Document:

Exhibit 10.28

 

THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS.  THIS WARRANT AND THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IWT
TESORO CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Right to Purchase up to 460,829 Shares of Common Stock
of

IWT Tesoro Corporation 

(subject to adjustment as provided herein)

 

COMMON STOCK
PURCHASE WARRANT

 

	
  No.

  	
  Issue Date: February 10, 2006

  

 

IWT Tesoro Corporation, a Nevada corporation (the “Company”),
hereby certifies that, for value received, LAURUS MASTER FUND, LTD., or assigns
(the “Holder”), is entitled, subject to the terms set forth below, to purchase
from the Company (as defined herein) from and after the Issue Date of this
Warrant and at any time or from time to time before 5:00 p.m., New York
time, through the close of business February 10, 2013 (the “Expiration
Date”), up to [amount] fully paid and nonassessable shares of Common Stock (as
hereinafter defined), $0.001 par value per share, at the applicable Exercise
Price per share (as defined below).  The
number and character of such shares of Common Stock and the applicable Exercise
Price per share are subject to adjustment as provided herein.

 

As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:

 

(a)                                  The
term “Company” shall include IWT Tesoro Corporation and any person or entity
which shall succeed, or assume the obligations of, IWT Tesoro Corporation
hereunder.

 

(b)                                 The
term “Common Stock” includes (i) the Company’s Common Stock, par value
$0.001 per share; and (ii) any other securities into which or for which
any of the securities described in the preceding clause (i) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.

 

(c)                                  The
term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the holder of the Warrant at any time shall be entitled to receive, or shall
have received, on the exercise of the Warrant, in lieu of or in addition to
Common Stock, or 

 

 

which at any time
shall be issuable or shall have been issued in exchange for or in replacement
of Common Stock or Other Securities pursuant to Section 4 or otherwise.

 

(d)                                 The
“Exercise Price” applicable under this Warrant shall be $2.39 per share;

 

1.                                       Exercise
of Warrant.

 

1.1.                              Number
of Shares Issuable upon Exercise. 
From and after the date hereof through and including the Expiration
Date, the Holder shall be entitled to receive, upon exercise of this Warrant in
whole or in part, by delivery of an original or fax copy of an exercise notice
in the form attached hereto as Exhibit A (the “Exercise Notice”), shares
of Common Stock of the Company, subject to adjustment pursuant to Section 4.

 

1.2.                              Fair
Market Value.  For purposes hereof,
the “Fair Market Value” of a share of Common Stock as of a particular date (the
“Determination Date”) shall mean:

 

(a)                                  If
the Company’s Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or Capital Market of The Nasdaq
Stock Market, Inc. (“Nasdaq”), then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date.

 

(b)                                 If
the Company’s Common Stock is not traded on the American Stock Exchange or
another national exchange or on the Nasdaq but is traded on the NASD Over the
Counter Bulletin Board, then it will mean the average of the closing bid and
asked prices reported for the last business day immediately preceding the
Determination Date.

 

(c)                                  Except
as provided in clause (d) below, if the Company’s Common Stock is not
publicly traded, then as the Holder and the Company agree or in the absence of
agreement by arbitration in accordance with the rules then in effect of
the American Arbitration Association, before a single arbitrator to be chosen
from a panel of persons qualified by education and training to pass on the
matter to be decided.

 

(d)                                 If
the Determination Date is the date of a liquidation, dissolution or winding up,
or any event deemed to be a liquidation, dissolution or winding up pursuant to the
Company’s charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of the Warrant are outstanding at the Determination
Date.

 

1.3.                              Company
Acknowledgment.  The Company will, at
the time of the exercise of this Warrant, upon the request of the holder hereof
acknowledge in writing its continuing obligation to afford to such holder any
rights to which such holder shall continue to be entitled after such exercise
in accordance with the provisions of this Warrant.  If the holder

 

2

 

shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder any such rights.

 

1.4.                              Trustee
for Warrant Holders.  In the event
that a bank or trust company shall have been appointed as trustee for the
holders of this Warrant pursuant to Subsection 3.2, such bank or trust
company shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.

 

2.                                       Procedure
for Exercise.

 

2.1.                              Delivery
of Stock Certificates, Etc., on Exercise. 
The Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be deemed to be issued to the Holder as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been surrendered and payment made for such shares in
accordance herewith so long as such surrender and payment has been made no
later than 12:00 noon (New York time) on such business day and if received
after 12:00 noon (New York time) on a business day the shares of Common Stock
shall be deemed issued on the next business day.  As soon as practicable after the exercise of
this Warrant in full or in part, and in any event within five (5) business
days thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Holder, or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct in compliance with applicable securities laws, a
certificate or certificates for the number of duly and validly issued, fully
paid and nonassessable shares of Common Stock (or Other Securities) to which
such Holder shall be entitled on such exercise, plus, in lieu of any fractional
share to which such holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Fair Market Value of one full share, together
with any other stock or other securities and property (including cash, where
applicable) to which such Holder is entitled upon such exercise pursuant to Section 1
or otherwise.

