**EXHIBIT 10.21****CORPORATE GUARANTY AND NEGATIVE PLEDGE AGREEMENT**Dated as of September 1, 2006          For good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, and to induce **GE Capital Public Finance, Inc.**, a Delaware corporation (herein, withits participants, successors and assigns, “Lender”), at its option, to provide financing to or forthe account of **Washington Economic Development Finance Authority**(“Issuer”) and **Absorption Corp.**(“Borrower”) or to engage in any other transactions with Borrower and Issuer, the undersignedhereby: (a) absolutely and unconditionally guarantees to Lender the full and prompt payment whendue, whether at maturity or earlier by reason of acceleration or otherwise in accordance with theterms of the Loan Agreement (as defined below), of any and all present and future debts,liabilities and obligations owed by Borrower or Issuer to Lender evidenced by or arising out of theLoan Agreement dated as of September 1, 2006 (the “Loan Agreement”) among Lender, Borrower andIssuer, and any and all extensions, renewals, modifications, supplements or amendments thereto orthereof and any related agreements (the “Indebtedness”), (b) absolutely and unconditionallyguarantees to Lender the full and timely performance by Borrower of all of its obligations underthe Loan Agreement and (c) so long as any Indebtedness shall remain outstanding, agrees andcovenants not to sell, convey, transfer, assign, encumber, hypothecate or pledge any evidence ofthe controlling ownership interest in Borrower (whether direct or indirect) to any person orentity.          1. No act or thing need occur to establish the liability of the undersigned hereunder, and noact or thing, except full payment and discharge of all Indebtedness, shall in any way exonerate theundersigned hereunder or modify, reduce, limit or release the liability of the undersignedhereunder. This is an absolute, unconditional and continuing guaranty of payment of theIndebtedness. The dissolution or adjudication of bankruptcy of the undersigned shall not revokethis Corporate Guaranty and Negative Pledge Agreement (this “Agreement”).          2. The undersigned represents and warrants to Lender that (a) the undersigned has a direct andsubstantial economic interest in Borrower and expects to derive substantial benefits therefrom andfrom any loans, credit transactions, financial accommodations, discounts, purchases of property andother transactions and events resulting in the creation of Indebtedness guaranteed hereby (thisAgreement shall be effective and enforceable by Lender without regard to the receipt, nature orvalue of any such benefits); (b) the undersigned executed this Agreement without any intent tohinder, delay, or defraud any current or future creditor of the undersigned; (c) the undersigned isnot insolvent and will not become insolvent as a result of the execution of this Agreement; (d) theundersigned is not engaged and is not about to engage in any business or transaction for which anyproperty remaining with the undersigned has an unreasonably small capital or for which theremaining assets of the undersigned were unreasonably small in relation to the business of theundersigned or the transaction contemplated by this Agreement; (e) the undersigned does not intendto incur, and does not believe or reasonably should not believe that the undersigned will incur,debts beyond the undersigned’s ability to pay such debts as they become due; (f) the undersigned isa corporation duly organized, validly existing and in good standing under the laws of the Provinceof British Columbia, Canada (the “State”), has power to enter into this Agreement and by propercorporate action has duly authorized the execution and delivery of this Agreement; (g) theundersigned is in good standing and is duly licensed or qualified to transact business in the Stateand in all jurisdictions where the character of the property owned or leased or the nature of thebusiness transacted by it makes such licensing or qualification necessary; (h) the undersigned hasbeen fully authorized to execute and deliver this Agreement under the terms and provisions of theresolutions of its board of directors, or by other appropriate official approval, and furtherrepresents, covenants and warrants that all requirements have been met, and procedures haveoccurred in order to ensure the enforceability of this Agreement and this Agreement has been dulyauthorized, executed and delivered; (i) the officer of the undersigned executing this Agreement andany related documents has been duly authorized to execute and deliver this Agreement and suchrelated documents under the terms and provisions of a resolution of the undersigned’s directors;(j) this Agreement constitutes a valid and legally binding obligation of the undersignedenforceable against the undersigned in accordance with its respective terms, except to the extentlimited by bankruptcy, reorganization or other laws of general application relating to effectingthe enforcement of creditors’ rights; and (k) the execution and delivery of this Agreement, theconsummation of the transactions contemplated hereby and the fulfillment of the terms andconditions hereof do not and will not violate any law, rule, regulation or order, conflict with orresult in a
1

 
