Document:

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                                                                   EXHIBIT 4.60

                               SECURITY AGREEMENT

THIS SECURITY AGREEMENT made the 26th day of November, 2004

FROM:

          FALLS MOUNTAIN COAL INC.,
          a company incorporated under the laws of British Columbia
          and having its head office at
          Suite 501 - 535 Thurlow Street, Vancouver, British Columbia, V6E 3L2

          ("Falls Mountain")

AND

          PINE VALLEY COAL LTD.
          a corporation incorporated under the laws of Alberts
          and having its head office in British Columbia at
          Suite 501 - 535 Thurlow Street, Vancouver, British Columbia, V6E 3L2

          ("Pine Valley")

(Falls Mountain and Pine Valley are collectively referred to herein as the
"Debtor")

TO:

          THE ROCKSIDE FOUNDATION
          an Ohio non-profit corporation
          and having an address at 524 North Avenue, Suite 203
          New Rochelle, NY 10801-3410

          (the "Secured Party")

FOR VALUE RECEIVED, the Debtor covenants, agrees, warrants, represents,
acknowledges, and confirms to and with the Secured Party and creates and grants
the mortgages, charges, transfers, assignments and security interests as
follows:

1.   SECURITY INTEREST

As security for the payment and performance of the Obligations (as defined in
paragraph 3), the Debtor, subject to the exceptions set out in paragraph 2,
does:

1.1 Grant to the Secured Party a security interest in, and mortgages, charges,
transfers and assigns absolutely, all of the Debtor's present and after acquired
personal property, and all personal property in which the Debtor has rights, of
whatever nature or kind and wherever situate, including, without limitation, all
of the following now owned or in future owned or acquired by or on behalf of the
Debtor:
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     (a)  all goods, including:

          (i)  all inventory of whatever kind and wherever situate, including,
               without limitation, goods acquired or held for sale or lease or
               furnished or to be furnished under contracts of rental or
               service, all raw materials, work in progress, finished goods,
               returned goods, repossessed goods, and all packaging materials,
               supplies, and containers relating to or used or consumed in
               connection with any of the foregoing (collectively the
               "Inventory");

          (ii) all equipment of whatever kind and wherever situate, including,
               without limitation, all machinery, tools, apparatus, plant,
               fixtures, furniture, furnishings, chattels, motor vehicles,
               vessels, and other tangible personal property of whatever nature
               or kind (collectively the "Equipment");

     (b)  all book accounts and book debts and generally all accounts, debts,
          dues, claims, choses in action, and demands of every nature and kind
          however arising or secured including letters of credit and advices of
          credit, which are now due, owing, or accruing, or growing due to, or
          owned by, or which may in future become due, owing, or accruing, or
          growing due to, or owned by the Debtor (the "Accounts");

     (c)  all contractual rights, equipment leases, insurance claims, licences,
          goodwill, patents, trademarks, trade names, copyrights, and other
          industrial or intellectual property of the Debtor or in which the
          Debtor has an interest, all other choses in action of the Debtor of
          every kind which now are, or which may in future be, due or owing to
          or owned by the Debtor, and all other intangible property of the
          Debtor which is not Accounts, Chattel Paper, Instruments, Documents of
          Title, Securities, or Money;

     (d)  all Money;

     (e)  all property described in Schedule A to this Agreement, or in any
          schedule now or at any time in future annexed to this Agreement or
          agreed to form part of this Agreement;

     (f)  the undertaking of the Debtor;

     (g)  all Chattel Paper, Documents of Title (whether negotiable or not),
          Instruments, Intangibles, and Securities now owned or in future owned
          or acquired by or on behalf of the Debtor (including those returned to
          or repossessed by the Debtor) and all other goods of the Debtor that
          are not Equipment, Inventory, or Accounts;

     (h)  all proceeds, renewals and accretions and substitutions of any of the
          foregoing; and

     (i)  all deeds, documents, writings, papers, books of account and other
          books and electronically recorded data relating to any of the
          foregoing or by which any of

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          the foregoing is or may in future be secured, evidenced, acknowledged
          or made payable;

1.2  Charge as and by way of a floating charge to and in favour of the Secured
     Party, and grant to the Secured Party a security interest, mortgage, and
     charge in and to:

     (a)  all the Debtor's right, title, and interest in and to all its
          presently owned or held and after acquired or held real, immovable,
          and leasehold property and all interests therein, and all easements,
          rights-of-way, privileges, benefits, licences, improvements, and
          rights whether connected therewith or appurtenant thereto or
          separately owned or held, including all structures, plant, and other
          fixtures, including without limitation the Coal Licenses and Coal
          Leases (collectively "Real Property"); and

     (b)  all property, assets and undertakings of the Debtor, both present and
          future, of whatever nature or kind and wherever situate, and all
          Proceeds thereof and therefrom,

other than any of its property, assets, and undertakings otherwise validly and
effectively subject to the charges and security interests in favour of the
Secured Party created under paragraph 1.1 of this Agreement. This charge
attaches immediately upon the Debtor acquiring any rights in any of that
property.

1.3 Mortgage and charge as and by way of a fixed and specific charge to and in
favour of the Secured Party, and assign and transfer to the Secured Party and
grant to the Secured Party, by way of mortgage, charge, assignment, and
transfer, a security interest in all of the Debtor's right, title, and interest,
both present and future, in and to all of its presently owned or held and after
acquired or held:

     (a)  coal leases, including, without limitation, the coal leases listed in
          Schedule B hereto, together with any renewals and replacements thereof
          (the "Coal Leases");

     (b)  coal licenses, including, without limitation, the coal licenses listed
          in Schedule B hereto, together with any renewals and replacements
          thereof (the "Coal Licenses");

     (c)  property which is or in future becomes a fixture, or

     (d)  property which constitutes a licence, quota, permit or other similar
          right or benefit, or crops.

1.4 The mortgages, charges, assignments, transfers, and security interests
created or granted under paragraphs 1.1, 1.2, and 1.3 of this Agreement are
collectively called the "Security Interest", and all property, assets,
interests, and undertakings (including Proceeds) subject to the Security
Interest or otherwise charged or secured by this Agreement or expressed to be
charged, assigned or transferred, or secured by any instruments supplemental to
this Agreement or in implementation of this Agreement are collectively called
the "Collateral".

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2.   EXCEPTIONS AND DEFINITIONS

The Security Interest granted by this Agreement shall not extend or apply to and
the Collateral shall not extend to the last day of the term of any lease or
agreement to lease real property, but upon the enforcement of the Security
Interest the Debtor shall stand possessed of such last day in trust to assign
and dispose thereof as the Secured Party shall direct.

The terms "Chattel Paper", "Document of Title", "Equipment", "Consumer Goods",
"Instrument", "Intangible", "Security", "Proceeds", "Inventory", "Accessions",
"Money", "financing statement", "financing change statement" and "verification
statement" shall, unless otherwise defined in this Agreement or otherwise
required by the context, be interpreted according to their respective meanings
as set out in the British Columbia Personal Property Security Act, as amended.

Any reference in this Agreement to "Collateral" shall, unless the context
otherwise requires, be deemed a reference to "Collateral or any part thereof.
The Collateral shall not include consumer goods of the Debtor.

The term "Proceeds", whenever used and interpreted as above, shall by way of
example include trade-ins, equipment, cash, bank accounts, notes, chattel paper,
goods, contract rights, accounts, and any other personal property or obligation
received when such collateral or proceeds are sold, exchanged, collected, or
otherwise disposed of. The term "licence" means any licence or similar right at
any time owned or held by the Debtor including without limitation a "licence" as
defined in the Act, and the meaning of the term "crops" whenever used in this
Agreement includes but is not limited to "crops" as defined in the Act.

"Lien" whenever used in this Agreement means any mortgage, consensual or
non-consensual lien, charge, pledge, hypothecation, security interest or other.
encumbrance or title retention agreement and any other agreement or arrangement
having substantially the same economic effect.

"Permitted Encumbrances" whenever used in this Agreement means:

     (a)  restrictions, easements, rights-of way, servitudes or other similar
          rights in land granted to or reserved by an persons or minor defects
          or irregularities of title;

     (b)  security given to a public utility (other than a rail transportation
          utility or an electrical utility) in connection with the operations of
          the Debtor in the ordinary course of its business;

     (c)  the reservations, limitations, provisos and conditions, if any,
          expressed in any original grants from the Crown;

     (d)  Purchase Money Obligations, including without limitation equipment,
          leases;

     (e)  the charges or security interests, if any, shown in Schedule C to this
          Agreement;

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     (f)  Liens in favour of the British Columbia Ministry of Energy and Mines
          (the "Ministry") over reclamation security deposits held on deposit
          with HSBC Mortgage Corporation or other deposit institutions from time
          to time pursuant to the requirements of Reclamation Permit C-153.

"Purchase Money Obligations" whenever used in this Agreement means:

     (a)  any Lien existing and assumed at the time of acquisition by the Debtor
          on any property acquired in an arm's length transaction;

     (b)  any Lien on any property acquired by the Debtor in an arm's length
          transaction to secure the whole or any part of the purchase price of
          such property or monies borrowed to pay such purchase price;

     (c)  any extensions, renewals, replacements or substitutions of any Lien or
          other security interest described in (a) and (b) above provided that
          the principal amount of the indebtedness secured thereby outstanding
          on the date of the extension, renewal, replacement or substitution is
          not increased to an amount greater than the amount outstanding on the
          date the mortgage, lien, charge or other encumbrance was first granted
          or assumed on the property,

provided that the aggregate amounts due under any Lien referred to above do not
exceed the cost of the asset encumbered by any such Lien and any such Liens are
secured only by the property so owned or acquired and not by any other assets
and may be discharged or caused to be discharged upon payment in full of the
amount permitted to be secured under (a) to (c) inclusive above.

3.   OBLIGATIONS SECURED

This Agreement and the Security Interest are in addition to and not in
substitution for any other security interest now or in future held by the
Secured Party from the Debtor or from any other person and shall be general and
continuing security for the payment of all indebtedness and liability of the
Debtor to the Secured Party (including interest thereon), present or future,
absolute or contingent, joint or several, direct or indirect, matured or not,
extended or renewed, wherever and however incurred, and any ultimate balance
thereof, and whether the Debtor be bound alone or with another or others, and
whether as principal, trustee, or surety, and for the performance and
satisfaction of all obligations of the Debtor to the Secured Party, whether or
not contained in this Agreement, and whether the Debtor be bound alone or with
another or others (all of which indebtedness, liability, and obligations are
collectively the "Obligations").

4.   PROHIBITIONS

Without the prior written consent of the Secured Party, the Debtor shall not and
shall not have power to:

     (a)  grant, create, or permit to be created any security interest in,
          charge, encumbrance, or lien over, or claim against, any of its
          property, assets, or undertakings that ranks or could rank in priority
          to or pari passu with the Security Interest other than Permitted
          Encumbrances; or

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     (b)  grant, sell, or otherwise assign its Chattel Paper.

