Exhibit 4.5



                                                                   02/06/03-27

                                LOAN AGREEMENT

         THIS AGREEMENT made as of the 5th day of June, 2003.

B E T W E E N :

         MARSOL CANADA CORPORATION

         (hereinafter called the "Borrower")

                                                             OF THE FIRST PART

A N D :

         FIRST TREASURY FINANCIAL INC.,

         (hereinafter called the "Lender")

                                                            OF THE SECOND PART

A N D :

         MARSULEX INC.

         (hereinafter called the "Guarantor")

                                                             OF THE THIRD PART

         WHEREAS the Lender has agreed to lend money to the Borrower subject
to the terms and conditions of this Agreement.

         NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
covenants and agreements herein contained and for other good and valuable
consideration (the receipt and adequacy whereof is hereby acknowledged) the
parties hereto agree as follows:

ARTICLE 1.00 - MISCELLANEOUS

1.1      Formal Date

         For the purpose of convenience this Agreement may be referred to as
bearing the formal date of the 5th day of June, 2003, irrespective of the
actual date of execution thereof.

1.2      Definitions

         For the purposes of this Agreement, unless there is something in the
subject matter or context inconsistent therewith:

         (a)      "Act" means the Alberta Environmental Protection Act;

         (b)      "Additional Security" shall have the meaning ascribed
                  thereto in Section 4.1(b);

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         (c)      "Advances" means collectively all those advances of monies
                  made by the Lender to the Borrower under this Agreement, and
                  "Advance" means any one of such Advances;

         (d)      "Applicable Canada Bond" means with respect to a prepayment
                  of an Advance the non-callable Government of Canada bond
                  denominated in Cdn. currency determined by the Lender as
                  having a remaining term to maturity closest to the remaining
                  term to maturity of the Advance in respect of which the
                  prepayment is to be made;

         (e)      "Applicable Canada Bond Yield" means with respect to the
                  prepayment of an Advance, the arithmetic average (rounded to
                  the nearest 1/100th of 1%) of the respective percentages
                  determined by the Lender, calculated in accordance with the
                  generally accepted financial practices, assuming semi-annual
                  compounding, to be the yield to maturity, expressed as an
                  annual rate of interest, on the Applicable Canada Bond for
                  the 3 business days immediately preceding the date of such
                  prepayment;

         (f)      "Assignment of Shares" means the assignment by the Guarantor
                  to the Lender, dated as of the 5th day of June, 2003, of the
                  interest of the Guarantor in the shares of the Borrower;

         (g)      "Assignment and Acknowledgement Syncrude" means the
                  agreement pursuant to which Syncrude Canada Ltd. agrees to
                  the assignment of the Syncrude Agreements to the Lender;

         (h)      "Blocked Account" means the special purpose limited access
                  account of the Guarantor identified as such in the Blocked
                  Account Agreement, established by and maintained by the
                  Lender with The Toronto-Dominion Bank;

         (i)      "Blocked Account Agreement" means the blocked account
                  agreement entered into as of the date hereof between the
                  Borrower, the Guarantor and the Lender, as the same may be
                  amended, modified, supplemented or replaced from time to
                  time;

         (j)      "business day" means a day other than Saturday, Sunday or a
                  statutory holiday, or any other day upon which the Lender is
                  not open for the transaction of business throughout normal
                  business hours, at its principal office, in the City of
                  Toronto;

         (k)      "Change in Control" means the Guarantor ceases to own or
                  Control, directly or indirectly, all of the issued and
                  outstanding shares of the Borrower;

         (l)      "Closing" means the date of first Advance after satisfaction
                  of all conditions precedent, delivery of this Agreement and
                  the Security;

         (m)      "control" and "controlled" shall have the same meaning as
                  defined in the Business Corporations Act (Ontario), and
                  "controlling" shall have a comparable meaning;

         (n)      "Corporate Distribution" means:

         (A)      (i)      until the Indenture Termination Date, the
                           declaration by the Borrower of any dividend or
                           other distribution based on issued shares of the
                           Borrower to shareholders of the Borrower, other
                           than the Guarantor or any Subsidiary of the
                           Guarantor which has entered into a blocked account

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                           agreement on similar terms to that with the
                           Guarantor and entered into a blocked account
                           arrangement providing the Lender with a first
                           charge security interest in the blocked account and
                           the funds contained therein; and

                  (ii)     after the Indenture Termination Date, the
                           declaration by the Borrower of any dividend or
                           other distribution based on issued shares of the
                           Borrower to shareholders of the Borrower;

         (B)      (i)      until the Indenture Termination Date, the purchase,
                           redemption or retirement, by the Borrower, of any
                           interest in the capital, or subordinated loans of
                           the Borrower other than capital owned by or
                           subordinated loans owed to the Guarantor or any
                           Subsidiary of the Guarantor which has entered into
                           a blocked account agreement on similar terms to
                           that with the Guarantor and entered into a blocked
                           account arrangement providing the Lender with a
                           first charge security interest in the blocked
                           account and the funds contained therein, and
                           excluding payments permitted to be made to Marsulex
                           under this Agreement or the Marsulex Agreement;

                  (ii)     after the Indenture Termination Date, the purchase,
                           redemption or retirement, by the Borrower, of any
                           interest in the capital, or subordinated loans of
                           the Borrower excluding payments permitted to be
                           made to the Guarantor under this Agreement or the
                           Marsulex Agreement;

         (C)      the payment by the Borrower of any management fee,
                  consulting fee, or bonus to shareholders of the Borrower or
                  persons related to such shareholders other than normal
                  remuneration payable to employees of the Borrower; and

         (D)      any payment by the Borrower on account of any principal or
                  interest on any loans or advances owing at any time by the
                  Borrower to any of its controlled companies or to its, or
                  their, shareholders, directors or officers, but excluding
                  (i) trade debt owing to such controlled companies or to its
                  or their shareholders, directors or officers incurred in the
                  ordinary course of business, (ii) payments by the Borrower
                  to the Guarantor to reimburse the Guarantor for amounts
                  advanced to or invested in connection with the Project and
                  (iii) prior to the Indenture Termination Date, payments by
                  the Borrower to the Guarantor or any Subsidiary of the
                  Guarantor which has entered into a blocked account agreement
                  on similar terms to that with the Guarantor and entered into
                  a blocked account arrangement providing the Lender with a
                  first charge security interest in the blocked account and
                  the funds contained therein;

         (o)      "Debt" means, for any person, on a consolidated basis, all
                  indebtedness of such person for borrowed money, including
                  borrowings by way of bankers' acceptances or letters of
                  credit and the maximum amount of all such Debt which is
                  directly or indirectly guaranteed by such person
                  (contingently or otherwise) (eliminating from such
                  calculation where it is duplicative of another person's
                  debt, any guarantee by such person of another person's
                  obligations); provided however, that there shall be excluded
                  therefrom all indebtedness incurred by the Guarantor
                  pursuant to the Indenture;

         (p)      "Default" means an event which, with the giving of notice or
                  the passage of time or the making of any determination or
                  any combination thereof for herein could become an Event of
                  Default;

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         (q)      "Disbursement Trust Account" means an escrow account
                  established as described in Schedule "H" for the purpose of
                  holding and advancing cost to complete, cash collateral and
                  amounts advanced as provided in section 3.4;

         (r)      "EBITDA" means, for any person, for any period, on a
                  consolidated basis, net income increased, to the extent
                  deducted in calculating net income, by the sum of (i)
                  interest charges, (ii) income taxes paid or accrued in
                  accordance with GAAP for such period, (iii) depreciation and
                  amortization expense; and (iv) as to any calculation with
                  respect to the Guarantor on a consolidated basis, items
                  classified as unusual non-operating gains or losses in the
                  audited financial statements, in accordance with GAAP;

         (s)      "Environmental Laws" means all applicable laws, by-laws,
                  regulations relating in full or in part to the protection of
                  the natural environment, including the storage, use,
                  generation, handling, manufacturing, manufacture,
                  processing, treatment, release and disposal of "hazardous
                  substances", "contaminants" and "industrial waste" as
                  defined in the Alberta Environmental Protection Act;

         (t)      "Event of Default" means any of the events described in
                  Section 6.1;

         (u)      "generally accepted accounting principles" ("GAAP") means
                  the accounting principles recommended by the Canadian
                  Institute of Chartered Accountants as provided in the "CICA
                  Handbook", as the same may be amended, replaced or restated
                  from time to time;

         (v)      "Government of Canada Bond Yield" means as the Applicable
                  Canada Bond Yield is defined at the stated time of
                  determination.

         (w)      "Guarantee" means the agreement of guarantee provided by the
                  Guarantor to the Lender with regard to the obligations of
                  the Borrower under this Agreement;

         (x)      "Guarantor" means Marsulex Inc., in its capacity as
                  guarantor of the obligations of the Borrower under this
                  Agreement;

         (y)      "Holdbacks" means those holdbacks as defined in the Builders
                  Lien Act (Alberta).

         (z)      "Indebtedness" means and includes all principal, interest,
                  interest on overdue interest and premium, costs and expenses
                  payable by the Borrower pursuant to the provisions of this
                  Agreement and the Security, from time to time outstanding,
                  and all other monies for the time being and from time to
                  time owing by the Borrower to the Lender pursuant to this
                  Agreement;

         (aa)     "Indenture" means the senior subordinated indenture of the
                  Guarantor, as Issuer and The Bank of Nova Scotia Trust
                  Company of New York, as trustee, dated as of June 30, 1998,
                  as may be amended, refinanced or replaced from time to time
                  and irrespective of whether such refinancing or replacement
                  occurs concurrently with the repayment of the Indenture;

         (bb)     "Indenture Termination Date" means the date upon which the
                  covenants of Article IV of the Indenture cease to apply;

         (cc)     "Independent Consultant" means Burns and Roe Entreprises,
                  Inc., or another independent technical consultant retained
                  by the Borrower and approved by the Lender responsible for
                  reviewing and advising the Lender on the Project and for co-

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                                     -5-

                  ordinating the contracts for the Project, and providing
                  other services in connection with the Project as
                  contemplated under this Agreement;

         (dd)     "Interest Rate Differential" means the premium equal to the
                  difference between (i) the present value of the Loan
                  interest and the principal payments foregone discounted at
                  the Government of Canada Bond Yield, (on a compounded
                  monthly equivalent basis) as determined by the Lender, for
                  the term from the date of prepayment to the date of original
                  maturity; and (ii) the face value of the principal amount
                  being prepaid at the date of prepayment;

         (ee)     "Letter of Credit" means a letter of credit issued in a form
                  and content acceptable to the Lender, by a bank listed in
                  Schedule I to the Bank Act, having assets of not less than
                  $100,000,000,000 and a current rating for its senior
                  unsecured or long term debt by Dominion Bond Rating Services
                  of not less than AA (low);

         (ff)     "Loan" means the principal amount advanced pursuant to this
                  Agreement from time to time;

         (gg)     "Loan Documents" means this Agreement, the Security and the
                  Marsulex Agreement;

         (hh)     "Marsulex Agreement(s)" means the agreement(s) of Marsulex
                  Inc. in relation to the Project, with the Lender, as listed
                  in Schedule "G";

         (ii)     "Mortgaged Property" means and includes all the undertaking,
                  property and assets of the Borrower subject to the Security;

         (jj)     "Permitted Encumbrances" means any one or more of the
                  following:

                  (i)      liens for taxes, assessments, governmental charges
                           or levies not at the time due and delinquent, or
                           the validity of which is being contested by the
                           Borrower or the Guarantor in good faith and by
                           proper legal proceedings which effectively postpone
                           enforcement of any such lien;

                  (ii)     the lien of any judgment rendered or claim filed
                           against the Borrower or the Guarantor which the
                           Borrower or the Guarantor shall be contesting in
                           good faith by proper legal proceedings, and
                           provided such proceedings effectively postpone
                           enforcement of any such lien;

                  (iii)    the reservations, limitations, provisos and
                           conditions, if any, expressed in any original
                           grants from the Crown, registered easements, or
                           statutory exceptions to title, which do not, in the
                           opinion of counsel for the Lender, impair the use
                           or materially affect the marketability of the
                           property;

                  (iv)     liens or rights of distress reserved in, or
                           exercisable under, any lease for rent, or for
                           compliance with the terms of such lease;

                  (v)      Inchoate or statutory liens of contractors,
                           subcontractors, mechanics, workers, suppliers,
                           materialmen, carriers and others in respect of
                           construction, maintenance, repair or operation of
                           assets of the Borrower or the Guarantor, provided
                           that such liens are related to obligations not due
                           or delinquent are not registered against title to
                           any assets of the Borrower or the Guarantor and in
                           respect of which adequate holdbacks are being
                           maintained as required by applicable law or such
                           liens are being contested in good faith

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                                     -6-


                           by appropriate proceedings and in respect of which
                           there has been set aside a reserve (segregated to
                           the extent required by GAAP) in an adequate amount
                           and provided further that such liens do not, in the
                           Lender's opinion reduce the value of the assets of
                           the Borrower or the Guarantor or materially
                           interfere with the use of such assets in the
                           operation of the business of the Borrower or the
                           Guarantor;

                  (vi)     Easements, rights-of-way, servitudes, restrictions
                           and similar rights in real property comprised in
                           the assets of the Borrower or the Guarantor or
                           interests therein granted or reserved to other
                           Persons, provided that such rights do not, in the
                           Lender's opinion, reduce the value of the assets of
                           the Borrower or the Guarantor or materially
                           interfere with the use of such assets in the
                           operation of the business of the Borrower or the
                           Guarantor;

                  (vii)    Title defects or irregularities which are of a
                           minor nature and which, in the Lender's opinion, do
                           not reduce the value of the assets of the Borrower
                           or the Guarantor or materially interfere with their
                           use in the operation of the business of the
                           Borrower or the Guarantor;

                  (vii)    liens securing appeal bonds and other similar liens
                           arising in connection with court proceedings
                           (including, without limitation, surety bonds,
                           security for costs of litigation where required by
                           law and letters of credit) or any other instruments
                           serving a similar purpose;

                  (ix)     Liens given to a public utility or any municipality
                           or governmental or other public authority when
                           required by such utility or other authority in
                           connection with the operation of the business or
                           the ownership of the assets of the Borrower or the
                           Guarantor, provided that such Liens do not, in the
                           Lender's opinion, reduce the value of the assets of
                           the Borrower or the Guarantor or materially
                           interfere with their use in the operation of the
                           business of the Borrower or the Guarantor;

                  (x)      Servicing agreements, development agreements, site
                           plan agreements, and other agreements with
                           Governmental Entities pertaining to the use or
                           development of any of the assets of the Borrower or
                           the Guarantor, provided same are complied with and
                           do not, in the Lender's opinion, reduce the value
                           of the assets of the Borrower or the Guarantor or
                           materially interfere with their use in the
                           operation of the business of the Borrower or the
                           Guarantor including, without limitation, any
                           obligations to deliver letters of credit and other
                           security as required;

                  (xi)     Applicable municipal and other governmental
                           restrictions, including municipal by-laws and
                           regulations, affecting the use of land or the
                           nature of any structures which may be erected
                           thereon, provided such restrictions have been
                           complied with and do not, in the Lender's opinion,
                           reduce the value of the assets of the Borrower or
                           the Guarantor or materially interfere with their
                           use in the operation of the business of the
                           Borrower or the Guarantor;

                  (xii)    The right reserved to or vested in any Governmental
                           Entity by any statutory provision or by the terms
                           of any lease, licence, franchise, grant or permit
                           of the Borrower or the Guarantor, to terminate any
                           such lease, licence, franchise, grant or permit, or
                           to require annual or other payments as a condition
                           to the continuance thereof;

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                  (xiii)   Liens in favour of the Lender created by the
                           Security;

                  (xiv)    as to the Guarantor, Purchase Money Mortgages
                           without restriction and as to the Borrower,
                           Purchase Money Mortgages restricted to the
                           acquisition of non-operating equipment having an
                           aggregate liability outstanding at any time of not
                           more than $200,000;

                  (xv)     the Bank Security as defined in section 1.18(b);
                           and

                  (xvi)    Liens disclosed in Schedule "B".

