-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CTbtUEZJ01lgEiRUwJmYksIDuYk3p54wgS3HaGpnmQcZwWACecaWg2h2DGteYE7x 2mKsfwcSkXBeMOe2CoYFBg== 0001127855-08-000142.txt : 20080509 0001127855-08-000142.hdr.sgml : 20080509 20080509153900 ACCESSION NUMBER: 0001127855-08-000142 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20080509 DATE AS OF CHANGE: 20080509 EFFECTIVENESS DATE: 20080509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATERIAL TECHNOLOGIES INC /CA/ CENTRAL INDEX KEY: 0001036668 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 954622822 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-150798 FILM NUMBER: 08818242 BUSINESS ADDRESS: STREET 1: 11661 SAN VICENTE BOULEVARD STREET 2: SUITE 707 CITY: LOS ANGELES STATE: CA ZIP: 90049 BUSINESS PHONE: 3102085589 MAIL ADDRESS: STREET 1: 11661 SAN VICENTE BOULEVARD STREET 2: SUITE 707 CITY: LOS ANGELES STATE: CA ZIP: 90049 S-8 1 matechs8050108.htm MATERIAL TECHNOLOGIES S-8, 05.09.08 Untitled Page

As filed with the Securities and Exchange Commission on May 9, 2008

Registration No. ____________

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549
____________________

FORM S-8

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_____________________

Material Technologies, Inc.
(Exact name of registrant as specified in its charter)
_____________________

Delaware
(State or other jurisdiction of incorporation or organization)

95-4622822
(I.R.S. Employer Identification No.)
_____________________

11661 San Vicente Boulevard, Suite 707
Los Angeles, California  90049
(Address of Registrant’s principal executive offices, including zip code)
_____________________

2008 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN
(Full title of the Plan)

Robert M. Bernstein
11661 San Vicente Boulevard, Suite 707
Los Angeles, CA  90049
(310) 208-5589
(Name, address and telephone number of agent for service)

____________________

CALCULATION OF REGISTRATION FEE

Title of Securities
to be Registered

Amount to be
Registered

Proposed Maximum
Offering Price per
Share

Proposed Maximum
Aggregate Offering
Price

Amount of
Registration Fee2

Common Stock, $0.001 Par Value1

100,000,000

$0.007

$700,000

$28

____________

1      Consists of 100,000,000 shares of common stock issuable under our 2008 Incentive and Nonstatutory Stock Option Plan.
2 The registration fee is based upon the closing bid price of the Shares as of May 5, 2008 calculated pursuant to Rule 457(c).





CROSS REFERENCE SHEET REQUIRED BY ITEM 501(b) OF REGULATION S-K

Form S-8 Item Number
    and Caption    
Caption in Prospectus
  
1.        Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus
Facing Page of Registration
Statement and Cover Page of
Prospectus
  
2. Inside Front and Outside Back
Cover Pages of Prospectus
Inside Cover Page of Prospectus
and Outside Cover Page of Prospectus
  
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed Charges
Not Applicable
  
4. Use of Proceeds Not Applicable
  
5. Determination of Offering Price Not Applicable
  
6. Dilution Not Applicable
  
7. Selling Security Holders Sales by Selling Security Holder
  
8. Plan of Distribution
Cover Page of Prospectus and Sales
by Selling Security Holder
  
9. Description of Securities to be
Registered
Description of Securities;
  
10. Interests of Named Experts and
Counsel
Legal Matters
  
11. Material Changes Not Applicable
  
12. Incorporation of Certain Information
by Reference
Incorporation of Certain
Documents by Reference
  
13. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities
Indemnification of Directors
and Officers; Undertakings



DATED:  May 6, 2008




PART II

Item 3. Incorporation of Documents by Reference.

We incorporate the following documents by reference in the registration statement:

Our Annual Report on Form 10-KSB filed for the fiscal year ended December 31, 2007; and the description of our common stock contained in our Registration Statement on Form SB-2 dated June 15, 2006.

All reports and documents filed by us pursuant to Section 13, 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the respective date of filing of such documents.  Any statement incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document, which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement.  Any statement modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus.

Item 4. Description of Securities.

The class of securities to be offered is registered under Section 12(g) of the Securities Exchange Act of 1934, as amended.  A description of the Registrant’s securities is set forth in the Prospectus incorporated as a part of this Registration Statement.

Item 5. Interests of Named Experts and Counsel

None.

Item 6. Indemnification of Officers and Directors

Our Bylaws and the Delaware General Corporation Law provide for indemnification of directors and officers against certain liabilities.  Our officers and directors are indemnified generally against expenses actually and reasonably incurred in connection with proceedings, whether civil or criminal, provided that it is determined that they acted in good faith, were not found guilty, and, in any criminal matter, had reasonable cause to believe that their conduct was not unlawful.

Our Certificate of Incorporation further provides that our directors shall not be personally liable for monetary damages to us or our shareholders for breach of any fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to us or our stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for the unlawful payments of dividends or stock redemption by us; or (iv) for any transaction from which the director derives an improper personal benefit.


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Item 7. Exemption from Registration Claimed

Not applicable.

Item 8. Exhibits

             5           Opinion of Oswald & Yap, LLP, consent included, relating to the issuance of the securities pursuant to the Plan
  
10.1 2008 Incentive and Nonstatutory Stock Option Plan, dated April 22, 2008
  
23.1 Consent of Oswald & Yap, LLP (contained in their opinion set forth as Exhibit 5)
  
23.2 Consent of Gruber & Company LLC, Certified Public Accountants

Item 9. Undertakings

            (a)        The undersigned registrant hereby undertakes:

                        (1)        To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

                                    (i)         To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

                                    (ii)        To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;

                                    (iii)       To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement, including (but not limited to) any addition or election of a managing underwriter.

                        (2)        That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities offered at that time shall be deemed to be the initial bona fide offering thereof.

                        (3)        To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.


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            (b)        The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

            (c)        Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel that matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnifi cation by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Los Angeles, State of California, on May 6, 2008.


                                                                                    Material Technologies, Inc.


                                                                                     /s/ Robert M. Bernstein                       
                                                                                    By: Robert M. Bernstein
                                                                                    Its: Chief Executive Officer and President




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EX-5 2 matechexh5.htm MATERIAL TECHNOLOGIES S-8, LEGAL OPINION & CONSENT Untitled Page



EXHIBIT 5

OPINION OF OSWALD & YAP, LLP

OSWALD & YAP
Lawyers
A Professional Corporation
Michael A. Oswald
Calvin C.S. Yap
Lynne Bolduc
Richard T. Hsueh
Carol A. Gefis
Min K. Chai
Zachary D. Reeves
Jay Y. Chiu
Anita S. Chang
Eric Shu
Claudia Mourad
Arrin Langdon
16148 Sand Canyon
Irvine, California 92618
Telephone (949) 788-8900
Telefax:  (949) 788-8980
Northern California Office
One Maritime Plaza
Suite 1040
San Francisco, California  94111

Midwest Office
53 West Jackson Boulevard
Suite 1550
Chicago, Illinois  60604

Of Counsel
John Allured
Thomas G. Gardiner


May 6, 2008

Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, DC 20549

          Re:       Material Technologies, Inc.

Ladies and Gentlemen:

This office represents Material Technologies, Inc., a Delaware corporation (the “Registrant”) in connection with the Registrant’s Registration Statement on Form S-8 under the Securities Act of 1933 (the “Registration Statement”), which relates to the registration of a total of 100,000,000 shares of the Registrant’s common stock issuable under the Registrant’s 2008 Incentive and Nonstatutory Stock Option Plan (the “Registered Securities”).  In connection with our representation, we have examined such documents and undertaken such further inquiry as we consider necessary for rendering the opinion hereinafter set forth.

Based upon the foregoing, it is our opinion that the Registered Securities, when sold as set forth in the Registration Statement, will be legally issued, fully paid and nonassessable.

We acknowledge that we are referred to under the heading “Legal Matters” in the Prospectus which is a part of the Registrant’s Form S-8 Registration Statement relating to the Registered Securities, and we hereby consent to such use of our name in such Registration Statement and to the filing of this opinion as Exhibit 5 to the Registration Statement.

Oswald & Yap LLP

/s/ Oswald & Yap LLP           




EX-10.1 3 matechexh10_1.htm MATERIAL TECHNOLOGIES S-8, 2008 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN Untitled Page



EXHIBIT 10.1

2008 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN,

DATED APRIL 22, 2008


MATERIAL TECHNOLOGIES, INC.

2008 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN

1.         Purpose

            This Incentive and Nonstatutory Stock Option Plan (the “Plan”) is intended to further the growth and financial success of Material Technologies, Inc., a Delaware corporation (the “Corporation”) by providing additional incentives to selected employees, directors, and consultants to the Corporation or parent corporation or subsidiary corporation of the Corporation as those terms are defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”) (such parent corporations and subsidiary corporations hereinafter collectively referred to as “Affiliates”) so that such employees and consultants may acquire or increase their proprietary interest in the Corporation.  Stock options granted under the Plan (hereinafter “Options”) may be either “Incentive Stock Options,” as defined in Section 422 of the Code and any regulations pro mulgated under said Section, or “Nonstatutory Options” at the discretion of the Board of Directors of the Corporation (the “Board”) and as reflected in the respective written stock option agreements granted pursuant hereto.

2.         Administration

            The Plan shall be administered by the Board of Directors of the Corporation; provided however, that the Board may delegate such administration to a committee of not fewer than three  members (the “Committee”), at least two of whom are members of the Board and all of whom are disinterested administrators, as contemplated by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 16b-3”); and provided further, that the foregoing requirement for disinterested administrators shall not apply prior to the date of the first registration of any of the securities of the Corporation under the Securities Act of 1933, as amended (the “Act”).

            Subject to the provisions of the Plan, the Board and/or the Committee shall have authority to (a) grant, in its discretion, Incentive Stock Options in accordance with Section 422 of the Code or Nonstatutory Options; (b) determine in good faith the fair market value of the stock covered by an Option; (c) determine which eligible persons shall be granted Options and the number of shares to be covered thereby and the term thereof; (d) construe and interpret the Plan; (e) promulgate, amend and rescind rules and regulations relating to its administration, and correct defects, omissions, and inconsistencies in the Plan or any Option; (f) consistent with the Plan and with the consent of the optionee, as appropriate, amend any outstanding Option or amend the exercise date or dates thereof; (g) determine the duration and purpose of leaves of absence which may be granted to optionholders without constituting termination of their employment for the purpose of the Plan; and (h) make all other determinations necessary or advisable for the Plan's administration.  The interpretation and construction by the Board of any provisions of the Plan or of any Option it shall be conclusive and final.  No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option.



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3.         Eligibility

            The persons who shall be eligible to receive Options shall be employees, directors, or consultants of the Corporation or any of its Affiliates (“Optionees”).  The term consultant shall mean any person who is engaged by the Corporation to render services and is compensated for such services, and any director of the Corporation whether or not compensated for such services; provided that, if the Corporation registers any of its securities pursuant to the Act, the term consultant shall thereafter not include directors who are not compensated for their services or are paid only a director fee by the Corporation.

                        (a)        Incentive Stock Options.  Incentive Stock Options may only be issued to employees of the Corporation or its Affiliates.  Incentive Stock Options may be granted to officers, whether or not they are directors, but a director shall not be granted an Incentive Stock Option unless such director is also an employee of the Corporation.  Payment of a director’s fee shall not be sufficient to constitute employment by the Corporation.  Any grant of option to an officer or director of the Corporation subsequent to the first registration of any of the securities of the Corporation under the Act shall comply with the requirements of Rule 16b-3.  An optionee may hold more than one Option.

                        The Corporation shall not grant an Incentive Stock Option under the Plan to any employee if such grant would result in such employee holding the right to exercise for the first time in any one calendar year, under all options granted to such employee under the Plan or any other stock option plan maintained by the Corporation or any Affiliate, with respect to shares of stock having an aggregate fair market value, determined as of the date of the Option is granted, in excess of $100,000.  Should it be determined that an Incentive Stock Option granted under the Plan exceeds such maximum for any reason other than a failure in good faith to value the stock subject to such option, the excess portion of such option shall be considered a Nonstatutory Option.  If, for any reason, an entire option does not qualify as an Incentive Stock Option by reason of exceedi ng such maximum, such option shall be considered a Nonstatutory Option.

                        (b)        Nonstatutory Option.  The provisions of the foregoing Section 3(a) shall not apply to any option designated as a “Nonstatutory Stock Option Agreement” or which sets forth the intention of the parties that the option be a Nonstatutory Option.

4.         Stock

            The stock subject to Options shall be the shares of the Corporation’s authorized but unissued or reacquired Common Stock (the “Stock”).

                        (a)        Number of Shares.  Subject to adjustment as provided in Paragraph 5(h) of this Plan, the total number of shares of Stock which may be purchased through exercise of Options granted under this Plan shall not exceed 100,000,000 shares.  If any Option shall for any reason terminate or expire, any shares allocated thereto but remaining unpurchased upon such expiration or termination shall again be available for the grant of Options with respect thereto under this Plan as though no Option had been granted with respect to such shares.


2






                        (b)        Reservation of Shares.  The Corporation shall reserve and keep available at all times during the term of the Plan such number of shares as shall be sufficient to satisfy the requirements of the Plan.  If, after reasonable efforts, which efforts shall not include the registration of the Plan or Options under the Act, the Corporation is unable to obtain authority from any applicable regulatory body, which authorization is deemed necessary by legal counsel for the Corporation for the lawful issuance of shares hereunder, the Corporation shall be relieved of any liability with respect to its failure to issue and sell the shares for which such requisite authority was so deemed necessary unless and until such authority is obtained.

5.         Terms and Conditions of Options

            Options granted hereunder shall be evidenced by agreements between the Corporation and the respective Optionees, in such form and substance as the Board or Committee shall from time to time approve.  Such agreements need not be identical, and in each case may include such provisions as the Board or Committee may determine, but all such agreements shall be subject to and limited by the following terms and conditions:

                        (a)        Number of Shares:  Each Option shall state the number of shares to which it pertains.

                        (b)        Option Price:  Each Option shall state the Option Price, which shall be determined as follows:

                                    (i)         Any Option granted to a person who at the time the Option is granted owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of value of all classes of stock of the Corporation, or of any Affiliate, (“10% Holder”) shall have an Option Price of no less than 110% of the fair market value of the common stock as of the date of grant; and

                                    (ii)        Incentive Stock Options granted to a person who at the time the Option is granted is not a 10% Holder shall have an Option price of no less than 100% of the fair market value of the common stock as of the date of grant.

                                    (iii)       Nonstatutory Options granted to a person who at the time the Option is granted is not a 10% Holder shall have an Option Price determined by the Board as of the date of grant.

                        For the purposes of this paragraph 5(b), the fair market value shall be as determined by the Board, in good faith, which determination shall be conclusive and binding; provided however, that if there is a public market for such stock, the fair market value per share shall be the average of the bid and asked prices on the date of grant of the Option, or if listed on a stock exchange, the closing price on such exchange on such date of grant.



3






                        (c)        Medium and Time of Payment:  To the extent permissible by applicable law, the Option price shall be paid, at the discretion of the Board, at either the time of grant or the time of exercise of the Option (i) in cash or by check, (ii) by delivery of other common stock of the Corporation, provided such tendered stock was not acquired directly or indirectly from the Corporation, or, if acquired from the Corporation, has been held by the Optionee for more than six months, (iii) by the Optionee's promissory note in a form satisfactory to the Corporation and bearing interest at a rate determined by the Board, in its sole discretion, but in no event less than 6% per annum, or (iv) such other form of legal consideration permitted by State law as may be acceptable to the Board.

                        (d)        Term and Exercise of Options:  Any Option granted to an Employee of the Corporation shall become exercisable over a period of no longer than ten years, and no less than 20% of the shares covered thereby shall become exercisable annually.  No Option shall be exercisable, in whole or in part, prior to one year from the date it is granted unless the Board shall specifically determine otherwise, as provided herein.  In no event shall any Option be exercisable after the expiration of ten years from the date it is granted.  Unless otherwise specified by the Board or the Committee in the resolution authorizing such option, the date of grant of an Option shall be deemed to be the date upon which the Board or the Committee authorizes the granting of such Option.

                        Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective option agreements may provide.  During the lifetime of an Optionee, the Option shall be exercisable only by the Optionee and shall not be assignable or transferable by the Optionee, and no other person shall acquire any rights therein.  To the extent not exercised, installments (if more than one) shall accumulate, but shall be exercisable, in whole or in part, only during the period for exercise as stated in the option agreement, whether or not other installments are then exercisable.

                        (e)        Termination of Status as Employee, Director, or Consultant:  If Optionee's status as an employee, director, or consultant shall terminate for any reason, then the Optionee (or if the Optionee shall die after such termination, but prior to exercise, Optionee's personal representative or the person entitled to succeed to the Option) shall have the right to exercise any vested Options, in whole or in part, at any time after such termination during the remaining term of the Option; provided, however, that the Board may specify a shorter period for exercise following termination as the Board deems reasonable and appropriate, but not shorter than six months in the event Optionee’s termination was caused by permanent disability within the meaning of Section 22(e)(3) of the Code.  The Option may be exercised only with respect to installments that the Optionee could have exercised at the date of termination of employment.  Nothing contained herein or in any Option granted pursuant hereto shall be construed to affect or restrict in any way the right of the Corporation to terminate the employment of an Optionee with or without cause.

                        (f)         Death of Optionee: If an Optionee dies while employed or engaged as a director or consultant by the Corporation or an Affiliate, the portion of such Optionee's Option or Options which were exercisable at the date of death may be exercised, in whole or in part, by the estate of the decedent or by a person succeeding to the right to exercise such Option or Options, at any time within the remaining term of the Option, but only to the extent, that Optionee could have exercised the Option as of the date of Optionee’s death; provided, in any case, that the Option may be so exercised only to the extent that the Option has not previously been exercised by Optionee.



4






                        (g)        Nontransferability of Option:  No Option shall be transferable by the Optionee, except by will or by the laws of descent and distribution.

                        (h)        Recapitalization:  Subject to any required action by the stockholders, the number of shares of common stock covered by each outstanding Option, and the price per share thereof set forth in each such Option, shall be proportionately adjusted for any increase in the number of issued shares of common stock of the Corporation resulting from a forward split of shares or the payment of a stock dividend, or any other increase in the number of such shares affected, without receipt of consideration by the Corporation.  However, the price per share set forth in each Option shall not be affected or adjusted for any decrease in the number of issued shares of common stock of the Corporation resulting from a reverse split of shares, or any other decrease in the number of such shares affected.