5.   ATTACHMENT

The Debtor acknowledges and confirms that:

     (a)  there is no intention to delay the time of attachment of the Security
          Interest created by this Agreement, and the Security Interest shall
          attach at the earliest time permissible under the laws governing this
          Agreement;

     (b)  that value has been given; and

     (c)  that the Debtor has (or in the case of any after acquired property,
          will have at the time of acquisition) rights in the Collateral.

6.   REPRESENTATIONS AND WARRANTIES

6.1 The Debtor represents and warrants to the Secured Party, and so long as this
Security Agreement remains in effect shall be deemed to continuously represent
and warrant, that:

     (a)  if the Debtor is a company or a partnership, this Agreement is granted
          in accordance with resolutions of the directors (and of the
          shareholders as applicable) or of the partners, as the case may be, of
          the Debtor, and that all other matters and things have been done and
          performed so as to authorize and make the execution and delivery of
          this Agreement, and the performance of the Debtor's obligations
          hereunder, legal, valid, and binding;

     (b)  the Debtor lawfully owns and possesses all presently held Collateral
          and has good title thereto, free from all security interests, charges,
          encumbrances, liens, and claims, save only Permitted Encumbrances and
          those consented to in writing by the Secured Party, and the Debtor has
          good right and lawful authority to grant a security interest in the
          Collateral as provided by this Agreement; and

     (c)  for goods constituting Collateral, the Debtor has in this Agreement or
          elsewhere fully and accurately disclosed to the Secured Party the
          locations thereof and of the business operations and records of the
          Debtor.

7.   COVENANTS OF THE DEBTOR

7.1 The Debtor covenants with the Secured Party that at all times while this
Agreement remains in effect the Debtor shall:

     (a)  defend the title to the Collateral for the benefit of the Secured
          Party against the claims and demands of all persons, other than
          holders of the Permitted Encumbrances;

     (b)  fully and effectually maintain and keep maintained the validity and
          effectiveness of the Security Interest;

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     (c)  maintain the Collateral in good order and repair taking into account
          its age and condition;

     (d)  forthwith pay:

          (i)  all taxes, assessments, rates, duties, levies, government fees,
               claims, dues, and other charges of every nature that may be
               lawfully levied, assessed, or imposed upon it or the Collateral
               when due, unless the Debtor shall in good faith contest its
               obligations so to pay and shall furnish such security as the
               Secured Party may require; and

          (ii) all security interests, charges, encumbrances, liens and claims
               that rank or could in any event rank in priority to the Security
               Interest, other than Permitted Encumbrances and those consented
               to in writing by the Secured Party;

     (e)  forthwith reimburse and indemnify the Secured Party for all costs,
          charges, expenses, and legal fees and disbursements that may be
          incurred by the Secured Party in:

          (i)  taking, recovering, keeping possession of, and insuring the
               Collateral; and

          (ii) all other actions and proceedings taken in connection with the
               preservation of the Collateral and the enforcement of this
               Agreement and of any other Security Interest held by the Secured
               Party as security for the Obligations;

     (f)  at the Secured Party's request at any time and from time to time,
          execute and deliver such further and other documents and instruments
          and do all acts and things as the Secured Party reasonably requires in
          order to confirm and perfect, and maintain perfection of, the Security
          Interest in favour of the Secured Party upon any of the Collateral;

     (g)  notify the Secured Party promptly of:

          (i)  any change in the information contained in this Agreement
               relating to the Debtor, its address, its business, or the
               Collateral, including without limitation any change of name or
               address of the Debtor and any change in location of any
               Collateral;

          (ii) the details of any material acquisition of Collateral;

          (iii) any material loss or damage to the Collateral;

          (iv) any material default by any account debtor in payment or other
               performance of his or her obligations to the Debtor with respect
               to any Accounts;

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          (v)  the return to or repossession by the Debtor of the Collateral
               where such return or repossession of the Collateral is material
               in relation to the business of the Debtor; and

          (vi) the details of any claims or litigation affecting the Debtor or
               the Collateral;

     (h)  prevent the Collateral, other than Inventory sold, leased, or
          otherwise disposed of as permitted by this Agreement, from being or
          becoming an accession to other property not covered by this Agreement;

     (i)  permit the Secured Party and its representatives, at all reasonable
          times, access to all its property, assets, and undertakings and to all
          its books of account and records reasonably required for the purpose
          of inspection, and render all assistance necessary for such
          inspection; and

     (j)  deliver to the Secured Party from time to time promptly upon request:

          (i)  all policies and certificates of insurance relating to the
               Collateral; and

          (ii) any information concerning the Collateral, the Debtor, and the
               Debtor's business and affairs as the Secured Party may reasonably
               require; and

     (k)  carry on and conduct the business of the Debtor in a proper and
          efficient manner and so as to protect and preserve the Collateral and
          to keep, in accordance with generally accepted accounting principles,
          consistently applied, proper books of account for the Debtor's
          business as well as accurate and complete records concerning the
          Collateral;

7.2 The Debtor covenants that at all times while this Agreement remains in
effect, without the prior written consent of the Secured Party, it shall not

     (a)  declare or pay any dividends;

     (b)  purchase or redeem any of its shares or otherwise reduce its share
          capital;

     (c)  become guarantor of any obligation other than with respect to
          obligations of affiliates of the Debtor;

     (d)  become an endorser of any obligation or otherwise become liable upon
          any note or other obligation other than bills of exchange deposited to
          any bank accounts of the Debtor, or

     (e)  become involved in or undertake any business or undertaking other than
          the development and operation of the Willow Creek Coal Project.

7.3 Except as provided in this Agreement, without the prior written consent of
the Secured Party, the Debtor Shall not:

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     (a)  sell, lease, or otherwise dispose of the Collateral;

     (b)  release, surrender, or abandon possession of the Collateral; or

     (c)  move or transfer the Collateral from the jurisdiction or jurisdictions
          in which the Security Interest has been perfected.

7.4 Provided that the Debtor is not in default under this Agreement, at any time
without the consent of the Secured Party the Debtor may lease, sell, license,
consign, or otherwise deal with items of Inventory in the ordinary course of its
business and for the purposes of carrying on its business.

7.5 The Debtor covenants that to the extent that any monies, credit, or other
consideration provided by, the Secured Party has enabled the Debtor to purchase
or acquire rights in any personal property or assets, the Security Interest is
and shall remain a purchase money security interest.

8.   INSURANCE

8.1  The Debtor covenants that at all times while this Agreement is in effect
     the Debtor shall:

     (a)  maintain or cause to be maintained insurance on the Collateral with an
          insurer, of the kinds, for amounts and payable to such person or
          persons, all as the Secured Party may require acting reasonably, and
          in particular but without limitation maintain insurance on the
          Collateral to its full insurable value against loss or damage by fire
          including extended coverage endorsement, and in the case of motor
          vehicles and other mobile Collateral, maintain insurance against
          theft;

     (b)  cause the insurance policy or policies required under this Agreement
          to have as part thereof a mortgage clause showing the Secured Party as
          a first loss payee (together with a secured lender ranking pari passu
          with the Secured Party, if applicable); and

     (c)  pay all premiums in connection with such insurance, and deliver all
          such policies to the Secured Party, if it so requires.

8.2 If proceeds of any insurance required under this Agreement become payable,
the Secured Party shall release any such insurance proceeds to the Debtor for
the purpose of repairing, replacing, or rebuilding, but any release of insurance
proceeds to the Debtor shall not operate as a payment on account of the
Obligations or in any way affect this Agreement. If the Debtor does not intend
to repair, replace or rebuild with the insurance proceeds, then the Secured
Party may, in its absolute discretion, apply those proceeds to such part or
parts of the Obligations as the Secured Party' may see fit.

8.3 The Debtor shall forthwith, on the happening of loss or damage to the
Collateral, notify the Secured Party thereof and furnish to the insurer at the
Debtor's expense any necessary proof and do any necessary act to obtain payment
of the insurance proceeds, but nothing contained in

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this Agreement shall limit the Secured Party's right after default by the
Debtor, to submit to the insurer a proof of loss on its own behalf.

8.4 The Debtor irrevocably authorizes and directs the insurer under any policy
of insurance required under this Agreement to include the name of the Secured
Party as a loss payee on any cheque or draft that may be issued with respect to
a claim under and by virtue of such insurance, and the production by the Secured
Party to any insurer of a certified copy of this Agreement shall be its full and
complete authority for so doing.

8.5 If the Debtor fails to maintain insurance as required by this Agreement, the
Secured Party may, but shall not be, obliged to, maintain or effect such
insurance coverage, or so much thereof as the Secured Party considers necessary
for its protection.

9.   USE AND VERIFICATION OF COLLATERAL

Subject to compliance with the Debtor's covenants contained in this Agreement
and compliance with paragraph 11 of this Agreement, the Debtor may, until
default, possess, operate, collect, use and enjoy, and* deal with the Collateral
in the ordinary course of the Debtor's business in any manner not inconsistent
with the provisions of this Agreement; provided always that the Secured Party
shall have the right at any time and from time to time to verify the existence
and state of the Collateral in any manner the Secured Party may consider
appropriate. The Debtor agrees to furnish all assistance and information and to
perform all such acts as the Secured Party may reasonably request in connection
therewith, and for such purpose to grant to the Secured Party or its agents
access to all places where the Collateral may be located and to all premises
occupied by the Debtor.

10.  SECURITIES

If Collateral at any time includes Securities, then upon a default, the Debtor
authorizes the Secured Party to transfer the same or any part of them into its
own name or that of its nominee(s) so that the Secured Party or its nominee(s)
may appear on record as the sole owner of them. After default, the Debtor waives
all rights to receive any notices or communications received by the Secured
Party or its nominee(s) as such registered owner and agrees that no proxy issued
by the Secured Party to the Debtor or its order as aforesaid shall thereafter be
effective.

11.  COLLECTION OF DEBTS

After default under this Agreement, without notice to the Debtor, the Secured
Party may notify all or any account debtors of the Debtor of the Security
Interest and may also direct such account debtors to make all payments on
Collateral to the Secured Party. The Debtor acknowledges that after default
under this Agreement, any payments on or other proceeds of Collateral received
by the Debtor from account debtors, whether before or after notification of this
Security Interest to account debtors, shall be received and held by the Debtor
in trust for the Secured Party and shall be turned over to the Secured Party
upon request. This includes interest on deferred payment contracts, and the
payments themselves, and lease payments, if any.

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12.  INCOME FROM AND INTEREST ON COLLATERAL

12.1 Until default, the Debtor reserves the right to receive any money
constituting income from or interest on Collateral and if the Secured Party
receives any such money before default, the Secured Party shall pay it promptly
to the Debtor.

12.2 After default, the Debtor shall not request or receive any money
constituting income from or interest on Collateral and if the Debtor receives
any such money in any event, the Debtor shall hold that money in trust for the
Secured Party and shall pay it promptly to the Secured Party.

13.  INCREASES, PROFITS, PAYMENTS, OR DISTRIBUTIONS

13.1 After a default has occurred, the Debtor authorizes the Secured Party:

     (a)  to receive any increase in or profits on the Collateral (other than
          money) and to hold the same as part of the Collateral. Money so
          received shall be treated as income for the purposes of paragraph 12
          of this Agreement and dealt with accordingly, and

     (b)  to receive any payment or distribution upon redemption or retirement
          or upon dissolution and liquidation of the issuer of Collateral; to
          surrender such Collateral in exchange therefore; and to hold any such
          payment or distribution as part of Collateral.

