Document:

Secured Promissory Note, dated 11/24/03

 EXHIBIT 10.5 
 Execution Copy 
  
 THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND THUS MAY NOT BE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER THAT ACT OR SUCH LAWS OR
UNLESS AN EXEMPTION FROM REGISTRATION OR QUALIFICATION IS AVAILABLE. 
  
 SECURED PROMISSORY NOTE 
  

	 $2,050,000.00
	  	Due November 24, 2008

  
 FOR VALUE RECEIVED,
PROLONG SUPER LUBRICANTS, INC., a Nevada corporation (the “Maker”), promises to pay to the order of ST. CLOUD CAPITAL PARTNERS, LP, a Delaware limited partnership (“Payee”), or its registered assigns,
the sum of Two Million Fifty Thousand Dollars ($2,050,000) and to pay interest thereon at the rate of: (i) eight percent (8.0%) per annum (the “Initial Interest Rate”) from the date hereof until June 30, 2004, and (ii) fourteen
percent (14.0%) per annum (the “Second Interest Rate”) thereafter until this Secured Promissory Note (as amended, modified or supplemented from time to time, this “Note”) is fully paid. 
  
 Principal and interest shall be payable as set forth below: 
  
 (1) Commencing on December 31, 2003, and on the last business day of each
succeeding month through and including June 30, 2004, interest only shall be paid by wire transfer in equal installments of Thirteen Thousand Six Hundred Sixty Six and 67/100 ($13,666.67) each; 
  
 (2) Commencing on July 31, 2004, and on the last business day of each
succeeding month through and including November 30, 2004, interest only shall be paid by wire transfer in equal installments of Twenty Three Thousand Nine Hundred Sixteen and 67/100 ($23,916.67) each; 
  
 (3) Commencing on December 31, 2004, and on the last business day of each
succeeding month through and including October 31, 2008, principal and interest shall be paid by wire transfer in equal installments of Thirty Eight Thousand Four Hundred Seventeen and 02/100 ($38,417.02) each; and 
  
 (4) All unpaid principal amount of this Note, together with all accrued but
unpaid interest hereon, shall be paid by the Maker to Payee in a lump sum payment November 24, 2008 (the “Due Date”). 
  
 Any payment of principal or interest not paid within five (5) business days after its due date shall be subject to a five percent (5%) charge on the
unpaid payment. 
  
 During the occurrence and continuation of an
Event of Default (defined below) the Initial Interest Rate or Second Interest Rate, as applicable, shall be increased five percent 

 
(5%) per annum. In no event shall Payee be entitled to interest exceeding the maximum rate permitted by law or under the applicable regulations promulgated
by the United States Small Business Administration (the “SBA”). If any excess interest is provided for or shall be adjudicated to be so provided for in this Note, or if any payment or other consideration under this Note or Section
6.1 of the Agreement (as defined below) is determined by the SBA to exceed the amount permitted under applicable regulations promulgated by the SBA, then in such event: (i) the provisions of this paragraph shall govern and control; (ii) the Maker
shall not be obligated to pay the amount of such interest or other payment or consideration to the extent that it is in excess of the maximum amount permitted by law or under applicable regulations promulgated by the SBA, and the same shall be
construed as a mutual mistake of the parties; and (iii) any such excess which may have been collected or attributed shall, at the option of Holder, be subtracted from the then unpaid principal amount hereof, or refunded to the Maker. 
  
 Both principal hereof and interest thereon are payable at such place as Payee
may from time to time designate in writing, in lawful money of the United States of America and in immediately available funds by wire transfer. Interest hereunder shall be computed on the basis of a year of three hundred sixty (360) days for the
actual number of days elapsed. 
  
 This Note is secured by that
certain Pledge and Security Agreement dated as of the date hereof, by and among the Maker, Payee and Parent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time (the “Pledge and Security
Agreement”). 
  
 This Note is subject to the terms and
conditions set forth below: 
  
 I. DEFINITIONS. 
  
 As used in this Note, the following terms shall mean: 
  
 “Agreement” shall mean that certain Securities Purchase
Agreement dated as of the date hereof, by and among the Maker, Payee, Parent, Prolong International Holdings Ltd., a Cayman Islands company, Prolong International Ltd., a Cayman Islands company, Bedford Oak Capital, L.P., a Delaware limited
partnership, Bedford Oak Offshore, Ltd., a Cayman Islands company, and Aspen Ventures LLC, a New York limited liability company, as amended, modified or supplemented from time to time. 
  
 “Board” shall mean the board of directors of Parent. 
  
 “Continuing Members” shall mean a member of the Board who
either (a) was a member of the Board on the day before the Closing or (b) became a member of the Board after the day before the Closing and whose election or nomination for election was approved by a vote of the majority of the Continuing Members
then members of the Board. 
  
 “EBITDA” shall
mean the consolidated earnings before interest, taxes, depreciation and amortization of the Credit Parties, determined in accordance with generally accepted accounting principles. 
  
 “Event of Default” shall have the meaning given such term in Section 4 below. 
  

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 “Note” shall mean this Note and any note delivered in substitution or exchange therefor
as provided herein. 
  
 “Note Percentage” shall
mean a fraction, the numerator of which is the original principal amount of this Note and the denominator of which is Two Million Five Hundred Thousand Dollars ($2,500,000). 
  
 “Parent” shall mean Prolong International Corporation, a Nevada corporation. 
  
 “Total Debt Service Payments” shall mean, with
respect to any period, Maker’s total scheduled principal and interest payments during such period under the Notes issued pursuant to the Agreement. 
  