                        Subject to any required action by the stockholders, if the Corporation shall be the surviving entity in any merger or consolidation, each outstanding Option thereafter shall pertain to and apply to the securities to which a holder of shares of common stock equal to the shares subject to the Option would have been entitled by reason of such merger or consolidation.  A dissolution or liquidation of the Corporation or a merger or consolidation in which the Corporation is not the surviving entity shall cause each outstanding Option to terminate on the effective date of such dissolution, liquidation, merger or consolidation.  In such event, if the entity which shall be the surviving entity does not tender to Optionee an offer, for which it has no obligation to do so, to substitute for any unexercised Option a stock option or capital stock of such surviving e ntity, as applicable, which on an equitable basis shall provide the Optionee with substantially the same economic benefit as such unexercised Option, then the Board may grant to such Optionee, but shall not be obligated to do so, the right for a period commencing 30 days prior to and ending immediately prior to such dissolution, liquidation, merger or consolidation or during the remaining term of the Option, whichever is the lesser, to exercise any unexpired Option or Options, without regard to the installment provisions of Paragraph 5(d) of this Plan; provided, that any such right granted shall be granted to all Optionees not receiving an offer to substitute on a consistent basis, and provided further, that any such exercise shall be subject to the consummation of such dissolution, liquidation, merger or consolidation.

                        In the event of a change in the common stock of the Corporation as presently constituted, which is limited to a change of all of its authorized shares without par value into the same number of shares with a par value, the shares resulting from any such change shall be deemed to be the common stock within the meaning of this Plan.

                        To the extent that the foregoing adjustments relate to stock or securities of the Corporation , such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive.  Except as expressly provided in this Paragraph 5(h), the Optionee shall have no rights by reason of any subdivision or consolidation of shares of stock or any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number or price of shares of common stock subject to any Option shall not be affected by, and no adjustment shall be made by reason of, any dissolution, liquidation, merger or



5






consolidation, or any issue by the Corporation of shares of stock of any class or securities convertible into shares of stock of any class.

                        The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Corporation to make any adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve, or liquidate or to sell or transfer all or any part of its business or assets.

                        (i)         Rights as a Stockholder:  An Optionee shall have no rights as a stockholder with respect to any shares covered by an Option until the date of the issuance of a stock certificate to Optionee for such shares.  No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as expressly provided in Paragraph 5(h) hereof.

                        (j)         Modification, Acceleration, Extension, and Renewal of Options:  Subject to the terms and conditions and within the limitations of the Plan, the Board may modify an Option, or once an Option is exercisable, accelerate the rate at which it may be exercised, and may extend or renew outstanding Options granted under the Plan or accept the surrender of outstanding Options (to the extent not theretofore exercised) and authorize the granting of new Options in substitution for such Options, provided such action is permissible under Section 422 of the Code and state law.

                        Notwithstanding the foregoing provisions of this Paragraph 5(j), however, no modification of an Option shall, without the consent of the Optionee, alter to the Optionee's detriment or impair any rights or obligations under any Option theretofore granted under the Plan.

                        (k)        Investment Intent:  Unless and until the issuance and sale of the shares subject to the Plan are registered under the Act, each Option under the Plan shall provide that the purchases of stock thereunder shall be for investment purposes and not with a view to, or for resale in connection with, any distribution thereof.  Further, unless the issuance and sale of the stock have been registered under the Act, each Option shall provide that no shares shall be purchased upon the exercise of such Option unless and until (i) any then applicable requirements of state and federal laws and regulatory agencies shall have been fully complied with to the satisfaction of the Corporation and its counsel, and (ii) if requested to do so by the Corporation, the person exercising the Option shall (i) give written assurances as to knowledge and experience of such person (or a representative employed by such person) in financial and business matters and the ability of such person (or representative) to evaluate the merits and risks of exercising the Option, and (ii) execute and deliver to the Corporation a letter of investment intent, all in such form and substance as the Corporation may require.  If shares are issued upon exercise of an Option without registration under the Act, subsequent registration of such shares shall relieve the purchaser thereof of any investment restrictions or representations made upon the exercise of such Options.

                        (l)         Exercise Before Exercise Date:  At the discretion of the Board, the Option may, but need not, include a provision whereby the Optionee may elect to exercise all or any portion of the Option prior to the stated exercise date of the Option or any installment thereof.  Any shares so purchased prior to the stated exercise date shall be subject to repurchase by the Corporation upon



6






termination of Optionee's employment as contemplated by Paragraphs 5(e) and 5(f) hereof prior to the exercise date stated in the Option and such other restrictions and conditions as the Board or Committee may deem advisable.

                        (m)       Other Provisions:  The Option agreements authorized under this Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the Options, as the Board or the Committee shall deem advisable.  Shares shall not be issued pursuant to the exercise of an Option, if the exercise of such Option or the issuance of shares thereunder would violate, in the opinion of legal counsel for the Corporation, the provisions of any applicable law or the rules or regulations of any applicable governmental or administrative agency or body, such as the Act, the Securities Exchange Act of 1934, the rules promulgated under the foregoing or the rules and regulations of any exchange upon which the shares of the Corporation are listed.

6.         Availability of Information

            During the term of the Plan and any additional period during which an Option granted pursuant to the Plan shall be exercisable, the Corporation shall make available, not later than 120 days following the close of each of its fiscal years, such financial and other information regarding the Corporation as is required by the bylaws of the Corporation and applicable law to be furnished in an annual report to the stockholders of the Corporation.

7.         Effectiveness of Plan; Expiration

            Subject to approval by the stockholders of the Corporation, this Plan shall be deemed effective as of the date it is adopted by the Board.  The Plan shall expire on April 22, 2018, but such expiration shall not affect the validity of outstanding Options.

8.         Amendment and Termination of the Plan

            The Board may, insofar as permitted by law, from time to time, with respect to any shares at the time not subject to Options, suspend or terminate the Plan or revise or amend it in any respect whatsoever, except that without the approval of the stockholders of the Corporation, no such revision or amendment shall (i) increase the number of shares subject to the Plan, (ii) decrease the price at which Options may be granted, (iii) materially increase the benefits to Optionees, or (iv) change the class of persons eligible to receive Options under this Plan; provided, however, no such action shall alter or impair the rights and obligations under any Option outstanding as of the date thereof without the written consent of the Optionee thereunder.  No Option may be granted while the Plan is suspended or after it is terminated, but the rights and obligations under any Option granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan.