         (kk)     "person" includes an individual, a partnership, a joint
                  venture, a trust, an unincorporated organization or any
                  other association, a corporation and a government or any
                  department or agency thereof;

         (ll)     "Plans and Specifications" means those plans and
                  specifications for the Project, containing a detailed cost
                  breakdown (both hard costs and soft costs) of the Project,
                  as approved by the Independent Consultant;

         (mm)     "Progress Claim" means a "Progress Claim: Request for
                  Disbursement", completed and with all referenced attachments
                  in the form attached as Schedule "K";

         (nn)     "Progress Report" means a report of the Independent
                  Consultant approving the Progress Claim including as to the
                  cost to complete analysis compared to budget;

         (oo)     "Project" means the project of the Borrower consisting of
                  the construction of a fertilizer processing plant and the
                  acquisition of equipment related thereto, in Fort McMurray,
                  Alberta as described in Schedule "I";

         (pp)     "Purchase Money Mortgages" means any security interest
                  charging property acquired, which is granted or assumed or
                  which arises by operation of law in favour of the transferor
                  concurrently with and for the purpose of the acquisition of
                  such property, in each case where (i) the principal amount
                  secured by the security interest is not in excess of the
                  purchase price (after any post-closing adjustment) of the
                  property acquired, and (ii) such security interest extends
                  only to the property acquired and its proceeds;

         (qq)     "Real Property" means the lands, premises and interests
                  therein, comprising the real property held in leasehold
                  interest and the buildings and structures thereon, of the
                  Borrower as described in Schedule "A" hereto;

         (rr)     "Release Date" is the date upon which the Guarantor is
                  entitled to a release of the Guarantee and security granted
                  by the Guarantor (other than the Assignment of Shares) in
                  accordance with Section 4.4;

         (ss)     "Reserve" means the mandatory reserves described in sections
                  5.1 (t) and (u);

         (tt)     "Security" means the Security Agreements, the Guarantee,
                  Assignment of Shares, and any other instrument or agreement
                  which purports to secure the Indebtedness provided in
                  accordance with the terms of this Agreement;

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         (uu)     "Security Agreements" means the general security agreements
                  issued by the Borrower and the Guarantor to the Lender and
                  dated as of the 5th day of June, 2003, and the Blocked
                  Account Agreement;

         (vv)     "Shortfall" means the amount by which the amount estimated
                  by the Independent Consultant as being required to complete
                  the Project is greater than the amount remaining in the
                  Disbursement Trust Account;

         (ww)     "Subsidiary" has the meaning provided in the Business
                  Corporations Act (Ontario);

         (xx)     "Syncrude Agreements" means the agreements with Syncrude
                  Canada Ltd. relating to the Project as listed in Schedule
                  F", and "Disposal Agreement" means the Syncrude Agreement so
                  entitled;

         (yy)     "this Agreement", "hereto", "herein", "hereof", "hereby",
                  "hereunder" and similar expressions refer to this Loan
                  Agreement and not to any particular section or other portion
                  hereof, and include any and every instrument supplemental or
                  ancillary hereto, or in implement hereof, and the
                  expressions "article" or "section" followed by a number mean
                  and refer to the specified article or section of this
                  Agreement.

1.3      Plurality and Gender, etc.

         Words importing the singular number shall include the plural and vice
versa, and words importing the masculine gender shall include the feminine
gender.

1.4      Headings

         The Article and section headings are not to be considered part of
this Agreement, are inserted for convenience of reference only, are not
intended to be full or accurate descriptions of the content thereof, and shall
not affect the construction or interpretation of this Agreement.

1.5      Law Applicable

         This Agreement shall be construed in accordance with the laws of the
Province of Ontario and shall be treated in all respects as an Ontario
contract.

1.6      Currency

         All dollar amounts referred to in this Agreement, and all payments to
be made hereunder, are in Canadian Dollars. All dollar amounts referred to in
this Agreement are expressed in Canadian Dollars.

1.7      Entire Agreement

         This Agreement, including the schedules hereto, the Security, and any
agreement collateral hereto or thereto constitutes the entire agreement
between the parties, and may not be amended or modified in any respect except
by written instrument signed by the parties hereto, and all other agreements,
undertakings, representations and writings, oral or written, are entirely
replaced thereby and are no longer effective.

1.8      Successor Legislation

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         Any statute referred to herein or in the Security shall be deemed to
include that statute as amended, restated and/or replaced from time to time,
and any successor legislation to the same general intent and effect.

1.9      Assignment

         This Agreement shall enure to the benefit of, and shall be binding
upon, the parties hereto and their respective successors and permitted
assigns. This Agreement may be assigned by the Lender, prior to an Event of
Default with the prior written consent of the Borrower, not to be unreasonably
withheld, except as to an assignment under section 7.9 for which no consent is
required, and no consent of the Borrower or Guarantor will be required after
the occurrence of an Event of Default which is continuing, in which event the
Borrower shall attorn in all respects to such assignment and the assignee
thereof. The Borrower may not assign this Agreement without the consent of the
Lender.

1.10     Business Day

         If under the provisions of this Agreement any amount is to be paid or
any act or thing is to be done or step is to be taken on a day other than a
business day, then such amount shall be paid or such act, thing or step shall
be done or taken on the next business day.

1.11     Severability

         In the event that any one or more provisions contained in this
Agreement, the Security, or any other agreement required hereunder to be
delivered to the Lender, shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality and enforceability of
the remaining provisions hereof or of the security shall not be affected or
impaired thereby.

1.12     Application of GAAP

         All financial statements herein shall, unless otherwise provided, be
interpreted in accordance with generally accepted accounting principles,
consistently applied and, if the Borrower shall have, or, at any time
hereafter shall acquire any Subsidiary, on both a consolidated, or combined
basis, as applicable, and an unconsolidated basis.

1.13     No Set-Off

         The obligations of the Borrower to make all payments of principal and
interest and all other amounts hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
any set-off, compensation, counterclaim, recoupment, defence or other right
which the Borrower may have against the Lender or anyone else for any reason
whatsoever, subject however, to the right of the Borrower to establish any
claim or defence in a Court of Law and the obligation of the parties hereto to
be bound by any judgement arising therefrom.

1.14     Execution

         This Agreement may be executed in one or more counterparts, each of
which when so executed shall constitute an original and all of which together
shall constitute one and the same Agreement.

1.15     Schedules

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                                     -10-


         The following schedules are incorporated herein and form part of this
Agreement.

         Schedule "A"      -     Real Property
         Schedule "B"      -     Permitted Encumbrances
         Schedule "C"      -     Environmental Reports
         Schedule "D"      -     Actions
         Schedule "E"      -     Form of Certificate of Financial Officer
         Schedule "F"      -     Syncrude Agreements
         Schedule "G"      -     Marsulex Agreements
         Schedule "H"      -     Disbursement Trust Account
         Schedule "I"      -     Project
         Schedule "J"      -     Location of Assets and Chief Executive Offices
         Schedule "K"      -     Progress Claim: Request for Disbursement Form

1.16     Financial Terms and Accounting Rules

         All financial terms employed and calculations provided for herein
shall, unless otherwise specifically provided, be interpreted and applied in
accordance with generally accepted accounting principles applied on a
consistent basis, and applicable on both a consolidated, or combined, if
appropriate, and unconsolidated basis.

1.17     Conflict

         In the event of any conflict between any term, condition or provision
of this Agreement and those of the Security, then the term, condition or
provision of this Agreement shall govern and without limitation the amount
owing by the Borrower shall not exceed the Indebtedness notwithstanding that
the Security may be expressed to stand as security for an amount greater than
the Indebtedness and provide for a nominal rate of interest higher than the
rate of interest provided for herein.

1.18     Bank Indebtedness

         (a) The Borrower does not and shall not have Debt except:

(i) the indebtedness to the Lender under this Agreement,

(ii) indebtedness owing to Marsulex,

(iii) indebtedness in connection with Purchase Money Mortgages permitted
hereunder,

(iv) until the Indenture Termination Date, Debt incurred pursuant to
guarantees of the indebtedness of the Guarantor or any Subsidiary of the
Guarantor which has entered into a blocked account agreement on similar terms
to that with the Guarantor and entered into a blocked account arrangement
providing the Lender with a first charge security interest in the blocked
account and the funds contained therein;

(v) and if agreed under section 3.1(b), the additional term debt with the
Lender of Ten Million Dollars ($10,000,000).

         (b) As to the Guarantor:

             (i)  The Lender hereby acknowledges that the Guarantor has
                  incurred and may hereafter incur Debt to its banker and
                  other Persons (which Debt, together with interest, fees,
                  costs, expenses and premiums with respect thereto is

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                  called the "Bank Indebtedness"), which Bank Indebtedness is
                  or may be secured by various security instruments ("Bank
                  Security"), over all or part of the assets and undertaking
                  of the Guarantor (which security and any other security now
                  held or hereafter acquired by its banker or other Persons
                  ("Bank") in respect of all or part of the undertaking,
                  property and assets of the Guarantor, both present and
                  future, but shall not include any interest in the shares of
                  the Borrower, is hereinafter called "Bank Security"; and

             (ii) The Lender acknowledges that the Bank Security is a
                  Permitted Encumbrance and agrees, with respect to the
                  incurrence of Bank Indebtedness from a Bank prior to the
                  Release Date, that at any time and from time to time that
                  the ratio of Debt to EBITDA of the Guarantor does not exceed
                  2.5:1, calculated for such purposes upon giving effect to
                  the incurrence of such Bank Indebtedness, at the request of
                  the Guarantor, to enter into an intercreditor agreement with
                  such Bank pursuant to which the Lender will covenant and
                  agree in favour of such Bank, subject to the last sentence
                  of this section, that (i) the Lender shall not be entitled
                  to payment with respect to indebtedness owing by the
                  Guarantor to the Lender (including, under the Guarantee)
                  after the occurrence of a payment default on the Bank
                  Indebtedness or any demand or acceleration by the Bank,
                  prior to the repayment in full of such Bank's Indebtedness,
                  (ii) that such Bank's Bank Security shall rank in priority
                  to any security granted by the Guarantor to the Lender,
                  excluding the pledge of shares in the capital of the
                  Borrower ("Pledge of Shares") and the Blocked Account and
                  any funds held therein, both of which shall remain solely
                  secured to the Lender (the "Lender Security") and (iii) that
                  the Lender shall not proceed to enforce the Lender Security
                  prior to the earlier of: (A) repayment in full of such
                  Bank's Bank Indebtedness, (B) commencement of enforcement
                  proceedings by the Bank with respect to its Bank Security,
                  (C) commencement of formal insolvency proceedings with
                  respect to the Guarantor and (D) passage of a negotiated
                  conventional standstill period; provided that if the ratio
                  of Debt to EBITDA, at any time exceeds 2.5:1; then any
                  further amounts of Bank Indebtedness advanced by such Bank
                  during the period when such ratio exceeds 2.5:1 shall not be
                  subject to the postponement and subordination provisions
                  hereof to the extent of such amounts until the ratio is
                  returned to 2.5:1 or less than 2.5:1, and the agreement with
                  such Bank will specifically be subject to compliance with
                  this covenant. For purposes of this calculation, each of
                  Debt and EBITDA shall be calculated on a trailing twelve
                  (12) month basis at the month end of the most recently
                  completed month immediately preceding the incurrence of such
                  Bank Indebtedness, adjusted to include the historical EBITDA
                  of any assets or Person acquired by the Guarantor and any
                  Debt incurred, assumed or acquired by the Guarantor in
                  connection with such acquisition and to exclude the EBITDA
                  of any assets or Person divested by the Guarantor or which
                  are discontinued operations of the Guarantor, in each case,
                  calculated on a trailing twelve (12) month basis in the
                  manner set forth above. The Borrower shall not require the
                  Lender to subordinate payment of the Indebtedness to payment
                  of any Bank Indebtedness at any time that the Indenture is
                  outstanding.

ARTICLE 2.00 - REPRESENTATIONS AND WARRANTIES

2.1      Representations and Warranties

<PAGE>
                                     -12-


         Each of the Borrower and the Guarantor represents and warrants to the
Lender, and acknowledges that the Lender is relying on such representations
and warranties in entering into this Agreement and in making Advances
hereunder, as follows:

         (a)      Status

                  It has been duly incorporated and organized and is a validly
                  existing corporation under the laws of its jurisdiction of
                  incorporation, and has full capacity and power to carry on
                  its business as presently conducted and to own or lease
                  property and holds all necessary material licences, permits
                  and consents to carry on such business in all jurisdictions
                  in which it does so;

         (b)      Corporate Power and Authority

                  It has the power and, in the case of the Borrower, is duly
                  authorized to borrow the monies herein contemplated, and to
                  enter into, execute, deliver and perform this Agreement and
                  the Security;

         (c)      Non-Violation of Other Instruments and Authorization

                  (i)      The borrowing of money by the Borrower, the
                           entering into and performance of this Agreement,
                           the Security and any other agreement collateral
                           hereto or thereto by the Borrower and the
                           Guarantor, and the issue of the Security to which
                           it is a party to be given hereunder does not
                           conflict, and will not conflict with, and does not
                           result, and will not result with the passage of
                           time or otherwise, in a breach or violation of, or
                           constitute a default under, its articles of
                           incorporation or its by-laws, or any of the
                           covenants or the provisions contained in any
                           agreement to which it is a party, or by which it or
                           its assets are subject; and

                  (ii)     All necessary steps and proceedings have been
                           taken, and all consents have been obtained to
                           authorize the entering into, delivery and
                           performance of this Agreement and to create and
                           authorize the issuance, delivery and performance of
                           the Security;

         (d)      Valid Security

                  This Agreement and the Security constitute valid and binding
                  obligations of the Borrower and Guarantor enforceable
                  against it in accordance with their respective terms subject
                  to applicable bankruptcy, insolvency and other similar laws
                  affecting the enforcement of creditors' rights generally and
                  to equitable remedies;

         (e)      Title to Assets and Property

                  Subject only to the Permitted Encumbrances, it has good and
                  marketable title to the real properties and good title to
                  the personal properties owned by it, based on the records
                  maintained, free and clear of encumbrances or security
                  interests except as listed in Schedule "B" and no person has
                  any agreement or right to acquire a material part of such
                  assets out of the ordinary course of business; the Guarantor
                  has granted to the Borrower all reasonably necessary rights
                  or licences to the intellectual property, including patents,
                  that are required for the Borrower to own and operate the
                  Project and satisfy the terms of the Syncrude Agreements;