 “Triggering Event” shall mean any sale, transfer or issuance or series of sales or issuances of Parent’s capital stock, or any
merger, consolidation or other transaction involving Parent where the shareholders of Parent immediately prior to such event do not retain more than a fifty percent (50%) voting power or interest in Parent or the successor corporation or other
entity, as the case may be, (ii) any transfer of capital stock of Maker or other transaction which results in the Maker ceasing to be a wholly-owned subsidiary of Parent; (iii) any sale of all or a substantial portion of the assets of Maker, (iv)
after the Closing, any Person or group of Persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934) other than Payee or its affiliates (including any other Purchaser), shall acquire beneficial ownership (within the
meaning of Rule 13d-3 promulgated under such Act) of more than twenty-five percent (25%) of the outstanding securities (on a fully diluted basis and taking into account any securities or contract rights exercisable, exchangeable or convertible into
equity securities) of Parent having voting rights in the election of directors under normal circumstances, or (v) a majority of the members of the Board shall cease to be Continuing Members. 
  
 Any capitalized terms used herein without definition shall have the meaning
set forth in the Agreement. 
  
 II. PREPAYMENT OF NOTE. 
  
 2.1 Mandatory Prepayments. 
  
 2.1.1 Full Prepayment. Except as set forth below, all
principal and accrued but unpaid interest on this Note shall immediately become due and payable upon the occurrence of a Triggering Event. 
  
 2.1.2 Partial Prepayment. Until such time that this Note is fully repaid, if the Total Debt Service Payments during any six consecutive
month period commencing after December 31, 2004 are less than sixty percent (60%) of EBITDA for such period, Maker shall, in addition to making the payments required to be made under this Note, prepay an amount with respect to such six month period
equal to the lesser of: (a) (i) sixty percent (60%) of EBITDA for such six month period minus Total Debt Service Payments for such period multiplied by (ii) the Note Percentage and (b) (i) (A) the amount set forth in the last column entitled
“Accrued Sweep” of Exhibit A attached hereto 

  

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corresponding to the applicable six month period minus (B) any prepayments previously made under this Section 2.1.2 multiplied by (ii) the Note
Percentage. An example of the application of this Section 2.1.2 is set forth on Exhibit B attached hereto. Payments under this Section 2.1.2 with respect to any six month period shall be due on the date that is the earlier to
occur of: (i) five (5) business days after Parent’s consolidated earnings for the last quarter of such six month period are released, (ii) five (5) business days after Parent files its Report on Form 10-Q or Report on Form 10-K or similar
report covering the period that includes the last quarter of such six month period or (iii) 45 days following the end of any six month period ending June 30 and 90 days following the end of any six month period ending December 31; provided,
however, that any prepayments made by Maker pursuant to this Section 2.1.2 shall not be subject to any prepayment premium described in Section 2.2. 
  
 2.2 Optional Prepayment. At any time, the Maker shall have the right to prepay all or part of the outstanding
principal amount of this Note in installments not less than the lesser of (i) One Hundred Thousand Dollars ($100,000) and (ii) the remaining outstanding principal balance of this Note; provided that (i) the Maker gives not less than thirty
(30) days’ prior written notice to Payee of the Maker’s election to prepay this Note, and (ii) the Maker pays a prepayment premium to Payee equal to (a) if such prepayment is made prior to November 30, 2004, five percent (5%) of the
principal amount of this Note being prepaid; (b) if such prepayment is made between November 30, 2004 and the November 30, 2005, four percent (4%) of the principal amount of this Note being prepaid; (c) if such prepayment is made between November
30, 2005 and November 30, 2006, three percent (3%) of the principal amount of this Note being prepaid; (d) if such prepayment is made between November 30, 2006 and November 30, 2007, two percent (2%) of the principal amount of this Note being
prepaid, or (e) if such prepayment is made between November 30, 2007 and the Due Date, one percent (1%) of the principal amount of this Note being prepaid, in each case, calculated as of the prepayment date. Payee shall notify the Maker of the
amount and basis of determination of the prepayment premium. Payee shall not be obligated to accept any prepayment of the principal balance of this Note unless such prepayment is accompanied by the applicable prepayment premium and all accrued
interest and other sums due under this Note. The Maker may not prepay this Note on a Friday or on any day preceding a public holiday, or the equivalent for banks generally under the laws of the State of California.  
  
 2.3 Prepayment Not to Affect Exercise of Warrant. No mandatory or
optional prepayment shall affect any exercise or other rights under the Warrant. 
  
 2.4 Interest Adjustment. The Maker and Payee agree that if this Note were not issued with the Warrant, the interest rate would be no more than one percent (1%) higher. 
  
 III. REPLACEMENT OF NOTE. 
  
 Upon receipt of evidence reasonably satisfactory to the Maker of the
ownership of and the loss, theft, destruction or mutilation of this Note and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement in an amount reasonably satisfactory to the Maker, or (in the case of mutilation) upon
surrender and cancellation of the mutilated Note, the Maker will execute and deliver, in lieu thereof, a new Note of like tenor. 
  

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 IV. EVENTS OF DEFAULT. 
  

The occurrence and continuation of any of the events or conditions described in Section 4.1 or Section 4.2 shall be an “Event of
Default.” 
  
 4.1 Payee Action. The occurrence of
any of the following Events of Default shall, at the option of Payee, entitle Payee to declare all sums of principal and interest then remaining unpaid, and all other amounts payable hereon, due and payable, all without demand, presentment, notice
or protest, all of which hereby are expressly waived, and permit Payee to exercise any other right available to it under the Loan Documents or otherwise available to it at law or in equity, all of which rights and powers may be exercised
cumulatively. 
  
 4.1.1 Failure to Pay Principal or
Interest. Failure to pay any installment of principal when due or interest hereon within five (5) business days of the date when due. 
  
 4.1.2 Breach of Covenants. The breach by any Credit Party of any covenant in the Agreement or any other Loan Document that is not cured
within thirty (30) days after written notice thereof to the Maker. 
  
 4.1.3 Breach of Representations and Warranties. The representations or warranties of the Credit Parties made in the Loan Documents or in any statement or certificate at any time given in writing to Payee pursuant to the
Agreement or this Note or in connection therewith or herewith, shall prove to have been false or misleading in any material respect as of the date such representations and warranties were made. 
  
