Document:

Exhibit 10.23

 

THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS.  THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE 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.

 

THIS
NOTE IS SUBJECT TO THE TERMS OF THE SENIOR SUBORDINATION AGREEMENT BETWEEN
LAURUS MASTER FUND, LTD. AND FLEET CAPITAL CORPORATION TO WHICH REFERENCE IS
MADE FOR THE TERMS OF SUBORDINATION AND FOR LIMITATIONS OF ENFORCEMENT OF THE
PROVISIONS HEREOF.

 

SECURED
CONVERTIBLE MINIMUM BORROWING NOTE

 

FOR VALUE RECEIVED, each of IWT TESORO CORPORATION, a
Nevada corporation (the “Parent”), and
the other companies listed on Exhibit A attached hereto (such other
companies together with the Parent, each a “Company”
and collectively, the “Companies”),
jointly and severally, promises to pay to LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309 GT, Ugland House, South Church
Street, George Town, Grand Cayman, Cayman Islands, Fax: 345-949-8080 (the “Holder”) or its registered assigns or successors in
interest, the sum of Three Million Dollars ($3,000,000), or, if different, the
aggregate principal amount of all Loans (as defined in the Security Agreement
referred to below), together with any accrued and unpaid interest hereon, on August 25,
2008 (the “Maturity Date”) if not sooner
paid.

 

Capitalized terms used herein without definition shall
have the meanings ascribed to such terms in the Security Agreement among the
Companies and the Holder dated as of the date hereof (as amended, modified
and/or supplemented from time to time, the “Security
Agreement”).

 

The following terms shall apply to this Minimum
Borrowing Note (this “Note”):

 

ARTICLE I

CONTRACT RATE

 

1.1                                 Contract
Rate.  Subject to Sections 4.2 and
5.10, interest payable on the outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate per annum equal to
the “prime rate” published in The Wall Street Journal from time to time
(the “Prime Rate”), plus one and one-half
percent (1.5%) (the “Contract Rate”).  The Contract Rate shall be increased or
decreased as the case may be for each increase or decrease in the Prime Rate in
an amount equal to such increase or decrease in the Prime Rate; each change to
be effective as of the day of the change in the Prime Rate.  Subject to Section 1.2, the Contract
Rate

 

 

shall not at any time be
less than six percent (6.0%).  Interest
shall be (i) calculated on the basis of a 360 day year, and (ii) payable
monthly, in arrears, commencing on October 1, 2005 on the first business
day of each consecutive calendar month thereafter through and including the
Maturity Date and on the Maturity Date, whether by acceleration or otherwise.

 

1.2                                 Contract
Rate Adjustments and Payments.  The
Contract Rate shall be calculated on the last business day of each calendar
month hereafter (other than for increases or decreases in the Prime Rate which
shall be calculated and become effective in accordance with the terms of Section 1.1)
until the Maturity Date (each a “Determination Date”)
and shall be subject to adjustment as set forth herein.  If (i) the Parent shall have registered
the shares of the Common Stock underlying the conversion of each Minimum Borrowing
Note and each Warrant on a registration statement declared effective by the
Securities and Exchange Commission (the “SEC”), and (ii) the
market price (the “Market Price”)
of the Common Stock as reported by Bloomberg, L.P. on the Principal Market for
the five (5) trading days immediately preceding a Determination Date
exceeds the then applicable Fixed Conversion Price by at least twenty-five
percent (25%), the Contract Rate for the succeeding calendar month shall
automatically be reduced by 200 basis points (200 b.p.) (2%) for each
incremental twenty-five percent (25%) increase in the Market Price of the
Common Stock above the then applicable Fixed Conversion Price.  Notwithstanding the foregoing (and anything
to the contrary contained herein), in no event shall the Contract Rate at any
time be less than zero percent (0%).

 

ARTICLE II

LOANS; PAYMENTS UNDER THIS NOTE

 

2.1                                 Loans.  All Loans evidenced by this Note shall be
made in accordance with the terms and provisions of the Security Agreement.

