Document:

Exhibit 10.1

 

AMENDMENT NUMBER ONE TO THE PRINCIPAL
UNDERWRITING AGREEMENT

BETWEEN ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

AND ALLSTATE DISTRIBUTORS, L.L.C.

 

This AMENDMENT NUMBER ONE (the “Amendment One”) is made and entered
into this 1st day of October 2002 (the “Effective Date”) by and
between Allstate Life Insurance Company of New York (“Allstate Life of New York”)
and Allstate Distributors, L.L.C. (“Distributors”).

 

WHEREAS, Allstate Life of New York and Distributors are parties to that
certain Principal Underwriting Agreement dated May 1, 2000 (the “Underwriting
Agreement”);

 

WHEREAS, the parties have agreed to revise the commission payment
structure relating to the sale of certain variable insurance contracts
described in the Underwriting Agreement; and

 

WHEREAS, the parties desire to amend the Underwriting Agreement to
reflect their new agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties agree
as follows:

 

1.     The first sentence of
Section 5.01 Compensation, shall be replaced with the following:

 

Allstate Life of New York shall pay to Distributors commissions
described in Exhibits 2.1.1, 2.1.4 and 2.1.5 to the Third Amended and Restated
Joint Venture Agreement between The Allstate Corporation and Putnam
Investments, LLC dated October 1, 2002, (the “Joint Venture Agreement”).

 

2.               Except as specifically amended hereby, the
Underwriting Agreement shall remain in full force and effect in accordance with
its terms.

 

4.     Capitalized terms used herein and not
otherwise defined in this Amendment One shall have the meanings given to them
in the Joint Venture Agreement.

 

IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be signed on its behalf by its duly authorized officers, all as of
the day and year first written above.

 

	
  ALLSTATE LIFE INSURANCE

  	
  ALLSTATE DISTRIBUTORS, L.L.C.

  
	
  COMPANY OF NEW YORK

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
        /s/ Steven C. Verney

  	
   

  	
  By:

  	
        /s/ Barry S. Paul

  	
   

  
	
   

  	
     Steven C. Verney

  	
   

  	
   

  	
     Barry S. Paul

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
     Treasurer

  	
   

  	
  Title:

  	
     Assistant Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
     May 1, 2005

  	
   

  	
  Date:

  	
     May 1, 2005

  	
   

  
									

 

E-2Exhibit 10.31

 

MINIMUM
BORROWING NOTE REGISTRATION RIGHTS AGREEMENT

 

This
Minimum Borrowing Note Registration Rights Agreement (this “Agreement”) is made
and entered into as of August 25, 2005, by and between IWT Tesoro Corporation,
a Nevada corporation (the “Company”), and Laurus Master Fund, Ltd. (the
“Purchaser”).

 

This
Agreement is made pursuant to the Security Agreement, dated as of the date
hereof, by and among the Purchaser, the Company and various subsidiaries of the
Company (as amended, modified or supplemented from time to time, the “Security
Agreement”), and pursuant to the Notes and the Warrants referred to therein.

 

The
Company and the Purchaser hereby agree as follows:

 

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

 

“Commission” means the Securities and Exchange Commission.

 

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

 

“Effectiveness Date” means, (i) with respect to the initial
Registration Statement required to be filed hereunder, a date no later than
one-hundred twenty (120) days following the date hereof, provided the Company
shall use its best efforts to cause such Registration Statement to be declared
effective within ninety (90) days following the date hereof, provided, however,
if such Registration Statement is not declared effective by such date solely as
a result of the Commission having provided comments to such Registration
Statement, such date shall be extended until the Commission has no further
comments as long as the Company has diligently responded to all such comments
within fifteen (15) days of receipt of such comments, and (ii) with respect to
each additional Registration Statement required to be filed hereunder, a date
no later than thirty (30) days following the applicable Filing Date; provided,
however, if such Registration Statement is not declared effective by
such date solely as a result of the Commission having provided comments to such
Registration Statement, such date shall be extended until the Commission has no
further comments as long as the Company has diligently responded to all such
comments within fifteen (15) days of receipt of such comments.