13.2 If the Debtor receives any such increase or profits (other than money) or
payments or distributions after a default under this Agreement, the Debtor shall
deliver the same promptly to the Secured Party to be held by the Secured Party
as provided in this Agreement.

14.  DISPOSITION OF MONEYS

Subject to any applicable requirements of the Act, all monies collected or
received by the Secured Party under. or in exercise of any right it possesses
with respect lo Collateral shall be applied on account of the Obligations in
such manner as the Secured Party deems best, without prejudice to the liability
of the Debtor or the rights of the Secured Party under this Agreement, and any
surplus shall be accounted for as required by law.

15.  PERFORMANCE OF OBLIGATIONS

If the Debtor fails to perform any of its obligations under this Agreement, the
Secured Party may, but shall not be obliged to, perform any or all of those
obligations without prejudice to any other rights and remedies of the Secured
Party under this Agreement, and any payments made and any costs, charges,
expenses, and legal fees and disbursements (on a solicitor and own client basis)
incurred in connection therewith shall be payable by the Debtor to the Secured
Party forthwith with interest until paid at the highest rate borne by any of the
Obligations and such amounts shall be secured by this Agreement and rank prior
to all claims subsequent to this Agreement.

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16.  DEFAULT

16.1 Unless waived by the Secured Party, it shall be an event of default
("default") under this Agreement and the security constituted by this Agreement
shall immediately become enforceable if:

     (a)  any material term, covenant, or representation of this Agreement or
          the Credit Facility Agreement, entitled as such, among, inter alia,
          the Debtor and the Secured Party, is breached, unless such default is
          remedied within 14 days of receipt of notice thereof by the Debtor; or

     (b)  any amount owed to the Secured Party is not paid when due unless such
          default is remedied within 14 days of receipt of notice thereof by the
          Debtor; or

     (c)  the Debtor defaults or threatens to default in payment when due or
          performance of any of the Obligations unless such default is remedied
          within 14 days of receipt of notice thereof by the Debtor; or

     (d)  the Debtor or any guarantor of the Debtor declares itself to be
          insolvent, makes an assignment for the benefit of its creditors, is
          declared bankrupt, declares bankruptcy, makes a proposal, or otherwise
          takes advantage of provisions under the Bankruptcy and Insolvency Act,
          the Companies' Creditors Arrangement Act, or similar legislation in
          any jurisdiction, or fails to pay its debts generally as they become
          due; or

     (e)  a receiver or receiver-manager is appointed; or

     (f)  the Debtor ceases to carry on all or a substantial part of its
          business; or

     (g)  distress, execution, or seizure of any of the Collateral occurs unless
          the Debtor is in good faith contesting such distress, execution, or
          seizure and the Debtor has provided security in respect thereof
          satisfactory to the Secured Party; or

     (h)  if the Debtor is a corporation, there is a change of voting control
          without the Secured Party's consent; or

     (i)  the Debtor changes its name or amalgamates or merges without the
          Secured Party's consent; or

     (j)  the Debtor allows any hazardous materials to be brought upon any lands
          or premises occupied by the Debtor other than in the normal course of
          business or does not deal with such materials in accordance with
          applicable laws;

16.2 In accordance with the British Columbia Property Law Act, the doctrine of
consolidation applies to this Agreement.

16.3 It shall be an event of default under this Agreement and the security
constituted by this Agreement shall immediately become enforceable if any
material term, covenant, or

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representation in any other agreement, contract, or other commitment of the
Debtor to the Secured Party, Marubeni Corporation or Mitsui Matsushima Canada
Ltd. is breached or if default should occur under the same.

17.  ACCELERATION

The Secured Party, in its sole discretion, may declare all or any part of the
Obligations that are not by their terms payable on demand to be immediately due
and payable in the event of any default. The provisions of this paragraph do not
and are not intended to affect in any way any rights of the Secured Party with
respect to any Obligations that may now or in future be payable on demand.

18.  ENFORCEMENT

18.1 Upon any default under this Agreement, the security constituted by this
Agreement shall immediately become enforceable, and any floating charge will
immediately attach the Real Property and Collateral. To enforce and realize on
the security constituted by this Agreement, the Secured Party may take any
action permitted by law or in equity, as it may deem expedient, and in
particular, but without limiting the generality of the foregoing, the Secured
Party may do any of the following:

     (a)  appoint by instrument a receiver, receiver and manager, or
          receiver-manager (the person so appointed is called the "Receiver") of
          the Collateral, with or without bond as the Secured Party may
          determine, and from time to time in its absolute discretion remove
          such Receiver and appoint another in its stead;

     (b)  enter upon any premises of the Debtor and take possession of the
          Collateral with power to exclude the Debtor, its agents, and its
          servants from those premises, without becoming liable as a mortgagee
          in possession;

     (c)  preserve, protect, and maintain the Collateral and make such
          replacements and repairs and additions as the Secured Party may, deem
          advisable;

     (d)  sell, lease, or otherwise dispose of all or any part of the
          Collateral, whether by public or private sale or lease or otherwise,
          in such manner, at such price as can be reasonably obtained, and on
          such terms as to credit and with such conditions of sale and
          stipulations as to title or conveyance or evidence of title or
          otherwise as to the Secured Party may seem reasonable, provided that
          if any sale, lease, or other -disposition is on credit, the Debtor
          shall not be entitled to be credited with the proceeds of any such
          sale, lease, or other disposition until the monies therefor are
          actually received; and

     (e)  exercise all of the rights and remedies of a secured party under the
          Act.

18.2 A Receiver appointed under this Agreement shall be the agent of the Debtor
and not of the Secured Party, and the Secured Party shall not be in any way
responsible for any misconduct, negligence or nonfeasance on the part of any
Receiver, its servants, agents, or employees. A Receiver shall, to the extent
permitted by law or to such lesser extent permitted by its

                                       13
<PAGE>
appointment, have all the powers of the Secured Party under this Agreement, and
in addition shall have power to carry on the business of the Debtor and for such
purpose to enter upon, use, and occupy all premises owned or occupied by the
Debtor in which Collateral may be situate, maintain Collateral upon such
premises, use, Collateral directly or indirectly in carrying on the Debtor's
business, and from time to time borrow money either unsecured or secured by a
security interest in any of the Collateral.

18.3 Subject to the claims, if any, of the creditors of the Debtor ranking in
priority to this Agreement, all amounts realized from the disposition of
Collateral under this Agreement shall be applied as the Secured Party, in its
absolute discretion, may direct or as follows:

     (a)  in payment of all costs, charges, and expenses (including legal fees
          and disbursements on a solicitor and own client basis) incurred by the
          Secured Party in connection with or incidental to:

          (i)  the exercise by the Secured Party of all or any of the powers
               granted to it under the Agreement; and

          (ii) the appointment of the Receiver and the exercise by the Receiver
               of all or any of the powers granted to it under this Agreement,
               including the Receiver's reasonable remuneration and all
               outgoings properly payable by the Receiver excluding the
               Receiver's borrowings;

     (b)  in payment of any sum or sums borrowed by the Receiver from the
          Secured Party and interest thereon if such sum or sums are secured by
          the Collateral;

     (c)  in or toward payment to the Secured Party of all principal and other
          monies (except interest) due in respect of the Obligations;

     (d)  in or toward payment to the Secured Party of all interest remaining
          unpaid in respect of the Obligations; and

     (e)  in or toward payment of any sum or sums borrowed by the Receiver from
          any financial institution, corporation, or person other than the
          Secured Party, and interest thereon if such sum or sums are secured by
          the Collateral.

Subject to applicable law and the claims, if any, of other creditors of the
Debtor, any surplus shall be paid to the Debtor.

18.4 The Debtor agrees that the Secured Party may exercise its rights and
remedies under this Agreement immediately upon default, except as may be
otherwise provided in the Act, and the Debtor expressly confirms that, except as
may be otherwise provided in this Agreement or in the Act, the Secured Party has
not given any covenant, express or implied, and is under no obligation to allow
the Debtor any period of time to remedy any default before the Secured Party
exercises its rights and remedies under this Agreement.

                                       14
<PAGE>
19. DEFICIENCY

If the amounts realized from the disposition of the Collateral are not
sufficient to pay the Obligations in full, the Debtor shall pay to the Secured
Party the amount of such deficiency immediately upon demand for the same.

20. RIGHTS CUMULATIVE

All rights and remedies of the Secured Party set, out in this Agreement are
cumulative, and no right or remedy contained in this Agreement is intended to be
exclusive but each shall be in addition to every other right or remedy contained
in this Agreement or in any existing or future security agreement or now or in
future existing at law, in equity or by statute, or under any other agreement
between the Debtor and the Secured Party that may be in effect from time to
time.

21. LIABILITY OF SECURED PARTY

The Secured Party shall not be responsible or liable for any debts contracted by
it, for damages to persons or property or for salaries or non-fulfillment of
contracts during any period when the Secured Party shall manage the Collateral
upon entry, as provided in this Agreement, nor shall the Secured Party be liable
to account as mortgagee in possession or for anything except actual receipts or
be liable for any loss on realization or for any default or omission for which a
mortgagee in possession may be liable, other than as, a result of the Secured
Party's misconduct or gross negligence. The Secured Party shall not be bound to
do, observe, or perform or to see to the observance or performance by the Debtor
of any obligations or covenants imposed upon the Debtor, nor shall the Secured
Party, in the case of Securities, Instruments, or Chattel Paper, be obliged to
preserve rights against other persons, nor shall the Secured Party be obliged to
keep any of the Collateral identifiable.

22. APPOINTMENT OF ATTORNEY AND DEED

22.1 The Debtor irrevocably appoints the Secured, Party or the Receiver, as the
case may be, with full power of substitution, to be the attorney of the Debtor
for and in the name of the Debtor to sign, endorse, or execute under seal or
otherwise any deeds, documents, transfers, cheques, instruments, demands,
assignments, assurances, or consents that the Debtor is obliged to sign,
endorse, or execute, and generally to use the name of the Debtor and to do all
things as may be necessary or incidental to the exercise of all or any of the
powers conferred on the Secured Party or the Receiver after a default under this
Agreement, as the case may be, under this Agreement.

22.2 Whether or not the Debtor attaches its corporate seal, if a corporation,
this Agreement is intended to be and is deemed to be a deed given under seal.

23. ACCOUNTS

Notwithstanding any other provision of this Agreement, the Secured Party may
collect, realize, sell, or otherwise deal with the Accounts or any part of them
in such manner, upon such terms and conditions, and at such time or times, after
default, as may seem to it advisable, and without notice to the Debtor, except
in the case of disposition after default and then subject to the

                                       15
<PAGE>
provisions of Part 5 of the Act. All monies or other forms of payment received
by the Debtor in payment of any Account shall be received and held by the Debtor
in trust for the Secured Party.

