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GUARANTY
THIS GUARANTY ("GUARANTY"), dated as of January 14, 2005, is made by VITRO
CO INCORPORATED, a Nevada corporation ("GUARANTOR"), in favor of VITROBIRTH,
LLC, a Delaware limited liability company ("LENDER").
RECITALS:
A. The Lender and Vitrotech Corporation, a Nevada corporation (the
"BORROWER"), have entered into a Note and Warrant Purchase Agreement, dated as
of the date hereof (the "PURCHASE AGREEMENT"), pursuant to which the Lender has
agreed to loan up to $3,000,000 to the Borrower on the terms and subject to the
conditions of the Purchase Agreement ("LOAN"). On the terms and subject to the
conditions of the Purchase Agreement, the Loan advances will be evidenced by one
or more secured, convertible promissory notes made by the Borrower in favor of
the Lender (the "NOTES") as more fully set forth in the Purchase Agreement.
B. The Borrower owns 100% of the issued and outstanding capital stock of
the Guarantor and substantially all of the Loan proceeds will be contributed to,
or otherwise used for the sole and exclusive benefit of the Guarantor.
C. To induce the Lender to enter into the Purchase Agreement and to make
the Loan, the Guarantor has agreed to execute and deliver to the Lender this
Guaranty to be secured by a first priority security interest in and to all of
Guarantor's personal property pursuant to that certain Subsidiary Security
Agreement (the "SECURITY AGREEMENT"), dated as of the date hereof, and the
Guarantor agrees that the Loan (or any part thereof) made by the Lender to the
Guarantor constitutes reasonably equivalent value to the Guarantor in
consideration for the execution of this Guaranty and the Security Agreement.
AGREEMENT
ACCORDINGLY, in consideration of the forgoing recitals, and for other
valuable consideration, the receipt and sufficiency of which Guarantor
acknowledges, Guarantor agrees as follows:
1. GUARANTY.
1.1 Guaranty of Obligations. Guarantor unconditionally, absolutely
and irrevocably guarantees and promises to pay to Lender, or order, on demand,
in lawful money of the United States of America and in immediately available
funds, any and all indebtedness and obligations of Borrower to Lender under the
Purchase Agreement and all Notes (collectively, the "GUARANTEED OBLIGATIONS").
The term "GUARANTEED OBLIGATIONS" is used herein in its most comprehensive sense
and includes any and all debts, obligations and liabilities of Borrower to
Lender (including, without limitation, any and all attorneys' fees, expenses,
costs, premiums, charges and accrued and unpaid interest, including interest
that, but for the filing of a petitions in bankruptcy, would have accrued on the
Guaranteed Obligations) now existing or hereafter incurred or created, whether
voluntary or involuntary, and however arising, whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, whether
Borrower may be liable individually or jointly with others, whether recovery
upon such indebtedness may be or hereafter become barred by any statute of
limitations or whether such indebtedness may be or hereafter become otherwise
unenforceable, and includes Borrower's prompt, full and faithful performance,
observance and discharge of each an every term, condition, agreement,
representation, warranty, undertaking and provision to be performed by Borrower,
as applicable, under the Purchase Agreement or any Note or otherwise. Guarantor
agrees that this Guaranty constitutes a guaranty of payment when due and not of
collection.
<PAGE>
1.2 Continuing Guaranty. This Guaranty is a continuing guaranty of
the Guaranteed Obligations, including any and all Guaranteed Obligations which
are renewed, extended, compromised, refinanced or restructured from time to
time. This Guaranty shall remain effective until the Guaranteed Obligations have
been fully paid, performed and discharged as provided in Section 7 and Lender
has given written notice of that fact to Guarantor.
1.3 Independent Obligations. Guarantor agrees that Guarantor is
directly and primarily liable to Lender, that Guarantor's obligations hereunder
are independent of the Guaranteed Obligations and that a separate action or
actions may be brought and prosecuted against Guarantor, whether action is
brought against Borrower or whether Borrower is joined in any such action or
actions. Guarantor agrees that any releases which may be given by Lender to
Borrower or any other guarantor or endorser shall not release Guarantor from
this Guaranty.
2. INDEMNITY.
2.1 Indemnity. In addition to the payment of expenses pursuant to
Section 9.1, Guarantor agrees to indemnify, defend, exonerate, pay and hold
Lender and the members, managers, directors, officers, employees and agents of
Lender (the "INDEMNITIES") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, causes of action, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements of counsel
to Lender and expert witness fees and disbursements) for such Indemnities in
connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitee shall be designated a party thereto, that may be
imposed on, incurred by or asserted against such Indemnitee, in any manner
relating to or arising out of or in connection with this Guaranty (the
"INDEMNIFIED LIABILITIES"). Notwithstanding the foregoing, the Indemnified
Liabilities shall not include liabilities, obligations, losses, damages,
penalties, actions, causes of action, judgments, suits, claims, costs, expenses
and disbursements to the extent caused by or resulting from the willful
misconduct or gross negligence of such Indemnitee.
