SECURITY AGREEMENT
EXHIBIT 10.3
SECURITY AGREEMENT (this “Agreement”), dated as
of May 9, 2008 between MEXORO MINERALS LTD., a Colorado corporation, (“Borrower”), and
Paramount Gold and Silver Corp., a Delaware corporation, (“Lender”). The
Lender and Borrower are concurrently entering into a Secured Convertible
Debenture, dated as of even date herewith, (as amended, modified or supplemented
from time to time in accordance with its terms, the (“Debenture”) pursuant
to which the Lender will make a loan to the Borrower in
the Principal Amount (as such term is defined in the
Debenture) pursuant to, and subject to the terms and conditions
thereof.
Execution and delivery of this
Agreement is a condition precedent to the making of the Loan.
The obligation of the Lender to make
the Loan is conditioned, among other things, on the execution and delivery by
the Borrower of the Debenture and this Agreement to secure the Obligations (as
such term will be defined in the Debenture), such Obligations to include,
without limitation, the due and punctual payment and performance of (a) the
principal of and interest and fees due under the Debenture, when and as due,
whether at maturity, by acceleration, or otherwise, (b) all obligations of the
Borrower at any time and from time to time under this Agreement and (c) all
other obligations at any time and from time to time under the Debenture or this
Agreement.
Accordingly, the Borrower and the
Lender hereby agree as follows:
1. Definitions of
Terms. All capitalized terms used herein, but not defined
herein, shall have the meanings set forth in the Debenture. As used
herein, the following terms shall have the following meanings:
(a) “Account” shall mean
all present and future rights of the Borrower to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (i) for services rendered or to be rendered, or
(ii) for a secondary obligation incurred or to be incurred.
(b) “Chattel Paper”,
“Documents” and
“Instruments”
shall have the meanings set forth in the Colorado Uniform Commercial
Code.
(c) “Equipment” shall mean
all of the equipment of the Borrower, including, without limitation, all
machinery, data processing and computer equipment (whether owned or licensed and
including embedded software), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located. Without limitation to the generality of the foregoing, such
term shall also include all “Equipment” as defined in the Uniform Commercial
code.
(d) General Intangibles”
shall mean all of any Borrower’s present and future general intangibles of every
kind and description, including, without limitation, mineral
concessions, option properties, contract rights, payment intangibles,
trade names and trademarks and the goodwill of the business symbolized thereby,
deposit accounts, letters of credit, and federal, state and local tax refund
claims of all kinds.
(e) “UCC” shall mean the
Uniform Commercial Code.
(e) “Proceeds” shall mean
any consideration received from the sale, lease, exchange or other disposition
of any asset or property which constitutes Collateral, any other value received
as a consequence of the possession of any Collateral and any payment received
from any insurer or other person or entity as a result of the loss,
nonconformity, or interference with the use of, defects or infringements of
rights, or damage to any asset or property that constitutes
Collateral.
(f) “Receivable” shall mean all of the following
property of the Borrower: (a) all Accounts; (b) all interest, fees, late
charges, penalties, collection fees and other amounts due or to become due or
otherwise payable in connection with any Account; (c) all payment intangibles;
(d) letters of credit, indemnities, guarantees, security or other deposits and
proceeds thereof issued and payable to the Borrower or otherwise in favor of or
delivered to the Borrower in connection with any Account; or (e) all other
accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to the Borrower, whether from
the rendition of services or otherwise associated with any Accounts, or general
intangibles of the Borrower (including, without limitation, choses in action,
causes of action, tax refunds, tax refund claims, any funds which may become
payable to the Borrower in connection with the termination of any Plan or other
employee benefit plan and any other amounts payable to the Borrower from any
Plan or other employee benefit plan, rights and claims against insurance
carriers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which the
Borrower is a beneficiary).
