<PAGE>  1

                         DEBT RESTRUCTURING AGREEMENT

THIS AGREEMENT is made this 30th day of August, 1999,

AMONG:

        MFC BANCORP LTD., a company continued under the laws of the Yukon
        Territory

        ("MFC")

AND:

        DRUMMOND FINANCIAL CORPORATION, a company
        incorporated under the laws of the State of Delaware

        ("Drummond")

WHEREAS Drummond is indebted to MFC and MFC has agreed to reduce the interest
rate applicable to that indebtedness in exchange for a general security
interest over the property, assets, effects and undertakings of Drummond, all
as hereinafter set forth;

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises
and the mutual covenants and agreements hereinafter contained and the sum of
$1.00 paid by each party to the other (the receipt and sufficiency of which
are hereby acknowledged by each party) the parties hereto warrant, represent,
covenant and agree as follows:

1.     INTERPRETATION

1.1    In this Agreement and the recitals hereto the following words have the
       following meanings:

       (a)    "Agreement" means this agreement between MFC and Drummond;

       (b)    "Closing Date" means August 30, 1999 or such other date as the
              parties hereto may agree; and

       (c)    "Indebtedness" means the indebtedness of US$21,515,000 bearing
              interest at 8.75% owed by Drummond to MFC which is evidenced by
              a promissory note due July 31, 2008.

1.2    The division of this Agreement into articles, sections and subsections
       and the insertion of headings are for reference purposes only and
       shall not effect the interpretation of the Agreement.  Unless
       otherwise indicated, the reference to a particular article, section,
       subsection or Schedule refers to a specified article, section,
       subsection or Schedule of this Agreement.


<PAGE>  2


1.3    This Agreement shall be construed in accordance with the laws of the
       Province of British Columbia.  All references to sums of money shall
       be deemed to refer to the legal tender of Canada unless otherwise
       stated.

2.     RESTRUCTURING OF INDEBTEDNESS

2.1    Subject to and in accordance with the terms and conditions of this
       Agreement, MFC and Drummond hereby covenant and agree with each other
       to reduce the interest rate payable on the Indebtedness from 8.75% per
       annum to 5.00% per annum and MFC and Drummond further covenant and
       agree to secure the Indebtedness by way of a general security
       agreement and securities pledge agreement.

3.     REPRESENTATIONS AND WARRANTIES

3.1    MFC represents and warrants to Drummond that:

       (a)    it is a company duly continued and validly existing under the
              laws of the Yukon Territory;

       (b)    it has all necessary corporate authority, power and capacity to
              enter into this Agreement and to carry out its terms and
              conditions to the full extent; and

       (c)    the acceptance of the general security interest in exchange
              for the reduction of the interest rate applicable to the
              Indebtedness has been validly authorized by all necessary
              corporate acts.

3.2    Drummond represents and warrants to MFC that:

       (a)    it is a company duly incorporated and validly existing under
              the laws of the State of Delaware;

       (b)    it has all necessary corporate authority, power and capacity to
              enter into this Agreement and to carry out its terms and
              conditions to the full extent; and

       (c)    the reduction of the interest rate applicable to the
              Indebtedness as consideration for the granting of the general
              security interest has been validly authorized by all necessary
              corporate acts.

4.     COMPLETION

4.1    On or before the Closing Date, MFC shall deliver, or cause to be
       delivered to Drummond, the following:

       (a)    the promissory note due July 31, 2008 in the principal amount
              of US$21,515,000 bearing interest at 8.75% per annum evidencing
              the Indebtedness surrendered for cancellation; and


                                       - 2 -


<PAGE>  3


       (b)    such other documents as may be required in order to carry out
              the terms of this Agreement.

4.2    On or before the Closing Date, Drummond shall deliver, or cause to be
       delivered to MFC, the following:

       (a)    a certified copy of a directors' resolution authorizing the
              entering into, the execution and delivery of this Agreement by
              Drummond and the consummation of the transactions contemplated
              hereby;

       (b)    a promissory note substantially in the form attached hereto as
              Schedule A due July 31, 2008 in the principal amount of
              US$21,515,000 bearing interest at 5.00% per annum;

       (c)    a general security agreement substantially in the form attached
              hereto as Schedule B;

       (d)    a securities pledge agreement substantially in the form
              attached hereto as Schedule C; and

       (e)    such other documents as may be required in order to carry out
              the terms of this Agreement.

5.     GENERAL

5.1    Time is of the essence of this Agreement.

5.2    This Agreement shall enure to the benefit of and be binding upon the
       parties hereto and their respective successors and assigns.

5.3    The parties hereto agree to execute such further and other agreements
       as may be necessary to give effect to the meaning and intent of this
       Agreement.

5.4    This Agreement constitutes the entire agreement between the parties
       with respect to the subject matter of this Agreement and supersedes
       every previous agreement, communication, expectation, negotiation,
       representation or understanding whether oral or written, express or
       implied, statutory or otherwise among the parties with respect to the
       subject matter of this Agreement except as specifically set out
       herein.

5.5    No director, officer, employee or agent of any party has any authority
       to make any representation, warranty or covenant not contained in this
       Agreement and each party agrees that it has executed this Agreement
       without reliance upon any such representation or promise.


                                       - 3 -


<PAGE>  4


5.6    This Agreement may be executed in several parts and in the same form
       and by facsimile and such parts so executed shall together constitute
       one original document, and such parts, if more than one, shall be read
       together and construed as if all the signing parties had executed one
       copy of the said agreement.

IN WITNESS WHEREOF the parties hereto have hereunto executed this Agreement
as of the day and year first above written.