 

2.2                                 No
Effective Registration. 
Notwithstanding anything to the contrary herein, the Holder shall not be
required to accept shares of Common Stock as payment following a conversion by
the Holder if there fails to exist an effective current Registration Statement
(as defined in the Registration Rights Agreement) covering the shares of Common
Stock to be issued, or if an Event of Default hereunder exists and is
continuing, unless such requirement is otherwise waived in writing by the
Holder in whole or in part at the Holder’s option.

 

2.3                                 Optional
Redemption in Cash.  The Companies
will have the option of prepaying this Note (“Optional
Redemption”) by paying to the Holder a sum of money equal to one
hundred twenty four percent (124%) of the principal amount of this Note
together with accrued but unpaid interest thereon and any and all other sums
due, accrued or payable to the Holder arising under this Note, the Security
Agreement, or any other Ancillary Agreement (the “Redemption
Amount”) outstanding on the Redemption Payment Date (as defined
below).  The Company shall deliver to the
Holder a written notice of redemption (the “Notice of
Redemption”) specifying the date for such Optional Redemption (the “Redemption Payment Date”), which date shall be seven (7) days
after the date of the Notice of Redemption (the “Redemption
Period”).  A Notice of
Redemption shall not be effective with respect to any portion of this Note for
which the Holder has previously delivered a Notice of Conversion (defined
below) pursuant to Section 3.1, or for conversions elected to be made by
the Holder pursuant to Section 3.1 during the Redemption Period.  The Redemption Amount shall be

 

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determined as if such
Holder’s conversion elections had been completed immediately prior to the date
of the Notice of Redemption.  On the
Redemption Payment Date, the Redemption Amount (plus any additional interest
and fees accruing on the Notes during the Redemption Period) must be
irrevocably paid in full in immediately available funds to the Holder.  In the event the Companies fail to pay the
Redemption Amount on the Redemption Payment Date, then such Redemption Notice
shall be null and void.

 

ARTICLE III

CONVERSION RIGHTS AND FIXED CONVERSION PRICE

 

3.1                                 Optional
Conversion. Subject to the terms of this Article III, the Holder shall
have the right, but not the obligation, at any time until the Maturity Date, or
during an Event of Default (as defined in Article IV), and, subject to the
limitations set forth in Section 3.2 hereof, to convert all or any portion
of the outstanding Principal Amount and/or accrued interest and fees due and
payable into fully paid and nonassessable shares of the Common Stock at the
Fixed Conversion Price.  For purposes
hereof, subject to Section 3.6 hereof, the initial “Fixed
Conversion Price” means $2.74 subject to adjustment as provided in Section 3.6
of this Note.  The shares of Common Stock
to be issued upon such conversion are herein referred to as the “Conversion Shares.”

 

3.2                                 Conversion
Limitation.  Notwithstanding anything
contained herein to the contrary, the Holder shall not be entitled to convert
pursuant to the terms of this Note an amount that would be convertible into
that number of Conversion Shares which would exceed the difference between (i) 4.99%
of the 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 Exchange
Act and Regulation 13d-3 thereunder.  The
Conversion Shares limitation described in this Section 3.2 shall
automatically become null and void following notice to any Company upon the
occurrence and during the continuance of an Event of Default, or upon 120 days
prior notice to the Parent, except that at no time shall the number of shares
of Common Stock beneficially owned by the Holder exceed 19.99% of the outstanding
shares of Common Stock.  Notwithstanding
anything contained herein to the contrary, the total number of shares of Common
Stock issuable by the Parent and acquirable by the Holder at a price below $2.65
per share pursuant to the terms of this Note, the Security Agreement or any
other Ancillary Agreement, shall not exceed an aggregate of 2,339,050 shares of
Common Stock (subject to appropriate adjustment for stock splits, stock
dividends, or other similar recapitalizations affecting the Common Stock) (the “Maximum Common Stock Issuance”), unless the issuance of
Common Stock hereunder in excess of the Maximum Common Stock Issuance shall
first be approved by the Parent’s shareholders in accordance with applicable
state and federal laws.  If at any point
in time and from time to time the number of shares of Common Stock issued
pursuant to the terms of this Note, the Security Agreement or any other
Ancillary Agreement, together with the number of shares of Common Stock that
would then be issuable by the Parent to the Holder in the event of a conversion
or exercise pursuant to the terms of this Note, the Security Agreement or any
other Ancillary Agreement, would exceed the Maximum Common Stock Issuance but
for this Section 3.2, the Parent shall promptly call a shareholders
meeting to solicit shareholder approval for the issuance of the shares of
Common Stock hereunder in excess of the Maximum Common Stock Issuance.  Notwithstanding anything contained herein to
the contrary,