(g) “Records” shall mean all of
the Borrower’s files, present and future books of account of every kind or
nature, invoices, ledger cards, statements, correspondence, memoranda, and other
data relating to the Collateral or any account debtor, together with the tapes,
disks, diskettes and other data and software storage media and devices, file
cabinets or containers in or on which the foregoing are stored (including any
rights of the Borrower with respect to the foregoing maintained with or by any
other person).
(h) “Securities” shall
mean all common or preferred equities owned by the Borrower in any subsidiary
company, affiliated company or any other entity wherever situated in the United
States of America or any other country including Mexico.
2. Grant and Perfection of
Security Interest. (a) As security for the payment or performance, as the
case may be, of the Obligations, the Borrower hereby creates and grants to the
Lender, its successors and its assigns, a continuing security interest in, lien
upon, and right of setoff against, and hereby assigns to the Lender, all
personal property and fixtures and interests of the Borrower, whether now owned
or hereafter acquired or existing and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by the Lender), collectively the “Collateral”,
including, without limitation, all of the Borrower’s right, title and interest
in the following:
(i) all
Receivables;
(ii) all
General Intangibles;
(iii) all
goods, including, without limitation, Equipment;
(iv) Chattel
Paper, including, without limitation, all tangible and electronic chattel
paper;
(v) all
Instruments, including, without limitation, all promissory notes;
(vi) all
Documents;
(vii) all
deposit accounts;
(viii) all
letters of credit, banker’s acceptances and similar instruments and including
all letter-of-credit rights;
(ix) all
supporting obligations and all present and future liens, security interests,
rights, remedies, title and interest in, to and in respect of any Collateral,
including (A) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral, and (B) deposits by and property of account debtors or other persons
securing the obligations of account debtors;
(x) all
(A) investment property (including but not limited to the securities of any
subsidiary now organized or hereinafter organized of the
Borrower, whether certificated or uncertificated, securities
accounts, security entitlements, commodity contracts or commodity accounts) and
(B) monies, credit balances, deposits and other property of the Borrower now or
hereafter held or received from or for the account of the Borrower, whether for
safekeeping, pledge, custody, transmission, collection or
otherwise;
(xi) all
commercial tort claims;
(xii) all
Records; and
(xiii) all
products and Proceeds of the foregoing, in any form, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
Attached
hereto and marked Schedule 1 is a list of the collateral.
(b) The
Borrower irrevocably and unconditionally authorizes the Lender (or its agent) to
file at any time and from time to time such financing statements with respect to
the Collateral naming the Lender as the secured party and the Borrower as
debtor, as the Lender may require, and including any other information with
respect to the Borrower or otherwise required by Article 9 of the Uniform
Commercial Code of such jurisdiction as the Lender may determine in good faith,
together with any amendment and continuations with respect thereto, which
authorization shall apply to all financing statements filed on, prior to or
after the date hereof. The Lender hereby ratifies and approves all
financing statements naming the Lender as secured party and the Borrower as
debtor with respect to the Collateral (and any amendments with respect to such
financing statements) filed by or on behalf of the Lender prior to the date
hereof and ratifies and confirms the authorization of the Lender to file such
financing statements (and amendments, if any). The Borrower hereby
authorizes the Lender to adopt on behalf of the Borrower any symbol required for
authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming the Lender as
the secured party and the Borrower as debtor includes assets and properties of
the Borrower that do not at any time constitute Collateral, whether hereunder,
under any of the other Financing Agreements or otherwise, the filing of such
financing statement shall nonetheless be deemed authorized by the Borrower to
the extent of the Collateral included in such description and it shall not
render the financing statement ineffective as to any of the Collateral or
otherwise affect the financing statement as it applies to any of the Collateral,
provided, that,
in such event, upon the Borrower’s written request and at the Borrower’s
expense, the Lender shall file such amendments to its financing statements to
change the assets described therein so as to constitute the
Collateral. In no event shall the Borrower at any time file, or
permit or cause to be filed, any correction statement or termination statement
with respect to any financing statement (or amendment or continuation with
respect thereto) naming the Lender as secured party and the Borrower as debtor
so long as this Agreement has not been terminated or all of the Obligations have
not been paid and satisfied in full in immediately available funds.
