SETTLEMENT AGREEMENT AND RELEASE

Exhibit 10.42

SETTLEMENT AGREEMENT AND RELEASE

THIS SETTLEMENT AGREEMENT AND RELEASE (“Agreement”), dated as of August 19, 2008, is by and among Material Technologies, Inc., a Delaware corporation (“MaTech”), RBC Dexia Investor Services Bank Luxembourg (“Julius Baer”), Anima S.G.R.P.A. Rubrica Anima America (“Anima”), and Kreuzfeld Ltd., (“Kreuzfeld”) (Julius Baer, Anima, and Kreuzfeld shall collectively be referred to as, the “Claimants”) (individually, a “Party”; collectively, the “Parties”).

RECITALS

WHEREAS, Claimants previously purchased directly from MaTech shares of the restricted common stock of MaTech (the “Common Stock”), and pursuant to such agreement, MaTech agreed to certain registration rights, including filing a registration statement registering the resale of the shares of Common Stock by Claimants; and

WHEREAS, MaTech has not filed the required registration statement, and has requested that Claimants waive all registration rights arising from or related to the Common Stock, and Claimants have agreed to such request subject to the terms hereof.

NOW THEREFORE, in consideration of the promises and respective mutual agreements herein contained, it is agreed by and between the Parties hereto as follows:

1.              Consideration .  In consideration for the Agreement, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

1.1           Claimants hereby waive any registration rights they may have with respect to any shares of common stock of MaTech currently held, including the Common Stock, and also hereby waive any default by MaTech under its agreements with Claimants arising from or related to the purchase by Claimants of the Common Stock;

1.2           Claimants hereby agree to return to MaTech, any and all shares of common stock held by them, including the Common Stock, in exchange for an equal number of newly issued shares of MaTech common stock (the “Shares”) to be issued after completion of MaTech’s proposed stock split;

1.4           Claimants hereby agree that any and all warrants currently held by Claimants shall be canceled;

1.5           MaTech hereby agrees to issue to Julius Baer warrants to purchase 5,000,000 shares of MaTech common stock at $0.20 per share;

1.6           MaTech hereby agrees to issue to Anima warrants to purchase 5,000,000 shares of MaTech common stock at $0.20 per share (together with the Julius Baer warrants, the “Warrants”); and

1.7           MaTech hereby agrees, within 45 days, to file a Registration Statement with the Securities and Exchange Commission registering the Shares and the shares underlying the Warrants (the “Registration Statement”) and to use best efforts to have the Registration Statement declared effective, but if the Rule 144 holding period expires, MaTech can withdraw the Registration Statement; and

2.              Mutual Release .  Expressly conditioned upon timely completion of the requirements set forth herein, the Parties, each for themselves, their respective Boards of Directors, officers, shareholders, assigns, employees, agents, predecessors, heirs, executors, and administrators, successors, subsidiary entities, former entities, attorneys, and any others claiming under or through them, both past and present, do hereby release and forever discharge each other, and each of the others' Boards of Directors, officers, shareholders, assigns, employees, agents, predecessors, successors, heirs, executors, and administrators, subsidiary entities, former entities, attorneys, and all others acting by, through, under, or in concert with the other, and each of them, from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts (express, implied in fact, or implied by law), agreements, promises, liabilities, claims, set offs, rights and claims for indemnity and/or contribution, refunds, overpayments, demands, damages, losses, costs, or expenses, of any nature whatsoever, known or unknown, suspected or unsuspected, fixed or contingent, which each now has or may hereafter have by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof, including, without limiting the generality of the foregoing, any matters that or might have been in any way raised, by complaint, cross-complaint or otherwise and the Agreements shall be null and void and of no effect.  Notwithstanding the above, or any other provisions of this instrument, this Agreement shall not affect, discharge, or release any claims, known or unknown, which arise from or relate to the rights or obligations of the Parties hereto, whether presently existing or subsequently accruing, with respect to the obligations created by or arising out of the provisions of this Agreement.

3.              Waiver Und