thereof may only be offered or sold pursuant to registration under or an
exemption from the Act.  In the event the Company shall file a
registration statement with the Securities and Exchange Commission, on any form
other than a Form S-8, then the Company shall register the shares issuable upon
conversion of this Debenture, as well as any other shares requested to be
registered by the Holder.

       

      Section
3.5.  Mergers,
Etc.  If the Company merges or consolidates with another
corporation or sells or transfers all or substantially all of its assets to
another person and the holders of the Common Stock are entitled to receive
stock, securities or property in respect of or in exchange for Common Stock,
then as a condition of such merger, consolidation, sale or transfer, the Company
and any such successor, purchaser or transferee shall amend this Debenture to
provide that it may thereafter be converted on the terms and subject to the
conditions set forth above into the kind and amount of stock, securities or
property receivable upon such merger, consolidation, sale or
transfer

      
        
           

        

        
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      by a
holder of the number of shares of Common Stock into which this Debenture might
have been converted immediately before such merger, consolidation, sale or
transfer, subject to adjustments which shall be as nearly equivalent as may be
practicable to adjustments provided for in this Article 3.

       

      Article
4.  Mergers

       

      The Company shall not
consolidate or merge into, or transfer all or substantially all of its assets
to, any person, without the prior written consent of the Holders of a majority
of the outstanding Debentures, which consent may be withheld in each Holder’s
sole and absolute discretion.  Any reference herein to the Company
shall refer to such surviving or transferee corporation and the obligations of
the Company shall terminate upon such written assumption.

       

      Article
5.  Reports

       

      The Company will mail to
the Holder hereof at its address as shown on the Register a copy of any annual,
quarterly or other report or proxy statement that it gives to its shareholders
generally at the time such report or statement is sent to shareholders, unless
such report is timely filed with the United States Securities and Exchange
Commission.

       

      Article
6.  Defaults
and Remedies

       

      Section
6.1.  Events
of Default.  An “Event of Default” occurs if (a) the Company
does not make the payment of the principal of this Debenture when the same
becomes due and payable at maturity, upon redemption or otherwise, (b) the
Company does not make a payment, other than a payment of principal, for a period
of five (5) business days after its due date, (c) any of the Company's
representations or warranties contained in this Debenture or in the related
Security Agreement dated the date hereof were false when made or the Company
fails to comply with any of its other agreements in this Debenture or such
Security Agreement and such failure continues for the period and after the
notice specified below, (d) the Company shall default under that certain License
Agreement between the Company and the Trustees of the University of Pennsylvania
(as amended), (e) the Company shall violate or breach any of the covenants
contained in this Agreement, or (f) the Company pursuant to or within the
meaning of any Bankruptcy Law (as hereinafter defined):  (i) commences
a voluntary petition under Bankruptcy Law; (ii) consents to the entry of an
order for relief against it in an involuntary bankruptcy petition; (iii)
consents to the appointment of a Custodian (as hereinafter defined) of it or for
all or substantially all of its property or (iv) makes a general assignment for
the benefit of its creditors or (v) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:  (A) is for relief
against the Company in an involuntary bankruptcy petition; (B) appoints a
Custodian of the Company or for all or substantially all of its property or (C)
orders the liquidation of the Company, and the order or decree remains unstayed
and in effect for 60 days.  As used in this Section 6.1, the term
“Bankruptcy Law” means Title 11 of the United States Code or any similar federal
or state law for the relief of debtors.  The term “Custodian” means
any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

      
        
           

        

        
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      Section
6.2.  Acceleration.  If
an Event of Default occurs and is continuing, the Holder hereof by notice to the
Company, may declare the remaining principal amount of this Debenture, together
with all accrued interest, to be due and payable.  Upon such
declaration, the remaining principal amount shall be due and payable
immediately.

       

      Section
6.3.  Covenants.  The Company hereby
agrees to comply with each of the following covenants, the breach or violation
of which shall be deemed an Event of Default hereunder.  Without the
prior written consent of the Holders of at least a majority of the outstanding
Debentures:

       

      
        	
                 
      

              	
                a.

              	
                The
      Company shall not authorize or issue any additional shares of preferred
      stock, or any shares of Common Stock other than Class A Common
      Stock;

              

      

       

      
        	
                 
      

              	
                b.

              	
                The
      Company shall not effect a split of its Common Stock, or pay any dividends
      on its Common Stock, without the consent of the Holders of a majority of
      the outstanding Debentures;

              

      

       

      
        	
                 
      

              	
                c.

              	
                The
      Company shall not issue any additional Debentures to any party (this shall
      not prevent the Company from issuing other debentures or debt
      obligations);

              

      

       

      
        	
                 
      

              	
                d.

              	
                The
      Company shall not increase the compensation paid or payable to any of its
      officers or directors by more than five percent (5%) in any one calendar
      year;

              

      

       

      
        	
                 
      

              	
                e.

              	
                The
      Company shall at all times comply in all respects with the reporting
      requirements of the Securities and Exchange Act of 1934, as amended (the
      “Exchange Act”), and shall take such action as is required from time to
      time to continue and maintain the eligibility of the Company’s
      stockholders to transfer securities without registration under the
      exemption provided by Rule 144 promulgated under the
  Act.

              

      

       

      
        	
                 
      

              	
                f.

              	
                The
      Company shall not use any of the proceeds of the issuance of the
      Debentures to pay any accrued salaries or past due accounts, payables or
      debts, without the prior written consent of the Holders of a majority of
      the Debentures.

              

      

       

      
        	
                 
      

              	
                g.

              	
                The
      Company shall not waive or modify any of the provisions of the Shareholder
      Agreement in connection with the 44,000,000 shares of Class A Common Stock
      issued to Robert Bernstein, or any transferee of such shares, and shall
      not permit any of such shares to be transferred without legend at any time
      prior to expiration of the term of such
  agreement.

              

      

       

      Article
7.  Record
Ownership

       

      Section
7.1.  Record
Ownership.  The Company, or its attorney, shall maintain a
register of the holders of the Debentures (the “Register”) showing their names
and addresses and the serial numbers and principal amounts of Debentures issued
to or transferred of record by them from time to time.  The Register
may be maintained in electronic, magnetic or other computerized
form.  The Company may treat the person named as the Holder of this
Debenture in the Register as the sole

      
        
           

        

        
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      owner of
this Debenture.  The Holder of this Debenture is the person
exclusively entitled to receive payments of interest on this Debenture, receive
notifications with respect to this Debenture, convert it into Common Stock and
otherwise exercise all of the rights and powers as the absolute owner
hereof.

       

      Section
7.2.  Registration
of Transfer.  Transfers of this Debenture may be registered on
the books of the Company maintained for such purpose pursuant to Section 7.2
above (i.e., the Register).  Transfers shall be registered when this
Debenture is presented to the Company with a request to register the transfer
hereof and the Debenture is duly endorsed by the appropriate person, reasonable
assurances are given that the endorsements are genuine and effective, and the
Company has received evidence satisfactory to it that such transfer is rightful
and in compliance with all applicable laws, including tax laws and state and
federal securities laws.  When this Debenture is presented for
transfer and duly transferred hereunder, it shall be canceled and a new
Debenture showing the name of the transferee as the record holder thereof shall
be issued in lieu hereof.  When this Debenture is presented to the
Company with a reasonable request to exchange it for an equal principal amount
of Debentures of other denominations, the Company shall make such exchange and
shall cancel this Debenture  and  issue in  lieu
thereof Debentures having a total principal amount equal to this Debenture in
such denominations as agreed to by the Company and Holder.

       

      Section
7.3.  Lost
Debentures.  If this Debenture becomes defaced or mutilated but
is still substantially intact and recognizable, the Company or its agent may
issue a new Debenture in lieu hereof upon its surrender.  Where the
Holder of this Debenture claims that the Debenture has been lost, destroyed or
wrongfully taken, the Company shall issue a new Debenture in place of the
original Debenture if the Holder so requests by written notice to the Company
actually received by the Company before it is notified that the Debenture has
been acquired by a bona fide purchaser and the Holder has delivered to the
Company an indemnity bond in such amount and issued by such surety as the
Company deems satisfactory together with an affidavit of the Holder setting
forth the facts concerning such loss, destruction or wrongful taking and such
other information in such form with such proof or verification as the Company
may request.

       

      Sectin
7.4.  Indemnification
for Transfers.  In the event any Holder transfers all or any
portion of the Debenture, the Holder hereby assumes liability for, and hereby
agree to pay, protect, defend (at trial and appellate levels and with attorneys,
consultants and experts reasonably acceptable to Company), and save Company
harmless from and against, and hereby indemnify Company from and against any and
all liens, damages, (including, without limitation, punitive or exemplary
damages) losses, liabilities, obligations, settlement payments, penalties,
fines, assessments, citations, directives, claims, litigation, demands,
defenses, judgments, suits, proceedings, costs, disbursements and expenses of
any kind or of any nature whatsoever (including, without limitation, reasonable
attorneys’, consultants’ and experts’ fees and disbursements actually incurred
in investigating, defending, settling or prosecuting any claim, litigation or
proceeding) (collectively “Costs”)
which may at any time be imposed upon, incurred by or asserted or awarded
against Company, and arising and proximately caused directly from or out of the
subsequent transfer, conveyance or other disposition of the any warrant, Common
Stock or debenture of the Company which results in a violation of, or otherwise
disqualifies the issuance of the such security from any federal and state
exemptions from registration which the Company relied on in issuing the such
security.

      
        
           

        

        
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      Article
8.  Dilution.