 

2.2.                              Exercise.

 

(a)                                  Payment
may be made either (i) in cash or by certified or official bank check
payable to the order of the Company equal to the applicable aggregate Exercise
Price, (ii) by delivery of this Warrant, or shares of Common Stock and/or
Common Stock receivable upon exercise of this Warrant in accordance with the
formula set forth in subsection (b) below, or (iii) by a
combination of any of the foregoing methods, for the number of Common Shares
specified in such Exercise Notice (as such exercise number shall be adjusted to
reflect any adjustment in the total number of shares of Common Stock issuable
to the Holder per the terms of this Warrant) and the Holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully-paid
and non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.

 

(b)                                 Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of one share of
Common Stock is greater than the Exercise Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the Holder may

 

3

 

elect to receive shares equal to the value (as determined below) of
this Warrant (or the portion thereof being exercised) by surrender of this
Warrant at the principal office of the Company together with the properly
endorsed Exercise Notice in which event the Company shall issue to the Holder a
number of shares of Common Stock computed using the following formula:

 

	
  X=

  	
  Y(A-B)

  	
   

  
	
   

  	
  A

  	
   

  
	
   

  	
   

  
	
  Where X =

  	
  the number of shares of Common Stock to be issued to
  the Holder

  
	
   

  	
   

  
	
  Y =

  	
  the number of shares of Common Stock purchasable
  under this Warrant or, if only a portion of this Warrant is being exercised,
  the portion of this Warrant being exercised (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 =

  	
  the Exercise Price per share (as adjusted to the
  date of such calculation)

  

 

3.                                       Effect
of Reorganization, Etc.; Adjustment of Exercise Price.

 

3.1.                              Reorganization,
Consolidation, Merger, Etc.  In case
at any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other person under
any plan or arrangement contemplating the dissolution of the Company, then, in
each such case, as a condition to the consummation of such a transaction,
proper and adequate provision shall be made by the Company whereby the Holder,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.

 

3.2.                              Dissolution.  In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, concurrently with any distributions made to holders of its
Common Stock, shall at its expense deliver or cause to be delivered to the
Holder the stock and other securities and property (including cash, where
applicable) receivable by the Holder pursuant to Section 3.1, or, if the
Holder shall so instruct the Company, to a bank or trust company specified by
the Holder and having its principal office in New York, NY as trustee for the
Holder (the “Trustee”).

 

3.3.                              Continuation
of Terms.  Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force
and effect and the terms hereof shall be applicable to the shares of stock and
other securities and property receivable on the exercise of this Warrant after
the

 

4

 

consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any such stock or other securities, including, in the case of any
such transfer, the person acquiring all or substantially all of the properties
or assets of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant as provided in Section 4.  In the event this Warrant does not continue
in full force and effect after the consummation of the transactions described
in this Section 3, then the Company’s securities and property (including
cash, where applicable) receivable by the Holder will be delivered to the
Holder or the Trustee as contemplated by Section 3.2.

 

4.                                       Extraordinary
Events Regarding Common Stock.  In
the event that the Company shall (a) issue additional shares of the Common
Stock as a dividend or other distribution on outstanding Common Stock or any
preferred stock issued by the Company (b) subdivide its outstanding shares
of Common Stock, or (c) combine its outstanding shares of the Common Stock
into a smaller number of shares of the Common Stock, then, in each such event,
the Exercise Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Exercise Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.  The number of shares of Common Stock that the
Holder shall thereafter, on the exercise hereof as provided in Section 1,
be entitled to receive shall be adjusted to a number determined by multiplying
the number of shares of Common Stock that would otherwise (but for the
provisions of this Section 4) be issuable on such exercise by a fraction
of which (a) the numerator is the Exercise Price that would otherwise (but
for the provisions of this Section 4) be in effect, and (b) the
denominator is the Exercise Price in effect on the date of such exercise
(taking into account the provisions of this Section 4).

 

5.                                       Certificate
as to Adjustments.  In each case of
any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (a) the consideration
received or receivable by the Company for any additional shares of Common Stock
(or Other Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or deemed to
be outstanding, and (c) the Exercise Price and the number of shares of
Common Stock to be received upon exercise of this Warrant, in effect
immediately prior to such adjustment or readjustment and as adjusted or
readjusted as provided in this Warrant. 
The Company will forthwith mail a copy of each such certificate to the
Holder and any Warrant agent of the Company (appointed pursuant to Section 11
hereof).

 

6.                                       Reservation
of Stock, Etc., Issuable on Exercise of Warrant.  The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of this

 

5

 

Warrant, shares of Common Stock
(or Other Securities) from time to time issuable on the exercise of this
Warrant.

 

7.                                       Assignment;
Exchange of Warrant.  Subject to
compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a “Transferor”)
in whole or in part.  On the surrender
for exchange of this Warrant, with the Transferor’s endorsement in the form of Exhibit B
attached hereto (the “Transferor Endorsement Form”) and together with evidence
reasonably satisfactory to the Company demonstrating compliance with applicable
securities laws, which shall include, without limitation, subject to certain
representations made by an transferee, the provision of a legal opinion from
the Transferor’s counsel (at the Company’s expense) that such transfer is
exempt from the registration requirements of applicable securities laws, the
Company at its expense (but with payment by the Transferor of any applicable
transfer taxes) will issue and deliver to or on the order of the Transferor
thereof a new Warrant of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”),
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant so surrendered
by the Transferor.

