HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. 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.
AMENDED AND RESTATED SECURED REVOLVING NOTE
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 Five Million Dollars ($5,000,000), , 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 indefeasibly paid in full.
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).
This Amended and
Restated Secured Revolving Note (the Note) replaces in its entirety that
certain Secured Revolving Note issued by the Companies to the Holder on August
24, 2005 (such note, the Original Note).
The following terms shall apply to this Amended and Restated Secured
Revolving Note (this Note):
CONTRACT RATE AND MINIMUM BORROWING NOTE
Rate. Subject to Sections 3.2 and
4.10, 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 percent) from the date of the Original Note
through July 21, 2006 and thereafter eight and one-half percent (8.5%) (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 seven and one-half percent (7.5%). Interest shall be (i) calculated on the basis
of a 360 day year, and (ii) payable monthly, in arrears,
commencing on September 1, 2006 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.
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.
EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS
of Default. The occurrence of an
Event of Default under the Security Agreement shall constitute an event of
default (Event of Default)
Interest. Following the occurrence
and during the continuance of an Event of Default, the Companies shall, jointly
and severally, pay additional interest on the outstanding principal balance of
this Note in an amount equal to two percent (2%) per month, 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
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 other Ancillary Agreements and all obligations and liabilities of each Company under the
Security Agreement and the other 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 , the Security
Agreement and/or the Ancillary Agreements, then to accrued and unpaid interest
due on the Notes and then to the outstanding principal balance of the
Notes. The Default Payment shall be due
and payable immediately on the date that the Holder has exercised its rights
pursuant to this Section 3.3.
Remedies. The remedies under this
Note shall be cumulative.
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.
3.3 Notices. Any notice herein required or permitted to be
given shall be in writing and shall be deemed effective 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
address 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 the 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
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.
3.5 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 not 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.
of Collection. In case of any Event
of Default under this Note, the Companies shall, jointly and severally, pay the
Holder the Holders reasonable costs of collection, including reasonable
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
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 COMPANYS 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.
3.8 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.
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.
Interest and Guarantee. The Holder
has been granted a security interest (i) in certain assets of the Companies as
more fully described in the Security Agreement and (ii) pursuant to the Stock
Pledge Agreement dated as of the date hereof.
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.
3.11 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
WITNESS WHEREOF, each Company has caused this Amended and
Restated Secured Revolving Note to be signed in its name effective as of this
___ day of July, 2006.
IWT TESORO CORPORATION
TILE CLUB, INC.