         (f)      No Default

<PAGE>
                                     -13-


                  It is not in default in the performance or observance of any
                  of the obligations, covenants or conditions contained in any
                  material contract, agreement or other instrument to which it
                  is a party or by which it is bound;

         (g)      Financial Condition

                  As at the date hereof, since the date of the audited,
                  consolidated, financial statements of the Guarantor, dated
                  as at December 31, 2002, there has occurred no material
                  adverse change affecting the business or financial condition
                  or position of the Guarantor;

         (h)      Financial Information

                  All balance sheets, earnings statements and other financial
                  data of the Borrower which have been delivered to the Lender
                  are true and correct in all material respects as of the
                  respective dates thereof, have been prepared in accordance
                  with generally accepted accounting principles consistently
                  applied, and do fairly present the financial position and
                  condition of the Borrower as of the respective dates
                  thereof, and all other information, certificates, schedules,
                  reports and other papers and data which have been furnished
                  by the Borrower to the Lender are complete, accurate and
                  correct in all material respects at the time the same were
                  furnished subject, in the case of interim statements, to
                  usual year end adjustments;

         (i)      No Actions

                  Except as disclosed in Schedule "D", there are no actions,
                  suits, judicial or arbitral proceedings pending or to the
                  knowledge threatened against the Borrower or the Guarantor
                  in any court or other authority which could reasonably be
                  expected to result in any material adverse change in the
                  business or financial condition of the Borrower or the
                  Guarantor, or which could reasonably be expected to
                  materially adversely affect the ownership, status or use of
                  the Mortgaged Property, which have not been reported in the
                  financial information provided by the Borrower or the
                  Guarantor to the Lender;

         (j)      Judgments and Executions

                  There are no judgments or executions filed or pending
                  against the Borrower or the Project, and there are no
                  judgments or executions filed or pending against the
                  Guarantor which, in any case, could reasonably be expected
                  to materially adversely affect the Borrower, the Guarantor
                  or the Project;

         (k)      Insolvency Proceedings

                  Neither the Borrower or Guarantor has made any assignment
                  for the benefit of creditors, nor has any receiving order
                  been made against it under the provisions of the Bankruptcy
                  and Insolvency Act, nor has any petition for such an order
                  been served upon it, nor are there any proceedings in effect
                  or threatened under the provisions of the Winding-Up and
                  Restructuring Act (Canada) or the Companies' Creditors
                  Arrangement Act (Canada), nor has any receiver, receiver and
                  manager, monitor, custodian or official with similar powers
                  been appointed by court order or privately respecting the
                  Borrower or any of its assets or property;

         (l)      Leases

<PAGE>
                                     -14-


                  The Borrower is in good standing under all leases to which
                  it is a party, and no right currently exists in any lessor
                  or lessee thereunder to terminate any such lease, and each
                  such lease is a valid and binding obligation of the
                  Borrower;

         (m)      Taxation Procedures

                  It has duly and timely filed all tax returns required to be
                  filed by it, and it has paid all taxes which are due and
                  payable, and has paid all assessments and reassessments, and
                  all other taxes, penalties, interest and fines claimed
                  against it which are due or payable by it on or before the
                  date other than those in respect of which liability based on
                  such returns is being contested in good faith and by
                  appropriate proceedings where adequate reserves have been
                  established in accordance with GAAP and the effect of such
                  proceedings is to stay any lien, charge or seizure of
                  property. Adequate provision and installment payments have
                  been made for taxes and governmental royalties payable for
                  the current period for which returns are not yet required to
                  be filed. Except as disclosed in writing to the Lender, as
                  at the date hereof there are no agreements, waivers or other
                  arrangements providing for an extension of time with respect
                  to the filing of any tax return, or payment of any taxes, or
                  deficiency;

         (n)      Employee Payments

                  It has withheld from each payment to any of its officers,
                  directors and employees the amount of all taxes, including
                  but not limited to, income tax and other deductions required
                  to be withheld therefrom, and has paid the same to the
                  proper tax or other receiving officers within the time
                  required under any applicable tax legislation. It is not
                  subject to any claim by its employees arising from salary or
                  benefits which have not been paid when due, all such salary
                  and benefits being paid to date, except where such claims
                  would not have a material adverse effect;

         (o)      Ownership or Licence

                  The Borrower owns or licenses, free of adverse claim other
                  than Permitted Encumbrances, all material licences, patents,
                  trademarks, copyright, industrial design, know how, trade
                  secrets and other industrial and intellectual property used
                  in connection with its business as presently conducted, and
                  all such licences are in good standing;

         (p)      Subsidiaries

                  The Borrower has no subsidiaries.

         (q)      Contingent Liabilities and Debt.

                  The Borrower and the Guarantor have disclosed all contingent
                  liabilities as at the date hereof in the most recent audited
                  annual financial statements furnished to the Lender to the
                  extent such liabilities are required to be disclosed in
                  accordance with GAAP other than such contingent liabilities
                  incurred in the ordinary course of business since such date,
                  and as at the date hereof neither the Borrower nor Guarantor
                  has incurred any Debt which is not disclosed on or reflected
                  in those financial statements or otherwise disclosed to the
                  Lender in writing, other than Debt or contingent liabilities
                  incurred by it or credit extended to it in the ordinary
                  course of business.

<PAGE>
                                     -15-


         (r)      Location of Assets, Places of Business.

                  As at the date of this Agreement, the location of all of the
                  tangible and intangible property and assets and places of
                  business of each of the Borrower and Guarantor is ~set out
                  in Schedule "J ". As at the date of this Agreement, the
                  registered and chief executive offices of each of the
                  Borrower and Guarantor are set out in Schedule "J".

         (s)      No Default or Event of Default.

                  As at the date of this Agreement, there exists no Default or
                  Event of Default.

         (t)      Compliance

                  Each of the Borrower and Guarantor is in compliance with its
                  constating documents and is in compliance in all material
                  respects with all applicable laws, including health, safety
                  and employment standards, labour codes and Environmental
                  Laws.

         (u)      Canadian Pension and Benefit Plans

                  All material obligations of the Borrower or Guarantor
                  (including fiduciary, funding, investment and administration
                  obligations) required to be performed in connection with the
                  Canadian pension plans and the funding agreements therefor
                  have been performed in a timely fashion. There have been no
                  improper withdrawals or applications of the assets of the
                  Canadian pension plans or the Canadian benefit plans. There
                  is no proceeding, action, suit or claim (other than routine
                  claims for benefits) pending or threatened involving the
                  Canadian pension plans or the Canadian benefit plans, and no
                  facts exist which could reasonably be expected to give rise
                  to that type of proceeding, action, suit or claim which
                  would have a material adverse effect on the business or
                  financial status of the Borrower. Any Canadian pension plan
                  is fully funded both on an ongoing basis and on a winding-up
                  basis (using actuarial methods and assumptions which are
                  consistent with the valuations last filed with the
                  applicable Governmental Authorities and which are consistent
                  with GAAP).

         (v)      Labour Matters

                  There are no strikes or other labour disputes against either
                  Borrower or Guarantor that are pending or, to the knowledge
                  of the Borrower or Guarantor, threatened. All payment due
                  from either the Borrower or Guarantor on account of employee
                  insurance and vacation pay have been paid or accrued as a
                  liability on its books which would have a material adverse
                  effect on the business or financial status of the Borrower.
                  Each of the Borrower or Guarantor is in material compliance
                  with the terms and conditions of any collective agreements,
                  consulting agreements, management agreements and employment
                  agreements, if any.

         (w)      Trade-marks, Patents, etc.

                  Each of the Borrower and Guarantor possesses all patents,
                  industrial designs, trade-marks, trade secrets, know-how,
                  environmental technology, biotechnology, confidential
                  information, trade-names, goodwill, copyrights, integrated
                  circuit topographies, software and all other forms of
                  intellectual and industrial property, and

<PAGE>
                                     -16-


                  any registrations and applications for registration of any
                  of the foregoing (collectively, the "Intellectual
                  Property"), necessary for the conduct of its business.

         (x)      Processing and Handling of Waste

                  Except as disclosed in Schedule "C", the processing,
                  storage, handling and to the extent applicable, disposal of
                  chemical or waste inventory by the Borrower as to the
                  ~Project are being conducted in all material respects in
                  accordance with Environmental Laws.

2.2               Real Estate Representations and Warranties

                  The Borrower also specifically represents and warrants as
follows:

         (a)      Lease and Right to Occupy

                  The lease of the Real Property is in good standing, and the
                  Borrower has taken all steps and actions required on its
                  part under the lease;

         (b)      Access

                  The lease arrangement provides full and unrestricted access
                  to the Real Property, adequate for all purposes of the
                  construction, ownership and operation of the Project;

         (c)      General Environmental Representations

                  The Borrower represents and warrants to the Lender that as
                  of the date hereof:

                  (i)      the Borrower is not aware of any environmental
                           problem or potential problem which materially
                           adversely affects the Borrower or any of its
                           assets;

                  (ii)     there is no action or other proceeding which has
                           been commenced against the Borrower or any asset of
                           the Borrower with respect to any breach of
                           Environmental Laws; and

                  (iii)    the Borrower has not used any of the Real Property,
                           to manufacture, store or otherwise deal with any
                           contaminants, pollutants, dangerous or toxic
                           substances, liquid wastes or other hazardous
                           substances except in material compliance with all
                           applicable Environmental Laws.

         (d)      Construction Liens

                  As at the date hereof, the Borrower has not received any
                  notice, written or otherwise, of any constructions liens
                  against the Real Property other than those construction
                  liens which could arise as to the Project. The Borrower has
                  taken all reasonable steps so as to ensure no construction
                  liens will be registered against the Real Property.

2.3               Survival of Representations, Warranties and Covenants

                  The covenants, agreements, representations and warranties
set forth in this Agreement, and in any certificate or other document
delivered hereunder, shall continue in full force and effect until repayment
in full of all of the Indebtedness, notwithstanding any investigation made

<PAGE>
                                     -17-


by the Lender or its counsel, or any other representative of the Lender, or the
making of any Advance hereunder.

ARTICLE 3.00 - REPAYMENT AND INTEREST

3.1      Principal Amount and Payments

         Subject to the terms and conditions hereunder, and relying upon the
representations and warranties herein set forth, the Lender hereby agrees to
lend to the Borrower an aggregate principal amount of up to Fifty Million
Dollars ($50,000,000), of which Ten Million Dollars ($10,000,000) will be
advanced only on agreement between the Lender and the Borrower, and
satisfaction of the conditions of this Agreement such to be advanced in two
parts, each as hereinafter described:

         (a) Part A Loan - this portion of the Loan will hereafter be referred
to as the "Part A Loan". The Part A Loan will be advanced on Closing to the
Disbursement Trust Account for advance to fund the Project, and will be
repayable, in Canadian Dollars. The Part A Loan will be in the maximum
principal amount of Forty Million Dollars, Canadian funds (Cdn $40,000,000),
and will be advanced as a single advance to the Disbursement Trust Account, to
be released for use in the Project as provided in Section 3.4.

         (b) Part B Loan - The Lender may but is not obliged to provide an
additional term loan in an amount of up to Ten Million Dollars ($10,000,000).
If the Borrower wants to borrow such amount it may, if the following
conditions have been satisfied, request such an additional term loan. The
Lender will determine, in its discretion, whether it will advance the further
term loan and set out the terms which will apply to the additional term loan
if the Lender is willing to provide the loan. If the Lender agrees to provide
the additional term loan and the Borrower agrees to the offered terms, then
the loan shall be identified as the "Part B Loan", will be subject to the
terms of this Agreement except as amended by the terms offered by the Lender,
and will be secured by the Security. If the Lender determines not to offer the
additional term loan or the Lender and the Borrower cannot agree on terms for
such additional loan, then the Borrower may not incur additional debt or grant
any additional security to any other person as to the Project.

         The conditions which must be satisfied for the Lender to consider
offering the additional term loan are:

         (i)      construction of the Project has been completed and the first
                  payment has been made by Syncrude Canada Ltd. to the
                  Borrower, under the Syncrude Agreements; and

         (ii)     the Project operating costs have been confirmed and the
                  Borrower will meet the financial covenants set forth in
                  section 5.3(a) of this Agreement, on a pro forma basis over
                  a 15 year test period to be co-terminus with the Loan after
                  giving effect to the advance of the additional Ten Million
                  Dollar ($10,000,000) term loan contemplated as the "Part B
                  Loan". The pro forma will be based on assumptions approved
                  by the Lender and supported by an opinion of the Independent
                  Consultant that the assumptions and conclusions are
                  reasonable;

         (iii)    the additional financing will not result in the Loan plus
                  such additional financing exceeding the purchase price then
                  stipulated for payments by Syncrude Canada Ltd. under the
                  Syncrude Agreements;

         (iv)     the Borrower shall have receipt of any requisite approvals
                  and authorizations; and

<PAGE>
                                     -18-


         (v)      the Guarantor shall have been released under section 4.4.

         (c) Proof of Outstanding Loan Amount. The records maintained by the
Lender of the amounts of the Loan advanced to the Borrower in connection with
this Agreement, the amount of advances of the Loan which are outstanding and
the amount of interest and other fees and costs payable and paid under this
Agreement shall constitute prima facie proof thereof in any legal proceedings
or action in respect of this Agreement

3.2      Principal Repayment

         (a)      The Part A Loan shall be interest only for the period of
                  time from the advance to the Disbursement Trust Account to
                  the earlier of: (i) December 15, 2005, and (ii) the date
                  upon which Syncrude Canada Ltd. is required to commence
                  payments to the Borrower under the Syncrude Agreements.

         (b) The principal amount advanced on the Loan, as to each of the Part
A Loan and Part B Loan, separately, shall, subject to the rights of the Lender
to accelerate the payment pursuant to this Agreement and the Security, become
due and payable in one hundred and eighty (180) equal blended monthly payments
of principal and interest based upon a fifteen (15) year amortization of the
principal amount, established using the interest rate payable on the Loan
pursuant to section 3.8 of this Agreement and shall be payable on the
fifteenth (15th) of each month. The principal balance of the Loan shall be
fully due and payable on the fifteenth (15th) anniversary of the earlier of:
(i) December 15, 2005, and (ii) the date upon which Syncrude Canada Ltd. is
required to commence payments to the Borrower under the Syncrude Agreements.

3.3      Conditions Precedent

         The following conditions precedent shall be satisfied prior
to advance of the Part A Loan to the Disbursement Trust Account:

         (1)      The Security and Additional Security shall be executed by
                  the Borrower and, where applicable, in registerable form,
                  and all registrations and other actions required to fully
                  perfect and maintain the priority of the Security shall have
                  been successfully completed to the satisfaction of the
                  Lender's counsel

         (2)      Legal opinions shall be issued by counsel for the Borrower
                  and the Guarantor opining :

                  (i)      as to the valid existence and good standing of the
                           Borrower and the Guarantor;

                  (ii)     as to the due authorization, execution, delivery,
                           enforceability and validity of the Loan Documents
                           with respect to the Borrower and the Guarantor;

                  (iii)    that there is no litigation, action, proceedings or
                           like matter pending with respect to the Project or
                           the Borrower of which they are aware; and

                  (iv)     and as to such other matters as the Lender and the
                           Lender's counsel reasonably may specify.