 

8.                                       Replacement
of Warrant.  On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of
any such mutilation, on surrender and cancellation of this Warrant, the Company
at its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.

 

9.                                       Registration
Rights.  The Holder has been granted
certain registration rights by the Company. 
These registration rights are set forth in a Registration Rights
Agreement entered into by the Company and Holder dated as of the date hereof,
as the same may be amended, modified and/or supplemented from time to time.

 

10.                                 Maximum
Exercise.  Notwithstanding anything
contained herein to the contrary, the Holder shall not be entitled to exercise
this Warrant in connection with that number of shares of Common Stock which
would exceed the difference between (i) 4.99% of the issued and
outstanding shares of Common Stock and (ii) the number of shares of Common
Stock beneficially owned by the Holder. 
For purposes of the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder.  The limitation described in
the first sentence of this Section 10 shall automatically become null and
void following notice to the Company upon the occurrence and during the
continuance of an Event of Default under and as defined in the Note made by the
Company to the Holder dated the date hereof (as amended, modified, restated
and/or supplemented from time to time, the “Note”), or upon 75 days prior
notice to the Company.

 

11.                                 Warrant
Agent.  The Company may, by written
notice to the each Holder of the Warrant, appoint an agent for the purpose of
issuing Common Stock (or Other Securities) on the exercise of this Warrant
pursuant to Section 1, exchanging this Warrant pursuant to Section 7,
and replacing this Warrant pursuant to Section 8, or any of the foregoing,
and thereafter any such

 

6

 

issuance, exchange or
replacement, as the case may be, shall be made at such office by such agent.

 

12.                                 Transfer
on the Company’s Books.  Until this
Warrant is transferred on the books of the Company, the Company may treat the
registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.

 

13.                                 Notices,
Etc.  All notices and other
communications from the Company to the Holder shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by such Holder or, until any such Holder
furnishes to the Company an address, then to, and at the address of, the last
Holder who has so furnished an address to the Company.

 

14.                                 Miscellaneous.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.  THIS WARRANT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  ANY ACTION BROUGHT CONCERNING THE
TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY IN THE STATE
COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK;
PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION AND
BRING AN ACTION OUTSIDE THE STATE OF NEW YORK. 
The individuals executing this Warrant on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury.  The prevailing party shall be entitled to
recover from the other party its reasonable attorneys’ fees and costs.  In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.  Any such provision
which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of this Warrant.  The headings in this Warrant are for purposes
of reference only, and shall not limit or otherwise affect any of the terms
hereof.  The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision hereof. 
The Company acknowledges that legal counsel participated in the
preparation of this Warrant and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Warrant to favor any party
against the other party.

 

[BALANCE OF PAGE
INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

 

7

 

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

 

 

	
   

  	
  IWT TESORO CORPORATION

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
					

 

8

 

Exhibit A

 

FORM OF SUBSCRIPTION

(To Be Signed Only On Exercise Of Warrant)

 

TO:                            IWT
TESORO CORPORATION

 

Attention:                                         Chief
Financial Officer

 

The undersigned, pursuant to the provisions set forth
in the attached Warrant (No.        ),
hereby irrevocably elects to purchase (check applicable box):

 

	
  o

  	
                  
  shares of the Common Stock covered by such Warrant; or

  
	
   

  	
   

  
	
  o

  	
  the maximum number of shares of Common Stock covered
  by such Warrant pursuant to the cashless exercise procedure set forth in
  Section 2.

  

 

The undersigned herewith makes payment of the full
Exercise Price for such shares at the price per share provided for in such
Warrant, which is $                      .  Such payment takes the form of (check
applicable box or boxes):

 

	
  o

  	
  $                 in
  lawful money of the United States; and/or

  
	
   

  	
   

  
	
  o

  	
  the cancellation of such portion of the attached
  Warrant as is exercisable for a total of
                
  shares of Common Stock (using a Fair Market Value of $                per
  share for purposes of this calculation); and/or

  
	
   

  	
   

  
	
  o

  	
  the cancellation of such number of shares of Common
  Stock as is necessary, in accordance with the formula set forth in
  Section 2.2, to exercise this Warrant with respect to the maximum number
  of shares of Common Stock purchasable pursuant to the cashless exercise
  procedure set forth in Section 2.

  

 

The undersigned requests that the certificates for
such shares be issued in the name of, and delivered to                                                                                       
whose address is                                                                                                    .