 

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

 

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

 

“Filing Date” means, with respect to (1) the Loans
evidenced by a Minimum Borrowing Note made on the initial funding date, the
date which is thirty (30) days after the date hereof, (2) each $2,500,000
tranche of Loans evidenced by a Minimum Borrowing Note funded after the date
hereof, the date which is thirty (30) days after such funding of such
additional tranche of Loans evidenced by a Minimum Borrowing Note, (3) the
shares of Common Stock issuable to the Holder upon exercise of a Warrant, the
date which is thirty (30) days after the issuance of such Warrant and (4) the
shares of Common Stock issuable to the Holder as a result of adjustments to the
Fixed Conversion Price made pursuant to Section 2.5 of the Revolving Note,
Section 3.5 of the Minimum Borrowing Notes, Section 4 of the Warrant or
otherwise, thirty (30) days after the occurrence of such event or the date of
the adjustment of the Fixed Conversion Price.

 

 

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

 

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

 

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

 

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

 

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

 

“Registrable Securities” means the shares of Common Stock issued upon
the conversion of the each Minimum Borrowing Note and issuable upon exercise of
the Warrants.

 

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

 

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

 

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

 

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

 

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

 

“Trading Day” means each day the Trading Market on which
the Common Stock is traded is open and available to trade securities.

 

“Trading Market” means any of the NASD OTC Bulletin Board,
NASDAQ SmallCap Market, the Nasdaq National Market, the American Stock Exchange
or the New York Stock Exchange

 

“Warrants” means the Common Stock purchase warrants issued pursuant to the
Security Agreement.

 

2.             Registration.

 

(a)           On or prior to each Filing Date, the
Company shall prepare and file with the Commission a Registration Statement
covering the Registrable Securities for a selling stockholder resale offering
to be made on a continuous basis pursuant to Rule 415. Each Registration
Statement shall be on Form S-3 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith). The
Company shall cause each Registration Statement to become effective and remain
effective as provided herein. The Company shall use its reasonable commercial
efforts

 

2

 

to cause each Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event no later than the Effectiveness Date. The Company
shall use its reasonable commercial efforts to keep each Registration Statement
continuously effective under the Securities Act until the date which is the
earlier date of when (i) all Registrable Securities covered by such
Registration Statement have been sold or (ii) all Registrable Securities
covered by such Registration Statement may be sold immediately without
registration under the Securities Act and without volume restrictions pursuant
to Rule 144(k), as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the
Company’s transfer agent and the affected Holders (each, an “Effectiveness
Period”).

 

If:  (i) any Registration Statement is not filed
on or prior to the applicable Filing Date for such Registration Statement; (ii)
a Registration Statement filed hereunder is not declared effective by the
Commission by the applicable Effectiveness Date; (iii) after a Registration
Statement is filed with and declared effective by the Commission, a
Discontinuation Event (as hereafter defined) shall occur and be continuing, or
such Registration Statement ceases to be effective (by suspension or otherwise)
as to all Registrable Securities to which it is required to relate at any time
prior to the expiration of the Effectiveness Period applicable to such
Registration Statement (without being succeeded immediately by an additional
Registration Statement filed and declared effective), for a period of time
which shall exceed 30 days in the aggregate per year (defined as a period of
365 days commencing on the date such Registration Statement is declared
effective) or more than 20 consecutive calendar days; or (iv) the Common Stock
is not listed or quoted, or is suspended from trading on any Trading Market for
a period of five (5) consecutive Trading Days (provided the Company shall not
have been able to cure such trading suspension within 30 days of the notice
thereof or list the Common Stock on another Trading Market) (any such failure
or breach as described in clauses (i) through (iv) being referred to as an
“Event,” and for purposes of clause (i) or (ii) the date on which such Event
occurs, or for purposes of clause (iii) the date which such 30 day or 20
consecutive day period (as the case may be) is exceeded, or for purposes of
clause (iv) the date on which such five (5) Trading Day period is exceeded,
being referred to as “Event Date”); then as partial relief for the damages to
the Purchaser by reason of the occurrence of any such Event (which remedy shall
not be exclusive of any other remedies available at law or in equity), the
Company shall pay to the Purchaser, as liquidated damages and not as a penalty,
for each day that an Event has occurred and is continuing, an amount in cash
equal to one-thirtieth (1/30th) of the product
of (A) the original principal amount of each applicable Minimum Borrowing Note
multiplied by (B) 0.02. In the event the Company fails to make any payments
pursuant to this Section 2(b) in a timely manner, such payments shall bear
interest at the rate of 1.0% per month (prorated for partial months) until paid
in full.