 

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the provisions of this Section 3.2
are irrevocable and may not be waived by the Holder or any Company.

 

3.3                                 Mechanics
of Holder’s Conversion.  In the event
that the Holder elects to convert this Note into Common Stock, the Holder shall
give notice of such election by delivering an executed and completed notice of
conversion in substantially the form of Exhibit A hereto (appropriately
completed) (“Notice of Conversion”) to the
Parent and such Notice of Conversion shall provide a breakdown in reasonable
detail of the Principal Amount, accrued interest and fees that are being
converted.  On each Conversion Date (as
hereinafter defined) and in accordance with its Notice of Conversion, the
Holder shall make the appropriate reduction to the Principal Amount, accrued interest
and fees as entered in its records and shall provide written notice thereof to
the Parent within five (5) Business Days after the Conversion Date.  Each date on which a Notice of Conversion is
delivered or telecopied to the Parent in accordance with the provisions hereof
shall be deemed a Conversion Date (the “Conversion Date”).  Pursuant to the terms of the Notice of
Conversion, the Parent will issue instructions to the transfer agent
accompanied by an opinion of counsel within three (3) Business Days of the
date of the delivery to the Parent of the Notice of Conversion and shall cause
the transfer agent to transmit the certificates representing the Conversion
Shares to the Holder by crediting the account of the Holder’s designated broker
with the Depository Trust Corporation (“DTC”) through
its Deposit Withdrawal Agent Commission (“DWAC”) system
within three (3) Business Days after receipt by the Parent of the Notice
of Conversion (the “Delivery Date”).  In the case of the exercise of the conversion
rights set forth herein the conversion privilege shall be deemed to have been
exercised and the Conversion Shares issuable upon such conversion shall be
deemed to have been issued upon the date of receipt by the Parent of the Notice
of Conversion.  The Holder shall be
treated for all purposes as the record holder of the Conversion Shares, unless
the Holder provides the Parent written instructions to the contrary.

 

3.4                                 Late
Payments.  Each Company understands
that a delay in the delivery of the Conversion Shares in the form required
pursuant to this Article beyond the Delivery Date could result in economic
loss to the Holder.  As compensation to
the Holder for such loss, in addition to all other rights and remedies which
the Holder may have under this Note, applicable law or otherwise, the Companies
shall, jointly and severally, pay late payments to the Holder for any late
issuance of Conversion Shares in the form required pursuant to this Article III
upon conversion of this Note, in the amount equal to $500 per Business Day
after the Delivery Date.  The Companies
shall, jointly and severally, make any payments incurred under this Section in
immediately available funds upon demand.

 

3.5                                 Conversion
Mechanics.  The number of shares of
Common Stock to be issued upon each conversion of this Note shall be determined
by dividing that portion of the principal and interest and fees to be
converted, if any, by the then applicable Fixed Conversion Price.

 

3.6                                 Adjustment
Provisions. The Fixed Conversion Price and number and kind of shares or
other securities to be issued upon conversion determined pursuant to Section 3.1
shall be subject to adjustment from time to time upon the occurrence of certain
events during the period that this conversion right remains outstanding, as
follows:

 

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(a)                                  Reclassification.  If the Parent at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such change
with respect to the Common Stock (i) immediately prior to or (ii) immediately
after such reclassification or other change at the sole election of the Holder.