(c) In the
event that any goods, documents of title are at any time after the date hereof
in the custody, control or possession of another person, the Borrower shall
promptly notify the Lender thereof in writing. Promptly upon the
Lender’s request, the Borrower shall promptly obtain an acknowledgment from such
other person, in form and substance satisfactory to the Lender, that such other
person, inter alia,
acknowledges the security interest of the Lender in such collateral, agrees to
waive any and all claims such other person may, at any time, have against such
collateral, and agrees to permit the Lender access to, and the right to remain
on, the premises of such other person so as to exercise the Lender’s rights and
remedies and otherwise deal with such collateral and in the case of any person
who at any time has custody, control or possession of any Collateral, holds such
collateral for the benefit of the Lender and shall agrees to act upon the
instructions of the Lender, without the further consent of the
Borrower.
(d) The
Borrower agrees at all times to keep in all material respects accurate and
complete accounting records with respect to the Collateral, including, but not
limited to, a record of all payments and Proceeds received.
3. Further
Assurances. The Borrower agrees to take any other actions
reasonably requested by the Lender to insure the attachment, perfection of, and
the ability of the Lender to enforce, the security interest of the Lender in any
and all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, including Mexico to the
extent, if any, that the Borrower’s signature thereon is required therefor, (ii)
causing the Lender’s name to be noted as secured party on any certificate of
title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of the Lender to enforce, the security
interest of the Lender in such Collateral, (iii) complying with any provision of
any statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of the Lender to enforce, the security interest of the
Lender in such Collateral, (iv) obtaining the consents and approvals of any
governmental and other third party consents and approvals, including, without
limitation, any consent of any other person obligated on Collateral, (v) paying
any fees and taxes required in connection with the execution and delivery of
this Agreement or the granting of the security interest of the Borrower, and
(vi) taking all actions required by any earlier versions of the UCC or by other
law, as applicable in any relevant jurisdiction.
4. Inspection
and Verification. The Lender and such persons
as the Lender may designate shall have the right, at any reasonable time or
times, and upon reasonable notice (which may be telephonic), to inspect the
Collateral owned by the Borrower, all records related thereto (and to make
extracts and copies from such records), and the premises upon which any such
Collateral is located, to discuss the Borrower’s affairs with the officers of
the Borrower and its independent accountants and to verify under reasonable
procedures the validity, amount, quality, quantity, value, and condition of or
any other matter relating to, such Collateral, including, in the case of
Receivables or Collateral in the possession of a third person, contacting
account debtors or a third person possessing such Collateral for the purpose of
making such a verification. The provisions of this Section 4 shall
not be deemed to limit the Lender’s rights under the
Debenture.
5. Taxes;
Encumbrances. At its option, the Lender may discharge past due
taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral, and may pay for the maintenance and preservation of
the Collateral to the extent the Borrower fails to do so and the Borrower agrees
to reimburse the Lender on demand for any payment made or any expense incurred
by it pursuant to the foregoing authorization; provided, however, that nothing
in this Section 5 shall be interpreted as excusing the Borrower from the
performance by it of any covenants or other promises as set forth herein or in
the Debenture.
6. Assignment of Security
Interest. If at any time the Borrower shall take and perfect a
security interest in any property of an account debtor or any other person to
secure payment and performance of a Receivable, any contract right, or payment
intangible the Borrower shall promptly assign such security interest to the
Lender. Such assignment need not be filed of public record unless
necessary to continue the perfected status of the security interest against
creditors of and transferees from the account debtor or other person granting
the security interest.
7. Records. The
Borrower shall keep or cause to be kept records with respect to the Collateral,
which are complete and accurate in all material respects. In
addition, the Borrower will provide the Lender with such further schedules
and/or information with respect thereto as the Lender may reasonably
require.
