GENERAL SECURITY AGREEMENT

 

(a)

mortgages and charges to the Secured Party, and grants to the Secured Party a security interest in, and the Secured Party hereby takes a security interest in, all of the Debtor’s right, title and interest in and to all of the Debtor’s present and after-acquired personal property and all proceeds thereof (except the property of the Debtor described in paragraph 1.3) of whatsoever nature and kind and wherever situate including, without limiting the generality of the foregoing, all of the Debtor’s right, title and interest in and to all of the Debtor’s present and after-acquired:

 

(i)

Accounts.  Debts, accounts, claims, monies and choses in action due or owing to or owned by the Debtor, and all books, records, documents, papers and electronically recorded data recording, evidencing, securing or otherwise relating to such debts, accounts, claims, monies and choses in action or any part or parts thereof (collectively “Accounts”);

 

(ii)

Equipment.  Goods and equipment, including all machinery, fixtures, plants, tools, furniture, vehicles of any kind or description, all spare parts, accessions and accessories located at or installed in or affixed or attached to any of the foregoing, and all drawings, specifications, plans and manuals relating thereto and any other goods that are not Inventory (collectively “Equipment”);

 

(iii)

Inventory.  Inventory of whatever kind, including all raw materials, materials used or consumed in the business or profession of the Debtor, goods, work in progress, finished goods, returned goods, repossessed goods, goods used for packing, all packaging materials, supplies and containers, materials used in the

 

(iv)

Other Tangible Personal Property.  Chattel paper, documents of title, instruments, money, investment property, and other goods that are not Accounts, Equipment or Inventory;

 

(v)

Intangibles.  Intangibles and intangible property (except for Accounts) including, without limitation, all contractual rights, licenses, goodwill, patents, trademarks, tradenames, copyrights, other industrial designs and other industrial or intellectual property and undertaking of the Debtor and all other choses in action of the Debtor of every kind which now are, or which may at any time hereafter be, due or owing to or owned by the Debtor and all other intangible property of the Debtor which is not Accounts, goods, chattel paper, documents of title, instruments, money or investment property; and

 

(b)

grants, mortgages and charges, to and in favour of the Secured Party, as and by way of a floating charge, all of its currently owned and held or hereafter acquired property, assets and undertakings, real and personal, of every nature and kind and wherever situate, except such of its property, assets, undertakings and interests as are validly subject to the mortgages, charges and security interests granted pursuant to paragraph 1.1(a).

 

(a)

the last day of any term created by any lease or agreement therefor now held or hereafter acquired by the Debtor, but the Debtor will stand possessed of the reversion thereby remaining in the Debtor of any leasehold premises upon trust for the Secured Party to assign and dispose thereof as the Secured Party or any buyer of such leasehold premises directs;

 

(b)

any lease or other agreement which contains a provision which provides in effect that such lease or agreement may not be assigned, subleased, charged or encumbered without the leave, licence, consent or approval of the lessor or other party until such leave, licence, consent or approval is obtained, and the security interest created hereby will attach and extend to such lease or agreement as soon as such leave, licence, consent or approval is obtained;

 

(c)

the issued and outstanding share capital of Vista Minerals (Barbados) Corp. held by the Debtor; or

 

(a)

this Security Agreement has been executed, or in the case of after-acquired property, such property has been acquired by the Debtor;

 

(b)

value has been given; and

 

(c)

the Debtor has rights in the Collateral, or in the case of after-acquired property, acquires rights in the Collateral.

 

(a)

this Security Agreement; or

 

(b)

that provision to the extent that it relates to Collateral other than ULC Shares.