9.         Indemnification of Board

            In addition to such other rights or indemnifications as they may have as directors or otherwise, and to the extent allowed by applicable law, the members of the Board and the Committee shall be indemnified by the Corporation against the reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any claim, action, suit or



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proceeding, or in connection with any appeal thereof, to which they or any of them may be a party by reason of any action taken, or failure to act, under or in connection with the Plan or any Option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Corporation) or paid by them in satisfaction of a judgment in any such claim, action, suit or proceeding, except in any case in relation to matters as to which it shall be adjudged in such claim, action, suit or proceeding that such Board member is liable for negligence or misconduct in the performance of  his or her duties; provided that within 60 days after institution of any such action, suit or Board proceeding the member involved shall offer the Corporation, in writing, the opportunity, at its own expense, to handle and defend the same.

10.       Application of Funds

            The proceeds received by the Corporation from the sale of common stock pursuant to the exercise of Options will be used for general corporate purposes.

11.       No Obligation to Exercise Option

            The granting of an Option shall impose no obligation upon the Optionee to exercise such Option.

12.       Notices

            All notice, requests, demand, and other communications pursuant this Plan shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the third day following the mailing thereof to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid.

13.       Financial Statements

            Optionees under this Plan have the right to receive, upon request, annual financial statements regarding the Corporation during the period the options are outstanding.

            The foregoing Incentive and Nonstatutory Stock Option Plan was duly adopted and approved by the Board of Directors on April 22, 2008, and approved by the shareholders of the Corporation on April 22, 2008, subject to the requirements to file with the United States Securities and Exchange Commission and mail a Definitive Information Statement to all shareholders.


                                                                                     /s/ Joel R. Freedman                           
                                                                                    Joel R. Freedman, Secretary    





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MATERIAL TECHNOLOGIES, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

            THIS STOCK OPTION AGREEMENT is made and entered into as of this ____ day of ______________, ____, by and between Material Technologies, Inc., a Delaware corporation (“Company”), and ________________________________ (referred to herein as the “Optionee”), with reference to the following recitals of facts:

            WHEREAS, the Board has authorized the granting to Optionee of a nonstatutory stock option (“Option”) to purchase shares of common stock of the Company (the “Shares”) upon the terms and conditions hereinafter stated; and

            WHEREAS, the Board and stockholders of the Company have heretofore adopted a 2008 Incentive and Nonstatutory Stock Option Plan (the “Plan”), pursuant to which this Option is being granted;

            WHEREAS, it is the intention of the parties that this Option be a Nonstatutory Stock Option;

            NOW, THEREFORE, in consideration of the covenants herein set forth, the parties hereto agree as follows:

            1.         Shares; Price.  The Company hereby grants to Optionee the right to purchase, upon and subject to the terms and conditions herein stated, ___________ Shares for cash (or other consideration acceptable to the Board of Directors of the Company, in their sole and absolute discretion) at the price of $____ per Share, such price being determined in accordance with the Plan.

            2.         Term of Option; Continuation of Employment.  This Option shall expire, and all rights hereunder to purchase the Shares shall terminate, ten years from the date hereof.  This Option shall earlier terminate as set forth in Paragraphs 5 and 6 hereof.  Nothing contained herein shall be construed to interfere in any way with the right of the Company to terminate the employment or engagement, as applicable, of Optionee or to increase or decrease the compensation of Optionee from the rate in existence at the date hereof.

            3.         Vesting of Option.  Subject to the provisions of Paragraphs 5 and 6 hereof, this Option shall vest and become exercisable during the term of Optionee's employment or engagement in whole or in part beginning on the date of this Agreement.

            4.         Exercise.  In order to exercise this Option with respect to all or any part of the Shares for which this Option is at the time exercisable, Optionee must take the following actions:

                        (a)        Execute and deliver to the Company a written notice of exercise stating the number of Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Appendix A; and

                        (b)        Pay the aggregate price for the purchased Shares (the “Exercise Price”) in one or more of the following forms:



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                                    (i)       Cash or check made payable to the Company; or

                                    (ii)      A promissory note payable to the Company, but only to the extent authorized by the Company.

                                    Should the Common Stock be registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) at the time the Option is exercised, then the Exercise Price may also be paid as follows:

                                    (iii)      In shares of Common Stock held by Optionee for the requisite period necessary to avoid a charge to the Company’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or

                                    (iv)      To the extent the Option is exercised for vested Shares, through a special sale and remittance procedure pursuant to which Optionee shall concurrently provide irrevocable instructions (a) to a Company-approved brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, State and local income and employment taxes required to be withheld by the Company by reason of such exercise; and (b) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale (a “cashless exercise transa ction”).

                                    (v)       Notwithstanding any provisions herein to the contrary, if the Fair Market Value of one share of the Company’s Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Option by payment of cash, the Optionee may elect to receive shares equal to the value (as determined below) of this Option (or the portion thereof being canceled) by surrender of this Option at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Optionee a number of shares of Common Stock computed using the following formula (a “net issuance transaction”):

                                    X = Y (A-B)
                                                A
             Where  X = the number of shares of Common Stock to be issued to the Optionee
  
               Y = the number of shares of Common Stock purchasable under the Option or, if only a portion of the Option is being exercised, the portion of the Option being canceled (at the date of such calculation)
  
            A = the Fair Market Value of one share of the Company’s Common Stock (at the date of such calculation)
  
            B = Exercise Price (as adjusted to the date of such calculation)



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

                        (c)        Execute and deliver to the Company such written representations as may be requested by the Company in order for it to comply with the applicable requirements of Federal and state securities laws.

                        (d)        Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, State and local income and employment tax withholding requirements applicable to the Option exercise, if any.

                        (e)        If requested, execute and deliver to the Company a written statement as provided for in Paragraph 11 hereof.

            5.         Termination of Employment or Engagement.  If Optionee shall cease to serve as an employee, director, or consultant of the Company for any reason, whether voluntarily or involuntarily, Optionee shall have the right, during the remaining term of the Option, to exercise in whole or in part this Option to the extent, but only to the extent, that this Option was exercisable as of the last day of employment or engagement, as applicable, and had not previously been exercised.  The Option may be exercised only with respect to installments that the Optionee could have exercised at the date of termination of employment or engagement. 