24. APPROPRIATION OF PAYMENTS

Any and all payments made in respect of the Obligations from time to time and
monies realized from any security interests held therefor (including monies
collected in accordance with or realized on any enforcement of this Agreement)
may be applied to such part or parts of the Obligations as the Secured Party may
see fit, and the Secured Party may at all times and from time to time change any
appropriation as the Secured Party may see fit.

25. LIABILITY TO ADVANCE

None of the preparation, execution, perfection, and registration of this
Agreement or notice of this Agreement or the advance of any monies shall bind
the Secured Party to make any advance or loan or further advance or loan, or
renew any note or extend any time for payment of any indebtedness or liability
of the Debtor to the Secured Party.

26. WAIVER

The Secured Party may from time to time and at any time waive in whole or in
part any right, benefit, or default under any paragraph of this Agreement but
any such waiver shall only be effective if made in writing and such waiver of
any right, benefit, or default on any occasion shall be deemed not to be a
waiver of any such right, benefit, or default thereafter, or of any other
right,, benefit or default, as the case may be, and no delay or omission by the
Secured Party in exercising any right or remedy under this Agreement or with
respect to any default shall operate as a waiver thereof or of any other right
or remedy.

27. NOTICE

Any notice, demand, or other communication required or permitted to be given
under this Agreement shall be effectually made or given if delivered by prepaid
private courier or by facsimile transmission to the address of ea party set out
below:

TO THE DEBTOR:

     Falls Mountain Coal Inc. and Pine Valley Coal Ltd.
     Suite 501 - 535 Thurlow Street
     Vancouver BC, V6E 3L2

     Facsimile: 604-682-4698

                                       16
<PAGE>
TO THE SECURED PARTY:

     The Rockside Foundation
     524 North Avenue, Suite 203
     New Rochelle, NY 10801-3410

     Facsimile: 914-632-5502

or to such other address or facsimile number as either party may designate in
the manner set out above. Any notice, demand, or other communication shall be
deemed to have been given and received on the day of prepaid private courier
delivery or facsimile transmission.

28. EXTENSIONS

The Secured Party may grant extensions of time and other indulgences, take and
give up security, accept compositions, compound, compromise, settle, grant
releases and discharges, refrain from perfecting or maintaining perfection of
the Security Interest, and otherwise deal with the Debtor, account debtors of
the Debtor, sureties, and others and with the Collateral, the Security Interest,
and other security interests as the Secured Party sees fit without prejudice to
the liability of the Debtor or the Secured Party's right to hold and realize on
the security constituted by this Agreement.

29. NO MERGER

This Agreement shall not operate to create any merger or discharge of any of the
Obligations, or of any assignment, transfer, guarantee, lien, mortgage,
contract, promissory note, bill of exchange, or security interest of any form
held or which may in future be held by the Secured Party from the Debtor or from
any other person. The taking of a judgment with respect to any of the
Obligations shall not operate as a merger of any of the covenants contained in
this Agreement.

30. ASSIGNMENT

The Secured Party may, upon giving prior notice to the Debtor, assign, transfer,
or grant a security interest in this Agreement and the Security Interest. The
Debtor expressly agrees that the assignee, transferee, or secured party, as the
case may be, shall have all of the Secured Party's rights and remedies under
this Agreement.

31. SATISFACTION AND DISCHARGE

Any partial payment or satisfaction of the Obligations, or any ceasing by the
Debtor to be indebted to the Secured Party, shall be deemed not to be a
redemption or discharge of this Agreement. The Debtor shall be entitled to a
release and discharge of this Agreement upon full payment and satisfaction of
all Obligations and upon written request by the Debtor and payment to the
Secured Party of all costs, charges, expenses, and legal fees and disbursements
(on a solicitor and own client basis) incurred by the Secured Party in
connection with the Obligations and such release and discharge.

                                       17
<PAGE>
The Secured Party agrees that if the Debtor arranges for a irrevocable letter of
credit or letter of guarantee on terms and from an issuer acceptable to the
Secured Party, to be issued in favour of the Secured Party in an amount
sufficient to satisfy the Obligations and on terms that provide for the complete
discharge of the Obligations, the Secured Party will, at the Debtor's expense,
release and discharge the Security Interest.

32. ENUREMENT

This Agreement shall enure to the benefit of and be binding upon the parties and
their respective heirs, executors, personal representatives, successors, and
permitted assigns.

33. INTERPRETATION

33.1 In this Agreement:

     (a)  "Debtor" and the personal pronoun "it" or "its" and any verb relating
          thereto and used therewith shall be read and construed as required by
          and in accordance with the context in which such words are used,
          depending upon whether the Debtor is one or more individuals,
          corporations, or partnerships and, if more than one, shall apply to
          and be binding upon each of them jointly and severally;

     (b)  "Act" means the British Columbia Personal Property Security Act and
          all regulations thereunder as amended;

33.2 Words and expressions used in this Agreement that have been defined in the
Act shall be interpreted in accordance with their respective meanings given in
the Act, whether expressed in this Agreement with or without initial capital
letters and whether in the singular or the plural, unless otherwise defined in
this Agreement or unless the context otherwise requires, and, wherever the
context so requires, in this Agreement the singular shall be read as if the
plural were expressed, and vice-versa, and the provisions of this Agreement
shall be read with all grammatical changes necessary dependent upon the person
referred to being a male, female, firm, or corporation.

33.3 Should any provision of this Agreement be declared or held invalid or
unenforceable in whole or in part or against or, with respect to the Debtor by a
court of competent jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of any or all of the remaining provisions
of this Agreement, which shall continue in full force and effect and be
construed as if this Agreement had been executed without the invalid or
unenforceable provision.

33.4 The headings of the paragraphs of this Agreement have, been inserted for
reference only and do not define, limit, alter, or. enlarge the meaning of any
provision of this Agreement.

33.5 This Agreement shall be governed by the laws of British Columbia.

34. MISCELLANEOUS

34.1 The Debtor authorizes the Secured Party to file such financing statements,
financing change statements, and other documents, and d such acts, matters, and
things as the Secured

                                       18
<PAGE>
Party may deem appropriate, to perfect on an ongoing basis and continue the
Security Interest, to protect and preserve the Collateral, and to realize upon
the Security Interest.

34.2 The Debtor waives protest of any Instrument constituting Collateral at
anytime held by the Secured Party on which the Debtor is any way liable and,
subject to the provisions of the Act, notice of any other action taken by the
Secured Party.

34.3 The Debtor covenants that it shall not amalgamate with any other company or
entity without first obtaining the written consent of the Secured Party. The
Debtor acknowledges and agrees that if it amalgamates with any other company or
companies, then it is the intention of the parties that the term "Debtor" when
used in this Agreement shall apply to each of the amalgamating companies and to
the amalgamated company, so that the Security Interest granted by this
Agreement:

     (a)  shall extend to "Collateral" (as that term is defined in this
          Agreement) owned by each of the amalgamating companies and the
          amalgamated company at the time of amalgamation and to any
          "Collateral" owned or acquired by the amalgamated company thereafter,
          and

     (b)  shall secure the "Obligations" (as that term is defined in this
          Agreement) of each of the amalgamating companies and the amalgamated
          company to the Secured Party at the time of amalgamation and any
          "Obligations" of the amalgamated company to the Secured Party arising
          thereafter. The Security Interest shall attach to "Collateral" owned
          by each company amalgamating with the Debtor, and by the amalgamated
          company, at the time of amalgamation, and shall attach to any
          "Collateral" thereafter owned or acquired by the amalgamated company
          when that Collateral becomes owned or is acquired.

34.4 The Debtor authorizes the Secured Party to provide a copy of this Agreement
and such other information and documents specified under the Act to any person
entitled under the Act to demand and receive them.

35. COPY OF AGREEMENT AND FINANCING STATEMENT

The Debtor:

     (a)  acknowledges receiving a copy of this 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, issued, or obtained at any time in respect of this
          Agreement.

                                       19
<PAGE>
IN WITNESS WHEREOF the Debtor has executed this Security Agreement on the date
indicated below.

<TABLE>
<CAPTION>
     Officer Signature(s)        Y   M   D
     --------------------       --  --  --
<S>                             <C> <C> <C> <C>
                                            FALLS MOUNTAIN COAL INC.
                                            by its authorized signatory(ies)

                                            /s/ Mark Fields
                                            ------------------------------------
/s/ Christopher A. Horte        04  11  26  Name: Mark Fields
------------------------------
Name: Christopher A. Horte
Barrister & Solicitor
Bull, Housser & Tupper                      PINE VALLEY COAL LTD. By
3000 -1055 W. Georgia St.                   its authorized signatory(ies)
Vancouver, BC V6E3R3

                                04  11  26
/s/ Christopher A. Horte                    /s/ Mark Fields
 -----------------------------              ------------------------------------
Name: Christopher A. Horte                  Name: Mark Fields
</TABLE>

OFFICER CERTIFICATION

Your signature constitutes a representation that you are a solicitor, notary
public or other person authorized by the Evidence Act, R.S.B.C. 1979, c. 116, to
take affidavits for use in British Columbia and certifies the matters set out in
Part 5 of the Land Title Act as they pertain to the execution of this
instrument.

                                       20
<PAGE>
                                   SCHEDULE A

       DESCRIPTION AND SERIAL NUMBERS FOR EQUIPMENT AND LOCATION OF GOODS

1.   Suite 501 -- 535 Thurlow Street, Vancouver, British Columbia, V6E 3L2

2.   Willow Creek coal mine project site, approximately 45 km west of the Town
     of Chetwynd in the Peace River District of north east British Columbia

                                       21
<PAGE>
                                  SCHEDULE "B"
                          Coal Licenses and Coal Leases

Licensor: Provincial Crown

Tenure Holder: Pine Valley Coal Ltd. ("PVC") or Falls Mountain Coal Inc. ("FMC")

<TABLE>
<CAPTION>
COAL LICENSE                                                      STATUS
NO./ TENURE                                          WORK      (G.S. - GOOD      AREA
NUMBER         TENURE NO.   OWNER   MAP NUMBER   RECORDED TO     STANDING)       (HA)
------------   ----------   -----   ----------   -----------   ---------------   ----
<S>            <C>          <C>     <C>          <C>           <C>               <C>
8574           327312       PVC     093O09W      2005.03.31    G.S. 2005.03.31    293
8575           327313       PVC     093O09W      2005.03.31    G.S. 2005.03.31    293
8576           327314       PVC     093009E      2005.03.31    G.S. 2005.03.31    293
8577           327316       PVC     093O09W      2005.03.31    G.S. 2005.03.31    293
8578           327318       PVC     093O09W      2005.03.31    G.S. 2005.03.31    293
8579           327320       PVC     093O09W      2005.03.31    G.S. 2005.03.31    293
8580           327321       PVC     093O09W      2005.03.31    G.S. 2005.03.31    293
347214         347214       PVC     093O09W      2005.03.31    G.S. 2005.03.31    292
347215         347215       PVC     093009E      2005.03.31    G.S. 2005.03.31    293
347216         347216       PVC     093009E      2005.03.31    G.S. 2005.03.31    293
347217         347217       PVC     093009E      2005.03.31    G.S. 2005.03.31    293
347218         347218       PVC     093009E      2005.03.31    G.S. 2005.03.31    293
389294         389294       PVC     093009E      2005.03.31    G.S. 2005.03.31   6151
409343         409343       FMC     093O09W      2005.04.07    G.S. 2005.04.07    293
409344         409344       FMC     093O09W      2005.04.07    G.S. 2005.04.07    293
409345         409345       FMC     093O09W      2005.04.07    G.S. 2005.04.07    293
409346         409346       FMC     093O09W      2005.04.07    G.S. 2005.04.07    293
409347         409347       FMC     093O09W      2005.04.07    G.S. 2005.04.07    293
409348         409348       FMC     093O09W      2005.04.07    G.S. 2005.04.07    293
409349         409349       FMC     093O09W      2005.04.07    G.S. 2005.04.07    293
409350         409350       FMC     093O09W      2005.04.07    G.S. 2005.04.07    293
409351         409351       FMC     093O09W      2005.04.07    G.S. 2005.04.07    293
409352         409352       FMC     093O09W      2005.04.07    G.S. 2005.04.07    292
</TABLE>

Together with any other coal licenses and coal leases acquired after the date
hereof by Pine Valley Coal Ltd. or Falls Mountain Coal Inc.