MFC BANCORP LTD.


Per:  /s/Roy Zanatta
      -----------------------------
      Authorized Signatory


Per:
      -----------------------------
      Authorized Signatory


DRUMMOND FINANCIAL CORPORATION


Per:  /s/ Michael J. Smith
      ------------------------------
      Authorized Signatory


Per:
      ------------------------------
      Authorized Signatory


                                     - 4 -


<PAGE>  5


                                   SCHEDULE A


                                PROMISSORY NOTE
                                ---------------

                                AUGUST 30, 1999

PRINCIPAL AMOUNT:  $21,515,000 (U.S.)                     DUE:  JULY 31, 2008

FOR VALUE RECEIVED, the undersigned DRUMMOND FINANCIAL CORPORATION
("Drummond") hereby promises to pay to MFC BANCORP LTD. ("MFC"), of 6 Rue
Charles-Bonnet, 1206 Geneva, Switzerland, on July 31, 2008, at such address
or at such other place as MFC may from time to time designate by written
notice to Drummond, the principal amount of TWENTY-ONE MILLION FIVE HUNDRED
AND FIFTEEN THOUSAND DOLLARS (U.S.) ($21,515,000), together with interest
thereon at the rate of 5.00% per annum compounded semi-annually as well after
as before maturity and judgment and both before and after default, such
interest payable semi-annually on the 25th day of January and the 25th day of
July in each year until payment in full.

The payment of the principal and the interest thereon is secured by way of a
general security agreement and a securities pledge agreement issued and
delivered by Drummond to MFC and each dated August 30, 1999.

Presentment for payment, demand, protest and notice of dishonour and protest
hereof are hereby waived.  This note shall be governed by and construed in
accordance with the laws of the Province of British Columbia.

DRUMMOND FINANCIAL CORPORATION

By:      /s/ Michael J. Smith
   -------------------------------------

Name:                                                               c/s
      ----------------------------------

Title:
       ---------------------------------


                                      A-1


<PAGE>  6


                                SCHEDULE B


                         GENERAL SECURITY AGREEMENT
                         --------------------------


THIS GENERAL SECURITY AGREEMENT is dated for reference the 30th day of
August, 1999,

BETWEEN:

           DRUMMOND FINANCIAL CORPORATION, a company
           incorporated under the laws of the State of Delaware

           ("Drummond")

AND:

           MFC BANCORP LTD., a company incorporated under the laws
           of the Yukon Territory

           ("MFC")


WHEREAS Drummond has executed a promissory note dated the 30th day of August,
1999 in favour of MFC (the "Note") in the principal amount of US$21,515,000
due July 31, 2008 and MFC has requested that Drummond secure the payment of
the principal and interest by way of a general security agreement;

NOW THEREFORE for good and valuable consideration, receipt and adequacy of
which is acknowledged by the parties, the parties agree that:

1.     DEFINITIONS

1.1    In this general security agreement:

       (a)    the terms "Goods", "Chattel paper", "Documents of Title",
              "Equipment", "Accounts", "Consumer Goods", "Instruments",
              "Intangibles", "Licenses", "Money", "Securities", "Proceeds",
              "Inventory" and "Accessions" and other words and expressions
              which have been defined in the Personal Property Security Act
              (British Columbia) (the "PPSA") shall be interpreted in
              accordance with their respective meanings given in the PPSA
              unless otherwise defined herein or unless the context otherwise
              requires and specifically;


                                       B-1


<PAGE>  7


       (b)    "Indebtedness" means all liabilities of every kind and
              description of Drummond to MFC, whether now or hereafter owed
              or any future advance, whether direct, indirect, contingent,
              and whether Drummond be bound alone or with others and whether
              as principal or surety and including, but not limited to, the
              principal amount of the Note and any interest accruing thereon;

       (c)    "PPSA" means the Personal Property Security Act (British
              Columbia); and

       (d)    "Related Documents" means the Note and any other documentation
              in connection with this general security agreement or the
              Indebtedness or related to its operation or administration,
              whether already existing or executed now or later.

2.     GENERAL SECURITY INTEREST

2.1    For value received and as a general and continuing security for the
       payment of the Indebtedness including any ultimate unpaid balance
       thereof, owed to MFC and to secure the payment of the Indebtedness
       under this general security agreement or any Related Documents,
       Drummond hereby:

       (a)    grants to and in favour of MFC by way of mortgage, charge,
              assignment and transfer, a general security interest in all
              presently owned and hereafter acquired personal property of
              Drummond of whatsoever nature and kind and wheresoever situate
              and all Proceeds thereof and therefrom, renewals thereof,
              Accessions thereto and substitutions therefor including,
              without limiting the generality of the foregoing, all the
              presently owned or held and hereafter acquired right, title,
              and interest in and to all Goods (including all accessories,
              attachments, additions, and Accessions thereto), Chattel Paper,
              Documents of Title (whether negotiable or not), Instruments,
              Intangibles, Licenses, Money (including, without limitation,
              the principal), Securities, and all:

              (i)    Inventory of whatsoever nature and kind and wheresoever
                     situate;

              (ii)   Equipment (other than Inventory) of whatsoever nature
                     and kind and wheresoever situate, including, without
                     limitation, all machinery, tools, apparatus, plant,
                     furniture, fixtures, and vehicles of whatsoever nature
                     and kind;

              (iii)  book accounts and book debts and generally all Accounts,
                     debts, dues, claims, choses in action and demands of
                     every nature and kind howsoever arising or secured
                     including letters of credit, letters of guarantee 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 Drummond (all of which are herein collectively called
                     the "Debts");


                                      B-2


<PAGE>  8


              (iv)   deeds, documents, writings, paper, 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, acknowledges or
                     made payable;

              (v)    contractual rights including rents, revenues and
                     incomes, and insurance claims and policies, and all
                     goodwill, patents, trademarks, copyrights, and other
                     industrial property;

              (vi)   monies (including, without limitation, the principal)
                     other than trust monies lawfully belonging to others;
                     and

              (vii)  personal property described in any schedule now or
                     hereafter annexed hereto;

              (all of which are herein collectively called the "Specifically
              Charged Property").