                        Notwithstanding anything herein to the contrary, all rights under this Option shall expire in any event on the date specified in Paragraph 2 hereof.

            6.         Death of Optionee.  If the Optionee shall die while an employee, director, or consultant of the Company, Optionee’s personal representative or the person entitled to Optionee’s rights hereunder may at any time during the remaining term of this Option, exercise this Option and purchase Shares to the extent, but only to the extent, that Optionee could have exercised this Option as of the date of Optionee’s death; provided, in any case, that this Option may be so exercised only to the extent that this Option has not previously been exercised by Optionee.

            7.         No Rights as Stockholder.  Optionee shall have no rights as a stockholder with respect to the Shares covered by any installment of this Option until the date of the issuance of a stock certificate to Optionee, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued except as provided in Paragraph 8 hereof.

            8.         Recapitalization.  Subject to any required action by the stockholders of the Company, the number of Shares covered by this Option, and the price per Share thereof, shall be proportionately adjusted for any increase in the number of issued Shares resulting from a forward split of shares or the payment of a stock dividend, or any other increase in the number of such shares affected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company shall not be deemed having been “effected without receipt of consideration


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by the Company.”  The number of Shares covered by this Option, and the price per Share thereof, shall not be affected or adjusted for any decrease in the number of issued shares of common stock of the Company resulting from a reverse split of shares, or any other decrease in the number of such shares affected.

            In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets of the Company, this Option shall terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board.  The Board may, at its sole and absolute discretion and without obligation, declare that this Option shall terminate as of a date fixed by the Board and grant Optionee the right for a period commencing 30 days prior to and ending immediately prior to such date, or during the remaining term of this Option, whichever occurs sooner, to exercise this Option as to all or any part of the Shares, without regard to the vesting provision of Paragraph 3; provided, however, that such exercise shall be subject to the consummation of such dissolution, liquidation, merger, consolidation or sale.

            Subject to any required action by the stockholders of the Company, if the Company shall be the surviving entity in any merger or consolidation, this Option thereafter shall pertain to and apply to the securities to which a holder of Shares equal to the Shares subject to this Option would have been entitled by reason of such merger or consolidation, and the vesting provisions of Section 3 shall continue to apply.

            In the event of a change in the Shares of the Company as presently constituted, which is limited to a change of all of its authorized Shares without par value into the same number of Shares with a par value, the Shares resulting from any such change shall be deemed to be the Shares within the meaning of this Agreement.

            To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive.  Except as hereinbefore expressly provided, Optionee shall have no rights by reason of any subdivision or consolidation of share of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of shares subject to this Option shall not be affected by, and no adjustments shall be made by reason of, any dissolution, liquidation, merger or consolidation, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class.

            The grant of this Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets.

            9.         Taxation upon Exercise of Option.  Optionee understands that, upon exercise of this Option, Optionee may recognize income, for federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Shares, determined as of the date of exercise, exceeds the exercise price.  The acceptance of the Shares by Optionee shall constitute an agreement by Optionee to report such income in accordance with then applicable law and to cooperate with Company in establishing the amount of such income and corresponding deduction to the Company for its income tax purposes.  Withholding for federal or state income and employment tax purposes will be made, if and as required by law, from Optionee's then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Optionee to make  cash payment to cover such liability as a condition of the exercise of this Option.


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           10.        Modification, Extension and Renewal of Options.  The Board may modify, extend or renew this Option or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution therefore (to the extent not theretofore exercised), subject at all times to the Plan.  Notwithstanding the foregoing provisions of this Paragraph 10, no modification shall, without the consent of the Optionee, alter to the Optionee's detriment or impair any rights of Optionee hereunder.

           11.        Investment Intent; Restrictions on Transfer.  Optionee represents and agrees that if Optionee exercises this Option in whole or in part, Optionee will in each case acquire the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise this Option under the provisions of Paragraphs 5 and 6 hereof) shall furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance.  The Company, at its option, may include a legend on each certificate representing Shares issued pursuant to any exercise of this Option, stating in effect that such Shares have not been registered under the Securities Act of 1933, as amended (the “Act”), and tha t the transferability thereof is restricted.  If the Shares represented by this Option are registered under the Act, either before or after the exercise of this Option in whole or in part, the Optionee shall be relieved of the foregoing investment representation and agreement and shall not be required to furnish the Company with the foregoing written statement.

            Optionee further represents that Optionee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information, and further represents that Optionee has either such experience and knowledge in investment, financial and business matters or has investments similar to the stock of the Company such that Optionee is capable of evaluating the merits and risks thereof and has the capacity to protect his or her own interest in connection therewith.

           12.        Notices.  Any notice required to be given pursuant to this Option or the Plan shall be in writing and shall be deemed to be delivered upon receipt or, in the case of notices by the Company, five days after deposit in the US. mail, postage prepaid, addressed to Optionee at the address last provided to the Company by Optionee for his or her employee records.

           13.        Agreement Subject to Plan; Applicable Law.  This Agreement is made pursuant to the Plan and shall be interpreted to comply therewith.  A copy of such Plan is available to Optionee, at no charge, at the principal office of the Company.  Any provision of this Agreement inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan.  This Agreement has been granted, executed and delivered in the State of Delaware, and the interpretation and enforcement shall be governed by the laws thereof and subject to the exclusive jurisdiction of the courts therein.


[SIGNATURE PAGE FOLLOWS]






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

                                                                                                Material Technologies, Inc.



                                                                                                ________________________________
                                                                                                BY:  Robert M. Bernstein
                                                                                                ITS: Chief Executive Officer, President,
                                                                                                and Chief Financial Officer



                                                                                                ________________________________
                                                                                                                                              , Optionee













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Appendix A

NOTICE OF EXERCISE

Material Technologies, Inc.
11661 San Vicente Boulevard, Suite 707
Los Angeles, CA  90049


            (1)               The undersigned hereby elects to purchase ________ shares of the Common Stock of Material Technologies, Inc., Inc. (the “Company”) pursuant to the terms of the attached Option and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

                               The undersigned hereby elects to purchase ________ shares of the Common Stock of the Company pursuant to the terms of the cashless exercise provisions set forth in Section 4(b)(iv) of the attached Option, and shall tender payment of all applicable transfer taxes, if any.

