Exhibit 10.36

 

REAFFIRMATION AND RATIFICATION AGREEMENT

 

May 3, 2006

 

Laurus Master Fund, Ltd.

c/o Laurus Capital Management, LLC

825 Third Avenue

New York, New York 10022

 

Ladies and Gentlemen:

 

Reference is made to the (a) Security Agreement, dated as of August 25, 2005
among IWT Tesoro Corporation, a Nevada corporation (the “Parent”), International
Wholesale Tile, Inc., a Florida corporation (“IWT”) The Tile Club, Inc., a
Delaware corporation (“Tile Club”) and Import Flooring Group, Inc., a Delaware
corporation (“IFG”) in favor of Laurus Master Fund, Ltd., a Cayman Islands
company (“Laurus”) (as amended, modified or supplemented from time to time, the
“Security Agreement”), (b) the Security Agreement, dated as of August 25, 2005
made by IWT Tesoro Transport, Inc., a Florida corporation (“Transport”), IFG,
Tile Club and IWT Tesoro International Ltd., a Bermuda corporation
(“International”) in favor of Laurus (as amended, modified or supplemented from
time to time, the “Subsidiary Security Agreement”), (c) the Continuing Guaranty
Agreement, dated as of August 25, 2005 made by International, Transport, Tile
Club and IFG in favor of Laurus (as amended, modified or supplemented, the
“Continuing Guaranty”), (d) the Grant of Security Interest in Patent and
Trademarks, dated as of August 25, 2005 made by IWT in favor of Laurus (the “IP
Assignment”), (e) the Secured Convertible Term Note, dated as of February 10,
2006, made by the Parent in favor of Laurus (as amended, modified or
supplemented from time to time, the “February Laurus Term Note”), (f) the
Purchase Agreement referred to in the February Laurus Term Note (as amended,
modified or supplemented from time to time, the “February Laurus Purchase
Agreement”); (g) the Related Agreements referred to in, and defined in, the
February Laurus Purchase Agreement (the agreements set forth in the preceding
clauses (e) through (g), inclusive, collectively, the “February Laurus
Agreements,” and together with the Security Agreement, the Subsidiary Security
Agreement and the Continuing Guaranty, the “Existing Security and Guaranty
Agreements”).

 

To induce Laurus to provide additional financial accommodations to the Parent
evidenced by (i) that certain Secured Term Note, dated the date hereof, made by
the Parent in favor of Laurus (as amended, modified or supplemented from time to
time, the “New Laurus Term Note”), (ii) the Purchase Agreement referred to in
the New Laurus Term Note (as amended, modified or supplemented from time to
time, the “New Laurus Purchase Agreement”); (iii) the Related Agreements
referred to in, and defined in, the New Laurus Purchase Agreement (the
agreements set forth in the preceding clauses (i) through (iii), inclusive,
collectively, the “New Laurus Agreements”) as of the date hereof, each of the
Parent, IWT, International, Transport, Tile Club and IFG, hereby:

 

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(a)                      represents and warrants to Laurus that it has reviewed
and approved the terms and provisions of each of the New Laurus Agreements and
the documents, instruments and agreements entered into in connection therewith;

 

(b)                     acknowledges, ratifies and confirms that all
indebtedness incurred by, and all other obligations and liabilities of, each of
the Parent, Tile Club, IWT, IFG, Transport and International under each of the
New Laurus Agreements are (i) ”Obligations” under, and as defined in the
Security Agreement and (ii) ”Guaranty Obligations” under, and as defined in the
Continuing Guaranty, acknowledges, ratifies and confirms that each of the New
Laurus Agreements are (i) ”Ancillary Agreements” under, and as defined in the
Security Agreement and (ii) ”Loan Documents” under, and as defined in, the
Continuing Guaranty;

 

(c)                      acknowledges, ratifies and confirms that all of the
terms, conditions, representations and covenants contained in the Existing
Security and Guaranty Agreements are in full force and effect and shall remain
in full force and effect after giving effect to the execution and effectiveness
of each of the New Laurus Agreements;

 

(d)                     represents and warrants that no offsets, counterclaims
or defenses exist as of the date hereof with respect to any of the undersigned’s
obligations under any Existing Security and Guaranty Agreement;

 

(e)                      acknowledges, ratifies and confirms the grant by each
of the Parent, Tile Club, IFG, IWT, Transport and International to Laurus of a
security interest in its assets (including the equity interests owned by it), as
more specifically set forth in the Existing Security and Guaranty Agreements;
and

 

(f)                        acknowledges, ratifies and confirms that all
indebtedness incurred by, and all other obligations and liabilities of, each of
the Parent, IWT, Tile Club, IFG, Transport and International under each of the
New Laurus Agreements are “Obligations” under, and as defined in the IP
Assignment.

 

Laurus hereby acknowledges and agrees that all of the aforementioned security
interests are subject to the terms of that certain Senior Subordination
Agreement dated as of August 25, 2005 by and between Laurus and Fleet Capital
Corporation, as the same may be amended, modified or supplemented from time to
time.

 

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This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York.

 

 

Very truly yours,

 

 

 

IWT TESORO CORPORATION

 

 

 

By:

 

 

 

Henry J. Boucher, Jr., CEO

 

191 Post Road West, Suite 10

 

Westport, CT 06880

 

 

 

INTERNATIONAL WHOLESALE TILE, INC.

 

 

 

By:

 

 

 

Paul F. Boucher, President

 

3500 N.W. 42nd Ave

 

Palm City, Florida 34990

 

 

 

IWT TESORO TRANSPORT, INC.

 

 

 

By:

 

 

 

Henry J. Boucher, Jr., CEO

 

191 Post Road West, Suite 10

 

Westport, CT 06880

 

 

 

THE TILE CLUB, INC.

 

 

 

By:

 

 

 

Henry J. Boucher, Jr., CEO

 

191 Post Road West, Suite 10

 

Westport, CT 06880

 

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IMPORT FLOORING GROUP, INC.

 

 

 

By:

 

 

 

Henry J. Boucher, Jr., CEO

 

191 Post Road West, Suite 10

 

Westport, CT 06880

 

 

 

IWT TESORO INTERNATIONAL, LTD.

 

 

 

By:

 

 

 

Henry J. Boucher, Jr., Director

 

191 Post Road West, Suite 10

 

Westport, CT 06880

 

 

Acknowledged and Agreed to by:

 

 

 

LAURUS MASTER FUND, LTD.

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

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