       (b)    charge as and by way of a floating charge in favour of MFC all
              the presently owned or held and hereafter acquired property,
              assets, effects and undertakings of Drummond of whatsoever
              nature and kind and wheresoever situate, other than such of the
              property, assets, effects and undertakings of Drummond as are
              validly and effectively subjected to the grant, mortgage,
              pledge and charge, and the general security interest granted to
              MFC pursuant to subsection 2.1(a) including, without limiting
              the generality of the foregoing, all presently owned or held
              and hereafter acquired:

              (i)    right, title and interest of Drummond in and to real and
                     immovable and leasehold property and rights whether in
                     fee or of a less estate and all interest in and rights
                     relating to lands and all easements, rights of way,
                     privilege, benefits, licenses, improvements and rights
                     whether connected therewith or appurtenant thereto or
                     separately owned or held and all structures, buildings,
                     plant, machinery, fixtures, apparatus and fixed assets;
                     and

              (ii)   businesses, goodwill and uncalled capital of Drummond;

              and the Specifically Charged Property and the property charged
              by this subsection 2.1(b) and all property and assets expressed
              to be charged by any instruments supplemental hereto or in
              implementation hereof are collectively referred to as the
              "Collateral".

2.2    TO HAVE AND TO HOLD unto and in favour of MFC on the terms and
       conditions herein set out, PROVIDED THAT Drummond shall not have the
       power without the prior written consent of MFC to:


                                     B-3


<PAGE>  9


       (a)    grant or allow any lien, charge or other encumbrance, whether
              fixed or floating, to be registered against or exist on any
              part of the Collateral, which ranks or could in any event rank
              to be enforced in priority to or pari passu with the security
              constituted by this general security agreement, save for:

              (i)    mortgages and charges and any other encumbrances, if
                     any, previously disclosed by Drummond;

              (ii)   mortgages and charges, and any other encumbrances to
                     MFC; and

              (iii)  encumbrances approved in writing by MFC prior to their
                     creation or assumption; and

       (b)    grant, sell, exchange, transfer, assign, lease or otherwise
              dispose of any of its properties, assets, effects, and
              undertakings.

3.     RIGHTS AND OBLIGATIONS OF DRUMMOND

3.1    Drummond warrants and covenants that it holds title or has rights in
       the Collateral sufficient for a general security interest to attach to
       the Collateral and that there are no existing encumbrances on this
       Collateral, except as previously disclosed to MFC by Drummond.

3.2    Until default, or unless otherwise agreed with MFC, Drummond may deal
       with the Collateral in the ordinary course of Drummond's business.

3.3    Drummond shall defend its own and MFC's rights in the Collateral
       against the claims and demands of all persons.

3.4    Drummond will conduct its business and affairs in a proper and
       efficient manner, in accordance with applicable law and keep records
       in accordance with generally accepted accounting principles.  Drummond
       shall pay all charges, such as taxes, assessments, claims, liens and
       encumbrances relating to the Collateral or Drummond's business and
       affairs when the same become due.  Drummond will deliver to MFC,
       promptly, such information concerning the Collateral, Drummond and
       Drummond's business and affairs, as MFC may reasonably request.

3.5    Drummond waives protest and notice of any instrument constituting
       Collateral at any time held by MFC on which Drummond is in any way
       liable, and subject to the notice requirements of the PPSA, notice of
       any other action taken by MFC.


                                      B-4


<PAGE>  10


4.     DEFAULT

4.1    The Indebtedness hereby secured shall become immediately due and
       payable, unless waived in writing by MFC, in any of the following
       events:

       (a)    if Drummond should make default in the payment when due of the
              Indebtedness, or any part thereof, hereby secured; or

       (b)    if Drummond should commit any breach of any term, condition,
              proviso, agreement, obligation or covenant to MFC, or any
              representation or warranty given by Drummond to MFC is untrue,
              whether or not any such term, condition, proviso, agreement or
              covenant, representation or warranty is contained in this
              general security agreement; or

       (c)    if an order be made or an effective resolution be passed for
              the winding up of Drummond or there is instituted by or against
              Drummond of any type of insolvency proceeding or creditor
              arrangement, any formal of informal proceeding for the
              dissolution or liquidation of, settlement of claims against, or
              winding up of affairs of Drummond; or

       (d)    if Drummond should make an assignment for the benefit of its
              creditors or be declared bankrupt or makes a proposal or an
              authorized assignment or otherwise takes advantage of
              provisions for relief under the Bankruptcy Act (Canada), the
              Company's Creditors Arrangement Act (Canada) or similar
              legislation in any jurisdiction; or

       (e)    if Drummond ceases or threatens to cease to carry on business
              or makes or agrees to make a bulk sale of assets or commits or
              threatens to commit an act of bankruptcy; or

       (f)    a receiver, receiver and manager or receiver/manager of all or
              any part of the Collateral, or of any other property, assets or
              undertakings of Drummond is appointed; or