 

(b)           Within three business days of the
Effectiveness Date and each request by Purchaser in the event it desires to
exercise any of the Warrants, the Company shall cause its counsel to issue an
opinion in the form attached hereto as Exhibit A, to the transfer agent stating
that the shares are subject to an effective registration statement and can be
reissued free of restrictive legend upon notice of a sale by the Purchaser and
confirmation by the Purchaser that it has complied with the prospectus delivery
requirements, provided that the Company has not advised the transfer agent
orally or in writing that the opinion has been withdrawn. Copies of the blanket
opinion required by this Section 2(c) shall be delivered to the Purchaser
within the time frame set forth above.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

5.             Indemnification.

 

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

 

(b)           In the event of a registration of the
Registrable Securities under the Securities Act pursuant to this Agreement,
each Holder will indemnify and hold harmless the Company, and its officers,
directors and each other person, if any, who controls the Company within the
meaning of the Securities Act, against all losses,

 

4

 

claims, damages or liabilities, joint or several, to
which the Company or such persons may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact which was furnished in writing
by such Holder to the Company expressly for use in (and such information is
contained in) the Registration Statement under which such Registrable
Securities were registered under the Securities Act pursuant to this Agreement,
any preliminary Prospectus or final Prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company and each such person for any reasonable legal or other
expenses incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action, provided, however,
that each Holder will be liable in any such case if and only to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished in writing to the Company by or
on behalf of such Holder specifically for use in any such document.
Notwithstanding the provisions of this paragraph, no Holder shall be required
to indemnify any person or entity in excess of the amount of the aggregate net
proceeds received by such Holder in respect of Registrable Securities in
connection with any such registration under the Securities Act.

 

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

 

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

 

5

 

6.             Representations and
Warranties.

 

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

 

(b)           The Common Stock is listed for trading on
the OTC Bulletin Board and satisfies all requirements for the continuation of
such listing, and the Company shall do all things necessary for the
continuation of such listing. The Company has not received any notice that its
Common Stock will be delisted from the OTC Bulletin Board or that the Common
Stock does not meet all requirements for the continuation of such listing.

 

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

 

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

 

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

 

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

 

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

 

6

 

7.             Miscellaneous.

 

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

 

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

 

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

 

(d)           Discontinued Disposition. 
Each Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of a
Discontinuation Event (as defined below), such Holder will forthwith discontinue
disposition of such Registrable Securities under the applicable Registration
Statement until such Holder’s receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement or until it is advised in
writing (the “Advice”) by the Company that the use of the applicable Prospectus
may be resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph. For
purposes of this Section 7(d), a “Discontinuation Event” shall mean (i) when
the Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders); (ii) any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to such Registration Statement or Prospectus or
for additional information; (iii) the issuance by the Commission of any stop
order suspending the effectiveness of such Registration Statement covering any
or all of the Registrable Securities or the initiation of any Proceedings for
that purpose; (iv) the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose; and/or (v) the occurrence of
any event or passage of time that makes the financial statements included in
such Registration Statement ineligible for inclusion therein or any statement
made in such Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material
respect or that requires any revisions to such Registration Statement,
Prospectus or other documents so that, in the case of such Registration
Statement or Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

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

 

7

 

customary underwriter cutbacks applicable to all
holders of registration rights and subject to obtaining any required consent of
any selling stockholder(s) to such inclusion under such registration statement.

 

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

 

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

 

	
  If to the Company:

  	
  IWT Tesoro Corporation

  
	
   

  	
  191
  Post Road West, Suite 10

  
	
   

  	
  Westport,
  Connecticut 06880

  
	
   

  	
  Attention:

  	
  Henry
  J. Boucher, Jr.,

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
  Facsimile:

  	
  203-221-2797

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Rader
  and Coleman P.L.