       

      The number of shares of
Common Stock issuable upon conversion of the Debentures shall be
dilutive.  The Company's executive officers and directors have studied
and fully understand the nature of the transactions contemplated by this
Debenture and recognize that the Debenture, if excercised will have a dilutive
effect on existing shareholders.  The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company.  The Company specifically
acknowledges that its obligation to issue additional shares of Common Stock is
binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company.

       

      Article
9.  Notices

       

      Any notice which is
required or convenient under the terms of this Debenture shall be duly given if
it is in writing and delivered in person or mailed by first class mail, postage
prepaid and directed to the Holder of the Debenture at its address as it appears
on the Register or if to the Company to its principal executive offices. The
time when such notice is sent shall be the time of the giving of the
notice.

       

      Article
10.  Time

       

      Where this Debenture
authorizes or requires the payment of money or the performance of a condition or
obligation on a Saturday or Sunday or a public holiday, or authorizes or
requires the payment of money or the performance of a condition or obligation
within, before or after a period of time computed from a certain date, and such
period of time ends on a Saturday or a Sunday or a public holiday, such payment
may be made or condition or obligation performed on the next succeeding business
day, and if the period ends at a specified hour, such payment may be made or
condition performed, at or before the same hour of such next succeeding business
day, with the same force and effect as if made or performed in accordance with
the terms of this Debenture.  A “business day” shall mean a day on
which the banks in California are not required or allowed to be
closed.

       

      Article
11.  Waivers

       

      The holders of a majority
in principal amount of the Debentures may waive a default or rescind the
declaration of an Event of Default and its consequences except for a default in
the payment of principal or conversion into Common Stock.

       

      Article
12.  Rules
of Construction

       

      In this Debenture, unless
the context otherwise requires, words in the singular number include the plural,
and in the plural include the singular, and words of the masculine gender
include the feminine and the neuter, and when the sense so indicates, words of
the neuter gender may refer to any gender.  The numbers and titles of
sections contained in the Debenture are inserted for convenience of reference
only, and they neither form a part of this Debenture nor are they to be used in
the construction or interpretation hereof.  Wherever, in this
Debenture, a determination of the

      
        
           

        

        
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      Company
is required or allowed, such determination shall be made by a majority of the
Board of Directors of the Company and if it is made in good faith, it shall be
conclusive and binding upon the Company and the Holder of this
Debenture.

       

      Article
13.  Governing
Law

       

      The validity, terms,
performance and enforcement of this Debenture shall be governed and construed by
the provisions hereof and in accordance with the laws of the State of California
applicable to agreements that are negotiated, executed, delivered and performed
solely in the State of California.  The prevailing party in any
dispute arising hereunder shall be entitled to recover all of its reasonable
attorney's fees and costs of defense, prosecution or
litigation.

       

      Article
14.  Litigation

       

      (a)           Forum
Selection and Consent to Jurisdiction.  Any litigation based
thereon, or arising out of, under, or in connection with, this agreement or any
course of conduct, course of dealing, statements (whether oral or written) or
actions of the Company or Holder shall be brought and maintained exclusively in
the state or federal courts of the State of California, city of Los
Angeles.  The Company hereby expressly and irrevocably submits to the
jurisdiction of the state and federal courts of the State of California, city of
Los Angeles, for the purpose of any such litigation as set forth above and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with such litigation.  The Company further irrevocably
consents to the service of process by registered mail, postage prepaid, or by
personal service within or without the State of California.  The
Company hereby expressly and irrevocably waives, to the fullest extent permitted
by law, any objection which it may have or hereafter may have to the laying of
venue of any such litigation brought in any such court referred to above and any
claim that any such litigation has been brought in any inconvenient
forum.  To the extent that the Company has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, the Company
hereby irrevocably waives such immunity in respect of its obligations under this
agreement and the other loan documents.

       

      (b)           Waiver
of Jury Trial.  The Holder and the Company hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this agreement, or any course of conduct, course of dealing,
statements (whether oral or written) or actions of the Holder or the
Company.  The Company acknowledges and agrees that it has received
full and sufficient consideration for this provision and that this provision is
a material inducement for the Holder entering into this agreement.

       

      (c)           Submission
To Jurisdiction.  Any legal action or proceeding in connection
with this Debenture or the performance hereof must be brought in the federal
courts located in the State of California and the parties hereby irrevocably
submit to the exclusive jurisdiction of such courts for the purpose of any such
action or proceeding.

      
        
           

        

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

       

      
        	
                MATERIAL
      TECHNOLOGIES, INC.

                a
      Delaware corporation 

              	
                PALISADES
      CAPITAL, LLC

                a
      Nevada limited liability company

              
	 	 
	By_______________________	By:____________________
	Robert
      Bernstein	Jean
      Turner, Secretary
	Chairman
      and CEO	 

      

                                                                                        

       

      [Signature
Page to Senior Secured Convertible Debenture]

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
           

        

        
          10

          
            
 

        

        
           

        

      

      Exhibit
A

       

      NOTICE
OF CONVERSION

       

      (To be
Executed by the Registered Holder upon Conversion.)