 

(b)                                 Stock
Splits, Combinations and Dividends. 
If the shares of Common Stock are subdivided or combined into a greater
or smaller number of shares of Common Stock, or if a dividend is paid on the
Common Stock or any preferred stock issued by the Parent in shares of Common
Stock, the Fixed Conversion Price shall be proportionately reduced in case of
subdivision of shares or stock dividend or proportionately increased in the
case of combination of shares, in each such case by the ratio which the total
number of shares of Common Stock outstanding immediately after such event bears
to the total number of shares of Common Stock outstanding immediately prior to
such event.

 

(c)                                  Share
Issuances.  Subject to the provisions
of this Section 3.6, if the Parent shall at any time prior to the
conversion or repayment in full of the Principal Amount issue any shares of
Common Stock or securities convertible into Common Stock to a person other than
the Holder (except (i) pursuant to Sections 3.6(a) or (b) above;
(ii) pursuant to options, warrants, or other obligations to issue shares
outstanding on the date hereof as disclosed to the Holder in writing; or (iii) pursuant
to options that may be issued under any employee incentive stock option and/or
any qualified stock option plan adopted by the Parent) for a consideration per
share (the “Offer Price”) less than the Fixed
Conversion Price in effect at the time of such issuance, then the Fixed
Conversion Price shall be immediately reset to such lower Offer Price.  For purposes hereof, the issuance of any
security of the Parent convertible into or exercisable or exchangeable for Common
Stock shall result in an adjustment to the Fixed Conversion Price upon the
issuance of such securities.

 

(d)                                 Computation
of Consideration.  For purposes of
any computation respecting consideration received pursuant to Section 3.6(c) above,
the following shall apply:

 

(i)                                     in
the case of the issuance of shares of Common Stock for cash, the consideration
shall be the amount of such cash, provided that in no case shall any deduction
be made for any commissions, discounts or other expenses incurred by the Parent
for any underwriting of the issue or otherwise in connection therewith;

 

(ii)                                  in
the case of the issuance of shares of Common Stock for a consideration in whole
or in part other than cash, the consideration other than cash shall be deemed
to be the fair market value thereof as determined in good faith by the Board of
Directors of the Parent (irrespective of the accounting treatment thereof); and

 

(iii)                               upon any such exercise,
the aggregate consideration received for such securities shall be deemed to be
the consideration received by the Parent for the issuance of such securities
plus the additional minimum consideration, if any, to be received by the Parent
upon the conversion or exchange thereof (the

 

5

 

consideration in each case to be determined in the same manner as
provided in subsections (i) and (ii) of this Section 2.5).

 

3.7                                 Reservation
of Shares.  During the period the
conversion right exists, the Parent will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Conversion Shares upon the full conversion of this Note and the
warrant.  The Parent represents that upon
issuance, the Conversion Shares will be duly and validly issued, fully paid and
non-assessable.  The Parent agrees that
its issuance of this Note shall constitute full authority to its officers,
agents, and transfer agents who are charged with the duty of executing and
issuing stock certificates to execute and issue the necessary certificates for
the Conversion Shares upon the conversion of this Note.

 

3.8                                 Registration
Rights.  The Holder has been granted
registration rights with respect to the Conversion Shares as set forth in a
Registration Rights Agreement.

 

3.9                                 Issuance
of New Note.  Upon any partial
conversion of this Note, a new Note containing the same date and provisions of
this Note shall, at the request of the Holder, be issued by the Parent to the
Holder for the principal balance of this Note and interest which shall not have
been converted or paid.  Subject to the
provisions of Article IV of this Note, the Parent shall not pay any costs,
fees or any other consideration to the Holder for the production and issuance
of a new Note.

 

ARTICLE IV

EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS

 

4.1                                 Events
of Default.  The occurrence of an
Event of Default under the Security Agreement shall constitute an event of
default (“Event of Default”) hereunder.