 

The undersigned represents and warrants that all
offers and sales by the undersigned of the securities issuable upon exercise of
the within Warrant shall be made pursuant to registration of the Common Stock
under the Securities Act of 1933, as amended (the “Securities Act”) or pursuant
to an exemption from registration under the Securities Act.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform to name of holder
  as

  specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

A-1

 

Exhibit B

 

FORM OF TRANSFEROR ENDORSEMENT

(To Be Signed Only On Transfer Of Warrant)

 

For value received, the undersigned hereby sells,
assigns, and transfers unto the person(s) named below under the heading “Transferees”
the right represented by the within Warrant to purchase the percentage and
number of shares of Common Stock of [Newco] into which the within Warrant
relates specified under the headings “Percentage Transferred” and “Number
Transferred,” respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the books of
[Newco] with full power of substitution in the premises.

 

	
  Transferees

  	
   

  	
  Address

  	
   

  	
  Percentage

  Transferred

  	
   

  	
  Number

  Transferred

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform to name of holder
  as

  specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SIGNED IN THE PRESENCE OF:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  	
   

  
	
  [TRANSFEREE]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  	
   

  
							

 

B-1Exhibit 10.29

 

REGISTRATION
RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”)
is made and entered into as of February 10, 2006  , by and
between IWT Tesoro Corporation, a Nevada corporation (the “Company”), and
Laurus Master Fund, Ltd. (the “Purchaser”).

 

This Agreement is made pursuant to the Securities
Purchase Agreement, dated as of the date hereof, by and between the Purchaser
and the Company (as amended, modified or supplemented from time to time, the “Securities
Purchase Agreement”), and pursuant to the Interest Shares and the Note and the
Warrants referred to therein.

 

The Company and the Purchaser hereby agree as follows:

 

1.             Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the Securities Purchase Agreement shall have
the meanings given such terms in the Securities Purchase Agreement.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Commission”
means the Securities and Exchange Commission.

 

“Common Stock”
means shares of the Company’s common stock, par value $0.001 per share.

 

“Effectiveness Date”
“ means, that the Company shall use its
best efforts to cause a Registration Statement to be declared effective within
ninety (90) days following the Filing Date; provided, however, if
such Registration Statement is not declared effective by such date (A) primarily,
in Laurus’ good faith judgment, as a result of the Commission having provided
comments to such Registration Statement, such date shall be extended until the
Commission has no further comments as long as the Company has used its
reasonable best efforts to diligently respond to all such comments within fifteen
(15) days of receipt of such comments, or (B) because the Effectiveness
Date falls within the period commencing (x) fifteen (15) days prior to and
forty-five (45) days following the end of any fiscal quarter of the Company or
(y) fifteen (15) days prior to and one hundred and five (105) days following
the end of any fiscal year of the Company, the Effectiveness Date shall be
extended until such financial statements required to be filed with the
Commission in respect of such fiscal quarter or year have been filed with the
Commission, and (ii) with respect to each additional Registration
Statement required to be filed hereunder, a date no later than thirty (30) days
following the applicable Filing Date; provided, however, if such
Registration Statement is not declared effective by such date solely as a
result of the Commission having provided comments to such Registration
Statement, such date shall be extended until the Commission has no further
comments as long as the Company has used its reasonable best efforts to diligently
responded to all such comments within fifteen (15) days of receipt of such comments.  The previous notwithstanding, in the event
that the Company has not responded to all comments within fifteen (15) days of
receipt of comments as a result of any delays by the Purchaser in providing
adequate responses to any applicable comments, such delay shall be
automatically be waived by the Purchaser and shall have no adverse effect on
the Company or any penalties that may be incurred by the Company as a result of
such delay.

 

 

“Effectiveness Period”
has the meaning set forth in Section 2(a).

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and any successor
statute.

 

“Filing Date”
means, with respect to the Registration Statement required to be filed
hereunder and particularly with respect to (i) the shares of Common Stock
issuable upon conversion of the Note, the shares of Common Stock issuable upon
exercise of any Warrant, and the Interest Shares, a date no later than April 15,
2006; and (ii) with respect to the shares of Common Stock issuable to the
Holder as a result of adjustments to the Fixed Conversion Price or Exercise
Price, as the case may be, pursuant to the Note, the Warrant, or otherwise,
thirty (30) days after the date of the adjustment of the Fixed Conversion Price
or the Exercise Price, as the case may be.

 

“Holder” or “Holders” means the Purchaser or any of its affiliates or
transferees to the extent any of them hold Registrable Securities, other than
those purchasing Registrable Securities in a market transaction.

 

“Indemnified Party”
has the meaning set forth in Section 5(c).

 

“Indemnifying Party”
has the meaning set forth in Section 5(c).

 

“Interest Shares” has the meaning
set forth in the Securities Purchase Agreement.

 

“Note” has the
meaning set forth in the Securities Purchase Agreement.

 

“Proceeding” means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

 

“Prospectus”
means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registrable Securities”
means the Interest Shares and the shares of Common Stock issued upon the
conversion of the Note and issuable upon exercise of the Warrants.

 

“Registration Statement”
means each registration statement required to be filed hereunder, including the
Prospectus therein, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

 

2

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Securities Act”
means the Securities Act of 1933, as amended, and any successor statute.