       (g)    any execution, sequestration, extent or other process of any
              court becomes enforceable against Drummond or a distress or
              analogous process is levied upon the Collateral or any part
              thereof; or

       (h)    if, without the prior written consent of MFC, Drummond creates
              or permits to exist any encumbrance against any of the
              Collateral which ranks or could in any event rank in priority
              to or pari passu with the security constituted by this general
              security agreement; or

       (i)    Drummond enters into any reconstruction, reorganization,
              amalgamation, merger or other similar arrangement with any
              other person; or


                                      B-5


<PAGE>  11


       (j)    any certificate, statement, representation, warranty or audit
              report herewith, heretofore or hereafter furnished by or on
              behalf of Drummond to MFC, whether in connection with this
              general security agreement or otherwise, and whether furnished
              as to an inducement to MFC to extend any credit to or to enter
              into this or any other agreement with Drummond, or not:

              (i)    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

              (ii)   proves to have omitted any substantial, contingent or
                     unliquidated liability or claim against Drummond;

              or, if upon the date of execution of this general security
              agreement, there shall have been any material adverse change in
              any of the facts disclosed by any such certificate, statement,
              representation, warranty or audit report, which change shall
              not have been disclosed to MFC at or prior to the time of such
              execution.

4.2    All amounts payable to MFC shall be made without deduction,
       compensation, set-off, or counterclaim.  A written statement of an
       officer of MFC as to the amount remaining unpaid to MFC at any time by
       Drummond shall be conclusive evidence and shall in any event be prima
       facie evidence against Drummond as to the amount remaining unpaid to
       MFC at such time by Drummond.

5.     RIGHTS AND OBLIGATIONS OF MFC

5.1    In addition to the rights granted herein, MFC may enforce any other
       rights and remedies it may have at law or in equity and specifically
       shall have all rights and remedies of a secured party under the PPSA.
       All rights and remedies of MFC are cumulative and one or more of these
       rights may be exercised independently or in combination from time to
       time including marshalling.

5.2    MFC may direct account debtors of Drummond to make all payments owing
       to Drummond on Collateral subject to the security interest directly to
       MFC, by notifying such account debtors of MFC's interest, either
       before or after default.

5.3    MFC shall have the right at any time to confirm the existence and
       state of the Collateral in any manner MFC may consider appropriate and
       Drummond agrees to furnish all assistance as MFC may reasonably
       request in connection therewith.  Drummond grants to MFC or its agents
       access to all places where Collateral may be located and to all
       premises occupied by Drummond for the purposes of inspection or
       obtaining possession.

5.4    MFC may appoint by instrument or by application to a court of
       competent jurisdiction a receiver or other person to act on its
       behalf, before or after default, or in any insolvency or like pro-
       ceeding (receiver includes a receiver-manager). The appointee has all the


                                      B-6


<PAGE>  12


       powers of MFC under this general security agreement.  In addition, on
       instructions from MFC, the receiver shall be entitled to carry on the
       business of Drummond with all the powers Drummond would have to operate
       its business, for such time as the receiver determines it advisable and
       in the best interest of MFC.  MFC is not liable for any act or omission
       by any receiver appointed or selected by a court.

5.5    MFC may take possession or constructive possession of, collect, `
       demand, sue on, enforce, recover and receive both Collateral and
       proceeds and give binding receipts and discharges therefor.  MFC in
       possession may use Collateral as it sees fit, providing such use is
       reasonable.  Any income from or money that is Collateral shall be
       applied to Drummond's account.  Upon default, MFC may also sell, lease
       or otherwise dispose of Collateral in any commercially reasonable
       manner.  MFC reserves the right to repair or restore Collateral prior
       to sale and to add any costs incurred to the Indebtedness.

5.6    MFC may declare all or any part of the Indebtedness which is not by
       its terms payable on demand to be immediately due and payable on the
       occurrence of any default.

5.7    Drummond agrees to pay all charges, including solicitors', auditors',
       receivers' or like persons' costs and remuneration or other expenses
       reasonably incurred by MFC or other party appointed by MFC in
       operating Drummond's accounts and in preparing or enforcing this
       general security agreement.  Such sums shall constitute a future
       advance increasing the Indebtedness hereunder.

5.8    The failure of MFC to receive full payment or satisfaction of the
       Indebtedness through its rights and remedies herein provided shall not
       in any way release Drummond from the obligation to satisfy any
       deficiency, including any costs of realization.

5.9    No variation, amendment (except for any schedules which may be added
       hereto pursuant to the provisions of this general security agreement)
       or waiver of any provision of this general security agreement shall be
       effective unless made by written agreement executed by the parties to
       this general security agreement.

5.10   No delay or omission by MFC in exercising any right or remedy
       hereunder or with respect to any Indebtedness shall operate as a
       waiver of that right or remedy and no single or partial exercise of
       any right or remedy shall preclude any other exercise of cumulative
       rights and remedies.

5.11   MFC may remedy any default or perform any duty of Drummond 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 Drummond.


                                     B-7


<PAGE>  13


6.     GENERAL

6.1    This general security agreement shall enure to the benefit of and be
       binding on the parties hereto and their respective heirs, executors,
       administrators, successors and assigns.

6.2    This general security agreement and the related documents shall be
       governed by the laws of the Province of British Columbia.

6.3    No action by MFC shall constitute a subordination of its general
       security interest to any other interest in the Collateral unless such
       subordination is effected by an agreement in writing, titled
       "Subordination Agreement", signed by MFC.

6.4    This general security agreement shall remain in full force and effect
       until the Collateral has been paid and written notice of discharge by
       MFC is received by Drummond.