 

(a)

deliver to the Secured Party each certificated security that is in bearer form;

 

(b)

deliver to the Secured Party each certificated security that is in registered form and, except for ULC Shares, either endorse the security certificate to the Secured Party or in blank or register the security certificate in the name of the Secured Party or its nominee;

 

(c)

as directed by the Secured Party, to either:

 

(i)

cause each uncertificated security to be delivered (as that term is defined in the STA) to the Secured Party; or

 

(ii)

cause the issuer of each uncertificated security to enter into an agreement in writing (“Control Agreement”) with the Secured Party agreeing that the issuer will comply with instructions originated by the Secured Party without the further consent of the Debtor or any other entitlement holder;

 

(d)

as directed by the Secured Party, do one of the following:

 

(i)

cause the Secured Party or its representative to become the entitlement holder of each security entitlement, except for a security entitlement in ULC Shares;

 

(ii)

cause the securities intermediary to enter into a Control Agreement with the Secured Party agreeing that the securities intermediary will comply with entitlement orders relating to security entitlements that are originated by the Secured Party without the further consent of the Debtor or any other entitlement holder; or

 

(iii)

cause another person that has control of each securities entitlement on behalf of the Secured Party, or having previously obtained control of the securities entitlement, to acknowledge that the other person has control on behalf of the Secured Party.

 

(e)

Subject to subparagraph (f) below, the Debtor will be entitled to exercise, or direct the exercise of, all rights conferred by statute or otherwise on a registered holder of investment property with respect to any investment property held directly by the Debtor or its nominee or with respect to any investment property held directly by the Secured Party or its nominee.

 

(f)

With respect to the Debtor’s rights relating to any investment property:

 

(i)

those rights will not be exercised in any manner which would be inconsistent with the rights of the Secured Party under this Security Agreement;

 

(ii)

the Debtor will not, without the prior written consent of the Secured Party, by the exercise of any of such rights or otherwise, permit or agree to any variation of the rights attached to or conferred by any of the investment property, participate in any rights issue, elect to receive or vote in favour of receiving any dividends other than in the form of cash or participate in any vote concerning a dissolution, liquidation, winding-up or similar proceeding of an issuer of investment property, except as expressly permitted by written agreement with the Secured Party; and

 

(iii)

after an Event of Default occurs, the Secured Party and its representatives may at the Secured Party’s discretion (in the Debtor’s name or otherwise and without any consent or authority on the part of the Debtor) exercise or cause to be exercised in respect of any of the investment property (other than ULC Shares) any voting rights or rights to receive dividends, interest, principal or other payments of money, as the case may be, forming part of the investment property and all other rights conferred on or exercisable by the bearer or holder thereof.

 

(a)

Corporate Requirements. If the Debtor is a corporation:

 

(ii)

it has the power and authority to carry on the business now being carried on by it and has the full power and authority to execute and deliver this Security Agreement;

 

(iii)

all necessary and requisite corporate proceedings, resolutions and authorizations have been taken, passed, done and given by it and by its directors to authorize, permit and enable it to execute and deliver this Security Agreement; and

 

(iv)

the entering into this Security Agreement is not in contravention of any statute, the organizational or constating documents of the Debtor or any agreement or other document to which the Debtor is a party;

 

(b)

No Actions.  There are no actions or proceedings pending or, to the knowledge of the Debtor, threatened which challenge the validity of this Security Agreement or which might result in a material adverse change in the financial condition of the Debtor or which would materially adversely affect the ability of the Debtor to perform its obligations under this Security Agreement or any document evidencing any indebtedness of the Debtor to the Secured Party;

 

(c)

Owns Collateral. The Debtor owns, possesses and has good title to all currently held Collateral, free from all security interests, mortgages, charges, encumbrances, liens and claims, except only those, if any, shown in Schedule 1;

 

(d)

Right and Authority.  The Debtor has the right and authority to create the security interests created in this Security Agreement;

 

(e)

Location of Collateral.  The only locations of Collateral (other than Inventory in transit) and the only places the Debtor carries on business are described in Schedule 2;

 

(f)

Financial Information.  All financial information and financial statements supplied to the Secured Party by or for the Debtor:

 

(i)

are not untrue in any material respect;

 

(ii)

have revealed all material facts the omission of which would make such information or statements misleading;

 

(iii)

disclose all facts which materially adversely affect, or so far as the Debtor can reasonably foresee will materially adversely affect, the Debtor’s financial condition, the Collateral or the Debtor’s ability to perform its obligations hereunder; and

 

(iv)

in the case of financial statements, have been prepared in accordance with generally accepted accounting principles.