breach of any of the terms or conditions of the articles of incorporation or bylaws of theundersigned or of any restriction or of any agreement or instrument to which the undersigned is nowa party and does not and will not constitute a default under any of the foregoing or result in thecreation or imposition of any liens, charges or encumbrances of any nature upon any of the propertyor assets of the undersigned contrary to the terms of any instrument or agreement to which theundersigned is a party or by which it is bound.          3. If the undersigned shall be or become bankrupt or insolvent (however defined), then Lendershall have the right to declare immediately due and payable, and the undersigned shall forthwithpay to Lender, the full amount of all Indebtedness whether due and payable or unmatured. If theundersigned voluntarily commences or there is commenced involuntarily against the undersigned acase under the United States Bankruptcy Code, the full amount of all Indebtedness, whether due andpayable or unmatured, shall be immediately due and payable without demand or notice thereof.          4. The undersigned shall not exercise or enforce any right of contribution, reimbursement,recourse or subrogation available to the undersigned as to any Indebtedness, or against any personliable therefor, or as to any collateral security therefor.          5. The undersigned shall pay or reimburse Lender for all costs and expenses (includingreasonable attorneys’ fees and legal expenses) incurred by Lender in connection with theprotection, defense or enforcement of this Agreement in any litigation or bankruptcy or insolvencyproceedings.          6. Lender shall not be obligated by reason of its acceptance of this Agreement to engage inany transactions with or for Borrower or Issuer. Whether or not any existing relationship betweenthe undersigned and Borrower has been changed or ended, Lender may enter into transactionsresulting in the creation or continuance of Indebtedness and may otherwise agree, consent to, orsuffer the creation or continuance of any Indebtedness, without any consent or approval by theundersigned and without any prior or subsequent notice to the undersigned. The liability of theundersigned shall not be affected or impaired by any of the following acts or things (which Lenderis expressly authorized to do, omit or suffer from time to time, both before and after revocationof this Agreement, without consent or approval by or notice to the undersigned): (a) any acceptanceof collateral security, guarantors, accommodation parties or sureties for any or all Indebtedness;(b) one or more extensions or renewals of Indebtedness (whether or not for longer than the originalperiod) or any modification of the interest rates, maturities or other contractual terms applicableto any Indebtedness; (c) any waiver or indulgence granted to Borrower or Issuer, any delay or lackof diligence in the enforcement of Indebtedness, or any failure to institute proceedings, file aclaim, give any required notices or otherwise protect any Indebtedness; (d) any full or partialrelease of, compromise or settlement with, or agreement not to sue, Borrower, Issuer or any otherguarantor or other person liable in respect of any Indebtedness; (e) any release, surrender,cancellation or other discharge of any evidence of Indebtedness or the acceptance of any instrumentin renewal or substitution therefor; (f) any failure to obtain collateral security (includingrights of setoff) for Indebtedness, or to see to the proper or sufficient creation and perfectionthereof, or to establish the priority thereof, or to preserve, protect, insure, care for, exerciseor enforce any collateral security; or any modification, alteration, substitution, exchange,surrender, cancellation, termination, release or other change, impairment, limitation, loss ordischarge of any collateral security; (g) any collection, sale, lease or disposition of, or anyother foreclosure or enforcement of or realization on, any collateral security; (h) any assignment,pledge or other transfer of any Indebtedness or any evidence thereof; (i) any manner, order ormethod of application of any payments or credits upon Indebtedness; or (j) any election by Lenderunder Section 1111(b) of the United States Bankruptcy Code. The undersigned waives any and alldefenses and discharges available to a surety, guarantor, or accommodation co-obligor.          