  
	
   

  	
  2101
  N.W. Boca Raton Boulevard, Suite 1

  
	
   

  	
  Boca
  Raton, Florida 33431

  
	
   

  	
  Attention:

  	
  Gayle
  Coleman, Esq.

  
	
   

  	
  Facsimile:

  	
  561-367-1725

  
	
   

  	
   

  
	
  If to a Purchaser:

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

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Loeb
  & Loeb LLP

  
	
   

  	
  345
  Park Avenue

  
	
   

  	
  New
  York, New York 10154

  
	
   

  	
  Attention:
  Scott J. Giordano, Esq.

  
	
   

  	
  Facsimile:

  	
  212-407-4990

  
	
   

  	
   

  	
   

  
	
  If to any other Person who is

  then the registered Holder:

  	
  

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

  

 

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

 

8

 

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

 

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

 

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

 

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

 

9

 

(l)            Severability. 
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their reasonable efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.

 

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

 

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

 

10

 

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

 

 

	
   

  	
  IWT TESORO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LAURUS MASTER FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  
	
   

  	
  825
  Third Avenue, 14th Floor

  
	
   

  	
  New
  York, New York 10022

  
	
   

  	
  Attention:
  David Grin

  
	
   

  	
  Facsimile:
  212-541-4434

  
							

 

11

 

EXHIBIT A

 

                 ,
200    

 

Florida
Atlantic Stock Transfer

7130 Nob Hill Road

Tamarac, Florida 33321

Attention:  Rene Garcia

 

Re:                               IWT Tesoro Corporation Registration Statement
on Form S-1

 

Ladies
and Gentlemen:

 

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

 

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

 

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

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Company
  counsel]

  

 

12

 

Schedule A

 

	
  Selling Stockholder

  	
   

  	
  R/N/O

  	
   

  	
  Shares

  Being Offered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

13

 

AMENDMENT

 

This
AMENDMENT (this “Amendment”), dated
as of December 9, 2005, is entered into by and between IWT TESORO CORPORATION,
a Nevada corporation (the “Company”),
INTERNATIONAL WHOLESALE TILE INC., a Florida corporation (“Tile” and, together with the Company, the “Credit Parties” and, each a “Credit Party”) and LAURUS MASTER FUND, LTD., a Cayman Islands company (“Laurus”), for the purpose of amending the
terms of (i) the Security Agreement, dated as of August 25, 2005, by and
between the Credit Parties and Laurus (as amended, modified or supplemented
from time to time, the “Security Agreement”)
and (ii) the Registration Rights Agreement by and between the Company and
Laurus, dated as of August 25, 2005 (as amended, modified or supplemented from
time to time, the ”Registration Rights
Agreement” and, together with the Security Agreement and the other
Ancillary Documents referred to in the Security Agreement, the ”Loan Documents”). Capitalized terms used
herein without definition shall have the meanings ascribed to such terms in the
Security Agreement.

 

WHEREAS,
the Company has agreed that it shall file a “Request for Withdrawal” (“RW”)
with the Securities and Exchange Commission (the “Commission”) with respect to
the Registration Statement (as defined in the Registration Rights Agreement)
filed by the Company with the Commission on September 21, 2005; and

 

WHEREAS,
as a result of the filing of the RW, the Registration Statement will not be
declared effective by the Commission by the Effectiveness Date (as defined in
the Registration Rights Agreement); and

 

WHEREAS,
Laurus has agreed to amend certain of the terms and conditions of the
Registration Rights Agreement in order to extend the deadline by which the
Registration Statement is required to be declared effective by the Commission.

 

NOW,
THEREFORE, in consideration of the above, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

 

1.             The definition of “Effectiveness Date” as set
forth in Section 1 of the Registration Rights Agreement is amended in its
entirety as follows:

 