 

“Securities Purchase
Agreement” has the meaning given to such term in the Preamble
hereto.

 

“Trading Market”
means any of the NASD Over The Counter Bulletin Board, NASDAQ Capital Market,
the NASDAQ National Markets System, the American Stock Exchange or the New York
Stock Exchange.

 

“Warrants” means
the Common Stock purchase warrants issued in connection with the Securities
Purchase Agreement, whether on the date hereof or thereafter.

 

2.             Registration.

 

(a)           On or prior to the Filing Date the Company shall
prepare and file with the Commission a Registration Statement covering the
Registrable Securities for a selling stockholder resale offering to be made on
a continuous basis pursuant to Rule 415. 
The Registration Statement shall be on Form [S-3] (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form [S-3], in which case such registration shall be on another
appropriate form in accordance herewith). 
The Company shall cause each Registration Statement to become effective
and remain effective as provided herein. 
The Company shall use its best efforts to cause each Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event no later than the
Effectiveness Date.  The Company shall
use its reasonable commercial efforts to keep each Registration Statement
continuously effective under the Securities Act until the date which is the
earlier date of when (i) all Registrable Securities have been sold or (ii) all
Registrable Securities covered by such Registration Statement may be sold
immediately without registration under the Securities Act and without volume
restrictions pursuant to Rule 144(k), as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness
Period”).

 

(b)           Within three business days of the Effectiveness
Date and each request by Purchaser in the event it desires to exercise any of
the Warrants, the Company shall cause its counsel to issue an opinion in the
form attached hereto as Exhibit A, to the transfer agent stating that the
shares are subject to an effective registration statement and can be reissued
free of restrictive legend upon notice of a sale by the Purchaser and
confirmation by the Purchaser that it has complied with the prospectus delivery
requirements, provided

 

3

 

that the Company has not advised the transfer agent orally or in
writing that the opinion has been withdrawn. Copies of the blanket opinion
required by this Section 2(b) shall be delivered to the Purchaser
within the time frame set forth above.

 

3.             Registration
Procedures.  If and whenever
the Company is required by the provisions hereof to effect the registration of
any Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:

 

(a)           prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities, respond as promptly as
possible to any comments received from the Commission, and use its best efforts
to cause the Registration Statement to become and remain effective for the
Effectiveness Period with respect thereto, and promptly provide to the
Purchaser copies of all filings and Commission letters of comment relating
thereto;

 

(b)           prepare and file with the Commission such
amendments and supplements to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all Registrable
Securities covered by such Registration Statement and to keep such Registration
Statement effective until the expiration of the Effectiveness Period applicable
to such Registration Statement;

 

(c)           furnish to the Purchaser such number of copies of
the Registration Statement and the Prospectus included therein (including each
preliminary Prospectus) as the Purchaser reasonably may request to facilitate
the public sale or disposition of the Registrable Securities covered by the
Registration Statement;

 

(d)           use its best efforts to register or qualify the
Purchaser’s Registrable Securities covered by such Registration Statement under
the securities or “blue sky” laws of such jurisdictions within the United
States as the Purchaser may reasonably request, provided, however, that the
Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;

 

(e)           list the Registrable Securities covered by such
Registration Statement with any securities exchange on which the Common Stock
of the Company is then listed;

 

(f)            immediately notify the Purchaser at any time when
a Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the Prospectus contained in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
and

 

(g)           make available for inspection by the Purchaser and
any attorney, accountant or other agent retained by the Purchaser, all publicly
available, non-confidential financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company’s officers,
directors and employees to supply all

 

4

 

publicly available, non-confidential information reasonably requested
by the attorney, accountant or agent of the Purchaser.

 

4.             Registration
Expenses.  All expenses
relating to the Company’s compliance with Sections 2 and 3 hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for the
Company, fees and expenses (including reasonable counsel fees) incurred in
connection with complying with state securities or “blue sky” laws, fees of the
NASD, transfer taxes, fees of transfer agents and registrars, fees of, and
disbursements incurred by, one counsel for the Holders, are called “Registration
Expenses”. All selling commissions applicable to the sale of Registrable
Securities, including any fees and disbursements of any special counsel to the
Holders beyond those included in Registration Expenses, are called “Selling
Expenses.”  The Company shall only be
responsible for all Registration Expenses.

 

5.             Indemnification.

 

(a)           In the event of a registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Company
will indemnify and hold harmless the Purchaser, and its officers, directors and
each other person, if any, who controls the Purchaser within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Purchaser, or such persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement under which such Registrable Securities were
registered under the Securities Act pursuant to this Agreement, any preliminary
Prospectus or final Prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse the
Purchaser, and each such person for any reasonable legal or other expenses
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in conformity with information furnished by or on behalf of the Purchaser or
any such person in writing specifically for use in any such document.