7. The undersigned waives any and all defenses, claims, setoffs, and discharges of Borrower orIssuer, or any other obligor, pertaining to Indebtedness, except the defense of discharge bypayment in full. Without limiting the generality of the foregoing, the undersigned shall notassert, plead or enforce against Lender any defense of waiver, release, discharge in bankruptcy,statute of limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,incapacity, minority, usury, illegality or unenforceability which may be available to Borrower orIssuer or any other person liable in respect of any Indebtedness, or any setoff available againstLender to Borrower or Issuer or any other such person, whether or not on account of a relatedtransaction. The undersigned expressly agrees that the undersigned shall be and remain liable forany deficiency remaining after foreclosure of any mortgage or security interest securingIndebtedness, whether or not the liability of Borrower or Issuer or any other obligor for such
2

 
deficiency is discharged pursuant to statute or judicial decision. The liability of theundersigned shall not be affected or impaired by any voluntary or involuntary liquidation,dissolution, sale or other disposition of all or substantially all the assets, marshalling ofassets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit ofcreditors, reorganization, arrangement, composition or readjustment of, or other similar event orproceeding affecting Borrower or Issuer or any of their respective assets. The undersigned shallnot assert, plead or enforce against Lender any claim, defense or setoff available to theundersigned against Borrower or Issuer.          8. The undersigned waives presentment, demand for payment, notice of dishonor or nonpayment,and protest of any instrument evidencing Indebtedness. Lender shall not be required first toresort for payment of the Indebtedness to Borrower or Issuer or other persons, or their properties,or first to enforce, realize upon or exhaust any collateral security for Indebtedness, beforeenforcing this Agreement.          9. If any payment applied by Lender to Indebtedness is thereafter set aside, recovered,rescinded or required to be returned for any reason (including, without limitation, the bankruptcy,insolvency or reorganization of Borrower or Issuer or any other obligor), the Indebtedness to whichsuch payment was applied shall for the purpose of this Agreement be deemed to have continued inexistence, notwithstanding such application, and this Agreement shall be enforceable as to suchIndebtedness as fully as if such application had never been made.          10. The liability of the undersigned under this Agreement is in addition to and shall becumulative with all other liabilities of the undersigned to Lender as guarantor, surety, endorser,accommodation co-obligor or otherwise of any Indebtedness or obligation of Borrower or Issuer,without any limitation as to amount, unless the instrument or agreement evidencing or creating suchother liability specifically provides to the contrary.          11. While any of the Indebtedness is outstanding, the undersigned shall comply with thefollowing financial covenants:          (a) The undersigned shall maintain at all times its ratio of Debt (as defined below) toTangible Net Worth (as defined below) at not more than 1.50 to 1.00. “Debt” shall mean (i) allitems of indebtedness or liability which in accordance with generally accepted accountingprinciples or federal tax law would be included in determining total liabilities as shown on theliabilities side of a balance sheet, (ii) indebtedness secured by any mortgage, pledge, lien orsecurity interest existing on property owned by the undersigned, whether or not the indebtednesssecured thereby shall have been assumed, and (iii) guaranties and endorsements (other than forpurposes of collection in the ordinary course of business) by the undersigned and other contingentobligations of the undersigned in respect of, or to purchase or otherwise acquire, indebtedness ofothers. “Tangible Net Worth” means the excess of:     (1) the tangible assets of the undersigned, which, in accordance with generallyaccepted accounting principles, are tangible assets, after deducting adequate reserves ineach case where, in accordance with generally accepted accounting principles, a reserve isproper over     (2) all Debt of the undersigned;*provided, however*, that (i) inventory shall be taken into account on the basis of the cost(determined on a first-in, first-out basis) or current market value, whichever is lower, (ii) in noevent shall there be included as such tangible assets patents, trademarks, trade names, copyrights,licenses, good will, advances or loans to, or receivables from, directors, officers, employees oraffiliates, prepaid or intangible assets, amounts relating to covenants not to compete, pensionsassets, deferred charges or treasury stock or any securities or Debt of the undersigned or anyother securities unless the same are readily marketable in the United States of America or entitledto be used as a credit against federal income tax liabilities, (iii) securities included as suchtangible assets shall be taken into account at their current market price or cost, whichever islower, and (iv) any write-up in the book value of any assets shall not be taken into account.          (b) The undersigned shall maintain for each fiscal year its Debt Service Coverage Ratio (asdefined below) at not less than 1.75 to 1.00 “Debt Service Coverage Ratio” means the ratio of (i)the undersigned’s Cash Flow Available for Debt Service (as defined below) to (ii) the undersigned’sDebt Service (as defined below). “Cash Flow Available for Debt Service” of the undersigned means,with respect to the applicable period of determination, the undersigned’s income, *plus*interestexpense, depreciation, amortization and other non-cash charges. “Debt Service”
3

 
of the undersigned means, with respect to the applicable period of determination, the aggregate of(i) interest expense of the undersigned, (ii) all installments of principal on Debt of theundersigned that are due on demand or during the period of determination, (iii) all installments ofrent under capitalized lease obligations (to the extent not already accounted for in computation ofnet income or Debt) of the undersigned that are due on demand or during the period of determinationand (iv) distributions and dividends to stockholders and advances to affiliates of the undersignedduring the period of determination.     (c) The undersigned shall maintain its Tangible Net Worth at all times at not less than$12,000,000.          12. This Agreement shall be effective upon delivery to Lender, without further act, conditionor acceptance by Lender, shall be binding upon the undersigned and the successors and assigns ofthe undersigned and shall inure to the benefit of Lender and its participants, successors andassigns. Any invalidity or unenforceability of any provision or application of this Agreementshall not affect other lawful provisions and application hereof, and to this end the provisions ofthis Agreement are declared to be severable. This Agreement may not be waived, modified, amended,terminated, released or otherwise changed except by a writing signed by the undersigned and Lender.This Agreement shall be governed by the laws of the State of Washington, United States of America.The undersigned waives notice of Lender’s acceptance hereof and waives the right to trial by juryin any action based on or pertaining to this Agreement.          13. The undersigned (a) hereby irrevocably submits itself to the nonexclusive jurisdiction ofthe federal and state courts of the State of Washington, United States of America, for the purposesof any suit, action or other proceeding arising out of this Agreement, or any of the transactionscontemplated hereby brought by any party or parties thereto, or their successors or assigns, (b)hereby irrevocably agrees that this Agreement shall be governed by and interpreted in accordancewith the laws of the State of Washington, United States of America, (c) hereby irrevocably agreesthat all claims in respect of such action or proceeding may be heard and determined in, to thefullest extent permitted by law, such courts, and (d) to the extent that the undersigned has orhereafter may acquire any immunity from jurisdiction of any such court or from any legal processtherein hereby waives, to the fullest extent permitted by law, such immunity, and agrees not toassert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, thedefense of sovereign immunity, or any claim (i) that it is not personally subject to thejurisdiction of the above-named courts by reason of sovereign immunity or otherwise, (ii) that itis immune from any legal process (whether through service or notice, attachment prior to thejudgment, attachments in aid of execution, execution or otherwise) with respect to itself or itsproperty, by reason of sovereign immunity, (iii) that the suit, action or proceeding is brought inan inconvenient forum, (iv) that the venue of the suit, action or proceeding is improper, or (v)that this Agreement may not be enforced in or by such courts.[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; EXECUTION/ACKNOWLEDGMENT PAGE FOLLOWS]
4

 
     IN WITNESS WHEREOF, this Corporate Guaranty and Negative Pledge Agreement has been executed bythe undersigned as of the day and year first above written.         INTERNATIONAL ABSORBENTS INC.           By: /s/ Gordon Ellis           Print: Gordon Ellis    Its: Director       SWORN BEFORE ME at the City of  )                     , in the Province of  )                     , this       day of                     , 2006.  )    )    )    )    ) A Notary Public in and for the Province of  )                       )    ) [EXECUTION/ACKNOWLEDGEMENT PAGE OF CORPORATE GUARANTY AND