“Effectiveness Date” means, (i) with respect to the initial
Registration Statement required to be filed hereunder, a date (the “New Filing
Date”) no later than one-hundred twenty (120) days following the earlier to
occur of (x) the date upon which certain of the Loan Documents shall have been
revised (the “Modification”) in good faith by the Company, International
Wholesale Tile Inc. (to the extent party thereto) and the Purchaser for the purpose
of addressing certain concerns raised by the Commission in respect of the
registration of the Registrable Securities and (y) February 28, 2006, but only
to the extent that the Purchaser is willing by February 28, 2006 to consent to
the Modification and has negotiated the terms of such Modification in good
faith; provided that the Company shall use its best efforts to cause such
Registration Statement to be declared effective within ninety (90) days
following the New Filing Date, provided, however, if such
Registration Statement is not declared effective by such date (A) primarily, in
Laurus’ good faith judgment, as a result of the Commission having provided
comments to such Registration Statement, such date shall be extended until the
Commission has no further comments as long as the Company has diligently
responded to all such comments within fifteen (15) days of receipt of such
comments or (B) because the Effectiveness Date falls within the period
commencing (x) fifteen (15) days prior to and forty-five (45) days following
the end of any fiscal quarter of the Company or (y) fifteen (15) days prior to
and ninety (90) days following the end of any fiscal year of the Company, the
Effectiveness Date shall be extended until such financial statements required to
be filed with the Commission in respect of such fiscal quarter or year have
been filed with the Commission, and (ii) with respect to each additional
Registration Statement required to be filed hereunder, a date no later than
thirty (30) days following the applicable Filing Date; provided, however,
if such Registration Statement is not declared effective by such date solely as
a result of the Commission having provided comments to such Registration
Statement, such date shall be extended until the Commission has no further
comments as long as the Company has diligently responded to all such comments
within fifteen (15) days of receipt of such comments.

 

14

 

2.             The Company understands that the Company has
an affirmative obligation to make prompt public disclosure of material
agreements and material amendments to such agreements. The Company hereby
agrees that Laurus shall not be in violation of any duty to the Company or its
shareholders, nor shall Laurus be deemed to be misappropriating any information
of the Company, if Laurus sells shares of common stock of the Company, or
otherwise engages in transactions with respect to securities of the Company,
while in possession of the information contained in this Amendment.

 

3.             Each amendment set forth herein shall be
effective as of the first date (the “Amendment
Effective Date”) when (i) each Credit Party and Laurus shall have
executed and each Credit Party shall have delivered to Laurus its respective
counterpart to this Amendment and (ii) the RW shall have been filed by the
Company with the Commission.

 

4.             Except as specifically set forth in this
Amendment, there are no other amendments, modifications or waivers to the Loan
Documents, and all of the other forms, terms and provisions of the Loan
Documents remain in full force and effect.

 

5.             Each Credit Party hereby represents and
warrants to Laurus that (i) no Event of Default exists on the date hereof, (ii)
on the date hereof, all representations, warranties and covenants made by the
Company in connection with the Loan Documents are true, correct and complete
and (iii) on the date hereof, all of the Company’s and its Subsidiaries’
covenant requirements have been met.

 

6.             From and after the Amendment Effective Date,
all references in the Loan Documents and in the other Related Agreements to the
Registration Rights Agreement shall be deemed to be references to the
Registration Rights Agreement, as the case may be, as modified hereby.

 

7.             This Amendment shall be binding upon the
parties hereto and their respective successors and permitted assigns and shall
inure to the benefit of and be enforceable by each of the parties hereto and
their respective successors and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Amendment
may be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one instrument.

 

IN WITNESS WHEREOF, each Credit Party and Laurus have caused
this Amendment to the Loan Documents to be signed in its name effective as of
this 9th day of December 2005.

 

 

	
   

  	
  IWT TESORO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL WHOLESALE TILE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

15

 

	
   

  	
  LAURUS MASTER FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

16

 

AMENDMENT

 

This
AMENDMENT #2 (this “Amendment 2”),
dated as of March 31, 2006, but effective as of August 25, 2005 (“Amendment
Effective Date”), is entered into by and between IWT TESORO CORPORATION, a
Nevada corporation (the “Company”),
INTERNATIONAL WHOLESALE TILE INC., a Florida corporation (“Tile” and, together with the Company, the “Credit Parties” and, each a “Credit Party”) and LAURUS MASTER FUND, LTD., a Cayman Islands company (“Laurus”), for the purpose of amending the
terms of (i) the Security Agreement, dated as of August 25, 2005, by and
between the Credit Parties and Laurus (as amended, modified or supplemented
from time to time, the “Security Agreement”)
and (ii) the Convertible Minimum Borrowing Note by and between the Company and
Credit Parties, dated as of August 25, 2005 (as amended, modified or
supplemented from time to time, the ”Minimum Note” and, together with the
Security Agreement and the other Ancillary Documents referred to in the
Security Agreement, the ”Loan Documents”).
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Security Agreement.