6.5    Drummond hereby acknowledges receipt of a copy of this general
       security agreement.

IN WITNESS WHEREOF this general security agreement is executed and delivered
on August 30, 1999.


DRUMMOND FINANCIAL CORPORATION



By:  /s/ Michael J. Smith
     --------------------------------
     Authorized Signatory


                                      B-8


<PAGE>  14


                                  SCHEDULE C


                         SECURITIES PLEDGE AGREEMENT
                         ---------------------------


THIS AGREEMENT is dated for reference the 30th day of August, 1999, and is
made by DRUMMOND FINANCIAL CORPORATION of 1250 - 400 Burrard Street,
Vancouver, British Columbia,  V6C 3A6 ("Drummond") in favour of MFC BANCORP
LTD. of 6 Rue Charles-Bonnet, 1206 Geneva, Switzerland ("MFC");

WHEREAS Drummond has executed a promissory note dated the 30th day of August,
1999 in favour of MFC (the "Note") in the principal amount of US $21,515,000
due July 31, 2008;

AND WHEREAS in order to secure the performance of its obligations under, in
connection with or relating to the Note, Drummond has agreed to pledge the
Securities (as hereinafter defined) to MFC;

NOW THEREFORE, this Agreement witnesses that in consideration of the
covenants and agreements herein contained, the parties hereto agree as
follows:


                                  ARTICLE I
                                  ---------

                      ASSIGNMENT, PLEDGE AND HYPOTHECATION

1.1    COLLATERAL

       Drummond hereby pledges to MFC all of the issued and outstanding
       shares in the capital of CVD Financial Corporation (British Columbia)
       and CVD Financial Corporation (Washington) and any and all accretions,
       additions, accessions, substitutions and replacements thereto or
       therefor (such shares, accretions, additions, accessions,
       substitutions and replacements collectively hereinafter referred to as
       the "Securities"), together with all money, income, proceeds and
       benefits, of every nature and kind whatsoever, now or at any time
       hereafter due, owing, payable or accruing on, under or in respect of
       the Securities or otherwise attributable or accruing thereto,
       including, without limitation, all distributions of earnings or
       capital (including, without limitation, all dividends in cash and
       dividends in kind, liquidating dividends, stock dividends, new
       security or other properties or benefits to which Drummond is or may
       hereafter become entitled to receive on account of the Securities and
       all payments by way of reduction of capital) (the Securities together
       with all such money, income, proceeds and benefits are collectively
       hereinafter referred to as the "Collateral").


                                     C-1


<PAGE>  15


1.2    INDEBTEDNESS SECURED

       The Collateral will be held by MFC as general and continuing security
       in favour of and as a fixed and specific assignment, pledge and
       hypothecation unto MFC to secure performance of the obligations of
       Drummond under the Note (the "Obligations").

1.3    ADDITIONAL SECURITY

       If Drummond becomes entitled to receive or receives any certificate
       (including, without limitation, any certificate representing a stock
       dividend or a distribution in connection with any reclassification,
       increase or reduction of capital), bond, note or other instrument, or
       any option or right, whether as an addition to or in substitution or
       exchange for, any of the Securities, Drummond will accept such
       certificate, bond, note, instrument, option or right in trust for MFC
       and will deliver such certificate, bond, note, instrument, option or
       right forthwith to MFC in the exact form received by Drummond, with
       Drummond's endorsement when necessary, to be held by MFC, subject to
       the terms hereof, as general and continuing security and as a fixed
       and specific assignment, pledge and hypothecation unto MFC to secure
       payment of the Obligations.

1.4    AMOUNTS HELD IN TRUST

       If any money, income, proceed or other benefit, of any nature or kind
       whatsoever, is received by Drummond in respect of any of the
       Collateral, Drummond will receive such money, income, proceed or other
       benefit in trust for MFC, will segregate such money, income, proceed
       or other benefit from its other property or funds and will forthwith
       upon receipt thereof assign, transfer, set over and deliver the same
       to MFC to be held by MFC hereunder as general and continuing security
       to secure payment of the Obligations in accordance with the terms
       hereof and MFC, as MFC in its uncontrolled discretion may determine,
       may deal with such amounts or benefits in accordance with the
       provisions hereof.

1.5    RESPONSIBILITY OF MFC

       It is agreed that the responsibility of MFC in regard to the
       Collateral will be limited to exercising the same degree of care which
       it gives to its own valuable property.

1.6    VOTING RIGHTS PRIOR TO DEFAULT

       So long as no Event of Default (as hereinafter defined) or event
       which, with the giving of notice or lapse of time, or both, would
       become an Event of Default has occurred and is continuing Drummond
       will be entitled to vote or refrain from voting the Securities at any
       meeting, whether special or general, at which the holder of the
       Securities is entitled to vote and will be entitled to take part in or
       consent to or refrain from taking part in or consenting to any
       corporate or shareholders' action which the holder of the Securities
       is entitled to take part in or consent to, provided that:


                                      C-2


<PAGE>  16


       (a)    Drummond has given MFC at its address set forth above not less
              than 15 days' written notice of the manner in which it intends
              to exercise, or the reasons for refraining from exercising, any
              such right to vote or to take part in or consent to any such
              corporate or shareholders' action;

       (b)    the exercise of such right to vote or to take part in or
              consent to any such corporate or shareholders' action would not
              result in a contravention of any covenant or agreement of
              Drummond to MFC hereunder or under any other agreement
              evidencing or securing any of the Obligations and if so,
              Drummond should not vote in such a manner; and

       (c)    Drummond has not received from MFC notice that, in the
              judgment of MFC, the exercise of such right to vote or to take
              part in or consent to any such corporate or shareholders'
              action would have a material adverse effect on the value of
              the Collateral or any part thereof.

