Exhibit 10.56
THE
SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE
ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE
UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS
AVAILABLE.
WARRANT AGREEMENT
MATERIAL TECHNOLOGIES,
INC.,
a Delaware corporation (the
“Company”)
THIS IS TO CERTIFY that, for value received,
Continental Advisors, or its assigns (the “Holder”) is
entitled, subject to the terms and conditions set forth herein, to
purchase, 6,000,000 shares of Class A common stock of the Company
(the “Warrant Shares”) upon exercise at a purchase
price of $0.10 per Warrant Share (the “Warrant
Price”).
1.
TERM. Subject to the terms of this Warrant, the
Holder shall have the right, at any time during the period
commencing at 9:00 a.m., Pacific Time, on the 15th day of
September, 2008 and ending at 5:00 p.m., Pacific Time, on the 15th
day of September, 2009 (the “Termination Date”), to
purchase from the Seller the Warrant Shares upon payment to the
Seller of the Warrant Price.
Notwithstanding anything to the contrary
contained in this Warrant or otherwise, the Holder shall not be
required, although it shall have the right, to exercise this
Warrant.
2. MANNER
OF EXERCISE. Payment of the aggregate Warrant Price
shall be made as described below. Upon the payment of all or a
portion of the Warrant Price and delivery of the Election to
Purchase, a form of which is attached hereto, the Company shall
issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Holder, and in such name or names as
the Holder may designate, a certificate or certificates for the
number of full Warrant Shares so purchased upon each exercise of
the Warrant. Such certificate or certificates shall be deemed to
have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such
securities as of the date of surrender of the Warrant (or if less
than the entire Warrant is exercised, upon the delivery of the new
Warrant described below) and payment of the Warrant Price, as
aforesaid, notwithstanding that the certificate or certificates
representing such securities shall not actually have been delivered
or that the stock transfer books of the Company shall then be
closed. The Warrant shall be exercisable, at the election of each
Holder, either in full or from time to time in part and, in the
event that a certificate evidencing the Warrant is exercised in
respect of less than all of the
Warrant Shares
specified therein at any time prior to the Termination Date, a new
certificate evidencing the remaining portion of the Warrant shall
be issued by the Company to such Holder.
Payment of the Warrant Price may be made by
either of the following forms, or a combination thereof:
(i)
Cash Exercise : cash, bank or cashiers check,
or wire transfer payable to the Company; or
(ii)
Promissory Note : through a promissory note
payable to the Company, but only to the extent authorized by the
Company, and which authorization may be withheld for any reason
whatsoever.
(iii)
Exercise Price . The price per share at which
the Warrant Shares shall be purchasable upon exercise of the
Warrant shall be $0.10 per share of Common Stock.
Cashless/Net Exercise
. In lieu of exercising the
Warrant or any portion thereof for cash, the Holder shall have the
right to convert the Warrant, or any portion thereof, into Warrant
Shares by executing and delivering to the Company, at its principal
executive office, a duly executed Subscription Form, specifying the
number of Warrant Shares as to which the Warrant is being
exercised, and accompanied by the surrender of the Warrant. The
number of Warrant Shares to be issued shall be computed using the
following formula:
X = the number
of Warrant Shares to be issued to such Holder
Y = the total
number of Warrant Shares then issuable upon exercise of the Warrant
in full
A = the Fair
Value (as defined below) of one Warrant Share
B = the
Exercise Price (as adjusted) on the date of conversion
Fair Value Defined . Fair Value as of a particular date shall
mean the closing price for the day before the day in question. The
closing price shall be the last reported sale price on the day in
question or, in case no such reported sale takes place on such day,
on the most recent reported sale prior to such day in question, in
each case on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not listed
or admitted to trading on any national securities exchange, the
last trade price as reported by the National Association of
Securities Dealers Automated Quotation System, (the
“NASDAQ”), Over the Counter or Bulletin Board market,
or the “pink sheets,” whichever is applicable. If such
quotations are unavailable, or with respect to other appropriate
security, property, assets, business or entity, “Fair
Value” shall mean the fair value of such item as determined
by mutual agreement reached by the Company and the Holder of Common
Stock issuable under the Warrant or, in the event the parties are
unable to agree, an opinion of an independent nationally recognized
investment banking, accounting or appraisal firm or firms
retainCompany’s expense, to determine such Fair
Value.
3. NO
STOCKHOLDER RIGHTS . Unless and until this Warrant is
exercised, this Warrant shall not entitle the Holder hereof to any
voting rights or other rights as a stockholder of the Company, or
to any other rights whatsoever except the rights herein expressed,
and