            (2)      Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

________________________
(Name)

________________________
________________________
(Address)

            (3)       The undersigned represents that (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned understands that the shares of C ommon Stock issuable upon exercise of this Option have not been registered under the Securities Act of 1933, as amended (the “Act”), by reason of a specific exemption from the registration provisions of the Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Act, they must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available; (v) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Act unless certain conditions are met and until the


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undersigned has held the shares for the number of years prescribed by Rule 144, that among the conditions for use of the Rule is the availability of current information to the public about the Company and the Company has not made such information available and has no present plans to do so; and (vi) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company, stating that such registration is not required.

                                                                       
(Date)

                                                                       
(Signature)

                                                                       
(Print name)





















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MATERIAL TECHNOLOGIES, INC.

INCENTIVE STOCK OPTION AGREEMENT

            THIS INCENTIVE STOCK OPTION AGREEMENT is made and entered into as of this ____ day of ______________, ____, by and between Material Technologies, Inc., a Delaware corporation (“Company”), and _____________________________ (referred to herein as the “Optionee”), with reference to the following recitals of facts:

            WHEREAS, the Board has authorized the granting to Optionee of an incentive stock option (“Option”) to purchase shares of common stock of the Company (the “Shares”) upon the terms and conditions hereinafter stated; and

            WHEREAS, the Board and stockholders of the Company have heretofore adopted a 2008 Incentive and Nonstatutory Stock Option Plan (the “Plan”), pursuant to which this Option is being granted;

            WHEREAS, it is the intention of the parties that this Option be an Incentive Stock Option (a “Qualified Stock Option”);

            NOW, THEREFORE, in consideration of the covenants herein set forth, the parties hereto agree as follows:

            1.         Shares; Price.  The Company hereby grants to Optionee the right to purchase, upon and subject to the terms and conditions herein stated, _______ Shares for cash (or other consideration acceptable to the Board of Directors of the Company, in their sole and absolute discretion) at the price of $____ per Share, such price being not less than the fair market value per share of the Shares covered by these Options as of the date hereof and as determined by the Board of Directors of the Company.

            2.         Term of Option; Continuation of Employment.  This Option shall expire, and all rights hereunder to purchase the Shares shall terminate, ten years from the date hereof.  This Option shall earlier terminate as set forth in Paragraphs 5 and 6 hereof.  Nothing contained herein shall be construed to interfere in any way with the right of the Company to terminate the employment or engagement, as applicable, of Optionee or to increase or decrease the compensation of Optionee from the rate in existence at the date hereof.

            3.         Vesting of Option.  Subject to the provisions of Paragraphs 5 and 6 hereof, this Option shall vest and become exercisable during the term of Optionee's employment or engagement in whole or in part beginning on the date of this Agreement.

            4.         Exercise.  In order to exercise this Option with respect to all or any part of the Shares for which this Option is at the time exercisable, Optionee must take the following actions:



1






                         (a)         Execute and deliver to the Company a written notice of exercise stating the number of Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Appendix A; and

                         (b)         Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

                                      (i)         Cash or check made payable to the Company; or

                                      (ii)        A promissory note payable to the Company, but only to the extent authorized by the Company.

                         Should the Common Stock be registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) at the time the Option is exercised, then the Exercise Price may also be paid as follows:

                                      (iii)       In shares of Common Stock held by Optionee for the requisite period necessary to avoid a charge to the Company’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or

                                      (iv)       To the extent the Option is exercised for vested Shares, through a special sale and remittance procedure pursuant to which Optionee shall concurrently provide irrevocable instructions (a) to a Company-approved brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, State and local income and employment taxes required to be withheld by the Company by reason of such exercise; and (b) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale (a “cashless exercise tran saction”).

                                      (v)        Notwithstanding any provisions herein to the contrary, if the Fair Market Value of one share of the Company’s Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Option by payment of cash, the Optionee may elect to receive shares equal to the value (as determined below) of this Option (or the portion thereof being canceled) by surrender of this Option at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Optionee a number of shares of Common Stock computed using the following formula (a “net issuance transaction”):

                                      X = Y (A-B)
                                                  A

             Where  X =    the number of shares of Common Stock to be issued to the Optionee
  
            Y = the number of shares of Common Stock purchasable under the Option or, if only a portion of the Option is being exercised, the portion of the Option being canceled (at the date of such calculation)


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            A = the Fair Market Value of one share of the Company’s Common Stock (at the date of such calculation)
  
            B = Exercise Price (as adjusted to the date of such calculation)

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

                        (c)        Execute and deliver to the Company such written representations as may be requested by the Company in order for it to comply with the applicable requirements of Federal and State securities laws.

                        (d)        Make appropriate arrangements with the Company (or Parent or Subsidiary   employing or retaining Optionee) for the satisfaction of all Federal, State and local income and employment tax withholding requirements applicable to the Option exercise, if any.

                        (e)        If requested, execute and deliver to the Company a written statement as provided for in Paragraph 11 hereof.

            5.         Termination of Employment or Engagement.  If Optionee shall cease to serve as an employee of the Company for any reason, whether voluntarily or involuntarily, Optionee shall have the right, during the remaining term of the Option, to exercise in whole or in part this Option to the extent, but only to the extent, that this Option was exercisable as of the last day of employment, and had not previously been exercised.  The Option may be exercised only with respect to installments that the Optionee could have exercised at the date of termination of employment.

            Notwithstanding anything herein to the contrary, all rights under this Option shall expire in any event on the date specified in Paragraph 2 hereof.

            6.         Death of Optionee.  If the Optionee shall die while an employee of the Company, Optionee’s personal representative or the person entitled to Optionee’s rights hereunder may at any time during the remaining term of this Option, exercise this Option and purchase Shares to the extent, but only to the extent, that Optionee could have exercised this Option as of the date of Optionee’s death; provided, in any case, that this Option may be so exercised only to the extent that this option has not previously been exercised by Optionee.

            7.         No Rights as Stockholder.  Optionee shall have no rights as a stockholder with respect to the Shares covered by any installment of this Option until the date of the issuance of a stock certificate to Optionee, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued except as provided in Paragraph 8 hereof.


3






            8.         Recapitalization.  Subject to any required action by the stockholders of the Company, the number of Shares covered by this Option, and the price per Share thereof, shall be proportionately adjusted for any increase in the number of issued Shares resulting from a forward split of shares or the payment of a stock dividend, or any other increase in the number of such shares affected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company shall not be deemed having been “effected without receipt of consideration by the Company.”  The number of Shares covered by this Option, and the price per Share thereof, shall not be affected or adjusted for any decrease in the number of issued shares of common stock of the Company resulting from a reverse split of shares, or any other decrease in th e number of such shares affected.