2.2 Notice. Each Indemnitee will promptly notify Guarantor of each
event of which it has knowledge that may give rise to a claim under this Section
2.
2.3 Defense of Actions. If any investigative, judicial or
administrative proceeding arising in connection with any of the Indemnified
Liabilities is brought against any Indemnitee indemnified or intended to be
indemnified pursuant to this Section 2, Guarantor, to the extent and in the
manner directed by the Indemnitee or intended Indemnitee, will resist and defend
such action, suit or proceeding or cause the same to be resisted and defended by
counsel designated by Guarantor (which counsel shall be satisfactory to the
Indemnitee or intended Indemnitee). Each Indemnitee will use its best efforts to
cooperate in the defense of any such action, suit or proceeding. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Guarantor shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under
the applicable law.
3. CONSENTS BY GUARANTOR.
3.1 Consents. Guarantor hereby authorizes Lender, without notice or
demand, and without affecting Guarantor's liability hereunder, from time to time
to:
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<PAGE>
(a) Changes in Terms. Renew, compromise, extend, refinance,
accept partial payments, accelerate or restructure the Guaranteed Obligations or
otherwise change the time for payment or the terms of any of the Guaranteed
Obligations, or any part thereof, including, without limitation, increasing or
decreasing the rate of interest thereof;
(b) Amendment of LLC Agreement. Waive, amend, rescind, modify
or fail to enforce any of the terms or provisions of the Guaranteed Obligations
or any agreement or document executed in connection therewith;
(c) Liquidation of Guaranteed Obligations. Settle, release,
compromise, collect or otherwise liquidate the Guaranteed Obligations, or any
part thereof, and any security or collateral therefor in any manner as Lender
may determine in Lender's sole discretion;
(d) Collateral. Take and hold collateral to secure the payment
or performance of the Guaranteed Obligations; exchange, enforce, waive and
release any such collateral; and apply such collateral and direct the order or
manner of sale thereof as Lender in its sole discretion may determine;
(e) Releases. Settle, release, compromise with or substitute
any one or more endorser(s), guarantor(s), or other obligors of this Guaranty or
the Guaranteed Obligations; and
(f) Assignment. Assign this Guaranty in whole or in part and
Lender's rights hereunder to anyone at any time.
3.2 Non-Release of Guarantor. Guarantor agrees that Lender may do
any or all of the foregoing in such manner, upon such terms, and at such times
as Lender, in Lender's sole discretion, deems advisable, without, in any way or
respect, impairing, affecting, reducing or releasing Guarantor from Guarantor's
undertakings hereunder, and Guarantor hereby consents to each and all of the
foregoing acts, events and occurrences.
4. WAIVERS.
4.1 Defenses. Guarantor hereby waives any right to assert against
Lender as a defense, counterclaim, set-off or crossclaim, any defense (legal or
equitable), counterclaim, set-off or crossclaim which Guarantor may now or at
any time hereafter have under applicable law, rule, arrangement or relationship
against Borrower, Lender or any other party. Guarantor waives all defenses,
counterclaims and set-offs of any kind or nature arising, directly or
indirectly, from the present or future lack of sufficiency, validity or
enforceability of the Purchase Agreement or any Note.
4.2 Statute of Limitations. Guarantor hereby waives any statute of
limitations affecting Guarantor's liability or obligations under this Guaranty
or the enforcement of this Guaranty.
4.3 Election of Remedies. Guarantor hereby waives any defense
arising by reason of any claim or defense based upon an election of remedies by
Lender, which in any manner impairs, affects, reduces, releases, destroys or
extinguishes Guarantor's subrogation rights, rights to proceed against Borrower
for reimbursement, or any other rights of Guarantor to proceed against any other
person or security, including, but not limited to, any defense based upon the
election of remedies by Lender under the provisions of Section 580(d) of the
California Code of Civil Procedure, or any similar law of California or of any
other state, or of the United States.
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<PAGE>
4.4 Presentment, Demand and Notice. Guarantor hereby waives all
presentments, demands for performance or payment, notices of nonperformance,
protests, notices of protests, notices of dishonor, notices of default, notice
of acceptance of this Guaranty, diligence, and notices of the existence,
creation or incurrence of the Guaranteed Obligations or of new or additional
Guaranteed Obligations incurred or created after the date of this Guaranty, and
all other notices or formalities to which Guarantor may be entitled under
applicable law.
4.5 Remedies. As a condition to payment or performance by Guarantor
under this Guaranty, Lend