         (3)      Current Personal Property Security Act searches for the
                  Borrower and for the Guarantor in those jurisdictions set
                  out in Schedule "J" together with all


<PAGE>
                                     -19-


                  subordinations, releases and discharges to ensure the first
                  priority position of the Security on personal property
                  relating to the Project shall have been completed and
                  received.

         (4)      Evidence of insurance as required by this Agreement, and
                  conforming in all respects to the requirements of the
                  Lender, shall have been delivered.

         (5)      The Marsulex Agreements and Syncrude Agreements which shall
                  be satisfactory to the Lender, shall be executed and in full
                  force and effect.

         (6)      Evidence by delivery of the report of the Independent
                  Consultant that the Project and the operation thereof comply
                  with all legal requirements, including that all requisite
                  building permits, and other licenses, certificates,
                  approvals or consents required of any governmental authority
                  have been issued without condition and that there is no
                  litigation, action, citation, injunctive proceedings, or
                  like matter pending or threatened with respect to the
                  validity of such matters, shall have been provided to the
                  Lender.

         (7)      No expropriation or adverse zoning or usage change
                  proceeding shall have occurred or shall have been threatened
                  against the Project; the Project shall not have suffered any
                  significant damage by fire or other casualty which has not
                  been repaired; no law, regulation, ordinance, moratorium,
                  injunctive proceeding, restriction, litigation, action,
                  citation or similar proceeding or matter shall have been
                  enacted, adopted, or threatened by any third party or
                  governmental body, which would have, in the Lender's
                  judgment, a material adverse effect on the Borrower or the
                  Project.

         (8)      Certified copies of the constating documents, including,
                  without limitation, any letters patent, articles of
                  incorporation, memorandum of association, articles of
                  association, certificates of amalgamation, articles of
                  continuation, articles of amendment and borrowing by-laws of
                  the Borrower and Guarantor, together with a certificate of
                  the Borrower and Guarantor certifying that its constating
                  documents therein described are all of its constating
                  documents and that other than as therein described such
                  constating documents have not been amended, shall have been
                  delivered to the Lender.

         (9)      Certified resolutions of the directors of the Borrower and
                  Guarantor confirming that it has been authorized to execute,
                  deliver and perform its obligations under this Agreement and
                  the Loan Documents, shall have been delivered to the Lender.

         (10)     A certificate of status or similar certificate for the
                  Borrower and Guarantor from the applicable government
                  ministry, dated not earlier than the Closing, shall have
                  been delivered to the Lender.

         (11)     An officer's certificate for the Borrower and Guarantor in
                  the required form of the Lender shall have been delivered:

         (12)     Such financial information in connection with the Project or
                  in respect of the Borrower as may be required by the Lender,
                  shall have been provided.

         (13)     The Lender shall be satisfied that the Borrower has paid
                  when due and in full all employee pensions and benefits
                  payable by it, including without limitation Workers'
                  Compensation Board premiums, Employer Health Tax premiums,
                  Canada Pension Plan contributions and Employment Insurance
                  Commission premiums, and has remitted when required and in
                  full all source deductions for income tax, Canada Pension
                  Plan contributions and Employment Insurance Commission
                  premiums of its

<PAGE>
                                     -20-


                  employees and all goods and services tax and retail sales
                  tax paid and received by it.

         (14)     The Borrower shall have made payments for the Project in the
                  amount of not less than Twenty-Four Million Dollars
                  ($24,000,000) (provided such may be provided as cash
                  invested of Sixteen Million Five Hundred Thousand Dollars
                  ($16,500,000) and up to Seven Million Five Hundred Thousand
                  Dollars ($7,500,000) may be secured by way of a letter of
                  credit for Project purposes).

         (15)     Such other documents or items as the Lender or its counsel
                  reasonably may require shall be delivered to the Lender.

3.4      Release Process: Part A Loan

(A) The Part A Loan will be advanced on Closing to the Disbursement Trust
Account and, except for any advances made to pay interest on the Loan until
the commencement of principal repayments which will be released automatically
on each payment date, will be released from the Disbursement Trust Account
(including for the purpose of reimbursement to the Guarantor for amounts
advanced or otherwise expended for construction of the Project prior to or
following the date of the first advance in excess of the amount of investment
required by the Borrower in section 3.3 (14)) subject to compliance with the
following conditions:

         (a)      releases shall comply with all holdback requirements of the
                  Builders Lien Act (Alberta) and Advances and amounts
                  released under the Part A Loan shall at no time exceed the
                  lesser of:

                  (i)      the total cost of work in place on the Project,
                           including soft costs and interest accrued less
                           holdbacks, and the cost of equipment acquired; and

                  (ii)     the amount which would ensure that the remaining
                           amount to be released on Part A Loan is sufficient
                           to satisfy the cost to complete the Project, less
                           holdbacks and deferred accounts payable.

         (b)      the Borrower shall have delivered to the Lender a Progress
                  Claim and a Progress Report;

         (c)      the Borrower has complied with its obligation to fund any
                  Shortfall from sources other than the Loan;

         (d)      no construction liens or other encumbrances other than the
                  Permitted Encumbrances, are registered against the Project;

         (e)      the Borrower shall have complied with all relevant
                  provisions of the Builders Lien Act (Alberta); and

         (f)      the Project and the Borrower, as applicable, will be in
                  compliance with the Syncrude Agreements and the Marsulex
                  Agreements.

 (B) The Lender will advance the final Advance of the amounts held back only
upon compliance by the Borrower with the requirements of the Builders Lien Act
(Alberta) permitting final advance of Holdbacks after substantial completion,
subject to the right of the Lender to hold back additional amounts for
finishing Holdbacks as contemplated by the Builders Lien Act (Alberta); and
subject to compliance with the following condition:

<PAGE>
                                     -21-


         (i)      the Borrower, as a condition to receiving the final Advance,
                  shall deliver to the Lender a copy of a certification or
                  declaration of the substantial performance of the contracts
                  between the Borrower and the contractors of the Project, or
                  the relevant portion thereof, made and published in
                  accordance with the provisions of the Alberta Builders Lien
                  Act, and evidence of the issuance of final occupancy
                  permits.

3.5      Minimum Amounts

         Except for the final Advance and advances in respect of interest
payments, each Advance from the Disbursement Account will be in an amount of
not less than One Million Dollars ($1,000,000);

3.6      Interest on Disbursement Account

         The Lender shall invest the Disbursement Trust Account in interest
bearing instruments, if agreement can be reached as mutually agreed between
the Lender and the Borrower, and otherwise as determined by the Lender.
Interest accruing on the amounts in the Disbursement Trust Account will be for
the benefit of the Borrower and be held in the Disbursement Trust Account and
paid to the Borrower on the Release Date.

3.7      Shortfall

         Any Shortfall of the cost to complete as against the balance
remaining in the Disbursement Trust Account must be advanced by the Borrower
or Guarantor, at the option of the Borrower or Guarantor, as the case may be,
as funds expended for the Project or by drawdown on the Letter of Credit (to
the extent sufficient to satisfy the Shortfall) by the Lender, prior to
advance by the Lender of additional amounts by way of an advance from the
Disbursement Trust Account. The costs and expenses, including all fees,
charged by the Independent Consultant, are required to be paid by the
Borrower. The payments required to be made to the Independent Consultant prior
to Default may be included as a project cost, and included in the
disbursements from the Disbursement Trust Account.

3.8      Advance Process: Part B Loan

         The Part B Loan, if made available by the Lender to the Borrower,
will be advanced in a single advance, provided that the Borrower is in
compliance with all terms, conditions, and including specifically the
representations and warranties, of this Agreement, and the conditions set out
in Section 3.1(b) have been fully complied with.

3.9      Compliance with the Interest Act (Canada)

         For the purposes of this Agreement, whenever any interest is
calculated on the basis of a period of time other than a calendar year, the
annual rate of interest to which each rate of interest determined pursuant to
such calculation is equivalent for the purposes of the Interest Act (Canada)
is such rate as so determined multiplied by the actual number of days in the
calendar year in which the same is to be ascertained and divided by the number
of days used in the basis of such determination.

3.10     Nominal Rate of Interest

         The parties acknowledge and agree that all calculations of interest
under this Agreement and the documents related thereto are to be made on the
basis of the nominal interest rate described herein and not on the basis of
effective yearly rates or on any other basis which gives effect to the
principle of deemed reinvestment of interest. The parties acknowledge that
there is a


<PAGE>
                                     -22-


material difference between the stated nominal interest rates and the
effective yearly rates of interest and that they are capable of making the
calculations required to determine such effective yearly rates of interest.

3.11     Criminal Rate of Interest

         Notwithstanding the foregoing provisions of this Article 3, the
Borrower shall in no event be obliged to make any payments of interest or
other amounts payable to the Lender hereunder in excess of an amount or rate
which would be prohibited by law or would result in the receipt by the Lender
of interest at a criminal rate (as such terms are construed under the Criminal
Code (Canada)).

3.12     Interest Calculation

         The principal amount outstanding from time to time hereunder, as to
the Loan, shall bear interest at a rate of seven point three per cent (7.3%)
per annum, calculated and payable monthly in accordance with this section.

         Interest shall be calculated and payable monthly on the daily
outstanding principal, and shall accrue both after and before maturity,
default and judgment, with interest on overdue interest at the same rate
computed from the date of each Advance calculated and payable monthly, in
arrears, on the fifteenth (15th) day of each and every month in each and every
year during the term commencing on June15, 2003. During the period from
June15, 2003 to the first required payment of principal under this Agreement,
payments may be made by release from the Disbursement Trust Account, and
thereafter shall be made by payment in the manner specified in this Agreement.

3.13     Increased Costs, Capital Adequacy, etc.

         (a)      If any change in law:

                  (i)      subjects the Lender, or any participant in the
                           syndication of the Loan, to any cost or tax or
                           changes the basis of taxation of payments due to
                           the Lender or any participant in the syndication of
                           the Loan or increases any existing cost or tax on
                           payments of principal, interest or other amounts
                           payable by the Borrower to the Lender or any
                           participant in the syndication of the Loan under
                           this Agreement (except for increased taxes on the
                           overall net income, assets or capital of the
                           Lender);

                  (ii)     imposes, modifies or deems applicable any reserve,
                           special deposit, regulatory or similar requirement
                           against assets held by, or deposits in or for the
                           account of, or loans by, or commitments of, or any
                           other acquisition of funds for loans by, the Lender
                           or any participant in the syndication of the Loan
                           or any drafts accepted by the Lender or any
                           participant in the syndication of the Loan;

                  (iii)    imposes on the Lender or any participant in the
                           syndication of the Loan a change in the manner in
                           which the Lender or any participant in the
                           syndication of the Loan is required to allocate
                           capital resources to its obligations under this
                           Agreement; or

                  (iv)     imposes on the Lender or any participant in the
                           syndication of the Loan any other cost, tax or
                           condition with respect to this Agreement,

<PAGE>
                                     -23-


                  and the result of (i), (ii), (iii) or (iv) is, in the
                  determination of the Lender, acting reasonably, to increase
                  the cost to the Lender or any participant in the syndication
                  of the Loan, or to impose a liability on or to reduce the
                  income or return receivable by the Lender or any participant
                  in the syndication of the Loan in respect of this Agreement,
                  the Borrower shall pay to the Lender that amount which
                  indemnifies the Lender or any participant in the syndication
                  of the Loan for such additional cost, ~liability or
                  reduction in income or return ("Additional Compensation").
                  Upon the Lender having determined that it is entitled to
                  Additional Compensation, it shall promptly notify the
                  Borrower. A certificate by a duly authorized officer of the
                  Lender setting forth the amount of the Additional
                  Compensation and the basis for it shall be prima facie
                  evidence, in the absence of manifest error, of the amount of
                  the Additional Compensation. The Additional Compensation
                  shall accrue from the date of delivery of the certificate to
                  the Borrower. If the Lender subsequently recovers all or a
                  part thereof, it will repay an amount equal to such recovery
                  to the Borrower. For greater certainty, it is acknowledged
                  that, if such increased cost, liability or reduction in
                  income or return is also attributable, in part, to dealings
                  between the Lender and its other customers, the obligation
                  of the Borrower under this section to provide compensation
                  therefor will not arise unless the Lender, as a general
                  practice, also requires compensation therefor from such
                  other customers and will not exceed the amount that is
                  directly proportionate to the extent to which such increased
                  costs, liabilities or reductions in income or return are
                  attributable to the Borrower and the Loan made by the Lender
                  hereunder.

         (b)      If the Lender notifies the Borrower that Additional
                  Compensation is owed to the Lender, the Borrower shall have
                  the right to make payment in full to the Lender in respect
                  of the Loan which has given rise to the Additional
                  Compensation on the date specified in such notice, together
                  with all unpaid interest accrued thereon to the date of
                  repayment and all other reasonable expenses incurred in
                  connection with the termination, together with in any case
                  the Additional Compensation to the date of payment, but
                  shall not be required to pay any prepayment fee.

3.14     Taxes

         Save and except as to any such payment which would arise as a result
of any Lender or any participant in the syndication of the Loan at any time
being, or being deemed to be, a non-resident of Canada (such payment to be
solely and only born by the Lender or any participant in the syndication of
the Loan as is, or is deemed to be, a non-resident of Canada), the following
shall apply as to taxes payable:

         (a)      Any and all payments by or on account of any obligation of
                  the Borrower hereunder shall be made free and clear of and
                  without deduction for any taxes; provided that if the
                  Borrower shall be required to deduct any taxes from such
                  payments, then (i) the sum payable shall be increased as
                  necessary so that, after making all required deductions
                  (including deductions applicable to additional sums payable
                  under this Section), the Lender receives an amount equal to
                  the sum it would have received had no such deductions been
                  made, (ii) the Borrower shall make such deductions and (iii)
                  the Borrower shall pay the full amount deducted to the
                  relevant governmental authority in accordance with
                  applicable law.

         (b)      In addition, the Borrower shall pay any such taxes to the
                  relevant governmental authority in accordance with
                  applicable law.

         (c)      The Borrower shall indemnify the Lender and each participant
                  in the Loan, within 10 days after written demand therefor,
                  for the full amount of any such taxes paid by the

<PAGE>
                                     -24-


                  Lender, and any penalties, interest and reasonable expenses
                  arising therefrom or with respect thereto, whether or not
                  such taxes were correctly or legally imposed or asserted by
                  the relevant governmental authority. A certificate as to the
                  amount of such payment or liability delivered to the
                  Borrower by the Lender, shall be prima facie evidence absent
                  manifest error.

         (d)      As soon as practicable after any payment of any such taxes
                  by the Borrower to a governmental authority, the Borrower
                  shall deliver to the Lender the original or a certified copy
                  of a receipt issued by such governmental authority
                  evidencing such payment, a copy of the return reporting such
                  payment or other evidence of such payment reasonably
                  satisfactory to the Lender.

3.15     Prepayment

         The Borrower is permitted to prepay the Loan in whole only and
provided the Borrower gives to the Lender thirty (30) days' prior written
notice, and at the time the Borrower makes prepayment pursuant to this
section, the Borrower shall also pay to the Lender a premium equal to the
greater of:

         (i)      three (3) months' interest calculated in the manner herein
                  provided on the amount prepaid at the annual rate of
                  interest herein provided; or

         (ii)     the Interest Rate Differential, if any and if positive.