       

      The
undersigned hereby irrevocably elects, as of ______________, 200 
to convert $_________________ of the Debentures into Shares of Common Stock (the
“Shares”) of Material Technologies, Inc., a Delaware corporation (the
“Company”).

       

      Date of
Conversion_________________________________________

       

      Applicable
Conversion Price_________________________________

       

      Number of
Shares Issuable upon this conversion______________

       

      Signature___________________________________________________

      [Name]

      Address_____________________________________________________

       

      ____________________________________________________________

       

      Phone______________________   Fax___________________________

       

       

       

       

       

       

       

       

      
        
           

        

        
          11

          
            
 

        

        
           

        

      

      Assignment of
Debenture

       

      The
undersigned hereby sell(s) and assign(s) and transfer(s) unto

       

       

      (name,
address and SSN or EIN of assignee)

       

      Dollars
($                                )           

      (principal
amount of Debenture, $1,000 or integral multiples of $1,000)

       

      of
principal amount of this Debenture together with all accrued and unpaid interest
hereon.

       

      Date:                                           Signed:                                                                                     

      (Signature
must conform in all 

      respects
to name of Holder shown

      of
face of Debenture)

       

       

       

       

       

       

       

       

       

       

       

       

      
        
           

        

        
          12

          
            
 

        

        
           

        

      

      Schedule
of Advances

       

      
        	
                 

                Date

              	
                 

                Amount

              	
                 

                Balance

              	
                 

                Company
      Signature

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      

      

       

       

       

      
        
           

        

        
          13matechexh10_12.htm

    
      
 

    Exhibit 10.12

     

     

    WORKOUT
AGREEMENT

     

     

               
This Workout Agreement (“Agreement”) is entered into by and between The Trustees
of the University of Pennsylvania, a Pennsylvania nonprofit corporation (“Penn”)
and Material Technologies, Inc., a Delaware corporation (“Matech” or the
“Company”) with regard to the following facts:

     

     

    RECITALS

     

     

               
Penn and Matech are parties to a License Agreement dated August 26, 1993, as
amended by Amendment 1 dated December 17, 1997 (together, the “Amended Licensed
Agreement”).  Penn and Matech are also parties to a Sponsored Research
Agreement dated August 26, 1993 (the “SRA Agreement”), as amended by a Repayment
Agreement dated December 17, 1997 (the “Repayment Agreement”, and together with
the SRA Agreement, the “SRA/Repayment Agreement”). 

     

     

               
Matech desires to reach an agreement with Penn to delay payment of some of the
principal debt owed, and interest accrued, and otherwise agree to the terms in
this Agreement; and

     

     

               
Penn, in furtherance of its education and research missions and desire to
benefit society through the timely commercialization of Penn’s invention(s), is
willing to postpone, temporarily, its right to pursue legal remedies against
Matech in connection with the SRA/Repayment Agreement, receive certain payments
from Matech, and otherwise agree to the terms in this Agreement.

     

     

               
NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:

     

     

    AGREEMENT

     

     

    1.        
Acknowledgment
of Debt Owed.  Penn and Matech acknowledge and agree
that:

     

     

               
(a)        as of December 31, 2004, all
amounts due and owing to Penn pursuant to the SRA/Repayment Agreement is Seven
Hundred Sixty Thousand Eight Hundred Thirty-One Dollars ($760,831.00) (the
“Remaining Obligation”); and

     

               
(b)        the maturity date, and all other
dates upon which payments are required to be made to Penn under the
SRA/Repayment Agreement are hereby modified as set forth in this
Agreement.

     

     

    2.        
Payment
Toward Obligation. 

     

     

               
(a)        Upon execution of this Agreement
by both parties, Matech shall deliver to Penn via wire transfer the sum of
Twenty-Five Thousand Dollars ($25,000), as a partial payment of the Remaining
Obligation owed pursuant to the SRA/Repayment Agreement (the “Partial
Payment”).

     

     

               
(b)        On or before each one-year
anniversary of the Agreement Effective Date (defined below), Matech shall pay
Penn an additional sum equal to Twenty Five Thousand Dollars ($25,000), which
will be applied toward reducing the then-current Remaining Obligation and
Accrued Interest (defined below) owed.

     

     

    
      
         

      

      
        Page 1 of
8

        
          
 

      

      
         

      

    

3.        
Interest
Rate.  Effective January 1, 2005, simple interest shall accrue on
the Remaining Obligation at the rate of one-half of one percent (0.5%) per month
of the Remaining Obligation, until paid in full.  All interest that accrues
after the Agreement Effective Date shall be referred to herein as the “Accrued
Interest”.  The Partial Payment, and all payments made pursuant to Sections
2 and 4 of this Agreement, shall be credited first against the Remaining
Obligation, and then credited against Accrued Interest. 