 

A.            The Credit Parties and Laurus agree to amend
the Minimum Note in order to accurately reflect the intent of the parties.

 

NOW,
THEREFORE, in consideration of the above, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

 

1.             Sections 3.6 (c) Share Issuances and
3.6(d) Computation of Consideration of the Minimum Note shall be deleted
in their entirety and shall have no further forth or effect.

 

2.             The Company understands that the Company has
an affirmative obligation to make prompt public disclosure of material
agreements and material amendments to such agreements. The Company hereby
agrees that Laurus shall not be in violation of any duty to the Company or its
shareholders, nor shall Laurus be deemed to be misappropriating any information
of the Company, if Laurus sells shares of common stock of the Company, or
otherwise engages in transactions with respect to securities of the Company,
while in possession of the information contained in this Amendment.

 

3.             Each Credit Party hereby represents and
warrants to Laurus that (i) no Event of Default exists on the date hereof, (ii)
on the date hereof, all representations, warranties and covenants made by the
Company in connection with the Loan Documents are true, correct and complete
and (iii) on the date hereof, all of the Company’s and its Subsidiaries’
covenant requirements have been met.

 

4.             From and after the Amendment Effective Date,
all references in the Loan Documents and in the other Related Agreements to the
Minimum Note shall be deemed to reference to the Minimum Note, as the case may
be, as modified hereby.

 

5.             This Amendment shall be binding upon the
parties hereto and their respective successors and permitted assigns and shall
inure to the benefit of and be enforceable by each of the parties hereto and
their respective successors and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Amendment
may be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one instrument.

 

17

 

IN WITNESS WHEREOF, each Credit Party and Laurus have caused
this Amendment to the Loan Documents to be signed in its name as of this
         day of
                ,
2006, but shall be effective as of the Amendment Effective Date..

 

 

	
   

  	
  IWT TESORO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Henry
  J. Boucher, Jr., President and CEO

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL WHOLESALE TILE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Paul
  F. Boucher, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LAURUS MASTER FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
					

 

18

 

AMENDMENT
#3 TO AUGUST 25, 2005 LOAN DOCUMENTS, AS AMENDED

 

This
AMENDMENT #3 (this “Amendment”),
dated as of April 15, 2006, is entered into by and between IWT TESORO
CORPORATION, a Nevada corporation (the “Company”),
INTERNATIONAL WHOLESALE TILE INC., a Florida corporation (“Tile” and, together with the Company, the “Credit Parties” and, each a “Credit Party”) and LAURUS MASTER FUND, LTD., a Cayman Islands company (“Laurus”), for the purpose of amending the
terms of (i) the Security Agreement, dated as of August 25, 2005, by and
between the Credit Parties and Laurus (as amended, modified or supplemented
from time to time, the “Security Agreement”)
and (ii) the Registration Rights Agreement by and between the Company and
Laurus, dated as of August 25, 2005, as amended December 10, 2005, (and as
amended, modified or supplemented from time to time, the ”Registration Rights Agreement”, and as
amended, modified or supplemented and, together with the Security Agreement and
the other Ancillary Documents referred to in the Security Agreement, the ”Loan Documents”). Capitalized terms used
herein without definition shall have the meanings ascribed to such terms in the
Security Agreement.

 

WHEREAS,
Laurus has agreed to amend certain of the terms and conditions of the Registration
Rights Agreement in order to extend the deadline by which the Registration
Statement is required to be filed and declared effective by the Commission.