 4.1.4 Judgments. The making or filing of any money judgment,
writ or similar process in excess of One Hundred Thousand Dollars ($100,000) against any Credit Party or any of the property or other assets of any Credit Party which shall remain unsatisfied, unvacated, unhanded or unstayed until the date that is
the earlier to occur of thirty (30) days after such judgment, writ or similar process is entered and five (5) days prior to the date of any proposed sale thereunder. 
  
 4.1.5 Default in Other Agreements. The occurrence of any event of default or other event triggering
acceleration of any indebtedness by any Credit Party under any note, agreement or other instrument involving the issuance of indebtedness (but not including any trade payables incurred in the ordinary course of business), whether such indebtedness
now exists or may hereafter be created, if, as a result of such event of default or other event, the maturity of such indebtedness has been accelerated or has otherwise become or been declared to be due prior to its stated maturity and the principal
amount of such indebtedness which has been accelerated or has otherwise become or been declared to be due exceeds, individually or in the aggregate, One Hundred Thousand Dollars ($100,000). 
  

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 4.1.6 Attachments. The levying of any writ of attachment against any property or other
assets of any Credit Party not fully covered by insurance in force valued individually or in the aggregate at an amount equal to or greater than One Hundred Thousand Dollars ($100,000) unless a Credit Party posts a bond or obtains other relief for
the release of such attachment within thirty (30) days. 
  
 4.1.7 Suspension of Business. The suspension of the usual business activities of the Credit Parties or the winding up or liquidation of the Maker’s business. 
  
 4.1.8 Challenges by the Maker. The Maker shall challenge, or institute or join in any proceedings to challenge
the validity, binding effect or enforceability of this Note or any endorsement of this Note or any other obligation to Payee under the Loan Documents. 
  
 4.1.9 Certain Agreements. The Pledge and Security Agreement or the Parent Guaranty or any provision thereof shall cease to be in full force
or effect or shall be declared to be null or void or otherwise unenforceable in whole or in part; or Payee shall not have or shall cease to have a valid and perfected security interest in the collateral described in the Pledge and Security
Agreement; provided that the failure of Payee to have a valid and perfected security interest in the shares of capital stock of the Cayman Subsidiaries shall not be deemed an Event of Default hereunder so long as the Credit Parties deliver to
St. Cloud stock certificates representing sixty-five percent (65%) of the capital stock of Cayman Sub I in accordance with Section 7.13 of the Agreement. 
  
 4.1.10 Change in Management. The termination of the employment of Elton Alderman for any reason (including, without limitation, as a result
of resignation); provided, however, that if such termination is as a result of his death or disability and Parent hires a replacement reasonably acceptable to Payee within six months thereafter, then such termination shall not be deemed an
Event of Default hereunder. 
  
 4.1.11
Other. The failure of the Maker to perform or observe any other material term, covenant or agreement to be performed or observed by it pursuant to this Note and the continuance thereof for a period of thirty (30) days after written notice
thereof to the Maker. 
  
 4.2 Acceleration Without Specific
Action. The occurrence of any of the following Events of Default shall make all sums of principal and interest then remaining unpaid and all other amounts payable hereon due and payable, all without demand, presentment, notice or protest, all of
which hereby are expressly waived, and permit Payee to exercise any other right available to it at law or in equity, all of which rights and powers may be exercised cumulatively. 
  
 4.2.1 Bankruptcy. The voluntary institution of bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors by any Credit Party; or the institution of any such proceedings against any Credit Party, which involuntary proceedings shall not have been
vacated by appropriate court order within sixty (60) days of such institution. 
  

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 4.2.2 Dissolution. Any order, judgment or decree shall have been entered against any Credit
Party decreeing the dissolution or liquidation of such Credit Party and such order shall remain undischarged or unstayed for a period of thirty (30) days. 
  
 4.2.3 Insolvency, Receiver or Trustee. The making by any Credit Party of an assignment for the benefit of creditors; or the making by any
Credit Party of an offer of settlement, composition or extension to the claims of all or substantially all of a Credit Party’s creditors or the application for or consent to the appointment of a receiver or trustee for it or for a substantial
part of its property or business; or the appointment otherwise of such a receiver or trustee or a committee of the Maker’s creditors. 
  
 V. TRANSFER OF SECURITIES. 
  
 Subject to the restrictions on transfer contained in the Agreement, this Note and all rights hereunder are transferable in whole or in part on the books
of the Maker maintained for such purpose at its principal office referred to above by Payee in person or by a duly authorized attorney, upon surrender of this Note properly endorsed and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer. Each taker and holder of this Note, by taking or holding the same, consents and agrees that this Note when endorsed in blank shall be deemed negotiable and agrees that when this Note shall have been so
endorsed, Payee hereof may be treated by the Maker and all other persons dealing with this Note, as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby, or to the transfer hereof on the
books of the Maker, any notice to the contrary notwithstanding; but until such transfer on such books, the Maker may treat Payee hereof as the owner for all purposes. 
  
 VI. METHODS; ADDRESSES. 
  
 Any notice, demand or other communication required or permitted under the terms of this Note shall be in writing and shall be made by telegram, telex or
electronic transmitter (including, without limitation, facsimile) or certified or registered mail, return receipt requested, and shall be deemed to be received by the addressee on the date delivery is confirmed, if sent by Fed Ex, Express Mail, or
other similar overnight delivery service, the date of electronic confirmation of receipt, if sent by telegram, telex, telecopy or electronic transmitter, and three (3) business days after mailing, if sent by certified or registered mail, with
postage prepaid, and properly addressed. Notices shall be addressed as provided below: 
  

	 (a)
	 	 If to Payee:
	  	 St. Cloud Capital Partners, LP

	 	 	 	  	 10866 Wilshire Blvd., Suite 1450

	 	 	 	  	 Los Angeles, California 90024

	 	 	 	  	 Facsimile: (310) 475-0550

	 	 	 	  	 Attention: Robert Lautz

  

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	 	 	 With copy to:
	  	 Latham & Watkins LLP

	 	 	 	  	 633 West Fifth Street, Suite 4000

	 	 	 	  	 Los Angeles, California 90071

	 	 	 	  	 Facsimile: (213) 891-8763

	 	 	 	  	 Attention: W. Alex Voxman, Esq.