    
    

     

    4.        
Payments. 
Beginning with Matech’s Second Quarter 2005, and continuing for so long as any
portion of the Remaining Obligation or Accrued Interest are outstanding, Matech
shall pay, or shall cause a Matech Affiliate to pay, to Penn quarterly payments
(each, the “Quarterly Payment”), toward the full payment of the Remaining
Obligation and Accrued Interest.  Such Quarterly Payment shall be due to
Penn by the earlier of:  (a) ten days following the filing of Matech’s
quarterly Form 10-Q or Form 10-K for each year that any portion of the Remaining
Obligation or Accrued Interest is outstanding; or (b) sixty (60) days after the
end of the calendar quarter for any quarter in which any portion of the
Remaining Obligation or Accrued Interest in outstanding.  Notwithstanding
the foregoing, the Quarterly Payments shall be made only out of, and not to
exceed ten percent (10%) of, Matech’s Net Income Before Extraordinary Items and
Provision for Income Taxes (“Net Income”).  For purposes of this Section 4,
“Net Income” shall have the same meaning as “Net Income Before Extraordinary
Items and Provision for Income Taxes” as set forth in Matech’s publicly-filed
quarterly and annual financial statements with the Securities and Exchange
Commission or successor regulatory authority and determined by Matech’s
accountant in accordance with generally accepted accounting principles
consistently applied, or, in the case of an Affiliate, as “net income”
determined by the Affiliate’s accountant in accordance with generally accepted
accounting principles consistently applied.  If Matech or a Matech
Affiliate has any Net Income for a quarter, Matech shall pay, or shall cause the
Matech Affiliate or Licensee to pay, some amount to Penn as a Quarterly Payment
up to the 10% of Net Income; if Matech or a Matech Affiliate does not have Net
Income for the quarter, then no Quarterly Payment shall be due.

     

     

    5.        
Repayment
Agreement Amendments.

     

     

               
(a)        Sections 5, 6 and 10 of the
Repayment Agreement are hereby deleted.

     

     

               
(b)        In Section 8 of the Repayment
Agreement, the amount “$150,000” is hereby amended to state “$300,000” and the
following sentence is inserted at the end of Section 8: “In the event Mr.
Bernstein’s cash salary exceeds the sum of $250,000 (excluding for this purpose
any noncash benefits, options, warrants which may otherwise be reportable as
salary) in any calendar year Penn shall receive, on a dollar for dollar basis,
an amount equal to any cash salary received by Mr. Bernstein in excess of
$250,000. For example, if Mr. Bernstein’s annual cash salary is $275,000 for
2005, in the year ending 2005 Penn shall receive the sum of $25,000 to be
credited to the Remaining Obligation.” This shall cease when the debt in Section
1(a) has been paid off.

     

     

    6.        
New
Equity Issuance and Other Equity Issues. 

     

     

               
(a)        Within ten business days following
the Agreement Effective Date (defined below), Matech shall issue and deliver in
the name of “The Trustees of the University of Pennsylvania”, that number of
shares of Matech’s Class A Common Stock as will cause Penn to own and hold of
record three and three-quarters percent (3.75%) of the issued and outstanding
shares (excluding any and all unexercised: i) options, ii) warrants, iii)
convertible debentures, or 

    
      
         

      

      
        Page 2 of
8

        
          
 

      

      
         

      

       

    

    iv) convertible
securities in any form) of Matech’s Class A Common Stock as set forth on
Matech’s December 31, 2004 Form 10-K (the “Penn Settlement Shares”). 
Within ten business days after receiving such representations and warranties as
shall be agreed upon between Matech and Dr. Campbell Laird in his individual
capacity (“Laird”), Matech shall issue and deliver in the name of Dr. Campbell
Laird that number of shares of Matech’s Class A Common Stock as will cause Laird
to own and hold of record three-quarters of a percent (0.75%) of the issued and
outstanding shares (excluding any and all unexercised: (i) options, (ii)
warrants, (iii) convertible debentures, or (iv) convertible securities in any
form) of Matech’s Class A Common Stock as set forth on Matech’s December 31,
2004 Form 10-K (the “Laird Settlement Shares”).  Within ten business days
after receiving such representations and warranties as shall be agreed upon
between Matech and Dr. Li Yuan Feng in his individual capacity (“Li”), Matech
shall issue and deliver in the name of Dr. Li Yuan Feng that number of shares of
Matech’s Class A Common Stock as will cause Li to own and hold of record
three-quarters of a percent (0.75%) of the issued and outstanding shares
(excluding any and all unexercised: (i) options, (ii) warrants, (iii)
convertible debentures, or (iv) convertible securities in any form) of Matech’s
Class A Common Stock as set forth on Matech’s December 31, 2004 Form 10-K (the
“Li Settlement Shares”).The Penn Settlement Shares, Laird Settlement Shares, and
Li Settlement Shares collectively shall be defined to be the “Settlement
Shares”. 