8. Priority. The
Lender’s security interest in the Collateral is and shall remain a first
priority security interest.
9. Protection of
Security. The Borrower shall, at its own cost and expense,
take any and all actions reasonably necessary to defend title to the Collateral
owned by it against all persons and to defend the security interest of the
Lender in such Collateral, and the priority thereof, against any Lien of any
nature whatsoever except for Liens which may be permitted by the
Debenture.
10. Continuing Obligations of
the Borrower. The Borrower shall remain liable to observe and
perform all the conditions and obligations to be observed and performed by it
under each contract, agreement, interest or obligation relating to the
Collateral, all in accordance with the terms and conditions thereof, and shall
indemnify and hold harmless the Lender from any and all such
liabilities.
11. Remedies Upon
Default. Upon the occurrence and during the continuance of an
Event of Default, it is agreed that the Lender shall have the right to take any
or all of the following actions at the same or different times: with
or without legal process and with or without previous notice or demand for
performance, to take possession of the Collateral and without liability for
trespass (except for actual damage caused by the Lender’s gross negligence or
willful misconduct) to enter any premises where such Collateral may be located
for the purpose of taking possession of or removing such Collateral and,
generally, to exercise any and all rights afforded to a secured party under, and
subject to its obligations contained in, the Uniform Commercial Code as in
effect in any state or other applicable law. Without limiting the generality of
the foregoing, the Borrower agrees that the Lender shall have the right to sell
or otherwise dispose of all or any part of the Collateral, at public or private
sale. Notwithstanding the foregoing, the parties agree that in the
event that Lender takes title to any mining
concessions, options or title to any securities, the
agreed upon value of the mining concessions, options and securities shall be
equal to the outstanding principal balance due under the Debenture and that
Lender shall be under no obligation to sell any of the mining concessions,
options or securities to satisfy any of the outstanding
liability. Lender reserves the right to take title to any mining
properties, mineral concessions for cash, upon credit or
for future delivery as the Lender shall deem appropriate. Each such
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of the Borrower, and the Borrower hereby waives (to
the extent permitted by law) all rights of redemption, stay and appraisal which
the Borrower now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted.
Without limiting the foregoing, upon
the occurrence and during the continuance of an Event of Default, the Lender
may, in its discretion, enforce the rights of the Borrower against any account
debtor or other obligor in respect of any of the Receivables. Without
limiting the generality of the foregoing, at any time or times that an Event of
Default exists or has occurred and is continuing, the Lender may, in its
discretion, at such time (i) notify any or all account debtors or other obligors
in respect thereof that the Receivables have been assigned to the Lender and
that the Lender has a security interest therein and the Lender may direct any or
all account debtors and other obligors to make payment of the Receivables
directly to the Lender, (ii) extend the time of payment of, compromise or
settle, and upon any terms or conditions, any and all Receivables and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivable or such other obligations,
but without any duty to do so, and the Lender shall not be liable to Borrower
(or any Affiliate of Borrower) for any failure to collect or enforce the payment
thereof nor for the negligence of its agents or attorneys with respect thereto
and (iv) take whatever other action the Lender may deem necessary or desirable
for the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at the Lender’s request, any
notice or demand for payment sent to any account debtor shall state that the
Receivables and such other obligations have been assigned to the Lender and are
payable directly and only to the Lender and the Borrower shall deliver to the
Lender such originals of documents evidencing the sale and delivery of goods or
the performance of services giving rise to any Receivables as the Lender may
require.