            In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets of the Company, this Option shall terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board.  The Board may, at its sole and absolute discretion and without obligation, declare that this Option shall terminate as of a date fixed by the Board and grant Optionee the right for a period commencing 30 days prior to and ending immediately prior to such date, or during the remaining term of this Option, whichever occurs sooner, to exercise this Option as to all or any part of the Shares, without regard to the installment provision of Paragraph 3; provided, however, that such exercise shall be subject to the consummation of such dissolution, liquidation, merger, consolidation or sale.

            Subject to any required action by the stockholders of the Company, if the Company shall be the surviving entity in any merger or consolidation, this Option thereafter shall pertain to and apply to the securities to which a holder of Shares equal to the Shares subject to this Option would have been entitled by reason of such merger or consolidation, and the vesting provisions of Section 3 shall continue to apply.

            In the event of a change in the Shares of the Company as presently constituted, which is limited to a change of all of its authorized Shares without par value into the same number of Shares with a par value, the Shares resulting from any such change shall be deemed to be the Shares within the meaning of this Agreement.

            To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive.  Except as hereinbefore expressly provided, Optionee shall have no rights by reason of any subdivision or consolidation of share of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of shares subject to this Option shall not be affected by, and no adjustments shall be made by reason of, any dissolution, liquidation, merger or consolidation, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class.

            The grant of this Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or


4






to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets.

            9.         Taxation upon Exercise of Option.  Optionee understands that, upon exercise of this Option, Optionee may recognize income, for federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Shares, determined as of the date of exercise, exceeds the exercise price.  The acceptance of the Shares by Optionee shall constitute an agreement by Optionee to report such income in accordance with then applicable law and to cooperate with Company in establishing the amount of such income and corresponding deduction to the Company for its income tax purposes.  Withholding for federal or state income and employment tax purposes will be made, if and as required by law, from Optionee's then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Optionee to make  cash payment to cover such liability as a condition of the exercise of this Option.



















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           10.       Modification, Extension and Renewal of Options.  The Board may modify, extend or renew this Option or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution therefore (to the extent not theretofore exercised), subject at all times to the Plan.  Notwithstanding the foregoing provisions of this Paragraph 10, no modification shall, without the consent of the Optionee, alter to the Optionee's detriment or impair any rights of Optionee hereunder.

           11.       Investment Intent; Restrictions on Transfer.  Optionee represents and agrees that if Optionee exercises this Option in whole or in part, Optionee will in each case acquire the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise this Option under the provisions of Paragraphs 5 and 6 hereof) shall furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance.  The Company, at its option, may include a legend on each certificate representing Shares issued pursuant to any exercise of this Option, stating in effect that such Shares have not been registered under the Securities Act of 1933, as amended (the “Act”), and that the transferability thereof is restricted.  If the Shares represented by this Option are registered under the Act, either before or after the exercise of this Option in whole or in part, the Optionee shall be relieved of the foregoing investment representation and agreement and shall not be required to furnish the Company with the foregoing written statement.

            Optionee further represents that optionee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information, and further represents that Optionee has (either such experience and knowledge in investment, financial and business matters in investments similar to the stock of the Company that Optionee is capable of evaluating the merits and risks thereof and has the capacity to protect his or her own interest in connection therewith.

           12.       Notices.  Any notice required to be given pursuant to this Option or the Plan shall be in writing and shall be deemed to be delivered upon receipt or, in the case of notices by the Company, five days after deposit in the US. mail, postage prepaid, addressed to Optionee at the address last provided to the Company by Optionee for his or her employee records.

           13.       Agreement Subject to Plan; Applicable Law.  This Agreement is made pursuant to the Plan and shall be interpreted to comply therewith.  A copy of such Plan is available to Optionee, at no charge, at the principal office of the Company.  Any provision of this Agreement inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan.  This Agreement has been granted, executed and delivered in the State of Delaware, and the interpretation and enforcement shall be governed by the laws thereof and subject to the exclusive jurisdiction of the courts therein.



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

                                                                                                Material Technologies, Inc.


                                                                                                ________________________________
                                                                                                BY: Robert M. Bernstein
                                                                                                ITS: Chief Executive Officer, President
                                                                                                and Chief Financial Officer



                                                                                                ________________________________
                                                                                                                                              , Optionee














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Appendix A

NOTICE OF EXERCISE

Material Technologies, Inc.
11661 San Vicente Boulevard, Suite 707
Los Angeles, CA  90049

            (1)                 The undersigned hereby elects to purchase ________ shares of the Common Stock of Material Technologies, Inc. (the “Company”) pursuant to the terms of the attached Option and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

                                 The undersigned hereby elects to purchase ________ shares of the Common Stock of the Company pursuant to the terms of the cashless exercise provisions set forth in Section 4(b)(iv) of the attached Option, and shall tender payment of all applicable transfer taxes, if any.

            (2)       Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

________________________
(Name)

________________________
________________________
(Address)

            (3)       The undersigned represents that (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned understands that the shares of Common Stock issuable upon exercise of this Option have not been registered under the Securities Act of 1933, as amended (the “Act”), by reason of a specific exemption from the registration provisions of the Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Act, they must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available; (v) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Act unless certain conditions are met and until the undersigned has held the shares for the number of years prescribed by Rule 144, that among the conditions for use of the Rule is the availability of current information to the public about the Company and the Company has not made such information available and has no present plans to


8






do so; and (vi) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company, stating that such registration is not required.

                                                                       
(Date)

                                                                       
(Signature)

                                                                       
(Print name)





















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EX-23.2 4 matechexh23_2.htm MATERIAL TECHNOLOGIES S-8, AUDITORS CONSENT Untitled Page




EXHIBIT 23.2

CONSENT OF GRUBER & COMPANY LLC,
CERTIFIED PUBLIC ACCOUNTANTS


Material Technologies, Inc.
Los Angeles, California

We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 and in the related Prospectus, of our report dated April 7, 2008 relating to the financial statements of Material Technologies, Inc. as of December 31, 2007 and 2006.


/s/ Gruber & Company LLC          
Gruber & Company LLC
Encinitas, California
Dated: May 5, 2008                      




















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