 

4.2                                 Default
Interest.  Following the occurrence
and during the continuance of an Event of Default and the expiration of any
applicable grace period, the Companies shall, jointly and severally, pay
additional interest on the outstanding principal balance of this Note in an
amount equal to the Contract Rate plus five percent (5%) per annum, and all
outstanding Obligations, including unpaid interest, shall continue to accrue
interest at such additional interest rate from the date of such Event of
Default until the date such Event of Default is cured or waived.

 

4.3                                 Default
Payment.  Following the occurrence
and during the continuance of an Event of Default, the Holder, at its option,
may elect, in addition to all rights and remedies of the Holder under the
Security Agreement and the Ancillary Agreements and all obligations of each
Company under the Security Agreement and the Ancillary Agreements, to require
the Companies, jointly and severally, to make a Default Payment (“Default Payment”). 
The Default Payment shall be 130% of the outstanding principal amount of
the Note, plus accrued but unpaid interest, all other fees then remaining
unpaid, and all other amounts payable hereunder.  The Default Payment shall be applied first to
any fees due and payable to the Holder pursuant to the Notes and/or the
Ancillary Agreements, then to accrued and unpaid interest due on the Notes, the
Security Agreement and then to the outstanding principal balance of the
Notes.  The Default

 

6

 

Payment shall be due and
payable immediately on the date that the Holder has exercised its rights
pursuant to this Section 4.3.

 

ARTICLE V

MISCELLANEOUS

 

5.1                                 Conversion
Privileges.  The conversion
privileges set forth in Article III shall remain in full force and effect
immediately from the date hereof until the date this Note is indefeasibly paid
in full and irrevocably terminated.

 

5.2                                 Cumulative
Remedies.  The remedies under this
Note shall be cumulative.

 

5.3                                 Failure
or Indulgence Not Waiver.  No failure
or delay on the part of the Holder hereof in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege.  All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.

 

5.4                                 Notices.  Any notice herein required or permitted to be
given shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party notified, (b) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient, if not,
then on the next business day, (c) five days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d) one
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt.  All communications shall be sent to the
respective Company at the addresses provided for such Company in the Security
Agreement executed in connection herewith, and to the Holder at the address
provided in the Security Agreement for such Holder, with a copy to John E.
Tucker, Esq., 825 Third Avenue, 14th Floor, New York, New York
10022, facsimile number (212) 541-4434, or at such other address as the
respective Company or the Holder may designate by ten days advance written
notice to the other parties hereto.

 

5.5                                 Amendment
Provision.  The term “Note” and all
references thereto, as used throughout this instrument, shall mean this
instrument as originally executed, or if later amended or supplemented, then as
so amended or supplemented, and any successor instrument as such successor
instrument may be amended or supplemented.

 

5.6                                 Assignability.  This Note shall be binding upon each Company
and its successors and assigns, and shall inure to the benefit of the Holder
and its successors and assigns, and may be assigned by the Holder in accordance
with the requirements of the Security Agreement.  No Company may assign any of its obligations
under this Note without the prior written consent of the Holder, any such
purported assignment without such consent being null and void.

 

5.7                                 Cost
of Collection.  In case of any Event
of Default under this Note, the Companies shall, jointly and severally, pay the
Holder’s reasonable costs of collection, including reasonable attorneys’ fees.

 

7

 

5.8                                 Governing
Law, Jurisdiction and Waiver of Jury Trial.

 

(a)                                  THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.

 

(b)                                 EACH
COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE HAND,
AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE, THE SECURITY
AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT
OF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER
ANCILLARY AGREEMENTS; PROVIDED, THAT EACH COMPANY ACKNOWLEDGES 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 NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION 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
HOLDER.  EACH COMPANY EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS.  EACH COMPANY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT 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 THE SECURITY AGREEMENT 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.