                                       22
<PAGE>
                                  SCHEDULE "C"
                             Permitted Encumbrances

Please see attached British Columbia and Alberta personal property registry
searches.

                                       23<PAGE>
                                                                   EXHIBIT 4.61

     GENERAL SECURITY AGREEMENT - FLOATING CHARGE ON LAND

1.   SECURITY INTEREST

     (a) For value received, the undersigned ("Debtor") hereby grants to ROYAL
BANK OF CANADA ("RBC") a security interest, mortgage and charge (hereinafter
collectively referred to as the "Security Interest") as hereinafter provided:

          (i)  a security interest in the undertaking of Debtor and all of
               Debtor's present and after acquired personal property including,
               without limitation, all Goods (including all parts, accessories,
               attachments, special tools, additions and accessions thereto),
               Chattel Paper, Documents of Title (whether negotiable or not),
               Instruments, Intangibles, Money and Securities now owned or
               hereafter owned or acquired by or on behalf of Debtor (including
               such as may be returned to or repossessed by Debtor) and
               including, without limitation, all of the following now owned or
               hereafter owned or acquired by or on behalf of Debtor:

               (A)  all Inventory of whatever kind and wherever situate;

               (B)  all equipment (other than Inventory) of whatever kind and
                    wherever situate, including, without limitation, all
                    machinery, tools, apparatus, plant, furniture, fixtures and
                    vehicles of whatsoever nature or kind;

               (C)  all Accounts and book debts and generally all debts, dues,
                    claims, choses in action and demands of every nature and
                    kind howsoever arising or secured and whether arising in
                    connection with an interest in real or personal property or
                    otherwise, including letters of credit and advices of
                    credit, which are now due, owing or accruing or growing due
                    to or owned by or which may hereafter become due, owing or
                    accruing or growing due to or owned by Debtor ("Debts");

               (D)  all deeds, documents, writings, papers, books of account and
                    other books relating to or being records of Debts, Chattel
                    Paper or Documents of Title or by which such are or may
                    hereafter be secured, evidenced, acknowledged or made
                    payable;

               (E)  all contractual rights and insurance claims;

               (F)  all patents, industrial designs, trade-marks, trade secrets
                    and know-how including without limitation environmental
                    technology and biotechnology, confidential information,
                    trade-names, goodwill, copyrights, personality rights, plant
                    breeders' rights, integrated circuit topographies, software
                    and all other forms of intellectual and industrial property,
                    and any registrations and applications for
<PAGE>
                    registration of any of the foregoing (collectively
                    "Intellectual Property"); and

               (G)  all lists, records and files relating to debtors, customers,
                    clients and patients;

          (ii) a mortgage and charge as and by way of a floating charge, in all
               of Debtor's present and after acquired interest in property,
               assets and undertaking not secured in (i) above, including all
               real, immoveable and leaseholds property and all easements,
               rights-of-way, privileges, benefits, licences, improvements and
               rights whether connected therewith or appurtenant thereto or
               separately owned or held, including without limitation, all
               structures, plant and other fixtures now owned or hereafter owned
               or acquired by or on behalf of Debtor, and including without
               limitation all present and after acquired coal leases and coal
               licences, including without limitation the coal leases and
               licences listed in Schedule C, together with any renewals and
               replacements to them (hereinafter collectively referred to as
               "Real Property");

          (iii) a mortgage and charge as and by way of a fixed and specific
               charge, and a security interest in, all of Debtor's present and
               after acquired interest in coal leases and licences, including
               without limitation the coal leases and licences listed in
               Schedule C, together with any renewals and replacements to them;
               and

          (iv) a security interest in all property described in Schedule "C" or
               any replacement or additional Schedule "C" now or hereafter
               annexed hereto; and a security interest in all proceeds and
               renewals thereof, accretions thereto and substitution therefor,
               all of the foregoing being hereinafter collectively referred to
               as the "Collateral".

     (b) The Security Interest granted hereby shall not extend or apply to and
Collateral shall not include the last day of the term of any lease or agreement
therefor but upon the enforcement of the Security Interest Debtor shall stand
possessed of such last day in trust to assign the same to any person acquiring
such term.

     (c) The terms "Goods", "Chattel Paper", "Document of Title", "Instrument",
"Intangible", "Security", "proceeds", "Inventory", "equipment", "accession",
"Money", "Account", "financing statement" and "financing change statement"
whenever used herein shall be interpreted pursuant to their respective meanings
when used in the Personal Property Security Act of the province where the herein
mentioned branch of RBC is located, which Act, including amendments thereto and
any Act substituted therefor and amendments thereto is herein referred to as the
"P.P.S.A.". Provided always that the term "Goods" when used herein shall not
include "consumer goods" of Debtor as that term is defined in the P.P.S.A. and
the term "Inventory" when used herein shall include livestock and the young
thereof after conception and crops that become such during the term of this
Security Agreement. Any reference herein to "Collateral"
<PAGE>
shall, unless the context otherwise requires, be deemed a reference to
"collateral or any part thereof' .

2.   INDEBTEDNESS SECURED

     The Security Interest granted hereby secures payment and performance of any
and all obligation, indebtedness and liability of Debtor to RBC (including
interest thereon) present or future, direct or indirect, absolute or contingent,
matured or not, extended or renewed, wheresoever and howsoever incurred and any
ultimate unpaid balance thereof and whether the same is from time to time
reduced and thereafter increased or entirely extinguished and thereafter
incurred again and whether Debtor be bound alone or with another or others and
whether as principal or surety (hereinafter collectively called the
"Indebtedness"). If the Security Interest in the Collateral is not sufficient,
in the event of default, to satisfy all Indebtedness of Debtor, Debtor
acknowledges and agrees that Debtor shall continue to be liable for any
Indebtedness remaining outstanding and RBC shall be entitled to pursue full
payment thereof.

3.   REPRESENTATIONS AND WARRANTIES OF DEBTOR

     Debtor represents and warrants and so long as this Security Agreement
remains in effect shall be deemed to continuously represent and warrant that:

     (a) the Collateral is genuine and owned by Debtor free of all security
interests, mortgages, lien claims, charges, licences, leases, infringements by
third parties, encumbrances or other adverse claim or interests (hereinafter
collectively called "Encumbrances"), save for the Security Interest and those
Encumbrances shown on Schedule "A" or hereafter approved in writing by RBC,
prior to their creation or assumption;

     (b) all Intellectual Property applications and registrations are valid and
in good standing and Debtor is the owner of the applications and registrations;

     (c) each Debt, Chattel Paper and Instrument constituting Collateral is
enforceable in accordance with its terms against the party obligated to pay the
same (the "Account Debtor"), and the amount represented by Debtor to RBC from
time to time as owing by each Account Debtor or by all Account Debtors will be
the correct amount actually and unconditionally owing by such Account Debtor or
Account Debtors, except for normal cash discounts where applicable, and no
Account Debtor will have any defence, set off, claim or counterclaim against
Debtor which can be asserted against RBC, whether in any proceeding to enforce
Collateral or otherwise;

     (d) the locations specified in Schedule "B" as to business operations and
records are accurate and complete and with respect to Real Property and Goods
(including Inventory) constituting Collateral, the locations specified in
Schedule "B" are accurate and complete save for Goods in transit to such
locations and Inventory on lease or consignment; and all buildings, fixtures or
Goods about to become fixtures and all crops and all oil, gas or other minerals
to be extracted and all timber to be cut which forms part of the Collateral will
be situate at one of such locations;
<PAGE>
     (e) Debtor has disclosed to RBC all environmental and other matters which
could have a material effect on the financial condition or operations of Debtor;
and

     (f) the execution, delivery and performance of the obligations under this
Security Agreement and the creation of any security interest in or assignment
hereunder of Debtor's rights in the Collateral to RBC will not result in a
breach of any agreement to which Debtor is a party.

4.   COVENANTS OF THE DEBTOR

     So long as this Security Agreement remains in effect Debtor covenants and
agrees:

     (a) to defend the Collateral against the claims and demands of all other
parties claiming the same or an interest therein; to diligently initiate and
prosecute legal action against all infringers of Debtor's rights in Intellectual
Property; to take all reasonable action to keep the Collateral free from all
Encumbrances, except for the Security Interest, licences which are compulsory
under federal or provincial legislation and those shown in Schedule "A" or
hereafter approved in writing by RBC, prior to their creation or assumption; and
not to sell, exchange, transfer, assign, lease, license or otherwise dispose of
Collateral or any interest therein without the prior written consent of RBC;
provided always that, until default, Debtor may, in the ordinary course of
Debtor's business, sell or lease Inventory and, subject to Clause 7 hereof, use
Money available to Debtor;

     (b) to notify RBC promptly of:

          (i)  any change in the information contained herein or in the
               Schedules hereto relating to Debtor, Debtor's business or
               Collateral;

          (ii) the details of any significant acquisition of Collateral;

          (iii) the details of any claims or litigation affecting Debtor or
               Collateral;

          (iv) any loss or damage to Collateral;

          (v)  any default by any Account Debtor in payment or other performance
               of its obligations with respect to Collateral; and

          (vi) the return to or repossession by Debtor of Collateral;

     (c) to keep Collateral in good order, condition and repair and not to use
Collateral in violation of the provisions of this Security Agreement or any
other agreement relating to Collateral or any policy insuring Collateral or any
applicable statute, law, by-law, rule, regulation or ordinance; to keep all
agreements, registrations and applications relating to Intellectual Property and
intellectual property used by Debtor in its business in good standing and to
renew all agreements and registrations as may be necessary or desirable to
protect Intellectual Property, unless otherwise agreed in writing by RBC; to
apply to register all existing and future copyrights, trade-marks, patents,
integrated circuit topographies and industrial designs whenever it is
commercially reasonable to do so;
<PAGE>
     (d) to do, execute, acknowledge and deliver such financing statements,
financing change statements and further assignments, transfers, caveats,
mortgages, notices, documents, acts, matters and things (including further
schedules hereto) as may be reasonably requested by RBC of or with respect to
Collateral in order to give effect to these presents and to pay all costs for
searches and filings in connection therewith;