			
	 (b)
	 	 If to the Maker:
	  	 Prolong Super Lubricants, Inc.

	 	 	 	  	 6 Thomas

	 	 	 	  	 Irvine, California 92618

	 	 	 	  	 Facsimile: (949) 587-2707

	 	 	 	  	 Attention: Chief Executive Officer

			
	 	 	 With a copy to:
	  	 Stradling Yocca Carlson & Rauth

	 	 	 	  	 660 Newport Center Drive, Suite 1600

	 	 	 	  	 Newport Beach, California 92660

	 	 	 	  	 Facsimile: (949) 725-4100

	 	 	 	  	 Attention: Michael E. Flynn, Esq.

  
 Any party may change
its address for this purpose by giving a written notice thereof as herein provided. 
  
 VII. MISCELLANEOUS. 
  
 7.1 Survival of
Covenants. All agreements and covenants made herein shall survive the execution and delivery hereof. 
  
 7.2 Failure or Indulgence Not Waiver. No failure or delay on the part of Payee or any other holder of this Note to exercise any right, power or
privilege under this Note and no course of dealing between the Maker and Payee shall impair such right, power or privilege or operate as a waiver of any default or an acquiescence therein, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies expressly provided in this Note are cumulative to, and not exclusive of, any rights or remedies that
Payee would otherwise have. No notice to or demand on the Maker in any case shall entitle the Maker to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of Payee to any other or further
action in any circumstances without notice or demand. 
  
 7.3
Cost of Collection. The Maker agrees to indemnify Payee against any losses, claims, damages and liabilities and related expenses, including counsel fees and expenses, incurred by Payee in connection with the collection and enforcement of this
Note (including, without limitation, in connection with any bankruptcy, insolvency, reorganization or workout). In addition, the Maker agrees to pay, and to save Payee harmless from all liability for, any stamp or other documentary taxes which may
be payable in connection with the Maker’s execution or delivery of this Note. 
  
 All payments made by the Maker under this Note shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp 

  

 8 

 
or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any
governmental authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on Payee as a result of a present or former connection between Payee and the jurisdiction of the governmental authority imposing
such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from Payee having executed, delivered or performed its obligations or received a payment under, or enforced, this Note). If
any such non-excluded taxes, levies, imposts, duties, charges, fees deductions or withholdings (“Non-Excluded Taxes”) are required to be withheld from any amounts payable to Payee under this Note, the amounts so payable to Payee
shall be increased to the extent necessary to yield to Payee (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Note. Whenever any Non-Excluded Taxes are
payable by the Maker, as promptly as possible thereafter (and, in any event, within five (5) business days) the Maker shall send to Payee for its own account a certified copy of an original official receipt received by the Maker showing payment
thereof. If the Maker fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to Payee the required receipts or other required documentary evidence, the Maker shall indemnify, defend and hold Payee harmless
for any incremental taxes, interest or penalties that may become payable by Payee as a result of any such failure. 
  
 The agreements in this Section 7.3 shall survive the termination of this Note and the payment of the loan and all other amounts payable hereunder.

  
 7.4 Governing Law. This Note has been executed in and
shall be governed by the laws of the State of California. As part of the consideration for Payee’s investment herein, the Maker and Payee hereby agree that all actions or proceedings arising directly or indirectly hereunder, whether instituted
by Payee or the Maker, may, at the option of Payee, be litigated in courts having situs within the State of California, County of Los Angeles and the Maker hereby expressly consents to the jurisdiction of any local, state or federal court located
within said state and county, and consents that any service of process in such action or proceeding may be made by personal service upon the Maker wherever the Maker may be located, or by certified or registered mail directed to the Maker at its
last known address. The Maker and Payee waive trial by jury, any objection based on forum non conveniens, and any objection to venue of any action instituted hereunder in such County. 
  
 7.5 Modification. Neither this Note nor any provision hereof may be amended, modified, waived, discharged or
terminated with respect to Payee unless agreed to in writing by the holder of this Note and the Maker. 
  
 7.6 Severability. Whenever possible, each provision of this Note will be interpreted in such manner as to be effective and valid under applicable
law, but, if any provision of this Note is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Note.

  
 7.7 Further Assurance. At any time or from time to time
upon the request of Payee, the Maker will execute and deliver such further documents and do such other acts and things as Payee may reasonably request in order fully to effectuate the purposes of this Note, and to provide for the payment of the
principal and interest due hereunder. 
  

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 7.8 Successors. The Maker may not pledge, assign or transfer any of its rights or obligations
under this Note without the prior written consent of Payee. Any purported assignment or transfer in breach of this Note shall be of no force and effect. Subject to the transfer restrictions contained in the Agreement, Payee may assign and
participate any of its interests in this Note and this Note to any Person. Each reference herein to powers or rights of Payee shall also be deemed a reference to the same power or right of such assignees, to the extent of the interest assigned to
them. All the covenants, agreements, representations and warranties contained in this Note shall bind the parties hereto and their respective heirs, executors, administrators, distributees, successors and assigns, including any Person to whom Payee
has granted a participation interest in this Note. 
  
 7.9
Headings. The section headings in this Note are inserted for purposes of convenience only and shall have no substantive effect. 
  
 7.10 No Strict Construction. The Maker hereby waives the benefit of any statute or rule of law or judicial decision, including without limitation
California Civil Code § 1654, which would otherwise require that the provisions of this Note be construed or interpreted most strongly against the party responsible for the drafting thereof. 
  
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 
  

 10 

 IN WITNESS WHEREOF, the Maker has caused this Note to be signed and delivered by its duly
authorized officer and to be dated November 24, 2003. 
  