1.7    VOTING RIGHTS AFTER DEFAULT

       Upon the occurrence and during the continuance of any Event of Default
       or event which, with the giving of notice or lapse of time, or both,
       would become an Event of Default all rights of Drummond pursuant to
       subsection 1.6 shall cease and MFC will be entitled (whether or not
       the Securities are registered in the name of MFC or its nominee) to
       vote or refrain from voting or direct Drummond or any other person as
       MFC may appoint to vote or refrain from voting the Securities at any
       meeting, whether special or general, at which the holder of the
       Securities is entitled to vote and will be entitled to take part in or
       consent to or refrain from taking part in or consenting to or direct
       Drummond or any other person as MFC may appoint to take part in or
       consent to or refrain from taking part in or consenting to any
       corporate or shareholders' action which the holder of the Securities
       is entitled to take part in or consent to and Drummond hereby
       irrevocably constitutes and appoints MFC and any other person
       appointed by MFC as its true and lawful attorney-in-fact and agent
       for, in the name of and on behalf of Drummond, to act and vote and
       otherwise exercise all powers exercisable with respect to the
       Securities or to take part in or consent to any such corporate or
       shareholders' action, and when so acting or refraining from acting,
       neither MFC nor any person appointed by MFC will incur any liability
       or responsibility of any kind whatsoever to Drummond.

1.8    ENTITLEMENT TO DIVIDENDS

       MFC will be entitled to receive and retain any dividends or
       distributions paid in respect of the Securities and any such dividends
       or distributions shall be held as Collateral hereunder.


                                     C-3


<PAGE>  17


                                 ARTICLE II
                                 ----------

                    WARRANTIES AND COVENANTS OF DRUMMOND

2.1    WARRANTIES AND COVENANTS

       Drummond hereby warrants, covenants and agrees with MFC that:

       (a)    the Securities have been duly authorized and validly issued and
              are outstanding as fully paid and non-assessable and were
              issued in compliance with all applicable corporate and
              securities laws;

       (b)    Drummond authorizes MFC to file, in jurisdictions where this
              authorization will be given effect, a financing statement or
              other statement disclosing the security interest created
              herein signed only by MFC covering the Collateral; and, at the
              request of MFC, Drummond will join MFC in executing one or
              more financing or other such statements, in form satisfactory
              to MFC, and will pay the cost of filing the same or filing or
              recording this Agreement in all public offices wherever filing
              or recording is deemed by MFC to be necessary or desirable, it
              being further stipulated in this regard that MFC may also at
              any time or times sign any counterpart of this Agreement
              signed by Drummond and file same as a financing statement if
              MFC shall elect to do so;

       (c)    Drummond will not sell, assign, transfer or otherwise dispose
              of the Collateral or any interest therein or agree to sell,
              assign, transfer or otherwise dispose of the Collateral or any
              interest therein without the prior written consent of MFC;

       (d)    Drummond will not create, incur or permit to exist any adverse
              claim, mortgage, assignment, pledge, hypothecation, lien,
              charge or other encumbrance or security interest whatsoever
              with respect to any of the Collateral (other than pursuant to
              this agreement) without the prior written consent of MFC; and

       (e)    Drummond will pay to MFC on demand all expenses and
              expenditures, including, without limitation, legal fees and
              disbursements, incurred or paid by MFC in connection with
              confirming, perfecting and preserving of the assignment, pledge
              and hypothecation constituted hereby, in connection with
              protecting MFC against the claims or interests of any third
              person against the Collateral and in connection with the
              exercise by MFC of any right, power or remedy conferred by this
              agreement or by law.


                                      C-4


<PAGE>  18


                                  ARTICLE III
                                  -----------

                                GENERAL COVENANTS

3.1    CONTINUING SECURITY

       This shall be a continuing agreement and the Collateral is in addition
       to and not in substitution for any other security held now or
       hereafter by MFC and shall not operate as a merger of any simple
       contract debt or suspend the fulfillment of, or affect the rights,
       remedies and powers of MFC in respect of the Obligations or the
       Collateral and this Agreement and the assignment, pledge and
       hypothecation constituted hereby shall continue in full force and
       effect in accordance with the terms hereof until all of the
       Obligations have been fully paid and satisfied by Drummond and
       discharged by MFC.  All claims, present and future, of Drummond
       against any person liable upon or for payment of any of the Securities
       are hereby assigned to MFC.

3.2    FUTURE SECURITIES

       Any and all securities and other properties heretofore, now or
       hereafter delivered by Drummond to MFC, or in MFC's possession, shall
       also secure payment of the Obligations and shall be held and construed
       to be a part of the Collateral hereunder to the same extent as fully
       described herein.

3.3    APPOINTMENT AS ATTORNEY

       Drummond hereby irrevocably constitutes and appoints MFC and any other
       person appointed by MFC as its true and lawful attorney-in-fact and
       agent for, in the name of and on behalf of Drummond, to execute and
       deliver, and to receive delivery of, all such assignments, transfers,
       deeds, assurances and instruments as may be necessary to transfer all
       or any of the Collateral (including, without limitation, to fill in
       all blanks in any transfers of stocks or any powers of attorney or
       other documents delivered to MFC) and when so acting neither MFC nor
       any person appointed by MFC will incur any liability or responsibility
       of any kind whatsoever to Drummond.