 

(a)

Defend Collateral.  It will defend the Collateral against all claims and demands of all persons claiming the Collateral or an interest therein at any time;

 

(b)

Lists of Accounts.  If the Collateral includes Accounts, the Debtor will (upon request of the Secured Party in writing) deliver to the Secured Party within 30 days of each calendar month end an aged list of the Accounts as at that particular month end in a form acceptable to the Secured Party;

 

(c)

Provide Information.  Upon the demand by the Secured Party it will furnish in writing to the Secured Party all information requested concerning the Collateral, and it will promptly advise the Secured Party of the serial number, year, make and model of each serial numbered good at any time included in the Collateral;

 

(d)

Insurance.  It will insure and keep insured to their full insurable value with a company or companies selected by the Debtor and approved in writing by the Secured Party all the Collateral against such perils as may be prudent having regard to the nature of the Collateral and the business of the Debtor (including an extended coverage insurance clause), and whenever and to the extent required in writing by the Secured Party, the Debtor will:

 

(i)

furnish a certificate by an independent appraiser or insurance adjuster selected by the Debtor and approved by the Secured Party as to the sufficiency of such insurance, which certificate will be conclusive as against the Debtor both as to the amount of insurance required hereunder and the perils against which coverage is required hereunder, and the Debtor will immediately insure in accordance with such certificate;

 

(ii)

cause to be included in such policy or policies a mortgage clause in such form as may be approved by the Secured Party;

 

(iii)

cause to be endorsed in such form as may be required by the Secured Party on the policies evidencing such insurance a notation that any amounts payable under such policies will be paid to the Secured Party as its interest may appear; and

 

(e)

Repair.  It will keep the Collateral in good condition and repair according to the nature and description thereof respectively and if the Debtor neglects to keep the Collateral or any part thereof in good condition and repair then the Secured Party may (but will not be

 

(f)

Other Indebtedness.  It will pay and discharge as they become due all payments due and owing under or concerning any other indebtedness created or security given by the Debtor to any person or corporation and will observe, perform and carry out all the terms, covenants, provisions and agreements relating thereto, and any default in payment of any monies due and payable under or relating to any previous indebtedness or security or in the observance, performance or carrying out of any of the terms, covenants, provisions and agreements relating thereto will be considered to be a default hereunder at the option of the Secured Party and any and all remedies available to the Secured Party hereunder by reason of any default hereunder or by law or otherwise will be immediately available to the Secured Party upon any default of the Debtor under the other indebtedness created or security given by the Debtor;

 

(g)

Right of Inspection.  The Secured Party will have the right whenever it considers reasonably necessary either by its officers or authorized agents to enter upon the Debtor’s premises and to inspect the Collateral, all books of account and records of the Debtor and copies of all returns made from time to time by the Debtor to boards, agencies or governmental departments and to make extracts therefrom, and generally to conduct such examinations as it may see fit, and without limiting the generality of the foregoing the Secured Party may request information from the solicitor, auditor and other advisors and agents of the Debtor for the time being concerning the affairs and the conduct of business of the Debtor, and the Debtor hereby irrevocably authorizes and directs, and this will constitute the sufficient authority and direction to, any such solicitor, auditor or other person to disclose to the Secured Party such information as to any and all matters relating to the affairs and conduct of the business of the Debtor whether of a confidential nature or otherwise and any costs, expenses and outlays which the Secured Party may incur pursuant hereto will be payable immediately by the Debtor to the Secured Party, will bear interest at the highest rate borne by any of the other Obligations and will, together with such interest, form part of the Obligations secured by this Security Agreement;

 

(h)

Costs of Preparation & Enforcement.  It will pay all costs, charges and expenses of and incidental to the taking, preparation, execution and registering notice (and any amendments and renewals of such notice) of this Security Agreement and in taking, recovering, keeping possession of or inspecting the Collateral and generally in any other proceedings taken in enforcing the remedies in this Security Agreement or otherwise in connection with this Security Agreement or by reason of non-payment or procuring payment of the monies hereby secured;

 

(i)

