November 1, 2004
VitroTech Corporation
0 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxx, XX 00000
ATTENTION: XX. XXXXX XXXXXXXXXXX,
CHIEF EXECUTIVE OFFICER
Dear Xx. Xxxxxxxxxxx:
The following letter sets forth basic business terms and conditions under
which 1568931 Ontario Ltd., ("Lender") would be willing to temporarily waive
certain conditions contained in the letter agreement dated September 29, 2004
pursuant to which Xxxxxx agreed to establish a $3,000,000 credit facility
(hereinafter, said letter of intent along with the definitive agreements to be
executed, collectively referred to as the "Credit Facility") (the terms of which
are incorporated herein by this reference) between VitroTech Corporation and
VitroCo., Inc. in their respective capacities (collectively referred to as
"VROT") and Lender. This letter of intent is intended to be binding and shall be
subject to the conditions precedent contained herein and further subject to the
parties entering into final agreements in form and content satisfactory to
Lender in its sole and exclusive discretion.
This Letter of Intent is being entered into relative to the following
facts:
X. Xxxxxxxx to the terms of the Credit Facility, XXXX's right to draw
against the Credit Facility and Xxxxxx's obligation to fund any such
draw is subject to VROT's meeting conditions contained within the
Credit Facility.
B. On September 29, 2004, XXXX requested Xxxxxx to advance the sum of
$850,000.00 plus loan fees and costs notwithstanding the fact that
VROT did not meet said conditions at the time of its request.
Without waiving its rights under the terms of the Credit Facility,
Lender advanced the amount requested by VROT.
November 1, 2004
VitroTech Corporation
Xxxxx Xxxxxxxxxxx
Page two
X. XXXX has advised Lender of its desire to make an additional draw in
the amount of $250,000.00 against the Credit Facility and has
requested Xxxxxx to advance said sum notwithstanding the fact the
VROT has not met the terms and conditions entitling it to request a
draw against the Credit Facility and Lender is under no obligation,
pursuant to the terms of the Credit Facility to fund such a draw.
D. Subject to the terms and conditions contained herein and without
waiving or modifying the terms and conditions of the Credit
Facility, Xxxxxx has agreed to advance an additional $250,000.00
under said Credit Facility.
Accordingly, in consideration of the foregoing and as an inducement to
Lender to advance said additional funds, it is agreed as follows:
1. Within seven (7) days of execution of this Letter of Intent, VROT
shall enter into a services agreement with an IR/PR firm acceptable to Lender as
contained in the Xxxx Xxxxx Term Sheet.
2. Relative to any warrants, stock purchase agreements, convertible
debt, options or similar rights issued by VROT to Lender, Xxxxx Xxxxxxx and/or
any Fialkov related entities (collectively the "Fialkov Related Entities")
arising in relation to funds advanced by such parties to VROT since September 1,
2004, VROT agrees to "ratchet down" all purchase, conversion and/or any other
rights contained within said warrants, purchase agreements etc. so that said
purchase, conversation and/or other rights shall at all times be as good or
better than any similar rights issued or granted by XXXX to any third party at
any time throughout the term of the Credit Facility. By way of example, in the
event that VROT issues warrants and/or shares to a third party with a stock
purchase price of $0.15 per share, the stock purchase price in any warrants
and/or shares issued to the Fialkov Related Entities (or any of them) which
provide for a purchase price in excess of $0.15 per share shall be "ratcheted
down" to $0.15 per share.
3. In further consideration of Xxxxxx's agreement to advance the
additional $250,000.00, XXXX agrees to issue to the Lender two million
(2,000,000) shares of common stock at no cost to the Lender. Said shares will be
subject to a Registration Agreement providing Lender with first priority with
regard to registration of any and all shares being registered by VROT.
4. VROT will not enter into any agreements outside the ordinary course
of its business (as defined in the Credit Facility), including, but not limited
to any settlement agreements, without the prior written consent of the Lender.
November 1, 2004
VitroTech Corporation
Xxxxx Xxxxxxxxxxx
Page three
5. Xxxxx Xxxxxxxxxxx will remain in the position of sole Chief
Executive Officer of VitroTech for a minimum additional period of six months
following the expiration of his current 90 day commitment.
6. XXXX agrees to execute any and all additional documents required by
Lender necessary to carry out the terms, intent and conditions of this Letter
Agreement.
Notwithstanding anything to the contrary, nothing herein shall be
construed as a modification to the Credit Facility or a waiver of any rights
which Lender may have or a release or modification of any obligation which VROT
may have. Lender reserves the right to restructure the terms of this Letter
Agreement provided that such restructuring does no negatively affect VROT's
financial condition.
Please signify your agreement with the foregoing by signing in the space
below.
FOREGOING CONSENTED AND AGREED TO:
VitroTech Corporation
By:_______________________________
Name: Xxxxx Xxxxxxxxxxx
Title: Chief Executive Officer
VitroCo., Inc.
By:_______________________________
Name:
Title:
