FORBEARANCE AGREEMENT
This Agreement (the "AGREEMENT") is entered into and made this
10th
day of May, 2005, by and among VITROTECH
CORPORATION, a Nevada corporation
("VitroTech"), VITROCO INCORPORATED, a
Nevada corporation
("VitroCo")(collectively, VitroTech and
VitroCo are referred to as the
"Borrowers"), and 1568931 ONTARIO LTD., an
Ontario company partnership
("Lender").
WHEREAS, Lender and Borrowers entered into that certain
agreement,
dated September 29, 2004 (the "September
2004 Agreement"), by which Lender
agreed to loan to VitroTech up to
$3,000,000 and pursuant to which Borrowers
agreed to grant to Lender a security
interest in substantially all of their
assets and funds have been loaned to date
and Borrowers and Lender have agreed
to execute various documents further
defining the rights of Lender and Borrowers
under the September 2004 Agreement (such
documents being referred to,
collectively with the September 2004
Agreement, as the "Loan Documents"); this
Agreement does not, in any way, diminish or
reduce any of the rights of Lender
under the September 2004 Agreement and,
except as otherwise provided for herein,
the September 2004 Agreement shall remain
in full force and affect and Lender
shall retain, unabated, all rights
conferred by law as well as those rights
contained in (1) the September 2004
Agreement, and (2) all Loan Documents
contemplated to be executed pursuant to the
September 2004 Agreement;
WHEREAS, pursuant to the terms of the September 2004 Agreement,
Enviro Investment Group LLC, Red Rock
Canyon Mineral LLC and Valley Springs
Mineral LLC (the "Mines") pledged to
Lender, as additional collateral to secure
Borrowers' obligations under the September
2004 Agreement, certain assets,
including but not limited to all then
mined, processed and/or warehoused mineral
owned by the Mines (the "Inventory"),
including Inventory in possession of
Borrowers and subject to Borrowers' rights
to purchase such Inventory;
WHEREAS, Lender has entered in an Inter-Creditor Agreement,
dated
April 18, 2005 (the "Inter-Creditor
Agreement"), with Vitrobirth LLC pursuant to
which Lender and Vitrobirth agreed to share
collateral pledged by Borrowers;
WHEREAS, Borrowers are presently out of compliance with various
provisions of the Loan Documents, such
non-compliance being grounds for Lender
to declare Borrowers in default under the
Loan Documents;
WHEREAS, Borrowers and Lender have negotiated and agreed in
principal that Lender will forbear from
exercising any remedy available to
Lender upon the occurrence of an event of
default, as defined under the Loan
Documents, until the earlier of (1) a
Triggering Event, as defined herein, or
(2) May 23, 2005 (subject to the sole and
absolute right of Lender to extend
said date); and Borrowers will facilitate
the sale and transfer to Lender of all
of Borrowers' interest in the Inventories
and receivables held by Borrowers, all
subject to the terms of the Inter-Creditor
Agreement and/or any amendment
thereto or subsequent agreement entered
into between Lender and Vitrobirth LLC
and the obligation to pay to the Mines and
Hi-Tech Environmental Products LLC
("Hi-Tech") an aggregate of fifteen percent
(15%) of the ultimate sales price of
Inventory; and
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WHEREAS, Borrowers and Lender wish to evidence their agreement
with
respect to the matters set forth above.
NOW, THEREFORE, for and in consideration of the mutual promises
herein contained, and other good and
valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, Lender and Borrowers hereby agree
as follows:
1. At the specific request of Borrowers, Lender hereby agrees
to
forbear from exercising any remedy
available to Lender upon the occurrence of an
Event of Default or Default (as such terms
are defined in the Loan Documents)
under the Loan Documents until the earlier
of (a) a Triggering Event
(hereinafter defined) or (b) May 23, 2005
(subject to the sole and absolute
right of Lender to extend said date)(the
earlier of such dates being referred to
herein as the "Termination Date").
2. In consideration of the forbearance agreed to in Paragraph 1
hereof, Borrowers hereby sell, assign,
transfer, convey and deliver to Lender,
as an outright conveyance and not as a
security interest, and subject to the
rights and obligations of Lender and
Vitrobirth under the Inter-Creditor
Agreement and/or any amendment thereto, or
subsequent agreement entered into
between Lender and Vitrobirth LLC, all
right, title and interest of Borrowers
in:
a. the Inventory, as set forth on Schedule A attached
hereto; and with respect to the Inventory: (i) Borrowers represent
and
warrant that (A) the Mines own all of the Inventory set forth
on
Schedule A, subject only to the rights of Borrowers to purchase
the
Inventory, (B) Borrowers own certain rights in the Inventory, free
and
clear of liens, subject only to the rights of (1) Lender under the
Loan
Documents, (2) Vitrobirth under an existing loan to the Borrowers,
(3)
warehousemen in possession of the Inventory and owed money with
respect
to the warehousing of Inventory, which amounts are, as of the
date
hereof, not more than $15,000 in the aggregate, and (4) the Mines
and
Hi-Tech to be paid an aggregate of fifteen percent (15%) of the
ultimate sales price of the inventory; and (C) the Inventory listed
on
Schedule A constitutes all of the Inventory of mined and/or
processed
material that the Borrowers own or have control over or an interest
in,
whether directly or indirectly; (ii) Borrowers agree that Lender
shall
have all of the rights Borrowers would otherwise have to deal with
the
Inventory and control the same as fully as Borrowers; (iii)
Borrowers
shall grant no rights in the inventory to any parties other than
Lender
without the prior written consent of Lender; (iv) Borrowers
shall
notify all persons in possession of the Inventory, including
warehousemen, of the rights granted to Lender hereunder; and
(v)
Borrowers have included herewith as Schedule C, and will update
as
appropriate Schedule C, listing all warehouse receipts, if any,
relating to the Inventory; and
b. all receivables and other forms of rights to payment
now existing, as reflected on Schedule B attached hereto, or
arising in
the future,