3.16     Place and Manner of Payment

         The Borrower shall deliver, by cheque or electronic transfer of
funds, to the Lender, the principal and interest due at or before 11:00 p.m.
on the date on which such principal and interest is due at 130 Adelaide St.
W., Suite 2200, Toronto, Ontario, or such other address as the Lender may
advise from time to time. If payment is made by cheque, the Borrower shall
ensure receipt by the Lender on the due date whether by delivery or post, and
in any event, shall, where paid by prepaid post, ensure deposit in a postal
station at least five (5) days prior to the due date, payment to be credited
to the account of the Borrower on the day of receipt only if received prior to
1:00 p.m., and otherwise to be credited on the next business day following
receipt. The receipt of such cheque shall satisfy and discharge the liability
for the principal and interest to the extent of the sums represented thereby,
unless such cheque shall not be paid on presentation.

3.17     No Set-Off

         The obligations of the Borrower to make all payments of principal and
interest and all other amounts due thereunder shall be absolute and
unconditional, and shall not be affected by any circumstance, including
without limitation, any set-off, compensation, counter-claim, recoupment,
defence or other right which the Borrower may have against the Lender or
anyone else for any reason whatsoever.

3.18     Interest on Overdue Amounts

         If the Borrower fails to pay any installment of interest or principal
on the date on which the same is due, the Borrower shall pay interest on such
overdue amount at a rate per annum equal to the applicable rate of interest
under this Agreement then in effect. At any time, upon a default in the
payment of any other amount (other than principal and interest) due under this
Agreement or any of the other Loan Documents, the Borrower shall pay interest
on such overdue amount (which overdue amount, for greater certainty, shall not
include overdue principal or interest) at a rate per annum equal to the
applicable rate of interest under this Agreement then in effect plus

<PAGE>
                                     -25-


2%. Interest on overdue amounts shall be payable on demand and shall be
calculated on a daily basis and compounded monthly from the date such amount
becomes due and payable and for so long as such amount remains unpaid and on
the basis of a year of 365 days. All interest provided for in this Agreement
shall be payable both before and after maturity, default and judgment.

ARTICLE 4.00 - SECURITY

4.1    (a) Security To secure the due and punctual payment of the Indebtedness,
and to secure the due and punctual performance of the Borrower's other
obligations and covenants hereunder, the Borrower shall execute and deliver,
or cause to be executed and delivered the Security to the Lender.

         (b) Additional Security In addition to the Security, the Borrower
shall provide, or cause to be provided, to the Lender the following (the
"Additional Security"):

         (i)      assignment of the Disbursement Trust Account;

         (ii)     acknowledged assignment of Syncrude Agreements to include;

                  (a)      Syncrude Canada Ltd. to acknowledge the security
                           interest of the Lender in relevant Syncrude
                           Agreements;

                  (b)      acknowledgement that no Syncrude Agreements are to
                           be amended, revised or modified without the
                           Lender's written consent;

                  (c)      Syncrude Canada Ltd. to provide the Lender with
                           notice of any defaults by the Borrower;

                  (d)      Syncrude Canada Ltd. covenants to remit any
                           termination payments owing to the Borrower pursuant
                           to the Syncrude Agreements directly to the Lender
                           while any amounts remain outstanding under this
                           Loan;

         (iii)    Marsulex Agreement(s) on terms satisfactory to the Lender
                  shall have been executed and delivered;

         (iv)     During the period prior to the Release Date, the Guarantor
                  shall provide the Lender with a Letter of Credit for
                  $7,500,000 as security for payment of the Shortfall in
                  accordance with section 3.7(in addition to the expenditure
                  of an amount of $16,500,000 in the Project) or shall have
                  $24,000,000 funds expended in the Project instead of
                  providing the letter of credit. Drawdowns on the Letter of
                  Credit will be applied to any Shortfall. The balance of the
                  cash in the Disbursement Trust Account and/or the Letter of
                  Credit shall be disbursed and/or released to the Borrower or
                  the Guarantor upon satisfaction of the conditions in section
                  4.4.

4.2      Discharge

         In addition to the release of the security of the Guarantor
contemplated by section 4.4, once the Borrower has satisfied all of its
obligations hereunder, the Lender shall, at the written request, and at the
expense, of the Borrower, discharge all charges and liens under the Security,
and execute and deliver to the Borrower and Guarantor such deeds or other
instruments as shall be required to discharge the charges and liens thereof.


<PAGE>
                                     -26-


4.3      Expropriation of Mortgaged Property

         If the Borrower receives notice that any part of its property or
assets included in the Mortgaged Property has been, or is to be, expropriated
or taken by similar proceedings, the Borrower shall forthwith deliver to the
Lender a written notice setting out particulars of the expropriation. Subject
to the terms of the Syncrude Agreements, the Borrower shall further cause all
proceeds payable in respect of such expropriation or taking to be paid to the
Lender to be applied as repayment of the Indebtedness, applied firstly to
interest, and thereafter to principal to the extent of the funds received,
unless otherwise agreed by the Lender at its sole option, and shall also pay
any applicable prepayment premium.

4.4      Release of Marsulex Security

         The Lender will release the Guarantee and, except as to the pledge of
shares, all security and any letter of credit provided by the Guarantor, but
shall retain the pledge of the shares of the Borrower and the limited
guarantee provided therein, upon satisfaction of the following conditions
precedent:

         (a)      issuance of the written notification of final acceptance of
                  the Project by Syncrude Canada Ltd., the payments owing from
                  Syncrude Canada Ltd. to the Borrower under the Syncrude
                  Agreement have commenced, with the first such quarterly
                  payment having been made by Syncrude Canada Ltd.;

         (b)      written confirmation from the Independent Consultant, in a
                  form reasonably usual for a performance completion report
                  that the Project has been substantially completed in
                  accordance with the Plans and Specifications and that no
                  outstanding issues have been identified by the Independent
                  Consultant which could impact the performance of the
                  Project, and a confirmation that the projections reviewed
                  prior to the date of this Agreement remain reasonable and
                  valid;

         (c)      the Project has been successfully operated for thirty (30)
                  consecutive days, producing a minimum of seven thousands
                  tonnes (7,000) of fertilizer meeting the specifications in
                  the Syncrude Agreements over the said thirty (30)
                  consecutive day period; and

         (d)      the Borrower is able to satisfy the Burden Coverage Ratio,
                  as defined in section 5.3(a) of this Agreement, but
                  calculated for such purposes as at the end of the most
                  recently completed fiscal quarter for the fiscal quarter
                  then ended.

ARTICLE 5.00 - COVENANTS

5.1      Positive Covenants

         The Borrower hereby covenants and agrees with the Lender that so long
as any of the Indebtedness remains unpaid or obligations unsatisfied:

         (a)      To Pay Indebtedness

                  The Borrower will punctually pay or cause to be paid to the
                  Lender the Indebtedness at the dates, time and places, and
                  in the manner provided for herein;

<PAGE>
                                     -27-


         (b)      Notice of Removal of Assets

                  If at any time or from time to time, the Borrower desires to
                  remove assets which comprise part or all of the Mortgaged
                  Property to any jurisdiction other than a jurisdiction in
                  which the Security is validly registered to create a charge
                  on that property, the Borrower will, prior to removing such
                  assets from a jurisdiction in which it is registered to a
                  jurisdiction in which it would not be registered, give the
                  Lender ten (10) days' notice thereof, accompanied by a full
                  description of such assets and the proposed situs thereof,
                  and shall deliver, prior to the removal of such assets, such
                  documents and instruments filed or registered pursuant to
                  applicable law, if required, as may be necessary to preserve
                  and perfect the Lender's security interest therein in such
                  other jurisdiction in form and content satisfactory to the
                  Lender and its counsel, and shall pay all legal and
                  registration costs in connection therewith;

         (c)      Notice of Litigation

                  The Borrower will give the Lender prompt written notice of
                  any action, suit, litigation or other proceeding which is
                  commenced or threatened against the Borrower and which
                  involves either a claim or potential claim in excess of One
                  Hundred Thousand Dollars ($100,000.00) which is not fully
                  covered by insurance, except for deductible amounts approved
                  by the Lender;

         (d)      Notice of Material Change

                  The Borrower will give the Lender prompt written notice of
                  any material adverse change in the business or condition of
                  the Borrower or until the Release Date, the Guarantor,
                  financial or otherwise, or of any material loss, destruction
                  or damage of or to any properties or assets of the Borrower
                  or until the Release Date, the Guarantor, including notice
                  of any material demand upon, or material change in the terms
                  and conditions governing, the operating or similar line of
                  credit of the Guarantor with its bank;

         (e)      To File Financial Statements and Certificate of No Defaults

                  The Borrower shall furnish to the Lender:

                  (i)      within one hundred and twenty (120) calendar days
                           after the end of each of its fiscal years, annual
                           financial statements as follows:

                           (A)      audited (and consolidated, if at any time
                                    the Borrower holds an interest in an
                                    entity that would be consolidated under
                                    GAAP), balance sheet of the Borrower,
                                    prepared in accordance with generally
                                    accepted accounting principles applied on
                                    a consistent basis, as at the end of such
                                    year, signed by two (2) directors or, if
                                    the Borrower has only one (1) director, by
                                    that director;

                           (B)      audited (and consolidated, if at any time
                                    the Borrower holds an interest in an
                                    entity that would be consolidated under
                                    GAAP), statements of profit and loss of
                                    the Borrower, surplus, source and
                                    application of funds, prepared in
                                    accordance with generally accepted
                                    accounting principles applied on a
                                    consistent basis for such year, including
                                    therewith, relevant information regarding
                                    dealings with controlled companies; and

<PAGE>
                                     -28-


                           (C)      a statement setting out any permitted
                                    sales of the Borrower of fixed assets
                                    charged with the Security, specifically
                                    setting out the date of sale, the purchase
                                    price and the method of payment including
                                    the cost and application of the proceeds
                                    of sale;

                  (ii)     within sixty (60) calendar days after the end of
                           each fiscal quarter of the Borrower, unaudited
                           unconsolidated, and consolidated if at any time the
                           Borrower holds an interest in an entity that would
                           be consolidated under GAAP, financial statements as
                           follows:

                           (A)      a balance sheet of the Borrower and its
                                    Subsidiaries, prepared in accordance with
                                    generally accepted accounting principles
                                    applied on a consistent basis;

                           (B       ) statements of profit or loss of the
                                    Borrower and its Subsidiaries, surplus,
                                    source and use of funds, prepared in
                                    accordance with ~generally accepted
                                    accounting principles applied on a
                                    consistent basis, for such period;

                           (C)      comparison of the year to date results,
                                    compared to year to date results for the
                                    immediately previous fiscal year, and
                                    against the budgeted, forecast, results,
                                    provided to the Lender, as required under
                                    the terms of this Section, together with a
                                    written explanation of any variances, as
                                    to either comparison, of more than ten
                                    percent (10%) provided such statement
                                    shall not be required to be delivered
                                    until after the Commencement Date; and

                           (D)      a certificate of the chief financial
                                    officer of the Borrower, setting out, with
                                    calculations appended, basis for
                                    compliance with the financial covenants
                                    required under the terms of this Loan
                                    Agreement in the form attached hereto as
                                    Schedule "F";

                  (iii)    not less than thirty (30) calendar days after each
                           fiscal year end an annual business plan and monthly
                           operating budget of the Borrower showing
                           anticipated capital expenditures for the next
                           fiscal year; and

                  (iv)     a quarterly report, signed by the chief financial
                           officer of the Borrower, to the effect that payment
                           of all Source Deductions (employee income tax, CPP
                           and EI premiums) is current, and that there are no
                           arrears, in the form appended hereto as Schedule
                           "F".

         (f)      Other Information

                  The Borrower will promptly furnish the Lender with such
                  other information respecting the Borrower, its properties,
                  assets, anticipated contracts, acquisitions, investments,
                  and other matters and information relating to the Borrower
                  and its business, as the Lender may from time to time
                  reasonably request, including specifically any request made
                  by the Lender for delivery of operating results and balance
                  sheet information with respect to any Subsidiary, or with
                  respect to business operation carried out through a joint
                  venture or limited partnership format;

         (g)      To Maintain Existence

                  The Borrower will at all times maintain its corporate
                  existence;


<PAGE>
                                     -29-


                  The Borrower shall preserve and keep in full force and
                  effect its corporate status, franchises, rights and
                  privileges under the laws of the jurisdiction of its
                  formation, and all qualifications, licenses and permits, in
                  each case, necessary to the ownership, use and operation of
                  the Project. The Borrower shall not without the prior
                  written consent of the Lender wind up, liquidate, dissolve,
                  reorganize, merge, amalgamate or consolidate with or into,
                  or convey, sell, assign, transfer, lease, or otherwise
                  dispose of all or substantially all of its assets, form any
                  subsidiary or acquire all or substantially all of the assets
                  of the business of any Person, or permit any Subsidiary of
                  the Borrower to do so. The Borrower shall conduct business
                  only in its own name and shall not change its name, or the
                  location of its chief executive office or principal place of
                  business unless it (a) shall have notified the Lender of
                  such change, and (b) shall have taken all actions necessary
                  or requested by the Lender to file or amend any financing
                  statement or continuation statement to assure perfection and
                  continuation of perfection of security interests under the
                  Security. The Borrower shall maintain its separateness as an
                  entity, including maintaining separate books, records, and
                  accounts and observing corporate and partnership formalities
                  independent of any other entity, shall pay its obligations
                  with its own funds and shall not commingle funds or assets
                  with those of any other entity.

         (h)      To Carry on Business and Abide by Government Regulations

                  The Borrower will carry on its business in a proper and
                  efficient manner, and will keep or cause to be kept proper
                  books of account, and make or cause to be made therein true
                  and faithful entries of all material dealings and
                  transactions in relation to its business, and will at all
                  times abide by all government regulations regarding the
                  operation of the business of the Borrower;

                  The Borrower shall observe and comply in all material
                  respects with all legal requirements applicable to the
                  ownership, use and operation of the Project. The Borrower
                  shall maintain the Project in good condition and promptly
                  repair any damage or casualty. The Borrower shall perform
                  all work required for the Project in a good and workmanlike
                  manner. The Borrower shall permit the Lender and its agents,
                  representatives and employees, upon reasonable prior notice
                  to the Borrower, to inspect the Project and conduct such
                  environmental and engineering studies as the Lender may
                  require, provided such inspections and studies do not
                  materially interfere with the use and operation of the
                  Project. The Borrower shall not pay any salaries, bonuses or
                  other amounts that are commercially unreasonable to any of
                  its directors, officers or employees;

         (i)      To Pay Taxes

                  The Borrower will pay or cause to be paid all taxes, rates,
                  government fees and dues levied, assessed or imposed upon it
                  and upon its property or any part thereof, as and when the
                  same become due and payable, save and except when, and so
                  long as, the validity of any such taxes, rates, fees, dues,
                  levies, assessments or imposts is in good faith, by proper
                  legal proceedings, being contested by it, provided such
                  proceedings effectively postpone enforcement of any lien
                  arising from non-payment;

         (j)      To Insure

                  (i)      Property Cover - The Borrower will insure the
                           Mortgaged Property, at its own expense, to the full
                           insurable value thereof, based on full replacement
                           value, against loss or damage by fire, lightning,
                           explosion, windstorm,

<PAGE>
                                     -30-

                           aircraft, vehicles or other insurable hazards,
                           which are now, or hereafter, from time to time may
                           be, insured against by the terms of a standard
                           All-Risk property policy of insurance against loss
                           of, or damage to, property of a class or kind
                           similar to the Mortgaged Property, including boiler
                           and machinery insurance, if applicable. To the
                           extent of its interests as they may appear in this
                           Agreement, the Lender shall be named as loss payee
                           to the extent of its interests in the
                           aforementioned insurance contracts effected by the
                           Borrower which shall include a standard mortgage
                           clause.