Costs Caused by Default.  If the Debtor defaults in any covenant to be performed by it hereunder, the Secured Party may, but is not required to, perform any covenant of the Debtor capable of being performed by the Secured Party, and if the Secured Party is put to any costs, charges, expenses or outlays to perform any such covenant, the Debtor will indemnify the Secured Party for such costs, charges, expenses or outlays and such costs, charges, expenses or outlays (including solicitors’ fees and charges incurred by the Secured Party on an “own client” basis) will be payable immediately by the Debtor to the Secured Party, will bear interest at the highest rate borne by any of the other Obligations and will, together with such interest, form part of the Obligations secured by this Security Agreement;

 

(j)

Court Costs.  In any judicial proceedings taken to cancel this Security Agreement or to enforce this Security Agreement and the covenants of the Debtor hereunder the Secured Party will be entitled to special costs.  Any costs so recovered will be credited against any solicitors’ fees and charges paid or incurred by the Secured Party relating to the matters in respect of which the costs were awarded and which have been added to the monies secured hereunder pursuant to the foregoing clause;

 

(k)

Notice of Litigation.  It will give written notice to the Secured Party of all litigation or other claims before any court, administrative board or other tribunal affecting the Debtor or the Collateral or any part thereof;

 

(l)

Payments.  It will promptly pay or remit all amounts which if left unpaid or unremitted might give rise to a lien or charge on any of the Collateral ranking or purporting to rank in priority to any security interest created by this Security Agreement;

 

(m)

Further Assurances.  It will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered, such further acts, deeds, mortgages, transfers and assurances as the Secured Party may reasonably require for the better assuring, charging, assigning and conferring unto the Secured Party the Collateral and the security interests intended to be created hereunder, for the purpose of accomplishing and effecting the intention of this Security Agreement;

 

(n)

Purchase Monies.  If the Secured Party advances money to the Debtor for the purpose of enabling the Debtor to purchase or acquire rights in any Collateral the Debtor will use such money only for that purpose and will promptly provide the Secured Party with evidence that such money was so applied; and

 

(o)

Governing Law.  The Debtor will require that any agreement to which it and any securities intermediary are a party in respect of any security entitlement or security account included in or relating to any Collateral will specify that the laws of the province of British Columbia, or such other laws consented to by the Secured Party in writing, will be that securities intermediary’s jurisdiction for the purposes of that agreement, the STA and the PPSA.

 

(a)

Amalgamate.  Amalgamate or otherwise merge its business with the business of any other person;

 

(c)

Permit Charges.  Permit the Collateral or any part or parts thereof to become subject to any mortgage, charge, lien, encumbrance or security interest, whether made, given or created by the Debtor or otherwise except Permitted Liens (as such terms is defined in the

 

(d)

Sell Collateral.  Except as permitted in paragraph 5.2 or the Credit Agreement, sell, lease or otherwise dispose of the Collateral or any part or parts thereof (and in the event of any sale, lease or other disposition permitted or consented to it will pay the proceeds to the Secured Party);

 

(e)

Abandon Collateral.  Release, surrender or abandon the Collateral or any part or parts thereof;

 

(f)

Move Collateral.  Move the Collateral or any part or parts thereof from its present location or locations (and will promptly advise the Secured Party of the new location or locations);

 

(g)

Accessions.  Permit any of the Collateral to become an accession to any property other than other Collateral;

 

(h)

Control Agreements.  Consent to, and represents and warrants to the Secured Party that it has not previously consented to:

 

(i)

the entering into by any issuer of uncertificated securities included in or relating to the Collateral of a Control Agreement in respect of those uncertificated securities with any person other than the Secured Party or such nominee or agent as it may direct; or

 

(ii)

the entering into by any securities intermediary for any securities accounts, security entitlements or other investment property other than uncertificated securities included in or relating to the Collateral, of a Control Agreement in respect of such securities accounts, security entitlements or other investment property with any person other than the Secured Party or such nominee or agent as it may direct.