 

(b)           In the event of a registration of the Registrable
Securities under the Securities Act pursuant to this Agreement, the Purchaser
will indemnify and hold harmless the Company, and its officers, directors and
each other person, if any, who controls the Company within the meaning of the
Securities Act, against all losses, claims, damages or liabilities, joint or
several, to which the Company or such persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact which was
furnished in writing by the Purchaser to the Company expressly for use in (and
such information is contained in) the Registration Statement under which such
Registrable Securities were

 

5

 

registered under the Securities Act pursuant to this Agreement, any
preliminary Prospectus or final Prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company and each such person for any reasonable legal or other expenses
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, provided, however, that the
Purchaser will be liable in any such case if and only to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in conformity with information furnished in writing to the Company by or on
behalf of the Purchaser specifically for use in any such document.  Notwithstanding the provisions of this
paragraph, the Purchaser shall not be required to indemnify any person or
entity in excess of the amount of the aggregate net proceeds received by the
Purchaser in respect of Registrable Securities in connection with any such
registration under the Securities Act.

 

(c)           Promptly after receipt by a party entitled to claim
indemnification hereunder (an “Indemnified Party”) of notice of the
commencement of any action, such Indemnified Party shall, if a claim for
indemnification in respect thereof is to be made against a party hereto
obligated to indemnify such Indemnified Party (an “Indemnifying Party”), notify
the Indemnifying Party in writing thereof, but the omission so to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
such Indemnified Party other than under this Section 5(c) and shall
only relieve it from any liability which it may have to such Indemnified Party
under this Section 5(c) if and to the extent the Indemnifying Party
is prejudiced by such omission. In case any such action shall be brought
against any Indemnified Party and it shall notify the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to participate
in and, to the extent it shall wish, to assume and undertake the defense
thereof with counsel satisfactory to such Indemnified Party, and, after notice
from the Indemnifying Party to such Indemnified Party of its election so to
assume and undertake the defense thereof, the Indemnifying Party shall not be
liable to such Indemnified Party under this Section 5(c) for any
legal expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof; if the Indemnified Party retains its own counsel,
then the Indemnified Party shall pay all fees, costs and expenses of such
counsel, provided, however, that, if the defendants in any such
action include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the Indemnifying Party or if the interests of the Indemnified
Party reasonably may be deemed to conflict with the interests of the
Indemnifying Party, the Indemnified Party shall have the right to select one
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred.

 

(d)           In order to provide for just and equitable
contribution in the event of joint liability under the Securities Act in any
case in which either (i) the Purchaser, or any officer, director or
controlling person of the Purchaser, makes a claim for indemnification

 

6

 

pursuant to this Section 5 but it is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 5 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of the Purchaser or such
officer, director or controlling person of the Purchaser in circumstances for
which indemnification is provided under this Section 5; then, and in each
such case, the Company and the Purchaser will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that the Purchaser is
responsible only for the portion represented by the percentage that the public
offering price of its securities offered by the Registration Statement bears to
the public offering price of all securities offered by such Registration
Statement, provided, however, that, in any such case, (A) the
Purchaser will not be required to contribute any amount in excess of the public
offering price of all such securities offered by it pursuant to such
Registration Statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act)
will be entitled to contribution from any person or entity who was not guilty
of such fraudulent misrepresentation.

 

6.             Representations
and Warranties.

 

(a)           The Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act and, except with respect to certain matters
which the Company has disclosed to the Purchaser on Schedule 4.21 to the
Securities Purchase Agreement, the Company has timely filed all proxy
statements, reports, schedules, forms, statements and other documents required
to be filed by it under the Exchange Act. 
The Company has filed (i) its Annual Report on Form 10-K for
its fiscal year ended [December 31, 2004 and (ii) its Quarterly
Report on Form 10-Qfor the fiscal quarters ended March 31, 2005, June 30,
2005 and September 30, 2005 (collectively, the “SEC Reports”).  Each SEC Report was, at the time of its
filing, in substantial compliance with the requirements of its respective form
and none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  The financial statements of
the Company included in the SEC Reports comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and regulations
with respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles (“GAAP”) applied on a consistent basis during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed) and fairly present
in all material respects the financial condition, the results of operations and
the cash flows of the Company and its subsidiaries, on a consolidated basis, as
of, and for, the periods presented in each such SEC Report.

 

7

 

(b)           The Common Stock is quoted for trading on the
NASDAQ Over The Counter Bulletin Board and satisfies all requirements for the
continuation of such quotation, and the Company shall do all things necessary
for the continuation of such quotation. 
The Company has not received any notice that its Common Stock will no
longer be quoted on the NASDAQ Over The Counter Bulletin Board (except for
prior notices which have been fully remedied) or that the Common Stock does not
meet all requirements for the continuation of such listing.

 

(c)           Except for securities sold to the Purchaser on August 25,
2005, neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or sales of any
security or solicited any offers to buy any security under circumstances that
would cause the offering of the Securities pursuant to the Securities Purchase
Agreement to be integrated with prior offerings by the Company for purposes of
the Securities Act which would prevent the Company from selling the Common
Stock pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any
of its affiliates or subsidiaries take any action or steps that would cause the
offering of the Securities to be integrated with other offerings.

 

(d)           The Interest Shares, the Warrants, the Note and the
shares of Common Stock which the Purchaser may acquire pursuant to the Warrants
and the Note are all restricted securities under the Securities Act as of the
date of this Agreement.  The Company will
not issue any stop transfer order or other order impeding the sale and delivery
of any of the Registrable Securities at such time as such Registrable
Securities are registered for public sale or an exemption from registration is
available, except as required by federal or state securities laws.

 

(e)           The Company understands the nature of the Interest
Shares and the Registrable Securities issuable upon the conversion of the Note
and the exercise of the Warrant and recognizes that the issuance of such
Registrable Securities may have a potential dilutive effect.  The Company specifically acknowledges that
its obligation to issue the Registrable Securities is binding upon the Company
and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.

 

(f)            Except for agreements made in the ordinary course
of business, there is no agreement that has not been filed with the Commission
as an exhibit to a registration statement or to a form required to be filed by
the Company under the Exchange Act, the breach of which could reasonably be
expected to have a material and adverse effect on the Company and its
subsidiaries, or would prohibit or otherwise interfere with the ability of the
Company to enter into and perform any of its obligations under this Agreement
in any material respect.

 

(g)           The Company will at all times have authorized and
reserved a sufficient number of shares of Common Stock for the full conversion
of the Note and exercise of the Warrants.

 

8

 

7.             Miscellaneous.

 

(a)           Remedies.  In the event of a breach by the Company or by
a Holder, of any of their respective obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this Agreement.

 

(b)           No Piggyback on
Registrations.  Except as and
to the extent specified in Schedule 7(b) hereto, neither the Company
nor any of its security holders (other than the Holders in such capacity
pursuant hereto) may include securities of the Company in any Registration
Statement other than the Registrable Securities, and the Company shall not
after the date hereof enter into any agreement providing any such right for
inclusion of shares in the Registration Statement to any of its security
holders.  Except as and to the extent
specified in Schedule 7(b) hereto, the Company has not previously
entered into any agreement granting any registration rights with respect to any
of its securities to any person or entity that have not been fully satisfied.

 

(c)           Compliance.  Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

 

(d)           Discontinued Disposition.  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of a Discontinuation Event (as defined below), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
applicable Registration Statement until such Holder’s receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it
is advised in writing (the “Advice”) by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.  For purposes of this
Agreement, a “Discontinuation Event” shall mean (i) when the Commission
notifies the Company whether there will be a “review” of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement (the Company shall provide true and complete copies thereof and all
written responses thereto to each of the Holders); (ii) any request by the
Commission or any other Federal or state governmental authority for amendments
or supplements to such Registration Statement or Prospectus or for additional
information; (iii) the issuance by the Commission of any stop order
suspending the effectiveness of such Registration Statement covering any or all
of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose; and/or (v) the
occurrence of any event or passage of time that makes the financial statements
included in such Registration Statement ineligible for inclusion therein or any
statement made in such Registration Statement or

 

9

 

Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires any
revisions to such Registration Statement, Prospectus or other documents so
that, in the case of such Registration Statement or Prospectus, as the case may
be, it will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

 

(e)           Piggy-Back Registrations.  If at any time after the date hereof there is
not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated
under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans, so long as such piggyback rights are permitted
under the Securities Act, then the Company shall send to each Holder written
notice of such determination and, if within fifteen (15) days after receipt of
such notice, any such Holder shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered to the extent the Company may
do so without violating registration rights of others which exist as of the
date of this Agreement, subject to customary underwriter cutbacks applicable to
all holders of registration rights and subject to obtaining any required consent
of any selling stockholder(s) to such inclusion under such registration
statement.

 

(f)            Amendments and Waivers.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of the then outstanding Registrable Securities.  Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of certain Holders and that does not directly
or indirectly affect the rights of other Holders may be given by Holders of at
least a majority of the Registrable Securities to which such waiver or consent
relates; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.

 

(g)           Notices.  Any notice or request hereunder may be given
to the Company or the Purchaser at the respective addresses set forth below or
as may hereafter be specified in a notice designated as a change of address
under this Section 7(g).  Any notice
or request hereunder shall be given by registered or certified mail, return
receipt requested, hand delivery, overnight mail, Federal Express or other
national overnight next day carrier (collectively, “Courier”) or telecopy
(confirmed by mail).  Notices and
requests shall be, in the case of those by hand delivery, deemed to have been
given when delivered to any party to whom it is addressed, in the case of those
by mail or overnight mail, deemed to have been given three (3) business
days after the date when deposited in

 

10

 

the mail or with the overnight mail carrier, in the case of a Courier,
the next business day following timely delivery of the package with the
Courier, and, in the case of a telecopy, when confirmed.  The address for such notices and
communications shall be as follows:

 

	
  If to
  the Company:

  	
  IWT Tesoro Corporation

  
	
   

  	
  191 Post Road West

  
	
   

  	
  Westport, Connecticut
  06880

  
	
   

  	
   

  
	
  Attention:

  	
  Henry J.
  Boucher, Jr., CEO

  
	
   

  	
  Telephone:

  	
  (203) 221-2770

  
	
   

  	
  Facsimile:

  	
  (203) 221-2797

  
	
   

  	
   

  
	
  with a copy to:

  	
  Rader and Coleman, P.L.