                  (ii)     Liability - The Borrower shall maintain commercial
                           general liability insurance with respect to the
                           Project providing for limits of liability of not
                           less than $10,000,000 for both injury to or death
                           of a person and for property damage per occurrence.

                  (iii)    Form and Quality - All insurance policies shall be
                           endorsed in form and substance acceptable to the
                           Lender to name the Lender as an additional insured,
                           loss payee or mortgagee thereunder, as its interest
                           may appear, with loss payable to the Lender,
                           without co-insurance or Lender retention or
                           contribution, under a standard Insurance Bureau of
                           Canada mortgagee clause. All such insurance
                           policies and endorsements shall be fully paid for
                           and contain such provisions and expiration dates
                           and be in such form and issued by such insurance
                           companies licensed to do business in the Province
                           of Ontario as are acceptable to the Lender. Each
                           policy shall provide that such policy may not be
                           cancelled or materially changed except upon thirty
                           (30) days' prior written notice of intention of
                           non-renewal, cancellation or material change to the
                           Lender and that no act or thing done by the
                           Borrower shall invalidate any policy as against the
                           Lender. Blanket policies will be permitted
                           confirming the Borrower's right to continue
                           coverage on a pro-rata pass-through basis provided
                           that coverage for the Project will not be affected
                           by loss on other properties or will be immediately
                           reinstated to ensure coverage as required by this
                           section is available as to the Project. If the
                           Borrower fails to maintain insurance in compliance
                           with this section, the Lender may obtain such
                           insurance and pay the premium therefor and the
                           Borrower shall, on demand, reimburse the Lender for
                           all reasonable expenses incurred in connection
                           therewith. The Borrower shall assign the policies
                           or proofs of insurance to the Lender, in such
                           manner and form that the Lender and its successors
                           and assigns shall at all times have and hold the
                           same as security for the payment of the Loan. The
                           Borrower shall deliver before the Closing Date
                           copies of all original policies certified to the
                           Lender by the insurance company or authorized agent
                           as being true copies, together with the
                           endorsements required hereunder.

                  (iv)     Adjustment - The Borrower shall give immediate
                           written notice of any loss to the insurance carrier
                           and to the Lender. Following the occurrence of an
                           Event of Default which is continuing, the Borrower
                           hereby irrevocably authorizes and empowers the
                           Lender, as attorney-in-fact for the Borrower
                           coupled with an interest, to make proof of loss, to
                           adjust and compromise any claim under insurance
                           policies, to appear in and prosecute any action
                           arising from such insurance policies, to collect
                           and receive insurance proceeds, and to deduct
                           therefrom the Lender's expenses incurred in the
                           collection of such proceeds. Nothing contained in
                           this subsection, however, shall require the Lender
                           to incur any expense or take any action hereunder.

<PAGE>
                                     -31-


                  (iv)     Renewal Receipt -The Borrower shall deliver, to the
                           Lender, within thirty (30) days or such shorter
                           period of time as is reasonable given market
                           conditions prior to the expiry of any insurance
                           policy required hereby, a renewal receipt, binder
                           or new policy replacing such expiring insurance
                           policy, or otherwise satisfy the Lender that such
                           insurance has been renewed; and

                  (v)      Insurance Consultant. The Lender shall be entitled
                           to retain an insurance consultant mutually agreed
                           upon between the Lender and the Borrower. The
                           reasonable costs of the insurance consultant shall
                           be paid by the Borrower, ~from time to time to
                           review the insurance policies of the Borrower. The
                           Borrower agrees to make such changes to their
                           insurance policies as such insurance consultant may
                           reasonably require and to the extent changes can
                           reasonably be effected are in accordance with
                           market standards;

                  (vi)     Use and Application of Insurance Proceeds. Subject
                           to the terms of the Syncrude Agreements and
                           provided such action shall not result in a default
                           thereunder, prior to the occurrence of an Event of
                           Default the Borrower shall be entitled to apply
                           proceeds of property damage insurance to pay costs
                           of restoration and after the occurrence of an Event
                           of Default which is continuing, the Lender in its
                           sole discretion shall be entitled to apply proceeds
                           of property and boiler and machinery insurance to
                           repay the Loan, notwithstanding that the Loan may
                           not then be due and payable, and other amounts
                           owing under the Security or to pay the costs of
                           restoration of the Project with respect to which
                           such proceeds arose;

         (k)      Further Assurances

                  At any and all times the Borrower will do, execute,
                  acknowledge, deliver, file and register, or will cause to be
                  done, executed, acknowledged, delivered, filed and
                  registered all and every such further acts, deeds,
                  conveyances, mortgages, transfers and assurances as the
                  Lender shall reasonably require for the purpose of giving
                  effect to this Agreement and shall pay, forthwith, the
                  reasonable costs and expenses of the Lender in connection
                  therewith;

         (l)      Payment of Costs and Expenses

                  The Borrower will pay or reimburse the Lender and its agent
                  for all reasonable costs, charges and expenses (including
                  legal fees and disbursements on a solicitor and his own
                  client basis) of or incurred by the Lender in connection
                  with the completion of the loan transaction provided for in
                  this Agreement and the Security taken in pursuance hereof,
                  including all reasonable costs of title examination,
                  compensation of engineers, solicitors, and other advisors as
                  required, and all costs, charges and expenses of the Lender
                  in connection with the preparation and registration of any
                  further security or agreements required as further
                  assurances or as a consequence of amendment or renewal, the
                  Lender receiving advice from time to time in connection with
                  this Agreement including relating to the recovery or
                  enforcement of repayment of the Indebtedness or any part
                  thereof, or in connection with the enforcement or
                  realization of any such Security, and any amount paid to
                  cure any default which may occur under the Syncrude
                  Agreements, the lender having the right but not the
                  obligation to cure any default occurring on the part of the
                  Borrower under the Syncrude Agreements, and any amount not
                  so paid shall bear interest at the rate of interest provided
                  at section 3.3 herein, and shall be payable out of any funds
                  coming into the possession of the Lender in priority to the
                  Indebtedness; Until final


<PAGE>
                                     -32-


                  disbursement from the Disbursement Trust Account the
                  Borrower shall be entitled to include all such ordinary
                  course costs, charges and expenses incurred in relation to
                  development of the Project as a cost of the Project;

         (m)      To Repair

                  The Borrower will at all times repair and keep in repair and
                  good order and condition, or cause to be so repaired and
                  kept in good order and condition, all buildings, erections,
                  machinery and plant used in or in connection with its
                  business, up to modern standards of usage, and subject to
                  section 5.2(a)(i) renew and replace or ~cause to be renewed
                  and replaced all and any of the same which may become worn,
                  dilapidated, unserviceable, or destroyed, and at all
                  reasonable times, within normal business hours, following
                  reasonable notice to the Borrower, will allow the Lender or
                  its duly authorized agent access to the Mortgaged Property
                  in order to view the state and condition of the same;

         (n)      Use of Proceeds

                  The Borrower will use the Advances only for the purpose of
                  payment of construction costs and expenses relating to the
                  Project, including interest and including costs and expenses
                  and commitment fees of Lenders, professional advisors and
                  experts, construction costs, soft costs and costs of
                  operation of the Project and provided that Advances may be
                  used to reimburse amounts advanced for such purposes by the
                  Guarantor in excess of the required amount of the
                  Twenty-Four Million Dollars ($24,000,000) funds expended in
                  the Project under section 3.3(14) and from and after the
                  Release Date in excess of Sixteen Million Five Hundred
                  Thousand Dollars ($16,500,000) plus any cost overruns;

         (o)      Change of Address

                  The Borrower shall notify the Lender of any change of
                  address of any office or other business location of the
                  Borrower existing as at the date of execution herein, and of
                  the location of any new business premises where the Borrower
                  undertakes its business at any time, subsequent to the date
                  of execution herein;

         (p)      Notice of Default

                  The Borrower shall give prompt written notice to the Lender,
                  and to any syndicate participant of which it has notice, of
                  any Default of which it is aware hereunder;

         (q)      Environmental

                  The Borrower shall at all times comply with all applicable
                  Environmental Laws and occupational health and safety laws,
                  regulations and orders which affect the Borrower or any of
                  its assets to the standards required by the Syncrude
                  Agreements. The Borrower shall inform the Lender in writing
                  of each:

                  (i)      environmental problem which materially adversely
                           affects the Borrower or any of its assets upon
                           becoming aware of such problem; and

                  (ii)     legal action or proceeding commenced against the
                           Borrower with respect to any environmental matter
                           which may materially adversely affect the Borrower
                           or any of its assets , promptly upon the Borrower
                           becoming aware of the commencement of such action
                           or other proceeding, and will specifically:

<PAGE>
                                     -33-


                           (a)   establish and maintain procedures for
                                 monitoring its continued compliance with
                                 applicable Environmental Laws, which
                                 procedures shall include periodic reviews of
                                 such compliance.

                           (b)   If the Borrower (i) receives written notice
                                 that any material violation of any
                                 Environmental Law may have been committed or
                                 is about to be committed by it, (ii) receives
                                 written notice that any administrative or
                                 judicial complaint or order has been filed or
                                 is about to be filed against it alleging
                                 material violations of any Environmental Law
                                 or ~requiring it to take any action of a
                                 material nature in connection with the
                                 release of Hazardous Materials into the
                                 environment, or (iii) receives any written
                                 notice from a governmental authority or other
                                 Person alleging that it may be liable or
                                 responsible for costs in a material amount
                                 associated with a response to or clean-up of
                                 a release of a Hazardous Material into the
                                 environment or any damages caused thereby,
                                 the Borrower shall provide the Lender with a
                                 copy of such notice within 10 business days
                                 of the Borrower's receipt thereof. The
                                 Borrower shall also provide to the Lender, as
                                 soon as practicable after it becomes
                                 available, a copy of any environmental site
                                 assessment or audit report, if any, required
                                 to be submitted to any governmental
                                 authority. If any such assessment or report
                                 estimates the cost of any clean-up or
                                 remedial action required by such governmental
                                 authority, Borrower shall provide evidence
                                 satisfactory to the Lender of disbursements
                                 made from time to time to effect such
                                 clean-up or remedial action within such time
                                 as may be prescribed by such governmental
                                 authority.

                           (c)   The Borrower shall indemnify the Lender and
                                 its respective officers, directors,
                                 employees, agents, representatives, loan
                                 participants, assignees, and the officers
                                 directors, employees of each of them and
                                 shareholders (each, an "Indemnified Person")
                                 and shall hold each of them harmless from and
                                 against any and all losses, liabilities,
                                 damages, costs, expenses and claims
                                 (including legal fees on a solicitor and
                                 client basis) relating to this Agreement or
                                 any other Loan Document and arising in
                                 respect of (i) any violation of an
                                 Environmental Law by it or the Guarantor
                                 including the assertion of any Lien
                                 thereunder, (ii) the presence of any
                                 Hazardous Material affecting any real or
                                 personal property owned by it resulting in
                                 any way from the Borrower's use of such
                                 property, or (iii) the release by it or the
                                 Guarantor of any Hazardous Material into the
                                 environment; provided that the Borrower shall
                                 not be obliged to indemnify any Indemnified
                                 Person for any losses, liabilities, damages,
                                 costs, expenses and claims which have arisen
                                 as a result of the gross negligence or wilful
                                 misconduct of such Indemnified Person. The
                                 Borrower's obligations and indemnification
                                 under this section shall survive the payment
                                 and satisfaction of all Obligations and the
                                 termination of this Agreement. The Lender
                                 shall hold the benefit of this indemnity in
                                 trust for those other Indemnified Persons who
                                 are not parties to this Agreement.

<PAGE>
                                     -34-


         (r)      Inspections

                  The Borrower shall permit the Lender, at any reasonable
                  time, within normal business hours following reasonable
                  notice to the Borrower to reasonable access of all premises
                  occupied by the Borrower and any Subsidiary, for the
                  purposes of physical inspection, and shall make available,
                  all financial and other records, and will permit the Lender,
                  access to, and the facility to complete, such books and
                  records, for the purpose of review, and making such copies,
                  as shall be required by the Lender.

         (s)      Indemnity for Builders Liens

                  (A)      The Borrower shall indemnify and save harmless the
                           Lender of and from any loss or costs, whatsoever
                           arising out of or pursuant to:

                           (i)      any expenses or costs of the Lender in
                                    fulfilling its obligations as a mortgagee
                                    under the provisions of the Alberta
                                    Builders Lien Act;

                           (ii)     any liability of the Lender whatsoever
                                    relating to any non- compliance by the
                                    Borrower in all respects of the provisions
                                    contained in the Alberta Builders Lien
                                    Act; and

                           (iii)    all claims, demands, reasonable costs and
                                    expenses of the Lender, including without
                                    limitation, legal fees and disbursements
                                    on a solicitor and his own client basis,
                                    in respect of the foregoing;

                  (B)      The Borrower will not permit or suffer any judgment
                           for the enforcement of any builder's, contractor's,
                           workmen's or other lien or privilege upon or in
                           respect of any of its property to remain
                           unsatisfied for a period of thirty (30) days after
                           the date of such judgment; provided that
                           non-payment of any such judgment shall be deemed
                           not to be a breach of this section if the Borrower
                           shall reasonably desire to contest the same and
                           shall have provided to the Lender reasonable
                           security to protect its security described
                           hereunder and in the Security with regard to the
                           lien or privilege.

                  (C)      Indemnity

                           (i)   General. The Borrower shall indemnify the
                                 Lender and each Indemnified Person against
                                 all suits, actions, proceedings, claims,
                                 losses (other than loss of profits), expenses
                                 (including reasonable fees, charges and
                                 disbursements of counsel), damages and
                                 liabilities except environmental liabilities
                                 as provided for under 5.1(q)(ii)(c) (each, a
                                 "Claim") that the Lender may sustain or incur
                                 as a consequence of (a) any default by the
                                 Borrower or Guarantor under this Agreement or
                                 any other Document, or (b) any
                                 misrepresentation by the Borrower or
                                 Guarantor contained in any writing delivered
                                 to the Lender in connection with this
                                 Agreement, or (c) the Lender entering into
                                 this Agreement, or (d) the use of proceeds of
                                 the Loan by the Borrower, or (e) the
                                 operations of the Borrower or Guarantor,
                                 except that no Indemnified Person will be
                                 indemnified for any Claim resulting from its
                                 own gross negligence or wilful misconduct.