	MAKER:
	
	 PROLONG SUPER LUBRICANTS, INC., a
 Nevada corporation

		
	 By:
	 	 /s/    Elton Alderman

	 	 	 Name: Elton Alderman

	 	 	 Title: President and Chief Executive Officer

  

 11Warrant, dated 11/24/03

 EXHIBIT 10.6 
 Execution Copy 
  
 NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO REGISTERED
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE. THIS LEGEND SHALL BE IMPRINTED ON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT. 
  
 WARRANT TO PURCHASE 
  
 COMMON STOCK OF 
  
 Prolong International Corporation 
  
 THIS CERTIFIES that, for value received, ST. CLOUD CAPITAL
PARTNERS, LP, a Delaware limited partnership (“St. Cloud”), or its permitted assigns (collectively, the “Holder”), is entitled to purchase from PROLONG INTERNATIONAL CORPORATION, a Nevada corporation (the
“Company”), at any time, and from time to time, during the exercise period referred to in Section 1 hereof, 4,885,492 fully paid, validly issued and nonassessable shares (the “Warrant Shares”) of common stock
of the Company, $0.001 par value per share (the “Common Stock”), at the exercise price of $0.06 (the “Warrant Share Price”); provided that if an Event of Default occurs under the St. Cloud Note (as defined in
the Securities Purchase Agreement (as defined below)) that involves in excess of Twenty Five Thousand Dollars ($25,000) or may result in losses or damages to the Company or Holder in excess of Twenty Five Thousand Dollars ($25,000) and is not cured
or waived by Holder within thirty (30) days thereafter, then this Warrant shall automatically become exercisable to purchase an additional number of Warrant Shares (any such additional Warrant Shares shall be considered Warrant Shares hereunder and
are also sometimes referred to as “Additional Warrant Shares”) equal to (A) the Warrant Percentage (as defined below) multiplied by (B) ten percent (10%) of the total number of shares of Common Stock outstanding as of the date of
the Event of Default on a fully diluted basis assuming exercise of this Warrant and any other options, warrants or convertible securities outstanding as of such date and including in such calculation all Additional Warrant Shares into which this
Warrant becomes exercisable, except that to the extent required by Rule 713 of the American Stock Exchange, the Warrant Share Price for such Additional Warrant Shares (and only for such Additional Warrant Shares) shall equal the greater of (i) the
Fair Market Value (as defined herein) of the Common Stock (or other securities underlying this Warrant at such time) as of the date of the Event of Default, (ii) the book value per share of the Common Stock as of the date of the Event of Default, or
(iii) the Additional Warrant Share Price (as calculated below): 
  
 X =     A     +     (A – $0.06)(B) 
                         C 

 Where: 
  
 X = the Additional Warrant Share Price 
  
 A = the greater of (i) the closing price of the Common Stock as reported by the American Stock Exchange on the Closing Date (as such term is defined in the Securities
Purchase Agreement) or (ii) the book value per share of the Common Stock on the Closing Date 
  
 B = the number of Warrant Shares represented by this Warrant on the date of the Event of Default plus the number of shares of Common Stock issued upon exercise of this Warrant on or prior to the date of the Event of
Default 
  
 C = the Additional Warrant Shares into which this Warrant becomes
exercisable 
  
 The components used in the calculation of
Additional Warrant Share Price shall be appropriately adjusted for stock splits, reverse stock splits, reclassifications, recapitalizations, consolidations, mergers or similar events occurring after the Closing Date. As used above, “Warrant
Percentage” shall mean a fraction, the numerator of which is the number of Warrant Shares (other than Additional Warrant Shares) into which this Warrant is exercisable as of the date on which this Warrant becomes exercisable for Additional
Warrant Shares and the denominator of which is the number of Warrant Shares (other than Additional Warrant Shares) into which all then outstanding Stock Purchase Warrants (as defined below) are exercisable as of such date. Notwithstanding the
foregoing, the initial exercise price for the Additional Warrant Shares shall be set such that in no event shall the weighted average exercise price for the Warrant Shares (including the Additional Warrants Shares) be less than the greater of (i)
the closing price of the Common Stock as reported by the American Stock Exchange on the Closing Date or (ii) the book value per share of the Common Stock on the Closing Date (in each case, as adjusted for stock splits, reverse stock splits,
reclassifications, recapitalizations, consolidations, mergers or similar events occurring after the Closing Date). 
  
 The number of Warrant Shares issuable upon exercise of this Warrant and the Warrant Share Price are subject to adjustment from time to time as hereinafter
set forth. As used herein, the term “Warrant” shall include any warrant or warrants hereafter issued in consequence of the exercise of this Warrant in part or transfer of this Warrant in whole or in part and any warrant or warrants
into which this Warrant may be divided or exchanged. As used herein, the term “Warrant Share Price” shall also refer to the Additional Warrant Share Price for the purchase of the Additional Warrant Shares. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them 

  

 2 

 
in the Securities Purchase Agreement, dated as of even date hereof, by and among the Company, St. Cloud, Prolong Super Lubricants, Inc., a Nevada
corporation, Prolong International Holdings Ltd., a Cayman Islands company, Prolong International Ltd., a Cayman Islands company, Bedford Oak Capital, L.P., a Delaware limited partnership, Bedford Oak Offshore, Ltd., a Cayman Islands company, and
Aspen Ventures LLC, a New York limited liability company (the “Securities Purchase Agreement”). 
  