     

     

               
(b)        Within ten business days following
the Agreement Effective Date, Matech shall deliver to Penn an updated
capitalization table setting forth the capital stock Matech is authorized to
issue, the beneficial ownership of the shares of each class and series thereof
and of the securities convertible, exercisable or exchangeable therefor, that
are outstanding as of the Agreement Effective Date.

     

     

               
(c)        The Penn Settlement Shares and all
shares of Matech common stock owned and held of record on the Agreement
Effective Date by Penn (collectively, the “Matech Shares”) shall be subject to a
shareholder lock-up agreement as follows: 

    
                    (1) 
  Except as otherwise provided in Section 6(c)(2) of this Agreement,
  any interest in the  Matech Shares may not be voluntarily or
  involuntarily transferred, by operation of law or otherwise, by Penn for a
  period of eighteen (18) months from the Agreement Effective Date (the “Lock Up
  Period”).

              (2) 
  The prohibition in Section 6(c)(1) shall not apply to a transfer
  of an interest in the Matech Shares, held by Penn for the benefit of and with
  the restrictive legends referred to in Section 6(c)(1) above, to Dr. Campbell
  Laird, Dr. Li Yuan Feng or to any employee of Penn who has developed or
  assisted in the development of the intellectual property described in the
  Amended License Agreement. Notwithstanding anything contained herein to the
  contrary, an interest in the Matech Shares may not be voluntarily or
  involuntarily transferred, by operation of law or otherwise, if such transfer
  would result in a violation of the Securities Act of 1933, as amended (the
  “Act”), as may be applicable.

             
  (3) 
  An attempt to transfer an interest in the Matech Shares in violation of
  this Section 6 shall be void and Matech shall refuse to register the Matech
  Shares in question in the name of the transferee on the books of
  Matech.

             
  (4)  After expiration of the Lock-Up Period, Matech shall not object to
  transferring the owner of record for any of the Matech Shares from Penn to a
  new owner or holder of record, and shall transfer such shares on its books and
  records if/when Penn 

    

    
      
         

      

      
        Page 3 of
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      sells or
  transfers any or all of such shares in accordance with applicable federal and
  state securities laws.  In the event of any dispute regarding whether any
  particular sale or transfer would result in a violation of the Act or
  otherwise not be in accordance with applicable federal or state securities
  laws, Matech and Penn shall obtain an opinion of counsel from an attorney who
  otherwise does not represent either Matech or Penn and who is acceptable to
  both Matech and Penn, and Matech shall comply with the opinion of counsel from
  such attorney regarding such proposed sale or transfer of such shares on its
  books and records.

    

    7.
        Waiver.
Penn hereby waives any and all defaults of Matech under the SRA/Repayment
Agreement between the parties existing on or prior to the Agreement Effective
Date, it being understood that this is a waiver of the default, and not a waiver
of any amounts owed as set forth in this Agreement or a waiver of the clause
itself.  The parties acknowledge and agree that Penn shall have no
preemptive or anti-dilution rights of any kind after the date by which Penn
receives the Penn Settlement Shares in accordance with Section 6(a) of this
Agreement.

     

    8.        
Matech
Representations and Warranties.  Matech hereby represents and
warrants to Penn:

     

               
(a)        that Matech and its Affiliates (as
defined in the License Agreement) are duly organized, validly existing and in
good standing under Delaware law, and Matech has all requisite power and
authority to enter into this Agreement and perform its obligations
hereunder;

     

               
(b)        that the execution, delivery and
performance of this Agreement by Matech, and the consummation by Matech of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Matech, and that this Agreement, upon execution
thereof, will constitute a valid and legally binding obligation of Matech,
enforceable against it in accordance with its terms;

     

               
(c)        the execution, delivery and
performance of this Agreement by Matech, and the consummation by Matech of the
transactions contemplated hereby, will not: (1) conflict with or result in a
breach of any provision of the charter or bylaws of Matech; (2) require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental authority (except as disclosed in writing to Penn prior to
execution of this Agreement by Matech); (3) require notice to, or the consent or
approval of, any person (other than a governmental authority) that has not been
obtained; (4) violate or conflict with, or result in a breach of any provision
of, or constitute a default under, or give to any third party any right of
termination, cancellation, amendment or acceleration under, any of the terms,
conditions or provisions of any contract to which Matech or an Affiliate is a
party or by which it or its assets, equity, debt or property are
bound;

     