                           (ii)  Certificate. A certificate of the Lender, as
                                 the case may be, setting out the basis for
                                 the determination of the amount necessary to


<PAGE>
                                     -35-


                                 indemnify the Agent or the Lender pursuant to
                                 this section shall be prima facie evidence,
                                 absent manifest error, of the correctness of
                                 that determination.

                  (D)      Survival. The obligations of the Borrower under
                           this section are absolute and unconditional and
                           shall not be affected by any act, omission or
                           circumstance whatsoever, whether or not occasioned
                           by the fault of the Lender, except in respect of
                           gross negligence or wilful misconduct by it or any
                           Indemnified Person. The obligations of the Borrower
                           under this section shall survive the repayment of
                           the other Obligations and the termination of this
                           Agreement.

         (t)      Remediation Reserves

                  The Borrower will be required to fund and maintain a
                  reserve, under the control of the Lender, for demolition and
                  remediation of the property if, at any time, the Project is
                  required by the terms of the Syncrude Agreements to be
                  removed from the property. The funding will be required to
                  be made in the amount of $167,500, per annum, payable
                  quarterly in the amount of $41,875, with the first
                  installment to be made to a reserve trust account on the
                  earlier of (i) the 15th day of the month next following the
                  end of the fiscal quarter in which the first payment is
                  required to be made by Syncrude to the Borrower under the
                  Syncrude Agreements and (ii) January 15, 2006, and then to
                  be made quarterly on the 15th day of the month next
                  following each fiscal quarter end of the Borrower
                  thereafter. The extent and nature of the reserve will be
                  reviewed by the Lender after the third fiscal year of
                  contribution to determine if adjustment to the amount or
                  manner of funding is warranted as a result of the
                  performance of the Project; provided no upward adjustment in
                  the Reserve shall be made. The determination whether to
                  allow any reduction or change in the manner of funding is in
                  the discretion of the Lender.

         (u)      Syncrude Agreements

                  At all times fully comply, in all material respects, with
                  the terms and conditions of the Syncrude Agreements.

         (v)      Marsulex Agreements

                  At all time fully comply, in all material respects, with the
                  terms and conditions of the Marsulex Agreements.

         (w)      Additional Reserves

                  The Borrower shall be required to maintain a cash reserve
                  account in an amount not less than three months principal
                  and interest payments, which reserve is to funded at earlier
                  of (i) the time that the first payment is required to be
                  made by Syncrude under the Syncrude Agreements and (ii)
                  January 15, 2006 and is to be maintained at the required
                  amount at all times thereafter.

         (x)      Government Approvals

                  Borrower shall obtain, or cause to be obtained (to the
                  extent not in existence on the Closing Date) and maintain,
                  by the observance and performance of all material
                  obligations thereunder and conditions thereof, all
                  government approvals required for it to carry on its
                  businesses.

<PAGE>
                                     -36-


         (y)      Auditors

                  The Borrower shall promptly give notice to the Lender of any
                  change in its auditors and the reasons for the change.

         (z)      Canadian Benefit and Pension Plans

                  Borrower shall perform all obligations (including fiduciary,
                  funding, investment and administration obligations in all
                  material respects) required to be performed in connection
                  with each Canadian pension plan and Canadian benefit plan
                  and the funding media therefor; make all contributions and
                  pay all premiums required to be made or paid in accordance
                  with the terms of the plan and all applicable laws.

         (aa)     Leases

                  Maintain the lease of the Real Property in good standing.

         (bb)     Payment to Blocked Accounts

                  Distributions and other amounts referred to in Section 3 of
                  the Blocked Account Agreement shall be paid by the Borrower
                  into the Blocked Account in accordance with the Blocked
                  Account Agreement.

5.2               Negative Covenants

                  The Borrower hereby covenants and agrees with the Lender
that so long as any of the Indebtedness remains outstanding, without the prior
written consent of the Lender, it will not:

         (a)      Not to Sell Assets or Enter Into Amalgamations and Mergers

                  (i)      sell or dispose of any of its property, assets or
                           undertaking in any fiscal year having a value of in
                           excess of $100,000, except property and assets
                           which are replaced as required by section 5.1(m);

                  (ii)     except with respect to (i) above, sell any portion
                           of the plant, machinery, equipment, to any
                           Subsidiary, other than where the Lender is provided
                           with directly equivalent security with regard to
                           the asset to be transferred to such Subsidiary;

         (b)      As to Encumbrances

                  as to the Guarantor until the Release Date only and as
                  provided in section 1.18, as to the Borrower for the term of
                  this Agreement, enter into any agreement to encumber any
                  asset, or create or permit to exist any mortgage, hypothec,
                  charge, pledge, lien or encumbrance, or other security
                  interest, whether by fixed or floating charge, as to the
                  Borrower which would rank in any respect prior to, or pari
                  passu with the Security, upon its undertaking, property or
                  assets, or any part or parts thereof, except for the
                  Security and Permitted Encumbrances;

         (c)      Not to Commit Waste

                  remove or destroy any of its buildings, machinery or any
                  structure, except in undertaking the Project, comprising the
                  Mortgaged Property or the plant, machinery

<PAGE>
                                     -37-


                  or fixtures attached or appertaining thereto, or otherwise
                  forming part of the Mortgaged Property;

         (d)      Restriction on Corporate Distribution

                  (i)      to the Indenture Termination Date, except as
                           otherwise permitted in this Agreement, make any
                           transfer or distribution of assets of the Borrower
                           or any Subsidiary that are secured by any of the
                           Security Agreements as a distribution to
                           shareholders, officers or directors outside of the
                           ordinary course of employment remuneration of an
                           officer with the Borrower or such Subsidiary, or
                           make other Corporate Distributions except the
                           Borrower may: (i) make the payments permitted by
                           the terms of the Marsulex Agreement as and when
                           permitted, and (ii) make payments or distributions
                           to reimburse Marsulex for amounts advanced or
                           invested in the Project; and

                  (ii)     after the Indenture Termination Date, except as
                           otherwise permitted in this Agreement, declare or
                           pay any dividends, redeem or purchase, for
                           cancellation or otherwise, any shares of the
                           Borrower or any Subsidiary, except as otherwise
                           permitted in this Agreement, make any distribution
                           of assets as distribution to shareholders, officers
                           or directors outside of the ordinary course of
                           employment remuneration of an officer with the
                           Borrower, or make other Corporate Distributions,
                           except the Borrower may (i) make the payments
                           permitted by the terms of the Marsulex Agreement as
                           and when permitted, (ii) reimburse amounts advanced
                           or invested in excess of $24,000,000 to reimburse
                           Marsulex for amounts expended in the Project and
                           (iii) on or after the Release Date reimburse
                           Marsulex for amounts advanced to or invested in the
                           Borrower in excess of $16,500,000 plus any cost
                           overrun for the Project over the approved budget
                           by: (A) cancellation of any remaining letter of
                           credit held for the Project; (B) release of the
                           remaining amount in the Disbursement Trust Account
                           which the Borrower may, if there is no Default
                           which is continuing, then distribute to the
                           Guarantor; and (C) by distribution of any cash
                           amounts then held by the Borrower;

         (e)      Restriction on Sale and Leasebacks

                  sell, assign or dispose of any property in any transaction
                  or series of transactions which will conclude with a
                  reacquisition by the Borrower of the same or similar
                  property:

                  (i)      subject to any encumbrance to which such property
                           was not theretofore subject; or

                  (ii)     pursuant to a conditional sale agreement or other
                           title retention agreement, including a financing
                           transaction or capital lease arrangement;

                  (iii)    neither the Borrower nor the Guarantor shall,
                           without the prior written consent of the Lender,
                           except for Permitted Encumbrances and the
                           assignment of the Project and Syncrude Agreements
                           by Marsulex to Marsol (a) directly or indirectly
                           sell, transfer, convey, mortgage, pledge, or assign
                           or otherwise transfer or encumber any interest in
                           the Project or any part thereof; (b) encumber,
                           alienate, grant or allow to exist a Lien or grant
                           or allow to exist any other interest in the Project
                           or any part thereof, whether voluntarily or
                           involuntarily; (c) permit any preferred equity or
                           other mezzanine financing for the Borrower, or (d)
                           enter into or agree to any easement or other
                           agreement

<PAGE>
                                     -38-

                           granting rights in or restricting the use
                           or development of any portion of the Project;

         (f)      Restrictions on Repayment of Subordinated Debt

                  except as provided in the Marsulex Agreement or otherwise
                  under the terms of this Agreement, make any payment of
                  interest, principal or fees on any debt of the Borrower the
                  payment and security of which is subordinate to the
                  Indebtedness;

         (g)      Nature of Business

                  permit the business to be conducted by the Borrower to be
                  other than the ownership and operation of the Project;

         (h)      Facility Alterations

                  make any material changes, additions, or alterations to the
                  facilities used for the Project from that contemplated in
                  the Plans and Specifications submitted to the Lender,
                  including any change in the usage thereof.

         (i)      Contingent Liabilities

                  make any loan to or investment in or enter into any
                  obligations on behalf of any other person, firm or
                  corporation, or give any guarantee on behalf of or otherwise
                  give financial assistance to any other person, firm or
                  corporation, other than prior to the Indenture Termination
                  Date, loans to or guarantees of Debt of the Guarantor or any
                  Subsidiary of the Guarantor which has entered into a blocked
                  account agreement on similar terms to that with the
                  Guarantor and entered into a blocked account arrangement
                  providing the Lender with a first charge security interest
                  in the blocked account and the funds contained therein,.

         (j)      Amalgamation and Investment

                  acquire or enter or amalgamate or merge or enter into any
                  statutory arrangement with any other corporation or entity
                  or enter into partnership or syndicate with, any other
                  corporation or person.

5.3               Financial Covenants

                  The Borrower hereby covenants and agrees with the Lender, to
be calculated on a consolidated basis, in accordance with generally accepted
accounting principles, as at the end of each fiscal quarter, that so long as
any of the Indebtedness remains outstanding, it will:

         (a)      Burden Coverage

                  maintain Burden Coverage of at least 1.3:1 calculated as at
                  the end of each fiscal quarter for the four fiscal quarters
                  then ended.

                  Burden Coverage is defined as the EBITDA of the Borrower
                  before the distribution payments made to Marsulex by Marsol
                  under the Marsulex Agreement divided by principal and
                  interest payments on the Loan. The calculation and
                  requirement to comply with the Burden Coverage Ratio set out
                  hereunder commences on the earlier of (i) third fiscal
                  quarter end of the Borrower following the quarter in which
                  Syncrude is required to make payments under the Syncrude
                  Agreements and (ii) December

<PAGE>
                                     -39-


                  31, 2006, for the four fiscal quarters then ended and
                  thereafter determined at the end of each fiscal quarter of
                  the Borrower for the four fiscal quarters then ended, if the
                  calculation hereunder includes a part quarter, then the
                  calculation shall include the EBITDA and principal and
                  interest payments on the Loan for such part quarter as if it
                  is a full quarter by extrapolating the results for the part
                  quarter over the full quarter on a simple daily multiple
                  basis.

ARTICLE 6.00 - DEFAULT AND ENFORCEMENT

6.1               Events of Default

                  Each and every of the following shall be an Event of Default
                  under this Agreement:

         (a)      if the Borrower makes default in payment of the principal
                  and/or interest owing as Indebtedness as and when the same
                  becomes due under any provision hereof;

         (b)      if the Borrower shall neglect to carry out or observe any
                  covenant or condition (other than those relating to the
                  payment of principal and interest as set forth in (a) and
                  that in section 5.1(u) which shall be governed by section
                  6.1(i)) hereunder or if the Borrower or, prior to the
                  Release Date, the Guarantor shall neglect to carry out or
                  observe any covenant or condition under the Security,
                  provided the Borrower and the Guarantor shall, in each case,
                  have ten (10) days after receipt of notice from the Lender
                  to remedy such default before the Borrower or the Guarantor,
                  as the case may be, shall be in Default hereunder, or
                  provided that such default cannot be cured within such ten
                  (10) day period and the Borrower or the Guarantor, as the
                  case may be, so advises the Lender prior to the termination
                  of such ten (10) day period and provided further that such
                  default is capable of being cured and the Lender in its sole
                  discretion is satisfied that the Borrower or the Guarantor,
                  as the case may be, is diligently ~proceeding to cure such
                  default, the Borrower and the Guarantor shall have an
                  additional twenty (20) days to remedy such default before
                  the Borrower or the Guarantor, as the case may be, shall be
                  in Default hereunder;

         (c)      if the Borrower or until the Release Date the Guarantor
                  ceases, or threatens to cease, carrying on its business or
                  if a petition shall be filed, an order shall be made or a
                  resolution be passed for the winding-up or liquidation of
                  the Borrower or, until the Release Date, the Guarantor, or
                  the auditor at any time issues an audit report expressing a
                  "going concern" qualification with respect to the Borrower;

         (d)      if the Borrower or, until the Release Date, the Guarantor
                  shall become insolvent, or shall make a bulk sale of its
                  assets, a general assignment for the benefit of its
                  creditors, a proposal under the Bankruptcy and Insolvency
                  Act (Canada), or if a bankruptcy petition shall be filed or
                  presented with respect to the Borrower or, until the Release
                  Date, the Guarantor and with respect to such proceeding
                  instituted against it, such is not removed or discharged or
                  unstayed prior to the legal effect of such process, or if a
                  custodian, sequestrator, receiver, receiver and manager, or
                  any other officer with similar powers shall be appointed of
                  its properties, or any part thereof of the Borrower or,
                  until the Release Date, the Guarantor which is, in the
                  opinion of the Lender, a substantial part thereof;

         (e)      if any proceedings respecting the Borrower or until the
                  Release Date the Guarantor are commenced by the Borrower or
                  the Guarantor under the Companies' Creditors Arrangement Act
                  (Canada), the Winding-Up and Restructuring Act (Canada), or
                  any legislation or other provision of law providing for
                  similar effect;

<PAGE>
                                     -40-


         (f)      if an encumbrancer shall take possession of the property of
                  the Borrower or until the Release Date the Guarantor or any
                  part thereof which is, in the opinion of the Lender, a
                  substantial part thereof, or if a distress or execution or
                  any similar process be levied or enforced there against the
                  Borrower or, until the Release Date, the Guarantor, and such
                  remains unsatisfied for such period as would permit such
                  property or such part thereof which is, in the opinion of
                  the Lender, a substantial part to be sold or seized
                  thereunder;

         (g)      if default shall occur under any obligation of the Borrower
                  or until the Release Date the Guarantor to repay borrowed
                  money or interest thereon to any person which as to the
                  Guarantor is outstanding in an aggregate amount exceeding
                  Five Hundred Thousand Dollars ($500,000) and as to the
                  Borrower is outstanding in an aggregate amount exceeding
                  Twenty-Five Thousand Dollars ($25,000) and such default is
                  not waived or rectified within the period provided for
                  rectification in any governing agreement;

         (h)      if any of the representations and warranties contained
                  herein or in any of the Security shall prove to have been
                  false or misleading in any material respect on the date
                  hereof or, subject to as hereinafter provided with respect
                  to the Guarantor, on the date of the making of any Advance
                  (except to the extent such representation and warranty
                  specifically relates to a prior date), each representation
                  and warranty being deemed to be restated as of the date of
                  each Advance provided that any representation or warranty
                  made by or with respect to the Guarantor shall not be deemed
                  to be restated after the Release Date;

         (i)      if the Borrower or the Guarantor, which is a party thereto,
                  shall be in default under the Syncrude Agreements at any
                  time and such default has not been waived or has continued
                  unremedied for the period set out in such agreement to
                  rectify the particular default and Syncrude shall have
                  provided notice of such default to the Borrower or the
                  Guarantor; or

         (j)      if, without the prior written consent of the Lender, which
                  consent shall not be unreasonably withheld or delayed, there
                  is any Change in Control in the legal or beneficial
                  ownership of the outstanding shares in the share capital of
                  the Borrower, as certified to the Lender on the date of
                  advance, whether or not such is voluntary or involuntary, by
                  operation of law, order of the Court or otherwise, or if any
                  of the outstanding shares of the Borrower are pledged,
                  charged, sold, assigned, transferred, or otherwise
                  encumbered other than in favour of the Lender, or if
                  additional shares of the Borrower are issued, such that any
                  of the foregoing cause a Change in Control of the Borrower
                  to a Person not controlling the Borrower as of the date
                  hereof.