 

(c)                                  EACH
COMPANY DESIRES THAT ITS 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,
EACH COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT,
OR OTHERWISE BETWEEN THE HOLDER, AND/OR ANY COMPANY ARISING OUT OF, CONNECTED
WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, ANY OTHER ANCILLARY
AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

 

8

 

5.9                                 Severability.  In the event that any provision of this Note
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 Note.

 

5.10                           Maximum
Payments.  Nothing contained herein
shall be deemed to establish or require the payment of a rate of interest or
other charges in excess of the maximum permitted by applicable law.  In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum rate
permitted by such law, any payments in excess of such maximum rate shall be
credited against amounts owed by the Companies to the Holder and thus refunded
to the Companies.

 

5.11                           Security
Interest and Guarantee.  The Holder
has been granted a security interest in certain assets of the Companies as more
fully described in the Security Agreement. 
The obligations of the Companies under this Note are guaranteed by
certain Subsidiaries of the Companies pursuant to the Subsidiary Guaranty dated
as of the date hereof.

 

5.12                           Construction.  Each party acknowledges that its legal
counsel participated in the preparation of this Note 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 Note to
favor any party against the other.

 

[Balance of page intentionally left blank;
signature page follows]

 

9

 

IN WITNESS WHEREOF, each Company
has caused this Secured Convertible Minimum Borrowing Note to be signed in its
name effective as of this       day of August, 2005.

 

 

	
   

  	
  IWT
  TESORO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL
  WHOLESALE TILE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

10

 

EXHIBIT A

 

OTHER COMPANIES

 

International Wholesale Tile, Inc., a Florida
corporation

 

11

 

EXHIBIT B

 

NOTICE OF
CONVERSION

 

(To be executed by the Holder in order to convert the

Secured Convertible Minimum Borrowing Note)

 

The undersigned hereby elects to convert $         
of the principal and $          of
the interest due on the Secured Convertible Minimum Borrowing Note dated as of          
  , 2005 (the “Note”) issued
by IWT TESORO CORPORATION (the “Parent”) and
the other Companies named and as defined therein into shares of Common Stock of
the Parent in accordance with the terms and conditions set forth in the Note,
as of the date written below.

 

	
  Date of
  Conversion:

  	
   

  
	
   

  	
   

  
	
  Conversion
  Price:

  	
   

  
	
   

  	
   

  
	
  Shares To Be
  Delivered:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  
	
   

  	
   

  
	
  Print Name:

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
  Holder DWAC
  instructions

  	
   

  

 

12Exhibit 10.24

 

THIS OPTION
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS OPTION HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS.  THIS OPTION AND THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS OPTION MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS OPTION 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 1,170,110 Shares of Common
Stock of

IWT Tesoro Corporation

(subject to adjustment as provided herein)

 

OPTION

 

	
  No. 

  	
  Issue Date:  August 25,
  2005

  

 

IWT TESORO CORPORATION, a corporation organized under
the laws of the State of Nevada (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 Option, up to 1,170,110
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 “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.

 

(b)                                 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.

 

(c)                                  The
term “Exercise Price” means a price of $0.001 per share of Common Stock.

 

(d)                                 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 Option at any time shall be entitled to receive, or shall
have

 

 

received, on the exercise of the Option, 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.

 

1.                                       Exercise
of Option.

 

1.1.                              Number
of Shares Issuable upon Exercise. 
From and after the date hereof, the Holder shall be entitled to receive,
upon exercise of this Option 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 SmallCap 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 the mean of 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 Option are outstanding at the Determination Date.

 

1.3.                              Company
Acknowledgment.  The Company will, at
the time of the exercise of this Option, 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 Option.  If the Holder 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.

 

2

 

1.4.                              Trustee
for Option Holders.  In the event
that a bank or trust company shall have been appointed as trustee for the
Holder of this Option pursuant to Subsection 3.2, such bank or trust
company shall have all the powers and duties of an Option 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 Option
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 Option 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 Option
shall have been surrendered and payment shall have been 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 12:01 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 Option in full or in part, and in any event within three (3) 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.  Payment shall be made either in cash or by
certified or official bank check payable to the order of the Company equal to
the applicable aggregate Exercise Price 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 Option) 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.