 1. Exercise; Payment for Ownership Interest. 
  
 1.1 Upon the terms and subject to the conditions set forth herein, this Warrant may be exercised in whole or in part by the Holder hereof at any time, or
from time to time, on or after the date hereof and prior to 5 p.m. California time on the earlier to occur of November 24, 2013 or thirty (30) days after the date that the Company delivers to each Holder an expiration notice (as described in and in
accordance with Section 10 hereof) (such earlier date, the “Expiration Date”) by presentation and surrender of this Warrant to the principal offices of the Company, or at the office of its Transfer Agent (as defined in
Section 9 hereof), if any, together with the Purchase Form attached hereto, duly executed, and accompanied by payment to the Company of the Warrant Share Price multiplied by the number of Warrant Shares as to which this Warrant is then being
exercised; provided, however, that in the event of any merger, consolidation or sale of all or substantially all the assets of the Company resulting in any distribution to the Company’s stockholders, prior to the Expiration Date, the
Holder shall have the right to exercise this Warrant commencing at such time through the Expiration Date into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of
Common Stock into which this Warrant might have been exercisable immediately prior thereto. Any transfer of Warrant Shares obtained by the Holder in exercise of this Warrant is subject to the requirement that such securities be registered under the
Securities Act of 1933, as amended (the “1933 Act”), and applicable state securities laws or an opinion of counsel reasonably satisfactory to the Company that such transfer is exempt from registration under such laws. The Holder of
this Warrant shall be deemed to be a stockholder of the Warrant Shares as to which this Warrant is exercised in accordance herewith effective immediately after the close of business on the date on which the Holder shall have delivered to the Company
this Warrant in proper form for exercise and payment by certified or official bank check or wire transfer of the cash purchase price for the number of Warrant Shares as to which the exercise is being made, notwithstanding that the stock transfer
books of the Company shall be then closed or that certificates representing such Warrant Shares shall not then be physically delivered to the Holder. 
  
 1.2 All or any portion of the Warrant Share Price may be paid by surrendering Warrants effected by presentation and surrender of this Warrant to the
Company, or at the office of its Transfer Agent, if any, with a Cashless Exercise Form annexed hereto duly executed (a “Cashless Exercise”). Such presentation and surrender shall be deemed a waiver by the Company of the
Holder’s obligation to pay all or any portion of the 

  

 3 

 
aggregate Warrant Share Price in cash. In the event of a Cashless Exercise, the Holder shall exchange its Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares for which the Holder desires to exercise this Warrant by a fraction, the numerator of which shall be the difference between the Fair Market Value (as defined below) and the Warrant Share Price,
and the denominator of which shall be the Fair Market Value. For purposes of any computation under this Warrant, the “Fair Market Value” per share of Common Stock at any date shall be deemed to be the average for the ten (10)
consecutive business days immediately prior to the Cashless Exercise of the daily closing prices of the Common Stock on the American Stock Exchange or such other principal national securities exchange on which the Common Stock is admitted to trading
or listed, or if not listed or admitted to trading on any such exchange, the closing prices as reported by the Nasdaq SmallCap Market or the Nasdaq National Market, or if not then included for quotation on the Nasdaq SmallCap Market or the Nasdaq
National Market, the average of the highest reported bid and lowest reported asked prices as reported by the OTC Bulletin Board or the National Quotations Bureau, as the case may be, or if not then publicly traded, the fair market price, not less
than book value thereof, of the Common Stock as determined in good faith by the independent members of the Board of Directors of the Company. 
  
 1.3 If this Warrant shall be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable hereunder as to which the Warrant has not been exercised. If this Warrant is exercised in part, such exercise shall be for a whole number of
Warrant Shares. If this Warrant shall be exercised in part and, at the time of such exercise, is exercisable for Additional Warrant Shares that have a different Warrant Share Price, then Holder shall specify the extent (if any) to which it is
exercising this Warrant to acquire such Additional Warrant Shares. Upon any exercise and surrender of this Warrant, the Company (a) will issue and deliver to the Holder a certificate or certificates in the name of the Holder for the largest whole
number of Warrant Shares to which the Holder shall be entitled and, if this Warrant is exercised in whole, in lieu of any fractional Warrant Share to which the Holder otherwise might be entitled, cash in an amount equal to the Fair Market Value of
such fractional Warrant Share, and (b) will deliver to the Holder such other securities, properties or cash which the Holder may be entitled to receive upon such exercise, or the proportionate part thereof if this Warrant is exercised in part,
pursuant to the provisions of this Warrant. 
  
 2.
Anti-Dilution Provisions. The Warrant Share Price in effect at any time and the number and kind of securities issuable upon exercise of this Warrant and the Warrant Share Price shall be subject to adjustment from time to time upon the
happening of certain events as follows: 
  
 2.1
Reorganization, Reclassification, Consolidation, Merger or Sale. If any capital reorganization, reclassification or any other change of capital stock of the 

  

 4 

 
Company, or any consolidation or merger of the Company with another person, or the sale or transfer of all or substantially all of its assets to another
person shall be effected in such a way that holders of shares of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for their shares of Common Stock, then provision shall be made by the Company, in
accordance with this Section 2.1, whereby the Holder hereof shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in this Warrant and in addition to or in exchange for, as
applicable, the Warrant Shares subject to this Warrant immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such securities or assets as would have been issued or payable with respect to or in
exchange for the aggregate Warrant Shares immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby if exercise of the Warrant had occurred immediately prior to such reorganization, reclassification,
consolidation, merger or sale. The Company will not effect any such consolidation, merger, sale, transfer or lease unless prior to the consummation thereof the successor entity (if other than the Company) resulting from such consolidation or merger
or the entity purchasing such assets shall assume by written instrument (a) the obligation to deliver to the Holder such securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase, and (b) all other
obligations of the Company under this Warrant. The provisions of this Section 2.1 shall similarly apply to successive consolidations, mergers, exchanges, sales, transfers or leases. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or transfer, additional shares of Common Stock shall be issued in exchange, conversion, substitution or payment, in whole or in part, for a security of the Company other than Common
Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Section 2 hereof. 
  