     (e) to pay all taxes, rates, levies, assessments and other charges of every
nature which may be lawfully levied, assessed or imposed against or in respect
of Debtor or Collateral as and when the same become due and payable;

     (f) to insure Collateral for such periods, in such amounts, on such terms
and against loss or damage by fire and such other risks as RBC shall reasonably
direct with loss payable to RBC and Debtor, as insureds, as their respective
interests may appear, and to pay all premiums therefor;

     (g) to prevent Collateral, save Inventory sold or leased as permitted
hereby, from being or becoming an accession to other property not covered by
this Security Agreement;

     (h) to carry on and conduct the business of Debtor in accordance with all
applicable laws, in a proper and efficient manner and so as to protect and
preserve Collateral and to keep, in accordance with generally accepted
accounting principles, consistently applied, proper books of account for
Debtor's business as well as accurate and complete records concerning
Collateral, and mark any and all such records and Collateral at RBC's request so
as to indicate the Security Interest; and

     (i) to deliver to RBC from time to time promptly upon request:

          (i)  any Documents of Title, Instruments, Securities, Chattel Paper
               and duplicate certificates of title to Real Property
               constituting, representing or relating to Collateral;

          (ii) all books of account and all records, ledgers, reports,
               correspondence, schedules, documents, statements, lists and other
               writings relating to Collateral for the purpose of inspecting,
               auditing or copying the same;

          (iii) all financial statements prepared by or for Debtor regarding
               Debtor's business;

          (iv) all policies and certificates of insurance relating to
               Collateral; and

          (v)  such information concerning Collateral, Debtor and Debtor's
               business and affairs as RBC may reasonably request.

5.   USE AND VERIFICATION OF COLLATERAL

     Subject to compliance with Debtor's covenants contained herein and Clause 7
hereof, Debtor may, until default, possess, operate, collect, use and enjoy and
deal with Collateral in the ordinary course of Debtor's business in any manner
not inconsistent with the provisions hereof;
<PAGE>
provided always that RBC shall have the right at any time and from time to time
to verify compliance by Debtor with Debtor's obligations under this Security
Agreement (including through inquiries with governmental agencies) and the
existence and state of the Collateral in any manner RBC may consider appropriate
and Debtor agrees to furnish all assistance and information and to perform all
such acts as RBC may reasonably request in connection therewith and for such
purpose to grant to RBC or its agents access to all places where Collateral may
be located and to all premises occupied by Debtor.

6.   SECURITIES

     If Collateral at any time includes Securities, Debtor authorizes RBC to
transfer the same or any part thereof into its own name or that of its
nominee(s) so that RBC or its nominee(s) may appear of record as the sole owner
thereof; provided that, until default, RBC shall deliver promptly to Debtor all
notices or other communications received by it or its nominees) as such
registered owner and, upon demand and receipt of payment of any necessary
expenses thereof, shall issue to Debtor or its order a proxy to vote and take
all action with respect to such Securities. After default, Debtor waives all
rights to receive any notices or communications received by RBC or its
nominee(s) as such registered owner and agrees that no proxy issued by RBC to
Debtor or its order as aforesaid shall thereafter be effective.

7.   COLLECTION OF DEBTS

     Before or after default under this Security Agreement, RBC may notify all
or any Account Debtors of the Security Interest and may also direct such Account
Debtors to make all payments on Collateral to RBC. Debtor acknowledges that any
payments on or other proceeds of Collateral received by Debtor from Account
Debtors, whether before or after notification of this Security Interest to
Account Debtors and whether before or after default under this Security
Agreement shall be received and held by Debtor in trust for RBC and shall be
turned over to RBC upon request.

8.   INCOME FROM AND INTEREST ON COLLATERAL

     (a) Until default, Debtor reserves the right to receive any Money
constituting income from or interest on Collateral and if RBC receives any such
Money prior to default, RBC shall either credit the same against the
Indebtedness or pay the same promptly to Debtor.

     (b) After default, Debtor will not request or receive any Money
constituting income from or interest on Collateral and if Debtor receives any
such Money without any request by it, Debtor will pay the same promptly to RBC.

9.   INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS

     (a) Whether or not default has occurred, Debtor authorizes RBC:

          (i)  to receive any increase in or profits on Collateral (other than
               Money) and to hold the same as part of collateral. Money so
               received shall be treated as income for the purposes of Clause 8
               hereof and dealt with accordingly; and
<PAGE>
          (ii) to receive any payment or distribution upon redemption or
               retirement or upon dissolution and liquidation of the issuer of
               Collateral; to surrender such Collateral in exchange therefor;
               and to hold any such payment or distribution as part of
               Collateral.

     (b) If Debtor receives any such increase or profits (other than Money) or
payments or distributions, Debtor will deliver the same promptly to RBC to be
held by RBC as herein provided.

10.  DISPOSITION OF MONEY

     Subject to any applicable requirements of the P.P.S.A. or other applicable
law, all Money collected or received by RBC pursuant to or in exercise of any
right it possesses with respect to Collateral shall be applied on account of
Indebtedness in such manner as RBC deems best or, at the option of RBC, may be
held unappropriated in a collateral account or released to Debtor, all without
prejudice to the liability of Debtor or the rights of RBC hereunder, and any
surplus shall be accounted for as required by law.

11.  EVENTS OF DEFAULT

     The happening of any of the following events or conditions shall constitute
default hereunder which is herein referred to as "default":

     (a) the nonpayment when due, whether by acceleration or otherwise, of any
principal or interest forming part of Indebtedness or the failure of Debtor to
observe or perform any obligation, covenant, term, provision or condition
contained in this Security Agreement or any other agreement between Debtor and
RBC;

     (b) the death of or a declaration of incompetency by a court of competent
jurisdiction with respect to Debtor, if an individual;

     (c) the bankruptcy or insolvency of Debtor; the filing against Debtor of a
petition in bankruptcy; the making of an authorized assignment for the benefit
of creditors by Debtor; the appointment of a receiver or trustee for Debtor or
for any assets of Debtor or the institution by or against Debtor of any other
type of insolvency proceeding under the Bankruptcy and Insolvency Act or
otherwise;

     (d) the institution by or against Debtor of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims against
or winding up of affairs of Debtor;

     (e) if any Encumbrance affecting Collateral becomes enforceable against
Collateral;

     (f) if Debtor ceases or threatens to cease to carry on business or makes or
agrees to make a sale of a substantial portion of Debtor's assets or commits or
threatens to commit an act of bankruptcy;
<PAGE>
     (g) if any execution, sequestration, extent or other process of any court
becomes enforceable against Debtor or if a distress or analogous process is
levied upon the assets of Debtor or any part thereof; and

     (h) if any certificate, statement, representation, warranty or audit report
heretofore or hereafter furnished by or on behalf of Debtor pursuant to or in
connection with this Security Agreement or otherwise (including, without
limitation, the representations and warranties contained herein) or as an
inducement to RBC to extend any credit to or to enter into this or any other
agreement with Debtor, proves to have been false in any material respect at the
time as of which the facts therein set forth were stated or certified, or proves
to have omitted any substantial contingent or unliquidated liability or claim
against Debtor; or if upon the date of execution of this Security Agreement,
there shall have been any material adverse change in any of the facts disclosed
by any such certificate, representation, statement, warranty or audit report,
which change shall not have been disclosed to RBC at or prior to the time of
such execution.

11A. REAL PROPERTY

     (a) For the purposes of any application to register a crystallized floating
charge under the Land Title Act (British Columbia) against any Real Property,
the floating charge created by this Security Agreement shall be crystallized and
become a fixed charge upon the earliest of:

          (i)  any one of the events described in Clause 11 hereof;

          (ii) a declaration by RBC pursuant to Clause 12 hereof; or

          (iii) RBC taking any action pursuant to Clause 13 hereof to appoint a
               receiver or to enforce its Security Interest or realize upon all
               or any part of the Collateral.

     (b) In accordance with the Property Law Act (British Columbia), the
doctrine of consolidation applies to this Security Agreement.

12.  ACCELERATION

     RBC, in its sole discretion, may declare all or any part of Indebtedness
which is not by its terms payable on demand to be immediately due and payable,
without demand or notice of any kind, in the event of default, or, if RBC
considers itself insecure or that the Collateral is in jeopardy. The provisions
of this clause are not intended in any way to affect any rights of RBC with
respect to any Indebtedness which may now or hereafter be payable on demand.

13.  REMEDIES

     (a) Upon default, RBC may appoint or reappoint by instrument in writing,
any person or persons, whether an officer or officers or an employee or
employees of RBC or not, to be a receiver or receivers (hereinafter called a
"Receiver", which term when used herein shall include a receiver and manager) of
Collateral (including any interest, income or profits therefrom) and may remove
any Receiver so appointed and appoint another in its stead. Any such Receiver
shall, so far as concerns responsibility for its acts, be deemed the agent of
Debtor and not RBC,
<PAGE>
and RBC shall not be in any way responsible for any misconduct, negligence or
nonfeasance on the part of any such Receiver, its servants, agents or employees.
Subject to the provisions of the instrument appointing it, any such Receiver
shall have power to take possession of Collateral, to preserve Collateral or its
value, to carry on or concur in carrying on all or any part of the business of
Debtor and to sell, lease, license or otherwise dispose of or concur in selling,
leasing, licensing or otherwise disposing of Collateral. To facilitate the
foregoing powers, any such Receiver may, to the exclusion of all others,
including Debtor, enter upon, use and occupy all premises owned or occupied by
Debtor constituting Collateral or wherein Collateral may be situate, maintain
Collateral upon such premises, borrow money on a secured or unsecured basis and
use Collateral directly in carrying on Debtor's business or as security for
loans or advances to enable the Receiver to carry on Debtor's business or
otherwise, as such Receiver shall, in its discretion, determine. Except as may
be otherwise directed by RBC, all Money received from time to time by such
Receiver in carrying out its appointment shall be received in trust for and paid
over to RBC. Every such Receiver may, in the discretion of RBC, be vested with
all or any of the rights and powers of RBC.

     (b) Upon default, RBC may, either directly or through its agents or
nominees, exercise any or all of the powers and rights given to a Receiver by
virtue of the foregoing sub-clause (a).

     (c) RBC may take possession of, collect, demand, sue on, enforce, recover
and receive Collateral and give valid and binding receipts and discharges
therefor and in respect thereof and, upon default, RBC may sell, lease, license
or otherwise dispose of Collateral in such manner, at such time or times and
place or places, for such consideration and upon such terms and conditions as to
RBC may seem reasonable.