 

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

 

3

 

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 Option,
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 Option 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 Option after
the 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 Option as provided
in Section 4.  In the event this Option
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).

 

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 Option, 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
Option 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 Option, in effect immediately
prior to such adjustment or readjustment and as adjusted or readjusted as
provided in this Option.  The Company
will forthwith mail a copy of each such certificate to the Holder and any Option
agent of the Company (appointed pursuant to Section 11 hereof).

 

6.                                       Reservation
of Stock, Etc., Issuable on Exercise of Option.  The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of this Option,
shares of Common Stock (or Other Securities) from time to time issuable on the
exercise of this Option.

 

7.                                       Assignment;
Exchange of Option.  Subject to
compliance with applicable securities laws, this Option, 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 Option, 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, 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 Option 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 Option
so surrendered by the Transferor.

 

8.                                       Replacement
of Option.  On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Option and, in the case of any such loss, theft or
destruction of this Option, 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 Option, the Company
at its expense will execute and deliver, in lieu thereof, a new Option 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 Minimum Borrowing Note 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.

 

5

 

10.                                 Maximum
Exercise.  Notwithstanding anything
contained herein to the contrary, the Holder shall not be entitled to exercise
this Option 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 the 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 or
supplemented from time to time, the “Note”), or upon 120 days prior notice to
the Company except that at no time shall the number of shares of Common Stock
beneficially owned by the Holder exceed 19.99% of the outstanding Common Stock.
Notwithstanding anything contained herein to the contrary, the total number of
shares of Common Stock issuable by the Company and acquirable by the Holder at
a price below $2.65 per share pursuant to the terms of this Option, shall not
exceed an aggregate of 2,339,050 shares of Common Stock (subject to appropriate
adjustment for stock splits, stock dividends, or other similar
recapitalizations affecting the Common Stock) (the “Maximum
Common Stock Issuance”), unless the issuance of Common Stock
hereunder in excess of the Maximum Common Stock Issuance shall first be
approved by the Company’s shareholders. 
If at any point in time and from time to time the number of shares of
Common Stock issued pursuant to the terms of this Option, together with the
number of shares of Common Stock that would then be issuable by the Company to
the Holder in the event of a conversion or exercise pursuant to the terms of
this Option, would exceed the Maximum Common Stock Issuance but for this Section 10,
the Company shall promptly call a shareholders meeting to solicit shareholder
approval for the issuance of the shares of Common Stock hereunder in excess of
the Maximum Common Stock Issuance.

 

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

 

6

 

BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.  ANY
ACTION BROUGHT CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS OPTION 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 Option 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 Option 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 Option.  The
headings in this Option are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. 
The Company acknowledges that legal counsel participated in the
preparation of this Option 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 Option to favor any party
against the other party.

 

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INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

 

7

 

IN WITNESS WHEREOF, the Company has executed
this Option 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 Option)

 

TO:                            IWT
Tesoro Corporation

191 Post Road West

Westport, CT 06880

 

Attention:                                         Chief
Financial Officer

 

The undersigned, pursuant to the provisions set forth
in the attached Option (No.    ), hereby irrevocably elects
to purchase          shares of the
Common Stock covered by such Option.

 

The undersigned herewith makes payment of the full
Exercise Price for such shares at the price per share provided for in such Option,
which is $           .  Such payment takes the form of lawful money
of the United States.

 

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 Option 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 Option)

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  

 

A-1

 

Exhibit B

 

FORM OF TRANSFEROR ENDORSEMENT

(To Be Signed Only On Transfer Of Option)

 

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 Option to purchase the percentage and
number of shares of Common Stock of IWT Tesoro Corporation into which the
within Option 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 IWT Tesoro Corporation 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 Option)

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SIGNED IN THE PRESENCE OF:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Name)

  
	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  
	
  [TRANSFEREE]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  
						

 

B-1

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