Document:

Exhibit 10.35

 

AMENDED AND
RESTATED REGISTRATION RIGHTS AGREEMENT

 

This Amended
and Restated Registration Rights Agreement (this “Agreement”) is made and
entered into as of May 3, 2006, by and between IWT Tesoro Corporation, a
Nevada corporation (the “Company”), and Laurus Master Fund, Ltd. (the “Purchaser”).

 

This
Agreement is made pursuant to (i) the Securities Purchase Agreement, dated
as of February 10, 2006, by and between the Purchaser and the Company (as
amended, modified or supplemented from time to time, the “February Securities
Purchase Agreement”), and pursuant to the Interest Shares and the Note and the
Warrants referred to therein; and (ii) the Securities Purchase Agreement,
dated as of the date hereof, by and between the Purchaser and the Company (as
amended, modified or supplemented from time to time, the “May Securities
Purchase Agreement”), and pursuant to 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 Securities Purchase Agreements shall
have the meanings given such terms in the Securities Purchase Agreements. As
used in this Agreement, the following terms shall have the following meanings:

 

“May Securities
Purchase Agreement” has the meaning given to such term in the
Preamble hereto.

 

“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, that the Company shall use its
best efforts to cause a 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 used its
reasonable best efforts to diligently respond 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 one hundred and five (105)
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 used its reasonable best efforts to diligently
responded to all such comments within fifteen (15) days of

 

 

receipt of such comments. The previous
notwithstanding, in the event that the Company has not responded to all comments
within fifteen (15) days of receipt of comments as a result of any delays by
the Purchaser in providing adequate responses to any applicable comments, such
delay shall be automatically be waived by the Purchaser and shall have no
adverse effect on the Company or any penalties that may be incurred by the
Company as a result of such delay.

 

 “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.

 

“February Securities
Purchase Agreement” has the meaning given to such term in the
Preamble hereto.

 

“February Registration Rights Agreement” means
the registration rights agreement executed on February 10, 2006, as
amended on April 10, 2006.

 

“Filing Date”
means, with respect to the Registration Statement required to be filed
hereunder and particularly with respect to (i) the shares of Common Stock
issuable upon conversion of the Note, the shares of Common Stock issuable upon
exercise of any Warrant, and the Interest Shares, a date no later than May 31,
2006; and (ii) with respect to the shares of Common Stock issuable to the
Holder as a result of adjustments to the Fixed Conversion Price or Exercise
Price, as the case may be, pursuant to the Note, the Warrant, or otherwise,
thirty (30) days after the date of the adjustment of the Fixed Conversion Price
or the Exercise Price, as the case may be.

 

“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).

 

“Interest Shares” has the meaning
set forth in the February Securities Purchase Agreement.

 

“Note” has the
meaning set forth in the February Securities Purchase Agreement.

 

“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 the 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

 

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covered by the 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 Interest Shares and the shares of Common Stock issued upon the
conversion of the 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.

 

 “Trading Market” means any of the NASD Over The Counter
Bulletin Board, NASDAQ Capital Market, the NASDAQ National Markets System, the
American Stock Exchange or the New York Stock Exchange.

 

“Warrants” means
the Common Stock purchase warrants issued in connection with the February Securities
Purchase Agreement and the Common Stock purchase warrants issued in connection
with the May Securities Purchase Agreement.

 

2.             Registration.

 

(a)           On
or prior to the 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. The 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 best efforts 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 have been sold or (ii) all Registrable Securities covered by
such Registration Statement may be sold immediately without registration

 

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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 (the “Effectiveness Period”).

 

(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(b) 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 the
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 the
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;

 

(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 the Registration Statement;

 

(d)           use
its best 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;

 

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(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
the Purchaser, and its officers, directors and each other person, if any, who
controls the Purchaser within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which the
Purchaser, 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 the Purchaser, 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.

 

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(b)           In
the event of a registration of the Registrable Securities under the Securities
Act pursuant to this Agreement, the Purchaser 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, 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 the Purchaser
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 the Purchaser 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 the
Purchaser specifically for use in any such document. Notwithstanding the
provisions of this paragraph, the Purchaser shall not be required to indemnify
any person or entity in excess of the amount of the aggregate net proceeds
received by the Purchaser 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 it shall notify 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 

 

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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.

 

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 4.21 to the February Securities
Purchase Agreement or on Schedule 4.21 to the May Securities Purchase
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 its fiscal year ended December 31, 2004 and (ii) its Quarterly
Report on Form 10-Qfor the fiscal quarters ended March 31, 2005, June 30,
2005 and September 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

 

7

 

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 quoted for trading on the NASDAQ Over The Counter Bulletin
Board and satisfies all requirements for the continuation of such quotation,
and the Company shall do all things necessary for the continuation of such
quotation. The Company has not received any notice that its Common Stock will
no longer be quoted on the NASDAQ Over The Counter Bulletin Board (except for
prior notices which have been fully remedied) or that the Common Stock does not
meet all requirements for the continuation of such listing.

 

(c)           Except
for securities sold to the Purchaser on August 25, 2005, 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 February Securities
Purchase Agreement or pursuant to the May Securities Purchase 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 Securities to be integrated with other offerings.

 

(d)           The
Interest Shares, the Warrants, the Note and the shares of Common Stock which
the Purchaser may acquire pursuant to the Warrants and the Note 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 Interest Shares and the Registrable
Securities issuable upon the conversion of the Note and the exercise of the
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.

 

8

 

(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 the Note and exercise of the
Warrants.

 

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
specified in 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 or entity 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
the 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 Agreement, 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

 

9

 

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 after the date
hereof there is not an effective Registration Statement covering all of the
Registrable Securities 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, so long as such piggyback rights are permitted
under the Securities Act, 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 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

 

10

 

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

Westport, Connecticut 06880

 

Attention:                                                                                                                                         Henry
J. Boucher, Jr., CEO

Telephone:            (203) 221-2770

Facsimile:               (203) 221-2797

 

with a copy to:                                                                                                               Rader
and Coleman, P.L.

2101 N.W. Boca Raton Blvd., Suite 1

Boca Raton, Florida 33431

 

Attention:              Gayle Coleman, Esq.

Telephone:            (561) 368-0545

Facsimile:               (561) 367-1725

 

If to a
Purchaser:                                                                                                                                                  To
the address set forth under such Purchaser name on the signature pages hereto.

 

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.

 

11

 

(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 their respective rights hereunder in the
manner and to the persons and entities as permitted under the Note, the February Securities
Purchase Agreement and the May Securities Purchase Agreement.

 

(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

 

12

 

February Securities Purchase Agreement, the May Securities
Purchase Agreement or any other Related Agreement (as such term is defined in
the February Securities Purchase Agreement and in the May Securities
Purchase 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.

 

(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.

 

(n)           Prior Agreement. This Agreement supersedes, amends and
restates the February Registration Rights Agreement,, which February Registration
Rights Agreement shall have no further force or effect.

 

 [Balance of page intentionally left
blank;

signature page follows]

 

13

 

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

 

	
  IWT TESORO CORPORATION

  	
   

  	
  LAURUS MASTER FUND, LTD.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  825 Third Avenue, 14th Floor

  
	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
  Attention:

  	
  David Grin

  
	
   

  	
   

  	
  Facsimile:

  	
  212-541-4434

  
								

 

14

 

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-3]

 

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]

 

 

Schedule A to
Exhibit A

 

	
  Selling Stockholder

  	
   

  	
  Shares

  Being Offered

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

SCHEDULE 7(b)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:

 

 

(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.

 

[The remainder of this page is
intentionally left blank]

 

2

 

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

  

 

3

 

	
   

  	
  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:

  	
   

  
						

 

4

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