3.4    RECORDS OF MFC

       The records of MFC as to the occurrence of any Event of Default (as
       hereinafter defined), as to the obligations secured hereby or as to
       any demand having been made on Drummond will be prima facie evidence
       of such default, obligation or demand.

3.5    NO OBLIGATION TO COLLECT

       MFC will not be bound or obliged, at any time or under any
       circumstances, to collect or see to the payment of any interest,
       dividends or other income of, on or from any of the Collateral, or to
       sell, transfer or otherwise realize upon any of the Collateral and MFC


                                      C-5


<PAGE>  19


       will not be responsible for any loss occasioned by any sale of any of
       the Collateral or by the retention of or refusal to sell the same.

3.6    NO OBLIGATION TO RELEASE

       If any payment on account of the Obligations is made MFC will not by
       reason thereof be required to surrender any of the Collateral;
       provided that MFC will, at the request of Drummond, surrender the
       Collateral to Drummond upon the earlier of the date on which:

       (a)    all indebtedness and liability of Drummond under the Note has
              been fully paid and satisfied and MFC has been released from
              all of its obligations to make any further advances to
              Drummond; and

       (b)    MFC has released Drummond from the Obligations.


                                  ARTICLE IV
                                  ----------

                               EVENTS OF DEFAULT

4.1    EVENTS OF DEFAULT

       Drummond shall be in default under this Agreement upon the occurrence
       of any of the following events or conditions (each an "Event of
       Default"):

       (a)    default in the payment or performance of any liability or
              obligation of Drummond or of any maker, endorser or guarantor
              of any liability or obligation of Drummond to MFC, including,
              without limitation, default in connection with the Obligations
              when due;

       (b)    default in the performance of any covenant or agreement of
              Drummond to MFC, whether under this Agreement or any other
              agreement evidencing or securing any of the Obligations or
              otherwise;

       (c)    any representation or warranty by Drummond herein or in any
              other agreement or instrument of which MFC has the benefit, or
              any certificate of Drummond or any shareholder, director or
              officer of Drummond delivered in connection herewith or
              pursuant hereto, being or becoming untrue or incorrect in whole
              or in part and the same not being remedied within 10 days after
              written notice thereof is given to Drummond;

       (d)    the levy of any attachment, execution, or other process against
              Drummond or any of the Collateral;

       (e)    the dissolution, termination of existence, insolvency or
              business failure of Drummond or any endorser, guarantor or
              surety of any of the Obligations, or the


                                     C-6


<PAGE>  20


              commission of an act of bankruptcy by, or by the appointment of
              receiver or other legal representative for any part of the
              property of, assignment for the benefit of creditors by, or the
              commencement of any proceedings under any bankruptcy or
              insolvency law by or against, Drummond or any endorser,
              guarantor or surety for any of the Obligations;

       (f)    the occurrence of any event which under the terms of any
              evidence of indebtedness, indenture, loan agreement, security
              agreement or similar instrument permits the acceleration of
              maturity of any indebtedness of Drummond to MFC;

       (g)    the receipt by MFC of notification that another person has or
              expects to acquire a security interest in the Collateral or any
              part thereof; or

       (h)    a change in the beneficial ownership or control of Drummond or
              the entering into of any agreement pursuant to which a right,
              agreement or option, present or future, contingent or absolute,
              or any right capable of becoming a right, agreement or option:

              (i)    to require Drummond to issue any further or other
                     shares or securities in its capital or to convert any
                     securities of Drummond into voting shares in its
                     capital; or

              (ii)   to purchase or otherwise acquire any shares in the
                     capital of Drummond from Drummond or the Borrower.


                                  ARTICLE V
                                  ---------

                             POWERS AND REMEDIES

5.1    SALE

       Upon the occurrence of an Event of Default and at any time thereafter,
       at the option of MFC, the Obligations shall become immediately due and
       payable without presentment or demand or any notice to Drummond or any
       other person obligated thereon and MFC shall have and may exercise
       with reference to the Collateral and the Obligations any and all of
       the rights and remedies of MFC under this Agreement and such other
       rights and remedies as are provided by law or by equity or by statute,
       including, without limitation, the right and power to sell on any
       recognized exchange dealing in such securities or by public or private
       sale or sales, or otherwise dispose of or utilize, the Collateral and
       any part or parts thereof as fully and effectually as if MFC were the
       absolute owner thereof, and to apply the proceeds thereof toward
       payment of any costs and expenses (including, without limitation,
       legal fees and disbursements) thereby incurred by MFC and toward
       payment of the Obligations, in such order, manner and priority as MFC
       in its uncontrolled discretion may see fit.  To the extent permitted
       by law, Drummond expressly waives any notice of sale or other
       disposition of the Collateral and any other rights or remedies of


                                     C-7


<PAGE>  21


       Drummond or formalities prescribed by law or by equity or by statute
       relative to the sale or other disposition of the Collateral or
       exercise of any other right or remedy of MFC; and to the extent any
       such notice is required and cannot be waived, Drummond agrees that if
       such notice is mailed, postage prepaid, to Drummond at the address
       shown above at least five days before the time of the sale or
       disposition, such notice shall be deemed reasonable and shall fully
       satisfy any requirement for giving of said notice.  Drummond expressly
       acknowledges and agrees that at any sale or realization of the
       Securities under this section, MFC may purchase the Securities or any
       part thereof, free from any right of redemption on the part of
       Drummond or anyone claiming through Drummond, which right is, to the
       extent permitted by law, hereby waived and released.