               
(d)        the Penn Settlement Shares, when
issued and delivered in accordance with the terms of this Agreement, have been
duly and validly issued, fully paid and nonassessable; are free of any liens,
options, encumbrances, and adverse claims or restrictions; and, assuming the
accuracy of Penn’s representations and warranties in this Agreement, are issued
in compliance with Regulation D, Rule 506 under the Securities Act of 1933, as
amended and the regulations promulgated thereunder (the “1933
Act”);

     

               
(e)        there are no restrictions on the
transfer of the Penn Settlement Shares imposed by Matech’s charter documents,
any agreement to which Matech is a party, or any court or government order,
other than restrictions imposed by relevant federal and state securities laws
and this agreement; and

     

               
(f)        with a view to making available
the benefits of certain SEC rules permitting certain sales of the Penn
Settlement Shares to the public without registration, Matech will make and keep
public information available (as those terms are understood in Rule 144 under
the 1933 

     

    
      
         

      

      
        Page 4 of
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    Act); and use
reasonable efforts to file in a timely manner any reports required to be filed
with the SEC.

     

    9. 
       Penn’s
Representations and Warranties.  Penn hereby represents and warrants
to Matech:

     

               
(a)        that Penn and its Affiliates (as
defined in the License Agreement) are duly organized, validly existing and in
good standing under Pennsylvania law, and Penn has all requisite power and
authority to enter into this Agreement and perform its obligations
hereunder;

     

               
(b)        that the execution, delivery and
performance of this Agreement by Penn, and the consummation by Penn of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Penn, and that this Agreement, upon execution
thereof, will constitute a valid and legally binding obligation of Penn,
enforceable against it in accordance with its terms;

     

               
(c)        the execution, delivery and
performance of this Agreement by Penn, and the consummation by Penn of the
transactions contemplated hereby, will not: (1) conflict with or result in a
breach of any provision of the charter or bylaws of Penn; (2) require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental authority (except as disclosed in writing to Matech prior
to execution of this Agreement by Penn); (3) require notice to, or the consent
or approval of, any person (other than a governmental authority, Laird and Li)
that has not been obtained; (4) violate or conflict with, or result in a breach
of any provision of, or constitute a default under, or give to any third party
any right of termination, cancellation, amendment or acceleration under, any of
the terms, conditions or provisions of any contract to which Penn or an
Affiliate is a party or by which it or its assets, equity, debt or property are
bound.

     

               
(d)        Penn has such knowledge and
experience in financial and business matters so as to be capable of evaluating
and understanding, and has evaluated and understood, the merits and risks of an
investment in the Company and the acquisition of the Penn Settlement Shares, and
Penn has been given the opportunity to (1) obtain information and to examine
documents relating to the Company and the Company’s business, to (2) ask
questions of, and to receive answers from, the Company concerning the Company,
the Company’s business and the terms and conditions of an investment in the
Company, and to (3) obtain any additional information, to the extent the Company
possesses such information or could acquire such information without
unreasonable effort or expense, necessary to verify the accuracy of any
information previously furnished.  All information and documents, records
and books pertaining to an investment in the Company which Penn has requested
have been made available to Penn.

     

               
(e)        The Penn Settlement Shares are
being acquired by Penn for Penn’s own account, for investment and not with a
view to, or in connection with, any public offering or distribution of the same
and without any present intention to sell the same at any particular event or
circumstances.  Penn has no agreement or other arrangement with any person
to sell, transfer or pledge any part of the Penn Settlement Shares which would
guarantee Penn any profit or provide any guarantee to Penn against any loss with
respect to the Penn Settlement Shares.

     

               
(f)        Penn understands that no federal,
state or other governmental agency of the United States or any other territory
or nation has passed on or made any recommendation or endorsement of an
investment in securities of the Company.

     

               
(g)        Penn understands that the Penn
Settlement Shares have not been registered under the United States Securities
Act of 1933, as amended (the “Act”) or applicable state or other securities
laws, and the Penn Settlement Shares are offered and sold under an exemption
from registration provided by such laws and the rules and regulations
thereunder; further, Penn understands that the Company is under no obligation to
register the Penn Settlement Shares or to comply with any applicable exemption
under any applicable securities laws with respect to the Penn Settlement
Shares.  Penn also understands that the exemption provided by Rule 144
under 

    
      
         

      

      
        Page 5 of
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    the Act may not
be available because of the conditions and limitations of such Rule, and that in
the absence of the availability of such Rule, any disposition by Penn of any
portion of the Penn Settlement Shares may require compliance with some other
exemption under the Act.

     

               
(h)        Penn has been informed that
legends referring to the restrictions indicated herein are placed on the
certificate(s) evidencing the Penn Settlement Shares held by Penn.

     

               
(i)         Penn agrees that the
foregoing representations and warranties will survive the transfer of the Penn
Settlement Shares to Penn, as well as any investigation made by any party
relying on same.

     

               
(j)         Penn is an “accredited
investor” as such term is defined in Regulation D promulgated under the
Act.