     (d) In addition to those rights granted herein and in any other agreement
now or hereafter in effect between Debtor and RBC and in addition to any other
rights RBC may have at law or in equity, RBC shall have, both before and after
default, all rights and remedies of a secured party under the P.P.S.A. provided
always, that RBC shall not be liable or accountable for any failure to exercise
its remedies, take possession of, collect, enforce, realize, sell, lease,
license or otherwise dispose of Collateral or to institute any proceedings for
such purposes. Furthermore, RBC shall have no obligation to take any steps to
preserve rights against prior parties to any Instrument or Chattel Paper or
prior encumbrances on any Real Property whether Collateral or proceeds and
whether or not in RBC's possession and shall not be liable or accountable for
failure to do so.

     (e) Debtor acknowledges that RBC or any Receiver appointed by it may take
possession of Collateral wherever it may be located and by any method permitted
by law and Debtor agrees upon request from RBC or any such Receiver to assemble
and deliver possession of Collateral at such place or places as directed.

     (f) Debtor agrees to be liable for and to pay all costs, charges and
expenses incurred by RBC or any Receiver or agent appointed by it, whether
directly or for services rendered (including solicitors costs on a solicitor and
his own client basis and auditors costs and other legal expenses and Receiver
and agent remuneration), in operating Debtor's accounts, preparing or enforcing
this Security Agreement, inspecting and determining the state of the Collateral,
<PAGE>
taking and maintaining custody of, preserving, repairing, processing, preparing
for disposition and disposing of Collateral and in enforcing or collecting
Indebtedness and all such costs, charges and expenses, together with any amounts
owing as a result of any borrowing by RBC or any Receiver appointed by it, as
permitted hereby, shall be a first charge on the proceeds of realization,
collection or disposition of Collateral and shall be secured hereby.

     (g) RBC will give Debtor such notice, if any, of the date, time and place
of any public sale or of the date after which any private disposition of
Collateral is to be made as may be required by the P.P.S.A. or other applicable
law.

     (h) Upon default and receiving written demand from RBC, Debtor shall take
such further action as may be necessary to evidence and effect an assignment or
licensing of Intellectual Property to whomsoever RBC directs, including to RBC.
Debtor appoints any officer or director or branch manager of RBC upon default to
be its attorney in accordance with applicable legislation with full power of
substitution and to do on Debtor's behalf anything that is required to assign,
license or transfer, and to record any assignment, licence or transfer of the
Collateral. This power of attorney, which is coupled with an interest, is
irrevocable until the release or discharge of the Security Interest.

14.  MISCELLANEOUS

     (a) Debtor hereby authorizes RBC to file such financing statements,
financing change statements, caveats, mortgages, forms, security notices and
other documents and do such acts, matters and things (including completing and
adding schedules hereto identifying Collateral or any permitted Encumbrances
affecting Collateral or identifying the locations at which Debtor's business is
carried on and Collateral and records relating thereto are situate) as RBC may
deem appropriate to perfect on an ongoing basis and continue the Security
Interest, to protect and preserve Collateral and to realize upon the Security
Interest and Debtor hereby irrevocably constitutes and appoints the Manager or
Acting Manager from time to time of the herein mentioned branch of RBC the true
and lawful attorney of Debtor, with full power of substitution, to do any of the
foregoing in the name of Debtor whenever and wherever it may be deemed necessary
or expedient.

     (b) Without limiting any other right of RBC, whenever Indebtedness is
immediately due and payable or RBC has the right to declare Indebtedness to be
immediately due and payable (whether or not it has so declared), RBC may, in its
sole discretion, set off against Indebtedness any and all amounts then owed to
Debtor by RBC in any capacity, whether or not due, and RBC shall be deemed to
have exercised such right to set off immediately at the time of making its
decision to do so even though any charge therefor is made or entered on RBC's
records subsequent thereto.

     (c) Upon Debtor's failure to perform any of its duties hereunder, RBC may,
but shall not be obligated to, perform any or all of such duties, and Debtor
shall pay to RBC, forthwith upon written demand therefor, an amount equal to the
expense incurred by RBC in so doing plus interest thereon from the date such
expense is incurred until it is paid at the rate of 15% per annum.
<PAGE>
     (d) RBC may grant extensions of time and other indulgences, take and give
up security, accept compositions, compound, compromise, settle, grant releases
and discharges and otherwise deal with Debtor, debtors of Debtor, sureties and
others and with Collateral and other security as RBC may see fit without
prejudice to the liability of Debtor or RBC's right to hold and realize the
Security Interest. Furthermore, RBC may demand, collect and sue on Collateral in
either Debtor's or RBC's name, at RBC's option, and may endorse Debtor's name on
any and all cheques, commercial paper, and any other Instruments pertaining to
or constituting Collateral.

     (e) No delay or omission by RBC in exercising any right or remedy hereunder
or with respect to any Indebtedness shall operate as a waiver thereof or of any
other right or remedy, and no single or partial exercise thereof shall preclude
any other or further exercise thereof or the exercise of any other right or
remedy. Furthermore, RBC may remedy any default by Debtor hereunder or with
respect to any Indebtedness in any reasonable manner without waiving the default
remedied and without waiving any other prior or subsequent default by Debtor.
All rights and remedies of RBC granted or recognized herein are cumulative and
may be exercised at any time and from time to time independently or in
combination.

     (f) Debtor waives protest of any Instrument constituting Collateral at any
time held by RBC on which Debtor is in any way liable and, subject to Clause 13
(g) hereof, notice of any other action taken by RBC.

     (g) This Security Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns. In any action brought by an assignee of this Security
Agreement and the Security Interest or any part thereof to enforce any rights
hereunder, Debtor shall not assert against the assignee any claim or defence
which Debtor now has or hereafter may have against RBC. If more than one Debtor
executes this Security Agreement the obligations of such Debtors hereunder shall
be joint and several and, unless the context otherwise requires, a reference to
"Debtor" herein shall be deemed to be a reference to each of the undersigned.

     (h) RBC may provide any financial and other information it has about
Debtor, the Security Interest and the Collateral to anyone acquiring or who may
acquire an interest in the Security Interest or the Collateral from RBC or
anyone acting on behalf of RBC.

     (i) Save for any schedules which may be added hereto pursuant to the
provisions hereof, no modification, variation or amendment of any provision of
this Security Agreement shall be made except by a written agreement, executed by
the parties hereto and no waiver of any provision hereof shall be effective
unless in writing.

     (j) Subject to the requirements of Clauses 13 (g) and 14 (k) hereof,
whenever either party hereto is required or entitled to notify or direct the
other or to make a demand or request upon the other, such notice, direction,
demand or request shall be in writing and shall be sufficiently given, in the
case of RBC, if delivered to it or sent by prepaid registered mail addressed to
it at its address herein set forth or as changed pursuant hereto and, in the
case of Debtor, if delivered to it or if sent by prepaid registered mail
addressed to it at its last address known to RBC. Either party may notify the
other pursuant hereto of any change in such party's principal address to be used
for the purposes hereof.
<PAGE>
     (k) This Security Agreement and the security afforded hereby is in addition
to and not in substitution for any other security now or hereafter held by RBC
and is intended to be a continuing Security Agreement and shall remain in full
force and effect until the Manager or Acting Manager from time to time of the
herein mentioned branch of RBC shall actually receive written notice of its
discontinuance; and, notwithstanding such notice, shall remain in full force and
effect thereafter until all Indebtedness contracted for or created before the
receipt of such notice by RBC, and any extensions or renewals thereof (whether
made before or after receipt of such notice) together with interest accruing
thereon after such notice, shall be paid in full.

     (l) The headings used in this Security Agreement are for convenience only
and are not to be considered a part of this Security Agreement and do not in any
way limit or amplify the terms and provisions of this Security Agreement.

     (m) When the context so requires, the singular number shall be read as if
the plural were expressed and the provisions hereof shall be read with all
grammatical changes necessary dependent upon the person referred to being a
male, female, firm or corporation.

     (n) In the event any provisions of this Security Agreement, as amended from
time to time, shall be deemed invalid or void, in whole or in part, by any Court
of competent jurisdiction, the remaining terms and provisions of this Security
Agreement shall remain in full force and effect.

     (o) Nothing herein contained shall in any way obligate RBC to grant,
continue, renew, extend time for payment of or accept anything which constitutes
or would constitute Indebtedness.

     (p) The Security Interest created hereby is intended to attach when this
Security Agreement is signed by Debtor and delivered to RBC.

     (q) Debtor acknowledges and agrees that in the event it amalgamates with
any other company or companies it is the intention of the parties hereto that
the term "Debtor" when used herein shall apply to each of the amalgamating
companies and to the amalgamated company, such that the Security Interest
granted hereby:

          (i)  shall extend to "Collateral" (as that term is herein defined)
               owned by each of the amalgamating companies and the amalgamated
               company at the time of amalgamation and to any "Collateral"
               thereafter owned or acquired by the amalgamated company; and

          (ii) shall secure the "Indebtedness" (as that term is herein defined)
               of each of the amalgamating companies and the amalgamated company
               to RBC at the time of amalgamation and any "Indebtedness" of the
               amalgamated company to RBC thereafter arising. The Security
               Interest shall attach to "Collateral" owned by each company
               amalgamating with Debtor, and by the amalgamated company, at the
               time of amalgamation, and shall attach to any "Collateral"
               thereafter owned or acquired by the amalgamated company when such
               becomes owned or is acquired.
<PAGE>
     (r) In the event that Debtor is a body corporate, it is hereby agreed that
The Limitation of Civil Rights Act and The Land Contracts (Actions) Act of the
Province of Saskatchewan, or any provisions thereof, shall have no application
to this Security Agreement or any agreement or instrument renewing or extending
or collateral to this Security Agreement. In the event that Debtor is an
agricultural corporation within the meaning of The Saskatchewan Farm Security
Act, Debtor agrees with RBC that all of Part IV (other than Section 46) of that
Act shall not apply to Debtor.

     (s) This Security Agreement and the transactions evidenced hereby shall be
governed by and construed in accordance with the laws of the province where the
herein mentioned branch of RBC is located including, where applicable, the
P.P.S.A. and the Land Title Act.

15.  COPY OF AGREEMENT AND FINANCING STATEMENT

     (a) Debtor hereby acknowledges receipt of a copy of this Security
Agreement.

     (b) Debtor waives Debtor's right to receive a copy of a financing statement
or financing change statement registered by RBC or any verification statement
pertaining to a registration by RBC.
<PAGE>
INDIVIDUAL DEBTOR

<TABLE>
<S>                                      <C>
SURNAME (LAST NAME)

FIRST NAME                               SECOND NAME

ADDRESS OF INDIVIDUAL DEBTOR             DATE OF BIRTH

                                         YEAR   MONTH   DAY
CITY                                     PROVINCE   POSTAL CODE

SURNAME (LAST NAME)

FIRST NAME                               SECOND NAME

ADDRESS OF INDIVIDUAL DEBTOR             DATE OF BIRTH

                                         YEAR   MONTH   DAY
CITY                                     PROVINCE   POSTAL CODE
</TABLE>

BUSINESS DEBTOR

NAME OF BUSINESS DEBTOR
PINE VALLEY COAL LTD.

ADDRESS OF BUSINESS DEBTOR
SUITE 501 - 535 THURLOW STREET

CITY        PROVINCE   POSTAL CODE
VANCOUVER   B.C.       V6E 3L2
<PAGE>
IN WITNESS WHEREOF Debtor has executed this Security Agreement on the date
specified below.