The Lender shall give the Borrower five
(5) days’ written notice (which the Borrower agrees is reasonable notice) of the
Lender’s intention to make any sale of Collateral. Such notice, in the case of a
public sale, shall state the time and place for such sale and, in the case of a
sale at a broker’s board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Lender may fix and state in
the notice (if any) of such sale. At any such sale, the Collateral,
or portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Lender may (in its sole and absolute discretion,
exercised in a commercially reasonable manner) determine. The Lender
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Lender may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be retained by
the Lender until the sale price is paid by the purchaser or purchasers thereof,
but the Lender shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like
notice. At any public sale made pursuant to this Section 11, the
Lender may bid for or purchase, free (to the extent permitted by law) from any
right of redemption, stay or appraisal on the part of the Borrower (all said
rights being also hereby waived and released to the extent permitted by law),
with respect to the Collateral or any part thereof offered for sale and the
Lender or any such Lender may make payment on account thereof by using any claim
then due and payable to the Lender from the Borrower as a credit against the
purchase price, and the Lender may, upon compliance with the terms of sale,
hold, retain and dispose of such property without further accountability to the
Borrower therefor. For purposes hereof, a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Lender shall be free to carry out such sale and purchase pursuant
to such agreement, and the Borrower shall not be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact that
after the Lender shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Lender may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.
12. Application of
Proceeds. The proceeds of any collection or sale of
Collateral, as well as any Collateral consisting of cash, shall be applied by
the Lender as follows:
FIRST, to the payment of all reasonable
costs and expenses incurred by the Lender in connection with such collection or
sale or otherwise in connection with this Agreement or any of the Obligations,
including, but not limited to, all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances made by
the Lender hereunder on behalf of the Borrower and any other reasonable costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder;
SECOND, to principal and then interest
on the Loan and all other fees, costs, charges and other Obligations arising
under the Debenture; and
THIRD, to the Borrower, its successors
and assigns, or as a court of competent jurisdiction may otherwise
direct.
Upon any
sale of the Collateral by the Lender (including, without limitation, pursuant to
a power of sale granted by statute or under a judicial proceeding), the receipt
of the Lender or of the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Lender or such officer or be answerable in any
way for the misapplication thereof.
13. Additional Covenants as to
the Collateral.
(a) The
Borrower shall keep the Collateral at their current locations and the
Borrower will not remove the Collateral from such locations without providing at
least thirty (30) days’ prior written notice to the Lender, whose consent may be
withheld.
(b) Without
providing at least thirty (30) days’ prior written notice to the Lender, the
Borrower will not change (i) its type of organization, jurisdiction of
organization or other legal structure.
(c) The
Borrower shall cause its Equipment to be maintained in the same condition,
repair and working order as when new, ordinary wear and tear excepted, and shall
forthwith, or in the case of any loss or damage to any such Equipment as quickly
as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith which are
necessary or desirable to such end. The Borrower shall promptly
furnish to the Lender a statement respecting any loss or damage to any of its
Equipment.
14. Security Interest
Absolute. All rights of the Lender hereunder, the security
interest created hereby, and all obligations of the Borrower hereunder, shall be
absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Debenture, any other agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or consent to any departure from the Debenture, or any other agreement or
instrument, (iii) any exchange, release or nonperfection of any other
Collateral, or any release or amendment or waiver of or consent to or departure
from any guarantee, for all or any of the Obligations, or (iv) any other
circumstance which might otherwise constitute a defense available to, or
discharge of, the Borrower or any other obligor in respect of the Obligations or
in respect of this Agreement.
15. No
Waiver. No failure on the part of the Lender to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Lender preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. The Lender shall not be deemed to have waived any rights hereunder or under
any other agreement or instrument unless such waiver shall be in writing and
signed by such parties.
16. Lender
Appointed Attorney-in-Fact. The Borrower hereby
appoints the Lender the attorney-in-fact of the Borrower solely for the purpose
of carrying out the provisions of this Agreement and taking any action and
executing any instrument which the Lender may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest.