 

NOW,
THEREFORE, in consideration of the above, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

 

1.             “Filing Date” as set forth in Section 1 of
the Registration Rights Agreement, as amended, is amended in its entirety to
read as follows:

 

“Filing Date” means, with respect to (1)
the Loans evidenced by a Minimum Borrowing Note made on the initial funding
date, May 31, 2006; (2) each $2,500,000 tranche of Loans evidenced by a Minimum
Borrowing Note funded after the date hereof, May 31, 2006, (3) the shares of Common
Stock issuable to the Holder upon exercise of a Warrant, May 31, 2006, and (4)
the shares of Common Stock issuable to the Holder as a result of adjustments to
the Fixed Conversion Price made pursuant to Section 2.5 of the Revolving Note,
Section 3.5 of the Minimum Borrowing Notes, Section 4 of the Warrant or
otherwise, no later than May 31, 2006.

 

2.             Effectiveness Date” as set forth in Section 1
of the Registration Rights Agreement is amended in its entirety as follows:

 

“Effectiveness Date” means, (i) with respect to the initial
Registration Statement required to be filed hereunder, a date (the “New Filing
Date”) no later than one-hundred twenty (120) days following the Filing Date;
provided that the Company shall use its best efforts to cause such Registration
Statement to be declared effective within ninety (90) days following the Filing
Date, provided, however, if such Registration Statement is not
declared effective by such date (A) primarily, in Laurus’ good faith judgment,
as a result of the Commission having provided comments to such Registration
Statement, such date shall be extended until the Commission has no further
comments as long as the Company has diligently responded to all such comments
within fifteen (15) days of receipt of such comments or (B) because the
Effectiveness Date falls within the period commencing (x) fifteen (15) days
prior to and forty-five (45) days following the end of any fiscal quarter of
the Company or (y) fifteen (15) days prior to and ninety (90) days following
the end of any fiscal year of the Company, the Effectiveness Date shall be
extended until such financial statements required to be filed with the
Commission in respect of such fiscal quarter or year have been filed with the
Commission, and (ii) with respect to each additional Registration Statement
required to be filed hereunder, a date no later than thirty (30) days following
the applicable Filing Date; provided, however, if such
Registration Statement is not declared effective by such date solely as a
result of the Commission having provided comments to such Registration
Statement, such date shall be extended until the

 

19

 

Commission
has no further comments as long as the Company has diligently responded to all
such comments within fifteen (15) days of receipt of such comments.

 

3.             The Company understands that the Company has
an affirmative obligation to make prompt public disclosure of material
agreements and material amendments to such agreements. The Company hereby
agrees that Laurus shall not be in violation of any duty to the Company or its
shareholders, nor shall Laurus be deemed to be misappropriating any information
of the Company, if Laurus sells shares of common stock of the Company, or
otherwise engages in transactions with respect to securities of the Company,
while in possession of the information contained in this Amendment.

 

4.             Each amendment set forth herein shall be
effective as of the first date (the “Amendment
Effective Date”) when each Credit Party and Laurus shall have
executed and each Credit Party shall have delivered to Laurus its respective
counterpart to this Amendment. .

 

5.             Except as specifically set forth in this
Amendment, there are no other amendments, modifications or waivers to the Loan
Documents, and all of the other forms, terms and provisions of the Loan
Documents remain in full force and effect.

 

6.             Each Credit Party hereby represents and
warrants to Laurus that (i) no Event of Default exists on the date hereof, (ii)
on the date hereof, all representations, warranties and covenants made by the
Company in connection with the Loan Documents are true, correct and complete
and (iii) on the date hereof, all of the Company’s and its Subsidiaries’
covenant requirements have been met.

 

7.             From and after the Amended Filing Date and
the Amended Effective Date, all references in the Loan Documents and in the
other Related Agreements to the Registration Rights Agreement shall be deemed
to be references to the Registration Rights Agreement, as the case may be, as
modified hereby.

 

8.             This Amendment shall be binding upon the
parties hereto and their respective successors and permitted assigns and shall
inure to the benefit of and be enforceable by each of the parties hereto and
their respective successors and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Amendment
may be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one instrument.

 

 

(REMAINDER OF THE PAGE LEFT INTENTIONALLY BLANK)

 

20

 

IN WITNESS WHEREOF, each Credit Party and Laurus have caused
this Amendment to the Loan Documents to be signed in its name effective as of
this 10th day of April, 2006.

 

 

	
   

  	
  IWT TESORO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL WHOLESALE TILE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  LAURUS MASTER FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]