<TABLE>
<CAPTION>
                                 EXECUTION
                                   DATE
                                ----------
<S>                             <C> <C> <C> <C>
                                 Y   M   D
                                            PINE VALLEY COAL LTD.

/s/ Gord Baizley                            /s/ Martin Rip
------------------------------              ------------------------------------
WITNESS/OFFICER SIGNATURE*      05  09  16  Per: Martin Rip
                                            Title:
                                                   -----------------------------

Gord Baizley
Name
     -------------------------

------------------------------
*Address                                    **Carrying on Business as:

------------------------------              ------------------------------------
*Address

------------------------------              ------------------------------------
*Professional Capacity                      (Principal Address)

                                            ------------------------------------
                                            (City, Town, etc. & Province)
</TABLE>

BRANCH ADDRESS

Royal Centre Branch
1025 West Georgia Street
Vancouver, B.C.

*    Officer certification required in B.C. only

*    OFFICER CERTIFICATION

Your signature constitutes a representation that you are a solicitor, notary
public or other person authorized by the Evidence Act, R.S.B.C. 1996. c. 124, to
take affidavits for use in British Columbia and certifies the matters set out in
Part 5 of the Land Title Act as they pertain to the execution of this
instrument.
<PAGE>
                                  SCHEDULE "A"

                       (Encumbrances Affecting Collateral)

(a)  any "purchase money security interest" or vendor's hypothec or other Lien
     on equipment (as defined in the Personal Property Security Act (British
     Columbia)) used by the Borrower in the operation of its business and which
     is not for resell, lease or rental to its customers which is assumed,
     created or reserved to secure the unpaid purchase price of such equipment
     after the date hereof provided that any such Lien is limited to the
     equipment so acquired, does not include, charge, apply or attach to the
     Equipment, and that the principal amount secured thereby is not increased;

(b)  Liens in favour of RBC;

(c)  Liens consented to by RBC in writing; and

(d)  the following liens in favour of each of the secured parties set out below:

(i)  Operating Leases

<TABLE>
<CAPTION>
                                              MONTHLY
                                           PAYMENT (NET
    ITEM LEASED         LEASING COMPANY      OF GST)      LEASE TERM   START DATE
    -----------       ------------------   ------------   ----------   ----------
<S>                   <C>                  <C>            <C>          <C>
Ricoh                 IOS Financial            770.40       4 years     13-Jan-05
Photocopiers          Services
Ford F350             Crowfoot Ford            869.23       3 years      1-Mar-05
Pickup
Ford F150             Crowfoot Ford            735.09       3 years      5-Jan-05
Ford F150             Peplinskis Ford        1,240.27       3 years      8-Jul-04
Ford E350             Ford Credit Canada       825.69       3 years      2-May-05
FordF250              Ford Credit Canada       648.51       3 years      2-May-05
Back Hoe              Komatsu                3,104.00       3 years     15-Aug-05
                      International
Site Office           ATCO                     783.00
Trailer (serial no.
152005322)

Trailer (serial no.   ATCO                     783.00
152005322)
</TABLE>
<PAGE>
(ii) Financing Leases

<TABLE>
<CAPTION>
                                   MONTHLY
                                PAYMENT (NET
ITEM LEASED   LEASING COMPANY     OF GST)      LEASE TERM   START DATE
-----------   ---------------   ------------   ----------   ----------
<S>           <C>               <C>            <C>          <C>
Trailer       Onset Capital       3,013.00       6 years     1-Oct-04
HPP Plotter   IOS Financial         659.93       4 years     1-Apr-05
              Services

Skid Steer    CNH Capital         5,329.50       1 year      6-May-05
</TABLE>

(iii) Other Secured Parties

     1.   Liens in favour of the Bank of Montreal having base registration
          numbers 345961C and 471008C, relating to collateral described as

          a.   LF269 - Instrument described as GIC 0004-9705087

          b.   LF269 - Instrument described as no. 0004-9594-006 in the amount
               of $50,000; and

     2.   Security granted to the Rockside Foundation, as set out in separate
          agreements between RBC and The Rockside Foundation;

(iv) PPSA Registrations

                         BRITISH COLUMBIA LIENS SCHEDULE

<TABLE>
<S>             <C>
DEBTOR          Falls Mountain Coal Inc. and Pine Valley Mining Corporation

SECURED PARTY   Onset Capital Corporation

BASE REG. NO.   007066C

EXPIRY DATE     October 27, 2011

COLLATERAL      Portable building(s)

DEBTOR          Falls Mountain Coal Inc. and Pine Valley Mining Corporation

SECURED PARTY   Crowfoot Ford Sales Limited

BASE REG. NO.   122026C

EXPIRY DATE     January 5, 2009
</TABLE>
<PAGE>
<TABLE>
<S>             <C>
COLLATERAL      Motor Vehicle, 2005 Ford F150 Supercab with serial no. 1
                FTRX14W25NA61237

DEBTOR          Falls Mountain Coal Inc. and Pine Valley Mining Corporation

SECURED PARTY   Crowfoot Ford Sales Limited

BASE REG. NO.   122080C

EXPIRY DATE     January 5, 2009

COLLATERAL      Motor Vehicle, 2005 Ford F150 Subercrew with serial no. 1
                FTRW14W05KC47704

DEBTOR          Falls Mountain Coal Inc.

SECURED PARTY   ATCO Structures Inc.

BASE REG. NO.   236074C

EXPIRY DATE     March 15, 2006

COLLATERAL      Manufactured Home, 2000 10 x 52 Office with serial no. 152005322

DEBTOR          Falls Mountain Coal Inc.

SECURED PARTY   Ford Credit Canada Limited

BASE REG. NO.   314070C

EXPIRY DATE     April 27, 2008

COLLATERAL      Motor Vehicle, 2005 Ford E350 with serial no. 1 FBNE31 L65HB26202

DEBTOR          Falls Mountain Coal Inc.

SECURED PARTY   Ford Credit Canada Leasing Company

BASE REG. NO.   342076C
</TABLE>
<PAGE>
<TABLE>
<S>             <C>
EXPIRY DATE     May 11, 2008

COLLATERAL      Motor Vehicle, 2005 Ford F250 with serial no. 1FTSX21525EB84233

DEBTOR          Falls Mountain Coal Inc.

SECURED PARTY   CNH Capital Canada Ltd.

BASE REG. NO.   350631C

EXPIRY DATE     May 17, 2006

COLLATERAL      Motor Vehicle, 2005 NEWHOL LS190 with serial no. LMUO22795

DEBTOR          Pine Valley Mining Corporation

SECURED PARTY   Jim Peplinski's Auto Leasing Ltd.

BASE REG. NO.   806480B

EXPIRY DATE     July 7, 2008

COLLATERAL      Motor Vehicle, 2004 Ford F150 with serial no. 1 FTPW14504KD02455

DEBTOR          Falls Mountain Coal Inc.

SECURED PARTY   Komatsu International Canada Inc.

BASE REG. NO.   540783C

EXPIRY DATE     August 24, 2009

COLLATERAL      Motor Vehicle, 2005 Komatsu WB150-2N, serial number A60126
</TABLE>

                             ALBERTA LIENS SCHEDULE

<TABLE>
<S>             <C>
DEBTOR          Pine Valley Mining Corporation and Falls Mountain Coal Inc.

SECURED PARTY   Crowfoot Ford Sales Limited
</TABLE>
<PAGE>
<TABLE>
<S>             <C>
BASE REG. NO.   05022531031

EXPIRY DATE     February 25, 2009

COLLATERAL      Motor Vehicle, 2005 Ford F350 pickup with serial no. 1
                FTWF31515EB55204
</TABLE>
<PAGE>
SCHEDULE "B"

1.   LOCATIONS OF DEBTOR'S BUSINESS OPERATIONS

(a)  Willow Creek Coal Mine Pine River Valley 45km West of the Town of Chetwynd,
     Peace River District, BC. NTS Map 93-0-9, longitude 122 degrees, 17' west,
     latitude 55 degrees 36'

(b)  Suite 501-535 Thurlow St., Vancouver, BC

(c)  Indin Lake. Leases located in the Mackenzie Mining Division of the NWT.

2.   LOCATIONS OF RECORDS RELATING TO COLLATERAL (IF DIFFERENT FROM 1, ABOVE)

3.   LOCATIONS OF COLLATERAL (IF DIFFERENT FROM 1, ABOVE)
<PAGE>
                                  SCHEDULE "C"

                            (DESCRIPTION OF PROPERTY)

The Debtor's interest in all present and after-acquired coal leases and coal
licences, including without limitation the coal leases and licences in the
attached list, together with any renewals and replacements to them.
<PAGE>
37 MATCHES

           Owner Name    Tenure Type
           ----------    -----------
CRITERIA   PINE VALLEY       Coal

<TABLE>
<CAPTION>
                                           WORK
TENURE   CLAIM      OWNER       MAP      RECORDED                                MINING                 TAG
NUMBER    NAME     NUMBER      NUMBER       TO                STATUS            DIVISION     AREA     NUMBER
------   -----   ----------   -------   ----------   ------------------------   --------   --------   ------
<S>      <C>     <C>          <C>       <C>          <C>                        <C>        <C>        <C>
327289           138283 100%  093O09W   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327290           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327291           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327292           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327293           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327294           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327296           138283 100%  093O09W   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327297           138283 100%  093O09W   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327298           138283 100%  093O09W   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327299           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327300           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327301           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327302           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327303           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327304           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327307           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
</TABLE>
<PAGE>
<TABLE>
<S>      <C>     <C>          <C>       <C>          <C>                        <C>        <C>        <C>
327308           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327310           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
327312           138283 100%  093O059   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
327313           138283 100%  093O059   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
327314           138283 100%  093O059   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
327316           138283 100%  093O059   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
327318           138283 100%  093O059   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
327320           138283 100%  093O059   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
327321           138283 100%  093O059   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
346175           138283 100%  093O09W   1998.03.31   Demised 1998.03.31         09 LIARD    292 ha
346176           138283 100%  093O09W   1998.03.31   Demised 1998.03.31         09 LIARD    292 ha
346177           138283 100%  093O09E   1998.03.31   Demised 1998.03.31         09 LIARD    293 ha
347214           138283 100%  093O069   2006.03.31   Good Standing 2006.03.31   09 LIARD    292 ha
347215           138283 100%  093O059   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
347216           138283 100%  093O059   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
347217           138283 100%  093O049   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
347218           138283 100%  093O049   2006.03.31   Good Standing 2006.03.31   09 LIARD    293 ha
384195           138283 100%  093O069   2004.02.22   Forfeited 2004.02.22       09 LIARD    294 ha
384196           138288 100%  093O069   2004.02.22   Forfeited 2004.02.22       09 LIARD    292 ha
384197           138283 100%  093O069   2004.02.22   Forfeited 2004.02.22       09 LIARD    292 ha
389294           138283 100%  093O060   2006.03.31   Good Standing 2006.03.31   09 LIARD   6151 ha
</TABLE>

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