  
	
   

  	
  2101 N.W. Boca Raton
  Blvd., Suite 1

  
	
   

  	
  Boca Raton, Florida
  33431

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Gayle
  Coleman, Esq.

  
	
   

  	
  Telephone:

  	
  (561) 368-0545

  
	
   

  	
  Facsimile:

  	
  (561) 367-1725

  
	
   

  	
   

  
	
  If to a Purchaser:

  	
   

  	
  To the address set
  forth under such Purchaser name on the signature pages hereto.

  
	
   

  	
   

  	
   

  
	
  If to any other Person who is

  	
   

  	
   

  
	
  then the registered Holder:

  	
   

  	
  To the address of such
  Holder as it appears in the stock transfer books of the Company

  
					

 

or such other address as may be designated in writing
hereafter in accordance with this Section 7(g) by such Person.

 

(h)           Successors and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder.  The Company may not assign its rights or
obligations hereunder without the prior written consent of each Holder.  Each Holder may assign their respective
rights hereunder in the manner and to the persons and entities as permitted
under the Note and the Securities Purchase Agreement.

 

(i)            Execution and Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
agreement.  In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such

 

11

 

signature is executed) the same with the same force and effect as if
such facsimile signature were the original thereof.

 

(j)            Governing Law,
Jurisdiction and Waiver of Jury Trial.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.  The
Company hereby consents and agrees that the state or federal courts located in
the County of New York, State of New York shall have exclusion jurisdiction to
hear and determine any Proceeding between the Company, on the one hand, and the
Purchaser, on the other hand, pertaining to this Agreement or to any matter
arising out of or related to this Agreement; provided, that the
Purchaser and the Company acknowledge that any appeals from those courts may
have to be heard by a court located outside of the County of New York, State of
New York, and further  provided, that nothing in this Agreement
shall be deemed or operate to preclude the Purchaser from bringing a Proceeding
in any other jurisdiction to collect the obligations, to realize on the
Collateral or any other security for the obligations, or to enforce a judgment
or other court order in favor of the Purchaser. 
The Company expressly submits and consents in advance to such
jurisdiction in any Proceeding commenced in any such court, and the Company
hereby waives any objection which it may have based upon lack of personal
jurisdiction, improper venue or forum non conveniens.  The Company hereby waives personal service of
the summons, complaint and other process issued in any such Proceeding and
agrees that service of such summons, complaint and other process may be made by
registered or certified mail addressed to the Company at the address set forth
in Section 7(g) and that service so made shall be deemed completed
upon the earlier of the Company’s actual receipt thereof or three (3) days
after deposit in the U.S. mails, proper postage prepaid.  The parties hereto desire that their disputes
be resolved by a judge applying such applicable laws.  Therefore, to achieve the best combination of
the benefits of the judicial system and of arbitration, the parties hereto
waive all rights to trial by jury in any Proceeding brought to resolve any
dispute, whether arising in contract, tort, or otherwise between the Purchaser
and/or the Company arising out of, connected with, related or incidental to the
relationship established between then in connection with this Agreement.  If either party hereto shall commence a
Proceeding to enforce any provisions of this Agreement, the Securities Purchase
Agreement or any other Related Agreement, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Proceeding.

 

(k)           Cumulative Remedies.  The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

 

(l)            Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an

 

12

 

alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.

 

(m)          Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

[Balance of page intentionally
left blank;

signature page follows]

 

13

 

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

 

 

	
  IWT TESORO CORPORATION

  	
  LAURUS MASTER FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  825 Third Avenue, 14th Floor

  
	
   

  	
  New York, NY 10022

  
	
   

  	
  Attention:David Grin

  
	
   

  	
  Facsimile:212-541-4434

  

 

14

 

EXHIBIT A

 

200  ]

 

Florida Atlantic Stock Transfer

7130 Nob Hill Road

Tamarac, Florida 33321

Attention:  Rene
Garcia

 

Re:          IWT Tesoro Corporation Registration Statement on Form [S-3]

 

Ladies and Gentlemen:

 

As counsel to IWT Tesoro Corporation, a Nevada corporation
(the “Company”), we have been requested to render our opinion to you in
connection with the resale by the individuals or entitles listed on Schedule A
attached hereto (the “Selling Stockholders”), of an aggregate of            shares
(the “Shares”) of the Company’s Common Stock.

 

A Registration Statement on Form S-1 under the
Securities Act of 1933, as amended (the “Act”), with respect to the resale of
the Shares was declared effective by the Securities and Exchange Commission on
[date].  Enclosed is the Prospectus dated
[date].  We understand that the Shares
are to be offered and sold in the manner described in the Prospectus.

 

As of the date hereof, the Registration Statement
remains in effect and no stop order suspending such effectiveness has been
issued.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [Company counsel]

  

 

 

Schedule A to
Exhibit A

 

	
  Selling Stockholder

  	
   

  	
  Shares

  Being Offered

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE 7(b)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]