17. Fees and
Expenses. The Borrower shall be obligated to, within ten (10)
days after demand, pay to the Lender the amount of any and all expenses,
including the reasonable fees and expenses of its counsel and of any experts or
agents which the Lender may incur in connection with (i) the administration of
this Agreement, including the cost and expenses of the Lender’s Collateral
examination as provided in the Debenture, (ii) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of the Lender
hereunder, or (iv) the failure by the Borrower to perform or observe any of the
provisions hereof. In addition, the Borrower indemnifies and holds the Lender
harmless from and against any and all liability incurred by the Lender hereunder
or in connection herewith, unless such liability shall be due to the gross
negligence or willful misconduct of the Lender, as the case may
be. Any such amounts payable as provided hereunder or thereunder
shall be additional Obligations secured hereby and by the other Financing
Agreements.
18. Submission to
Jurisdiction. (a) Any legal action or proceeding with respect
to this Agreement may be brought in either the province of Ontario or in Mexico
at the sole discretion of the Lender. By execution and delivery of
this Agreement, the Borrower hereby accepts for itself and in respect of his
property, generally and unconditionally, the jurisdiction of the aforesaid
courts.
(b) The
Borrower hereby irrevocably waives, in connection with any such action or
proceeding, any objection, including, without limitation, any objection to the
laying of venue or based on the grounds of forum non conveniens, which it may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(c) The
Borrower hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it, as the case may
be, at its address set forth in the Debenture.
(d) Nothing
herein shall affect the right of the Lender to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Borrower in any other jurisdiction which the Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against the Borrower or its property.
19. Entire Agreement; Waiver of
Jury Trial, etc. (a) This Agreement and the Debenture constitute the
entire contract between the parties hereto relative to the subject matter
hereof. Except as expressly provided herein, nothing in
this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, any rights, remedies, obligations or liabilities
under or by reason of this Agreement the other Financing
Agreements.
(b) EXCEPT
AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND THE OTHER FINANCING
AGREEMENTS.
(c) Except
as prohibited by law, each party hereto hereby waives any right it may have to
claim or recover in any litigation arising under the Financing Agreements, any
special, exemplary, punitive or consequential damages or any damages other than,
or in addition to, actual damages.
(d) Each
party hereto (i) certifies that no representative, Lender or attorney of the
Lender has represented, expressly or otherwise, that the Lender would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that it has been induced to enter into this Agreement or the other
Financing Agreements, as applicable, by, among other things, the mutual waivers
and certifications herein.
20. Binding Agreement;
Assignments. This Agreement, and the terms, covenants and
conditions hereof, shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower
shall not be permitted to assign this Agreement or any interest herein or in the
Collateral, or any part thereof, or any cash or property held by the Lender as
Collateral under this Agreement, except as contemplated by this Agreement or the
Debenture.
21. Applicable
Law. This Agreement shall be construed in accordance with and
governed by the law of the State of Delaware (other
than the conflicts of laws principles thereof) except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular collateral are governed by the laws of
Mexico with respect to any mining concessions.
22. Notices. All
communications and notices hereunder shall be in writing and given as provided
in the Debenture.
23. Severability. In
the event any one or more of the provisions contained in this Agreement should
be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
24. Section
Headings. Section headings used herein are for convenience
only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
25. Counterparts; Facsimile
Signatures. This Agreement may be executed in counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute but one contract, and shall become effective when copies hereof
which, when taken together, bear the signatures of each of the parties hereto
shall be delivered to the Lender. Delivery of an executed counterpart
of a signature page to this Agreement by telecopier shall be effective as
delivery of a manually executed signature page hereto.
26. Termination. This
Agreement shall terminate when (a) all the Obligations have been fully and
indefeasibly paid in immediately available funds and (b) the Debenture has been
terminated.
27. Debenture. The
Borrower acknowledges that this Agreement does not and shall not be construed as
requiring the Lender to enter into the Debenture or make the Loan.
.
[SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto
have duly executed this Security Agreement as of the day and year first above
written.
Paramount Gold and Silver
Corp.
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
Schedule
I
The
Collateral