5.2    TRANSFER OF SECURITIES

       MFC is hereby granted the right, at its option, either before or after
       the occurrence of an Event of Default, to transfer at any time to
       itself or its nominee the Securities or any part thereof and to have
       the Securities or any part thereof registered in its name or in the
       name of its nominee.

5.3    RIGHT TO EXERCISE OPTION

       Upon the occurrence and during the continuance of any Event of Default
       or event which, with the giving of notice or lapse of time, or both,
       would become an Event of Default, MFC will have the right but will not
       be bound nor required to exercise any option or right which the holder
       of any of the Collateral may at any time have, and any and all costs,
       charges, expenses, fees, outlays and premiums incurred by MFC in
       connection with the exercise of any such option or right will be added
       to and form part of the Obligations and be secured hereby.

5.4    COMPROMISE AND RELEASE

       MFC will not be obliged to exhaust its recourse against Drummond or
       any other person or against any other security or securities which it
       may hold before realizing on or otherwise dealing with the Collateral,
       and MFC may grant time, renewals, extensions, indulgences, releases
       and discharges to, may take securities from and give the same and any
       and all securities up to, may abstain from taking securities from, or
       from perfecting securities of, may accept compositions from, and may
       otherwise deal with, Drummond and all other persons as MFC may see
       fit, without prejudice to the right of MFC to hold, deal with, sell,
       transfer and otherwise realize on the Securities in accordance with
       the terms of this Agreement.


                                     C-8


<PAGE>  22


5.5    COOPERATION WITH LENDER

       Drummond hereby agrees to cooperate fully with MFC in order to permit
       MFC to sell, transfer or otherwise realize on the Collateral in
       accordance with the terms hereof.  Specifically, Drummond agrees to
       fully comply with the securities laws of the Province of British
       Columbia and any other province having jurisdiction, and the rules,
       bylaws and regulations of any stock exchange on which the Securities
       may be traded, and to take such action as may be necessary to permit
       MFC to sell, transfer or otherwise realize on the Securities in
       compliance with such laws.

5.6    APPLICATION OF COLLATERAL

       MFC may, at its option, hold any and all proceeds, payments, monies,
       income or benefits attributable or accruing to the Collateral which is
       received by MFC as security for the Obligations, or, apply any or all
       of such proceeds, payments, monies, income or benefits to the
       Obligations, whether or not then due, in such order manner or priority
       as MFC may, in its uncontrolled discretion, determine.

                                  ARTICLE VI
                                  ----------

                                 MISCELLANEOUS

6.1    FURTHER ASSURANCES

       At the request of MFC Drummond will, at its own expense, execute all
       such transfers, stock powers, proxies and other documents as may be
       required by MFC, with all such powers of sale and other necessary
       powers as may be expedient for vesting in MFC or such person or person
       as MFC may appoint, the Securities and to otherwise carry into effect
       the intent and purposes of this Agreement.

6.2    NO REVOCATION

       The appointment and power of attorney contained in sections 1.7 and
       3.3, respectively, will be deemed to be coupled with an interest and
       will not be revoked by the bankruptcy, insolvency, winding-up,
       liquidation or dissolution of Drummond and Drummond hereby ratifies
       and confirms and agrees to ratify and confirm all that MFC or any
       person appointed by MFC, as attorney-in-fact and agent for, in the
       name of and on behalf of Drummond, may lawfully do or cause to be done
       by virtue of sections 1.7 and 3.3, respectively.

6.3    WAIVER

       No delay or omission on the part of MFC in exercising any rights
       hereunder shall operate as a waiver of any such right or any other
       right.  A waiver on any one or more occasions shall not be construed
       as a bar to or waiver of any right or remedy on any future occasion.


                                     C-9


<PAGE>  23


6.4    SEIZURE OF COLLATERAL

       Upon the occurrence of an Event of Default MFC shall have the absolute
       and unconditional right, without prior notice or any prior hearing of
       any kind whatsoever, to seize and take possession of the Collateral,
       and Drummond does hereby expressly waive any right to any prior notice
       or any prior hearing prior to seizure and taking possession of the
       Collateral by MFC.

6.5    SUCCESSORS AND ASSIGNS

       This Agreement shall be binding on Drummond, and its successors and
       assigns, and shall enure to the benefit of MFC, and its successors and
       assigns.

6.6    RIGHTS CUMULATIVE

       The rights and remedies of MFC hereunder are cumulative and the
       exercise of any one or more of the remedies provided herein shall not
       be construed as a waiver of any of the other remedies of MFC.

6.7    SEVERABILITY

       If any provision of this Agreement shall be found or determined to be
       invalid, illegal or unenforceable it shall be severable from this
       Agreement and the remainder of this Agreement shall be read and
       construed as if such invalid, illegal or unenforceable provision or
       part had been deleted herefrom.

6.8    APPLICABLE LAW

       This Agreement and the rights and obligations of the parties hereunder
       shall be governed and construed according to the laws of the Province
       of British Columbia.


                                     C-10


<PAGE>  24


6.9    OWNERSHIP CERTIFICATES

       In connection with the Securities MFC is hereby authorized to sign on
       behalf of and as agent for Drummond such income tax ownership
       certificates as may be required.

EXECUTED as of the 30th day of August, 1999.

SIGNED, SEALED and DELIVERED by     )
DRUMMOND FINANCIAL                  )
CORPORATION in the presence of:     )     By:
                                    )
--------------------------------    )     /s/ Michael J. Smith
Witness                             )     ------------------------------
--------------------------------    )     Authorized Signatory
Address                             )
--------------------------------    )
                                    )     ------------------------------
--------------------------------    )     Authorized Signatory
Occupation


                                     C-11