 

(b)

which is obsolete, worn out or otherwise no longer used or useful to the Debtor in its business; or

 

(a)

Take Possession.  By taking possession of the Collateral or any part thereof, and collecting, demanding, suing, enforcing, recovering, receiving and otherwise getting in the Collateral, and for that purpose entering into and upon any lands, tenements, buildings, houses and premises and doing any act and taking any proceedings in the name of the Debtor, or otherwise, as the Secured Party considers necessary;

 

(b)

Court Appointed Receiver.  By proceedings in any court of competent jurisdiction for the appointment of a receiver or receiver-manager of all or any part of the Collateral;

 

(c)

Court Ordered Sale.  By proceedings in any court of competent jurisdiction for the sale or foreclosure of all or any part of the Collateral;

 

(d)

File Proofs of Claim.  By filing of proofs of claim and other documents to establish its claims in any proceeding or proceedings relating to the Debtor;

 

(f)

Sale or Lease.  By sale or lease by the Secured Party of all or any part of the Collateral (whether or not it has taken possession of the Collateral);

 

(g)

Voluntary Foreclosure.  By retaining any of the Collateral in satisfaction of all or part of the Obligations, in accordance with paragraph 6.11;

 

(h)

Other Remedies.  By any other remedy or proceeding authorized or permitted hereby or by law or equity (including all of the rights and remedies of a secured party under the Personal Property Security Act in effect from time to time);

 

(a)

Take Possession. To take possession of the Collateral or any part thereof, and to collect and get in the Collateral and for that purpose to enter into and upon any lands, tenements, buildings, houses and premises wheresoever and whatsoever and to do any act and take any proceedings in the name of the Debtor, or otherwise, as the Receiver considers necessary;

 

(b)

Carry On Business.  If this Security Agreement creates security interests in substantially all of the Debtor’s present and after-acquired personal property, to carry on or concur in carrying on the business of the Debtor (including, without limiting the generality of the powers contained in this Security Agreement, the payment of the obligations of the Debtor whether or not they are due and the cancellation or amendment of any contracts between the Debtor and any other person) and the employment and discharge of such agents, managers, clerks, accountants, servants, workmen and others upon such terms and with such salaries, wages or remuneration as the Receiver thinks proper;

 

(c)

Repair.  To repair and keep in repair the Collateral or any part or parts thereof and to do all necessary acts and things for the protection of the Collateral;

 

(d)

Arrangements.  To make any arrangement or compromise which the Receiver thinks expedient in the interests of the Secured Party or the Debtor and to assent to any modification or change in or omission from the provisions of this Security Agreement;

 

(e)

Exchange.  To exchange any part or parts of the Collateral for any other property suitable for the purposes of the Debtor upon such terms as may seem expedient and either with or without payment or exchange of money or equality of exchange or otherwise;

 

(g)

 

(a)

FIRSTLY to pay and discharge all rents, taxes, rates, insurance premiums and out-goings affecting the Collateral;

 

(b)

SECONDLY to pay all costs and expenses of taking possession and/or sale or lease or otherwise (including the Receiver’s remuneration, if any);

 

(c)

THIRDLY to pay such amounts as are necessary to keep in good standing all liens and charges on the Collateral ranking in priority to the security interests hereby created;

 

(d)

FOURTHLY to pay any principal, interest and other monies due and payable hereunder (in such order as the Secured Party may require); and

 

(e)

if any surplus remains in the hands of the Receiver or the Secured Party then the Debtor will be entitled to such surplus but only upon demand in writing made therefor.

 

(a)

 

(i)

if to Secured Party:

 

(ii)

if to Debtor:

 

(b)

Any notice or communication will be considered to have been received:

 

(i)

if delivered by hand during business hours, upon receipt by a responsible representative of the receiver, and if not delivery during business hours, upon the commencement of the next business day;

 

(ii)

if sent by facsimile transmission during business hours, upon the sender receiving confirmation of the transmission, and if not transmitted during business hours, upon the commencement of the next business day; and

 

(iii)

if mailed by prepaid registered post in Canada, upon the fifth business day following posting; except that, in the case of a disruption or an impending or threatened disruption in postal services every notice or communication will be delivered by hand or sent by facsimile transmission.

 

(c)

In this Security Agreement “business day” will mean a day which is not a Saturday or defined as a “holiday” under the Interpretation Act (British Columbia), as amended or replaced from time to time.

 

(a)

acknowledges receiving a copy of this Security Agreement; and

 

(b)

waives all rights to receive from the Secured Party a copy of any financing statement, financing change statement or verification statement filed or issued, as the case may be, at any time in respect of this Security Agreement or any amendments hereto.