General Security Agreement

(a)

To diligently maintain, use and operate the Collateral and to conduct the Debtor’s affairs in a proper and efficient manner so as to preserve and protect the Collateral and the earnings, income, rents and profits thereof;

(b)

Not to sell, exchange, transfer, assign, lease or otherwise dispose of the Collateral or any interest therein other than in the ordinary course of the Debtor’s business or with the prior written consent of the Secured Party;

(c)

To cause all of the Collateral which is of a character usually insured in comparable circumstances to be properly insured with reputable insurers against loss or damage by fire or other hazards, to maintain such insurance with loss payable to the Secured Party and to deliver to the Secured Party evidence of such insurance satisfactory to the Secured Party;

(d)

To pay all rents, taxes, rates, levies, assessments and government fees or dues lawfully levied, assessed or imposed in respect of the Collateral or any part thereof as and when the same shall become due and payable and to exhibit to the Secured Party, on demand, the receipts and vouchers establishing such payments;

(e)

To keep proper books of accounts in accordance with generally accepted accounting principals, consistently applied, and to furnish to the Secured Party, within 48 hours following the Secured Party’s request during normal business hours, such financial information and statements relating to the Collateral as the Secured Party may from time to time require;

 

(f)

To notify the Secured Party promptly of:

 

i.

Any change in the information contained in this agreement;

 

ii.

The details of any significant acquisition of, loss of or damage to the Collateral;

 

iii.

Any significant default in the payment to the Debtor of accounts which are part of the Collateral; and

 

iv.

All litigation before any court, administrative board or other tribunal affecting the Debtor or the Collateral;

(g)

To furnish to the Secured Party such other information with respect to the Collateral as the Secured Party may from time to time require;

(h)

Not to, without the prior written consent of the Secured Party, create any other security interest, mortgage, hypothec, charge, lien or other encumbrance upon the Collateral or any part thereof ranking or purporting to rank in priority to or equally with the Security Interest; and

 

(i)

To defend the title to the Collateral against all persons and, upon demand by the Secured Party, to furnish such further assurance of title and further security for the obligations herein secured and to execute any written instruments or do any other acts necessary to make effective the purposes and provisions of this agreement.

(a)

The Debtor fails to pay or perform any of the obligations referred to in paragraph 2 of this agreement;

(b)

The Debtor fails to comply with any other commitments or provisions of this agreement or other agreements between the parties referred to herein;

(c)

Any of the representations and warranties in this agreement were incorrect in any material respect when made or deemed to have been made;

(d)

The Debtor ceases or threatens to cease to carry on its business, commits an act of bankruptcy, becomes insolvent or makes an assignment or bulk sale of the Debtor’s assets without the written consent of the Secured Party;

(e)

Any proceeding is taken with respect to a compromise or arrangement with the Debtor’s creditors, having the Debtor wound up, having a receiver appointed over any part of the Collateral or any encumbrancer taking possession of any part thereof without the written consent of the Secured Party;

 

(f)

Any execution or other process of any court becomes enforceable against the Debtor or any distress or analogous process is levied upon the Collateral or any part thereof; or

(g)

The Secured Party in good faith believes that the prospect of payment or performance of any of the obligations herein is impaired.

(a)

Upon the Security Interest becoming enforceable, the Secured Party shall have the right:

 

i.

To take immediate possession of the Collateral in any manner permitted by law and to require the Debtor to assemble and deliver the Collateral or make the Collateral available to the Secured Party at a reasonably convenient place designated by the Secured Party;

 

ii.

To dispose of the Collateral in any manner permitted by law, with or without judicial process;

 

iii.

To enforce any rights of the Debtor in respect of the Collateral, including the right to demand, sue for and receive any book debts or accounts receivable, to give effectual receipts and discharges therefore, to give time for payment thereof with or without security, and to compromise any book debts or accounts receivable which may seem bad or doubtful to the Secured Party; and

 

iv.

To take proceedings in any court of competent jurisdiction for the appointment of a receiver (which term shall include a receiver and manager) of the Collateral or any part thereof or by instrument in writing to appoint any person to be a receiver of the Collateral or any part thereof and to remove any receiver so appointed by the Secured Party and appoint another in his stead. Any receiver appointed by instrument in writing shall have power (i) to take possession of the Collateral or any part thereof, (ii) to carry on the business of the Debtor, (iii) to borrow money required  for the maintenance, preservation or protection of the Collateral or any part thereof or for the carrying on of the business of the Debtor, and (iv) to sell, lease or otherwise dispose of the whole or any part of the Collateral at public auction, by public tender or by private sale, either for cash or upon credit, at such time and upon such terms and conditions as the receiver may determine. Any such receiver shall be deemed to be the agent of the Debtor, and the Secured Party shall not be responsible for misconduct of or negligence by any such receiver.

(b)

The remedies of the Secured Party provided for in this agreement are in addition to, not in substitution of, any rights or remedies provided by law

 

(a)

Any failure by the Secured Party to exercise any right set out in this agreement in any particular instance shall not constitute a waiver thereof in any other instance.

 

(b)

If any provision in this agreement is determined to be invalid or unenforceable, such provision shall be severed from the agreement, and the remaining portions shall continue to be given full force and effect.

 

(c)

All rights of the Secured Party under this agreement shall be assignable.

 

(d)

The rights and obligations agreed to herein shall extend to the benefit of and be binding on the parties hereto and their successors and permitted assigns.

 

(e)

If more than one party executes this agreement as Debtor, the obligations of such parties shall be joint and several.

 

(f)

Any notice required or permitted to be given under this agreement may be given in writing to a party at that party’s last known address by personal delivery, mail, facsimile and/or other means of electronic communication. Notice by mail shall be deemed received on the fifth Business Day following the date same was deposited in the mail.

 

(g)

This agreement shall be governed by and construed in accordance with the laws in force in the Province of British Columbia without prejudice to or limitation of any other rights or remedies available under the laws of any jurisdiction where property or assets of the Debtor may be found.

 

(h)

The Debtor acknowledges receiving an executed copy of this agreement.

June 20, 2008

Date

Syntec Biofuel Inc.

Name: Janet Cheng

CFO.