 2.2 Stock Dividends and Securities Distributions. If, at any time or from time to time after the date of this Warrant, the Company shall distribute
to the holders of shares of Common Stock (a) securities (including rights, warrants, options or another form of convertible securities) other than securities of the Company, (b) property, other than cash, or (c) cash, without fair payment therefor,
then, and in each such case, the Holder, upon the exercise of this Warrant, shall be entitled to receive such securities, property and cash which the Holder would hold on the date of such exercise if, on the date of the distribution, the Holder had
been the holder of record of the shares of Common Stock issued upon such exercise and, during the period from the date of this Warrant to and including the date of such exercise, had retained such shares of Common Stock and the securities, property
and cash receivable by the Holder during such period, subject, however, to the Holder agreeing to any conditions to such distribution as were required of all other holders of shares of Common Stock in connection with such distribution. 

  

 5 

 2.3 Other Adjustments. In addition to those adjustments set forth in Section 2.1 and
Section 2.2, but without duplication of the adjustments to be made under such Sections, if the Company: 
  
 (a) makes a distribution on its Common Stock in shares of its Common Stock; 
  
 (b) subdivides or reclassifies its outstanding shares of Common Stock into a greater number of shares; 
  
 (c) combines or reclassifies its outstanding shares of Common Stock into a
smaller number of shares; 
  
 (d) makes a distribution on its
Common Stock in shares of its capital stock other than Common Stock; and/or 
  
 (e) issues, by reclassification of its Common Stock, any shares of its capital stock; 
  
 then the number and kind of Warrant Shares purchasable upon exercise of this Warrant shall be adjusted so that the Holder upon exercise hereof shall be entitled to
receive the kind and number of Warrant Shares or other securities of the Company that the Holder would have owned or have been entitled to receive after the happening of any of the events described above had this Warrant been exercised immediately
prior to the happening of such event or any record date with respect thereto. An adjustment made pursuant to this Section 2.3 shall become effective immediately after the record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision, combination or issuance. If, as a result of an adjustment made pursuant to this Section 2.3, the Holder of this Warrant thereafter surrendered for exercise shall
become entitled to receive shares of two (2) or more classes of capital stock or shares of Common Stock and any other class of capital stock of the Company, the Board of Directors (whose determination shall be conclusive and shall be described in a
written notice to all holders of Warrants promptly after such adjustment) shall determine the allocation of the adjusted Warrant Share Price between or among shares of such classes of capital stock or shares of Common Stock and such other class of
capital stock.  
  
 The adjustment to the number of Warrant
Shares purchasable upon the exercise of this Warrant described in this Section 2.3 shall be made each time any event listed in paragraphs (a) through (e) of this Section 2.3 occurs. 
  
 Simultaneously with all adjustments to the number and/or kind of securities,
property and cash under this Section 2.3 to be issued in connection with the exercise of this Warrant, the Warrant Share Price will also be appropriately and proportionately adjusted. 
  

 6 

 (f) In the event that at any time, as a result of an adjustment made pursuant to this Section 2.3,
the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Section 2.1 and Section 2.2 above. 
  
 2.4 Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Warrant Share Price pursuant
to this Section 2, the Company at its expense will promptly compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment or readjustment, including a statement of
the adjusted Warrant Share Price or adjusted number of shares of Common Stock, if any, issuable upon exercise of each Warrant, describing the transaction giving rise to such adjustments and showing in detail the facts upon which such adjustment or
readjustment is based. The Company will forthwith mail, by first class mail, postage prepaid, a copy of each such certificate to the Holder of this Warrant at the address of such Holder as shown on the books of the Company, and to its Transfer
Agent. Any Holder of this Warrant may change his address by written notice to the Company at its office (or at such other office or agency of the Company as it may from time to time designate in writing to the Holder) requesting such change.

  
 2.5 Other Notices. If at any time: 
  
 (a) the Company shall (i) offer for subscription pro rata to the holders of
shares of the Common Stock any additional equity in the Company or other rights; (ii) pay a dividend in additional shares of the Common Stock or distribute securities or other property to the holders of shares of the Common Stock (including, without
limitation, evidences of indebtedness and equity and debt securities); or (iii) issue securities convertible into, or rights or warrants to purchase, securities of the Company; 
  
 (b) there shall be any capital reorganization or reclassification or consolidation or merger of the Company with, or sale,
transfer or lease of all or substantially all of its assets to, another entity; or 
  
 (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; 
  
 then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, to the Holder of this Warrant at the address of such Holder as shown
on the books of the Company, (a) at least fifteen (15) days’ prior written notice of the date on which the books of the Company shall close or a record shall be taken for such subscription rights, dividend, distribution or issuance, and (b) in
the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, at least fifteen (15) days’ prior written notice of the date when the same shall 

  

 7 

 
take place if no stockholder vote is required and at least fifteen (15) days’ prior written notice of the record date for stockholders entitled to vote
upon such matter if a stockholder vote is required. Such notice in accordance with the foregoing clause (a) shall also specify, in the case of any such subscription rights, the date on which the holders of shares of Common Stock shall be entitled to
exercise their rights with respect thereto, and such notice in accordance with the foregoing clause (b) shall also specify the date on which the holders of shares of Common Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. Failure to give the notice referred to herein shall not affect the validity
or legality of the action which should have been the subject of the notice. 
  
 2.6 No Impairment. The Company shall not, by amendment of its Articles of Incorporation or Bylaws or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, including, without limitation, voluntary bankruptcy proceedings, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but shall at all
times in good faith assist in the carrying out of all the provisions of this Section 2 and in the taking of all such action as may be necessary or appropriate on order to protect the rights of the registered holder of this Warrant against
impairment. 
  
 3. No Voting Rights. This Warrant shall not
be deemed to confer upon the Holder any right to vote or to consent to or receive notice as a stockholder of the Company, as such, in respect of any matters whatsoever, or any other rights or liabilities as a stockholder, prior to the exercise
hereof. 
  
 4. Warrants Transferable. Subject to the
transfer restrictions in the Securities Purchase Agreement and the Investors’ Rights Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, at the principal offices of the Company by the Holder hereof, upon
surrender of this Warrant properly endorsed; provided, however, that without the prior written consent of the Company, this Warrant and all rights hereunder may be transferred only (a) pursuant to an exemption from registration under the 1933
Act and the Company shall have received an opinion of counsel to such effect, or (b) pursuant to the registration of this Warrant or the Warrant Shares under the 1933 Act. 
  
 5. Warrants Exchangeable; Assignment; Loss, Theft, Destruction, Etc. This Warrant is exchangeable, without expense,
upon surrender hereof by the Holder hereof at the principal offices of the Company, or at the office of its Transfer Agent, if any, for new Warrants of like tenor representing in the aggregate the right to subscribe for and purchase the Warrant
Shares which may be subscribed for and purchased hereunder, each such new Warrant to represent the right to subscribe for and 

  

 8 

 
purchase such Warrant Shares as shall be designated by such Holder hereof at the time of such surrender. Upon surrender of this Warrant to the Company at its
principal office, or at the office of its Transfer Agent, if any, with an instrument of assignment duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall promptly be cancelled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company, or
at the office of its Transfer Agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. Upon receipt of evidence 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, upon delivery of a bond or indemnity satisfactory to the Company, or, in the case of any such mutilation, upon surrender or cancellation
of this Warrant, the Company will issue to the Holder hereof a new Warrant of like tenor, in lieu of this Warrant, representing the right to subscribe for and purchase the Warrant Shares which may be subscribed for and purchased hereunder. Any such
new Warrant executed and delivered shall constitute an additional contractual obligation of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. 
  
 6. Legends. Any certificate evidencing the securities issued upon
exercise of this Warrant shall bear a legend in substantially the following form: 
  
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO
REGISTERED OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE. 
  

7. Modifications and Waivers. The terms of this Warrant may be amended, modified or waived only by (i) the written agreement of the Company and
the Holder or (ii) the written agreement of the Company and the holders of a Majority of Warrants. “Majority of Warrants” shall mean holders of Stock Purchase Warrants (as defined below) that would, upon exercise of the outstanding
Stock Purchase Warrants, hold a majority of the Warrant Shares issued upon such exercise. “Stock Purchase Warrants” shall mean all warrants issued to the Purchasers under the Securities Purchase Agreement. 
  
 8. Miscellaneous. The Company shall pay all expenses and other charges
payable in connection with the preparation, issuance and delivery of this Warrant and all substitute Warrants. The Holder shall pay all taxes (other than any issuance taxes, including, without limitation, documentary stamp taxes, transfer taxes and
other governmental charges, which shall be paid by the Company) in connection with such issuance and delivery of this Warrant and the Warrant Shares. 
  

 9 

 The Company shall maintain, at the office or agency of the Company maintained by the Company, books for
the registration and transfer of the Warrant. 
  
 9.
Reservation of Warrant Shares. The Company will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock or its authorized and issued Common Stock held in its
treasury, solely for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise of this Warrant, the maximum number of shares of Common Stock which may then be deliverable upon the exercise of this Warrant.

  
 The Company or, if appointed, the Transfer Agent for the
Common Stock (the “Transfer Agent”) and every subsequent transfer agent for any shares of the Company’s capital stock issuable upon the exercise of any of the rights of purchase aforesaid will be irrevocably authorized and
directed at all times to reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Warrant on file with the Transfer Agent and with every subsequent transfer agent for any shares of the
Company’s capital stock issuable upon the exercise of the rights of purchase represented by this Warrant. The Company will furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto transmitted to the
Holder pursuant to Section 2.4 hereof. 
  
 The Company
covenants that all Warrant Shares which may be issued upon exercise of this Warrant will, upon issue, be fully paid, nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issue
thereof. 
  
 10. Expiration Notice. Upon St. Cloud’s
sale of eighty percent (80%) of the Warrant Shares to an unaffiliated third party, St. Cloud shall provide written notice to the Company of such event. At any time thereafter, the Company shall have the right to send a notice to Holder in writing
stating that such sale has been consummated and that the Expiration Date shall occur thirty (30) days following delivery of such notice to Holder. 
  
 11. Registration Rights. Subject to the restrictions set forth therein, the Holder shall be entitled to the registration rights with respect to the
Warrant Shares as set forth in the Investors’ Rights Agreement. 
  
 12. Equity Participation. This Warrant is issued in connection with the Securities Purchase Agreement. It is intended that this Warrant constitute an equity participation under California law and not constitute interest on the Note.
If under any circumstances whatsoever, fulfillment of any obligation of this Warrant, the Securities Purchase Agreement, or any other agreement or document executed in connection with 

  

 10 

 
the Securities Purchase Agreement, shall violate the lawful limit of any applicable usury statute or any other applicable law with regard to obligations of
like character and amount, then the obligation to be fulfilled shall be reduced to such lawful limit, such that in no event shall there occur, under this Warrant, the Securities Purchase Agreement, or any other document or instrument executed in
connection with the Securities Purchase Agreement, any violation of such lawful limit, but such obligation shall be fulfilled to the lawful limit. If any sum is collected in excess of the lawful limit, such excess shall be applied to reduce the
principal amount of the Note and, following full payment of the Note, shall be returned to the Company. 
  
 13. Descriptive Headings and Governing Law. The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only
and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with the laws of the State of California, and the rights of the parties shall be governed by, the law of such State. 
  
 14. Severability. If any provision of this Warrant or the application
thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Warrant and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law. 
  
 15. No Strict
Construction. The Company hereby waives the benefit of any statute or rule of law or judicial decision, including without limitation California Civil Code § 1654, which would otherwise require that the provisions of this Warrant be
construed or interpreted most strongly against the party responsible for the drafting thereof. 
  
 [SIGNATURE PAGE FOLLOWS] 
  

 11 

 Execution Copy 
  
 IN WITNESS WHEREOF, this Warrant has been executed as of the 24th day of November, 2003. 
  

	PROLONG INTERNATIONAL CORPORATION
		
	 By:
	 	 /s/    Elton Alderman

	 	 	 Name: Elton Alderman

	 	 	 Title:   President and Chief Executive Officer

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