     

    10.      
Material
Breach.  In the event Matech fails to remit, or fails to cause its
Affiliate or Licensee to remit, any payment due under Section 2 or 4, Penn shall
deliver a written notice to Matech, demanding payment.  If such payment is
not paid to Penn within sixty (60) days after the date of such written notice
(the “Due Date”), in addition to any other rights and remedies Penn may have at
law or in equity:

     

     

                (a)       
Penn shall have the right to immediately file suit to enforce the terms of this
Agreement; and

     

     

                (b)       
Penn shall have the right, but not the obligation, to terminate the Amended
License Agreement, effective as of a date selected by Penn at least sixty (60)
days after the Due Date, by delivering a notice of termination of the Amended
License Agreement to Matech at least thirty (30) days prior to the selected
effective date of such termination of the Amended License
Agreement.

11.       Miscellaneous. 

     

     

                (a) 
Capitalized terms not defined in this Agreement shall have the meaning set forth
in the SRA/Repayment Agreement or the Amended License Agreement, as the case may
be.  In particular, and not in limitation of the generality of the
foregoing sentence, when used in this Agreement, the capitalized terms
“Licensee” and “Affiliate” shall have the same definition and meaning as that
set forth in the Amended License Agreement.

     

               
(b)        Except as expressly set forth in
this Agreement, none of the terms of the SRA/Repayment Agreement shall be deemed
amended hereby, and each of the Amended License Agreement and SRA/Repayment
Agreement shall remain in full force and effect, except as expressly amended by
this Agreement.

     

               
(c)        There are no express or intended
third party beneficiaries pursuant to this Agreement.

     

               
(d)        This Agreement may only be
modified by a written amendment that is executed by an authorized representative
of each party.  Any waiver must be express and in writing.  No waiver
by either party of a breach by the other party will constitute a waiver of any
different or succeeding breach.  Unless otherwise specified, all remedies
are cumulative.

     

               
(e)        This Agreement, and any of the
rights or obligations hereunder, shall not be assigned or transferred, either
directly or by merger or operation of law, without the prior written consent of
the other party hereto.  Any purported assignment or transfer without such
prior written consent of the other party hereto shall be null and void. 
Any permitted assignee must agree in writing to be legally bound by this
Agreement as one, but not the only, condition of any consent granted for such
assignment.

     

               
(f)        Any notice or other required
communication (each, a “Notice”) must be in writing, addressed to the party’s
respective Address for Notices listed below the signatures on this

    
      
         

      

      
        Page 6 of
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    Agreement, and
delivered: (1) by recognized overnight courier service, charges prepaid; (2) by
U.S. mail with postage prepaid and a return receipt requested; or (3) by
facsimile with delivery acknowledged.  The addresses for Notices pursuant
to the Amended License Agreement and the SRA/Repayment Agreement are hereby
amended to reflect the Notice information listed below the signatures on this
Agreement.

     

               
(g)        If any provision of this Agreement
is held to be invalid or unenforceable by a court of competent jurisdiction,
then the remaining provisions of this Agreement will remain in full force and
effect, and such invalid or unenforceable provision will be automatically
revised to be a valid or enforceable provision that comes as close as permitted
by law to the parties’ original intent.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        Page 7 of
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    IN WITNESS
WHEREOF, the parties have executed this Agreement, through duly
authorized representatives, as of this 15th
day of August, 2005 (the “Agreement Effective Date”).

    
       

       

      
        	
                “PENN”

                THE TRUSTEES
      OF THE

                UNIVERSITY OF
      PENNSYLVANIA

              	 	 	
                “MATECH”

                MATERIAL
      TECHNOLOGIES, INC.

              	 
	 	 	 	 	 
	
                 

              	 	 	
                 

              	 
	
                By:   Perry B.
      Molinoff  

              	 	 	
                By:    Robert M.
    Bernstein

              	 
	
                Vice Provost
      for Research 

              	 	 	
                President and
      Chief Executive Officer

              	 
	 	 	 	 	 
	 	 	 	 	 
	Address for
      Notices:	 	 	 	 
	 	 	 	 	 
	
                University of
      Pennsylvania 

                Center for
      Technology Transfer

                3160 Chestnut
      Street, Suite 200

                Philadelphia,
      PA  19104-6283

                Attn.: 
      Managing Director

              	 	 	
                11661 San
      Vicente Blvd., Suite 707

                Los Angeles,
      CA  90049

                Attn.: 
      President and Chief Executive

                Officer

              	 
	 	 	 	 	 
	
                With a copy
      to:

                University of
      Pennsylvania

                Office of the
      General Counsel

                133 South 36th Street,
      Suite 300

                Philadelphia,
      PA  19104-3246

                Attn.: 
      Associate General Counsel--CTT

              	 	 	 	 

                              

       

       

       

       

       

       

       

       

    

    
      
         

      

      
        Page 8 of
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