6.2      Acceleration on Event of Default

         Upon the occurrence of an Event of Default, the Lender may, in
addition to any other rights or remedies provided for herein, in the Security,
at law, or in equity, by written notice to the Borrower, declare the
Indebtedness to be immediately due and payable, and the same shall forthwith
become immediately due and payable, and the Borrower shall forthwith pay to
the Lender the Indebtedness.

         In addition to the right provided to the Lender to accelerate payment
of the Indebtedness, under the terms of this section 6.2, on the occurrence of
an Event of Default, it is acknowledged that the Lender may, in addition to
any other rights or remedies provided for herein, in the Security, at law, or
in equity, by thirty (30) days written notice to the Borrower, declare the


<PAGE>
                                     -41-


Indebtedness to be immediately due and payable, and the same shall forthwith
become immediately due and payable, and the Borrower shall forthwith pay to
the Lender the Indebtedness, if Syncrude Canada Ltd. has not been required to,
or for any reason has not, commenced payments required to be made by Syncrude
Canada Ltd. to the Borrower pursuant to the terms of the Syncrude Agreements
by December 15th, 2006.

6.3      Waiver of Default

         The Lender may at any time waive in writing any Default or Event of
Default which may have occurred, provided that no such waiver shall extend to,
or be taken in any manner whatsoever to affect, any subsequent Event of
Default or the rights or remedies resulting therefrom. No delay or failure by
the Lender to exercise any right or remedy hereunder shall impair any such
~right or remedy, or shall be construed to be a waiver of any Event of Default
hereunder or under the Security, or acquiescence therein.

6.4      Indebtedness Due Under Security

         An Event of Default hereunder shall also be a default under each
Security instrument.

6.5      Remedies Cumulative

         Each of the remedies available to the Lender is a separate remedy and
in no way is a limitation on any one or more of the other remedies otherwise
available to the Lender. The rights and remedies herein expressly specified or
in the Security are cumulative and not exclusive. The Lender may, in its sole
discretion, exercise any and all rights, powers, remedies and recourses
available herein or in the Security, or any other remedy available to it, and
such rights, powers, remedies and recourses may be exercised concurrently or
individually without the necessity of any election.

6.6      Requirement to Pay Directly

         The Lender may, only after an Event of Default and while it is
continuing, provide notice to Syncrude under the Syncrude Agreements requiring
payments thereunder to be made directly to the Lender.

ARTICLE 7.00 - ENFORCEMENT OF SECURITY

7.1      Remedies

         Whenever the Security has become enforceable, but subject to the
provisions hereof:

         (a)      The Lender may proceed to enforce its rights by any action,
                  suit, remedy or proceeding authorized or permitted by law or
                  by equity, and may file such proofs of claim and other
                  papers or documents as may be necessary or advisable in
                  order to have its claims lodged in any bankruptcy,
                  winding-up or other judicial proceeding relative to the
                  Borrower;

         (b)      The Lender may enter into and upon and take possession of
                  all or any part of the Mortgaged Property, with full power
                  to carry on, manage and conduct the business and operations
                  of the Borrower, including the power to borrow monies or
                  advance its own monies for the purpose of such business
                  operations, the maintenance and preservation of the
                  Mortgaged Property or any part thereof, the payment of
                  taxes,

<PAGE>
                                     -42-


                  wages and other charges ranking in priority to the
                  Indebtedness and operating expenses. The Lender shall
                  specifically have the right to exercise the rights and
                  remedies of the Borrower under any joint venture, limited
                  partnership, or equivalent agreement or arrangement, and to
                  exercise the rights pursuant to share pledges held as to the
                  Subsidiaries. The monies so borrowed or advanced shall be
                  repaid by the Borrower on demand and until repaid with
                  interest thereon at the rate per annum provided in section
                  3.3 hereunder calculated monthly, in arrears, shall form a
                  charge upon the Mortgaged Property in priority to the
                  Indebtedness and shall be secured hereby. The Lender shall
                  have the right to demand and to receive the revenues,
                  incomes, issues and profits of the Mortgaged Property and to
                  pay therefrom all of its expenses, charges and advances in
                  carrying on the business operations or otherwise, of the
                  Borrower and the payment of all taxes, assessments and other
                  charges against the Mortgaged Property ranking in priority
                  to the Indebtedness, or payment of which may be necessary to
                  preserve the Mortgaged Property, and to apply the remainder
                  of the monies so received in accordance with the provisions
                  hereof;

         (c)      The Lender may, either after entry as provided herein, or
                  without any entry, and with or without possession or control
                  of the Mortgaged Property sell and dispose of all the
                  Mortgaged Property, either as a whole or in separate parcels
                  at public auction, by tender, or by private contract at such
                  time and on such terms and conditions, having first given
                  such notice of the time and place of such sale, as it may
                  think proper. The Lender may make such sale whether by
                  auction, tender or private contract, either for cash, upon
                  credit, or in exchange for bonds, mortgages, stocks or other
                  securities of another corporation, or partly for one and
                  partly for the other upon such reasonable conditions as to
                  terms of payment as it may deem proper, and upon any such
                  sale, shall be obliged to account to the Borrower only in
                  relation to monies actually received and only at the time of
                  receipt. It shall be lawful for the Lender to rescind or
                  vary any contract of sale that may have been entered into,
                  and resell with or under any of the powers conferred herein,
                  to adjourn any such sale from time to time, and to execute
                  and deliver to the purchaser or purchasers of the said
                  property, or any part thereof, good and sufficient deed or
                  deeds for the same, the Lender being hereby irrevocably
                  constituted an attorney of the Borrower for the purpose
                  thereof, any such sale made as aforesaid shall be a
                  perpetual bar both in law and equity against the Borrower
                  and its assigns and all other persons claiming the said
                  property or any part or parcel thereof, by, from, through,
                  or under the Borrower or its assigns, and the proceeds of
                  any such sale shall be distributed in the manner hereinafter
                  provided; and

         (d)      The Lender or any agent or representative thereof, may
                  become the purchaser at any sale of the Mortgaged Property
                  whether made under the power of sale herein contained,
                  pursuant to foreclosure, or other judicial proceedings.

7.2      Remedies Not Exclusive

         No remedy for the enforcement of the rights of the Lender shall be
exclusive of, or depend on, any other remedy, but any one or more remedies may
from time to time be exercised independently or in combination.

7.3      Remedies Not Prejudiced by Delay

         No delay or omission of the Lender to exercise any remedy shall
impair any such remedy, or shall be construed to be a waiver of any Event of
Default hereunder or under the Security, or acquiescence therein.

<PAGE>
                                     -43-


7.4      Borrower to Yield Possession

         Upon the occurrence of an Event of Default which is continuing, the
Borrower shall yield possession of the Mortgaged Property and the conduct of
its business in connection therewith to the Lender and agrees to put no
obstacles in the way of, but to facilitate by all legal means, the actions of
the Lender hereunder, and not to interfere with the carrying out of the powers
hereby granted to it. The Borrower shall forthwith, by and through its
officers and directors, at any time upon the occurrence of an Event of Default
which is continuing, and request in writing by the Lender execute such
documents and transfers as may be necessary to place the Lender in legal
possession of the Mortgaged Property and its business in connection therewith,
and thereupon all the powers and functions, rights and privileges of each and
every of its directors and officers shall cease and determine solely with
respect to the possession of the Mortgaged Property, unless specifically
continued in writing by the Lender, or unless the property shall have been
restored to the Borrower.

7.5      Lender Entitled to Perform Covenants

         Upon the occurrence of an Event of Default which is continuing, the
Lender may, in its discretion, perform any of the said covenants capable of
being performed by it, and if any such covenant requires the payment or
expenditure of money, the Lender may make payments or expenditure with its own
funds, or with money borrowed by or advanced to it for such purpose, but shall
be under no obligation to do so, and all sums so expended or advanced shall be
at once payable by the Borrower on demand, shall bear interest at the rate of
eighteen per cent (18%) per annum, calculated and payable monthly, in arrears,
until paid, and shall be payable out of any funds coming into the possession
of the Lender in priority to the Indebtedness, but no such performance or
payment shall be deemed to relieve the Borrower from any Event of Default
hereunder.

7.6      The Lender as Agent of Borrower and Power of Attorney

         Upon the occurrence of an Event of Default which is continuing, and
written notification by the Lender, the Borrower hereby irrevocably appoints
the Lender to be its attorney, and in its name and on its behalf, to execute
and carry out any deeds, documents, transfers, conveyances, assignments,
assurances, consents and things which the Borrower ought to, or may, sign,
execute and do hereunder, and generally to use its name in the exercise of all
or any of the powers hereby conferred on the Lender, with full power of
substitution and revocation. In the exercise of all of its rights hereunder,
the Lender shall be, so far as concerns responsibility for its action or
inaction, the agent of the Borrower.

7.7      For the Protection of the Lender

         In realizing upon the Mortgaged Property, the Lender shall not be
responsible for any loss occasioned by any demand, collection, enforcement,
sale or other realization thereof, or the failure to, or delay in, demand,
collect, enforce or sell any portion, and the Lender shall not be bound to
protect the Mortgaged Property from depreciating in value. Upon any sale or
realization of the Mortgaged Property by way of public auction, the Lender may
become purchaser free from any right or equity of redemption, which right or
equity is expressly waived by the Borrower, and the Lender may, in paying the
purchase price, apply so much of the obligations of the Borrower hereunder on
account of the purchase price as may be necessary for such purpose.

7.8      Charges for Late Payment

         Notwithstanding any waiver or enforcement of an Event of Default
hereunder, the Borrower acknowledges that the Lender shall be paid interest on
overdue interest at the applicable

<PAGE>
                                     -44-


rate set out in section 3.3 and the sum of Two Hundred and Fifty Dollars
($250.00) in each instance, to compensate for costs, penalties or expenses
caused to the Lender arising as a result of any payment made after its due
date hereunder.

7.9      Lender's Agents

         The Lender may appoint any agent or representative to exercise any of
its rights hereunder, provided that it is specifically acknowledged and agreed
that First Treasury Corporation may appoint a management subsidiary to act as
agent or representative of the Lender at any time without formal appointment
or notice to the Borrower at no additional cost to the Borrower. The syndicate
participants, from time to time, may exercise the rights and remedies of the
Lender, directly or by appointment of a participant as a successor or assign
to the Lender on written notice ~provided by the participants in the Loan
holding not less that 66.67% of the outstanding principal amount of the Loan
at the relevant time to the Borrower advising as to what participant will be
so exercising the rights of the Lender.

ARTICLE 8.00 - APPLICATION OF FUNDS

8.1      Appointment of Receiver

         If the Security shall become enforceable, the Lender may appoint a
receiver, manager, or receiver and manager of the Mortgaged Property, or any
part thereof (hereinafter called the "Receiver"), and may remove any Receiver
so appointed and appoint another in his stead, and the following provisions
shall take effect:

         (a)      such appointment may be made at any time after the Security
                  shall have become enforceable and either before or after the
                  Lender shall have entered into or taken possession of the
                  Mortgaged Property or any part thereof, but such appointment
                  may be revoked upon the direction in writing of the Lender;

         (b)      every such Receiver shall be vested with all or any of the
                  powers and discretions of the Lender;

         (c)      such Receiver may carry on the business of the Borrower or
                  any part thereof, and may exercise all the powers conferred
                  upon the Lender hereby;

         (d)      the Lender may from time to time fix the remuneration of
                  every such Receiver, which remuneration shall be reasonable,
                  and direct the payment thereof out of the Mortgaged Property
                  or the proceeds thereof in priority to payment of the
                  Indebtedness;

         (e)      the Lender may from time to time require any such Receiver
                  to give security for the performance of his duties, and may
                  fix the nature and amount thereof, but shall not be bound to
                  require such security;

         (f)      every such Receiver may, with the consent in writing of the
                  Lender, borrow money for the purpose of carrying on the
                  business of the Borrower, for the maintenance of the
                  Mortgaged Property or any part or parts thereof, or for any
                  other purposes approved by the Lender, and may issue
                  security on the Mortgaged Property in priority to the
                  Security and in the amounts from time to time required to
                  carry out the duties of the Receiver appointed hereunder,
                  which shall bear interest as shall be reasonably determined
                  by the Receiver;

<PAGE>
                                     -45-


         (g)      save so far as otherwise directed by the Lender, all monies
                  from time to time received by such Receiver shall be paid
                  over to the Lender; and

         (h)      every such Receiver shall so far as concerns responsibility
                  for his acts and omissions in exercising all or any of the
                  powers and discretions conferred upon him hereunder, be
                  deemed the agent of the Borrower and not of the Lender.

8.2      Application of Funds

         Except as otherwise herein provided and subject to the terms of the
Priority Agreement, the monies arising from any enforcement of the Security
shall be applied as follows:

         (a)      firstly, in payment of, or reimbursement to the Lender of,
                  the expenses, disbursements, prepayment bonus, and advances
                  of the Lender (including the fees and expenses of any
                  Receiver, agent or representative appointed pursuant hereto
                  or under the Security and any legal fees with respect
                  thereto, on a solicitor and client basis) incurred or made
                  in connection with the enforcement of this Agreement or the
                  realization of the Security;

         (b)      secondly, in payment of interest on overdue interest,
                  interest and principal included in the Indebtedness, in that
                  order of priority, and in the case of accrued and unpaid
                  interest in reverse order of maturity; and

         (c)      the surplus, if any, shall be paid to the Borrower or its
                  assigns.

8.3      Deficiency

         If the monies received by the Lender or any Receiver are insufficient
to repay to the Lender all monies due to it, the Borrower shall forthwith pay
or cause to be paid to the Lender such deficiency.

ARTICLE 9.00 - NOTICES

9.1      Any demand or notice to be given by any party hereto to any other party
shall be in writing and may be given by personal delivery, or except during
any period when postal service is interrupted, by prepaid registered mail or
by telex, telecopy or by other means of instantaneous transmission that
produces a permanent copy ("other communication") addressed as follows:

         (a)      to the Borrower at:       111 Gordon Baker Road
                                            Suite 300
                                            Toronto, Ontario
                                            M2H 3R1

                                            Attention: Chief Financial Officer

         (b)      to the Lender at:         130 Adelaide Street West
                                            Suite 2200
                                            Toronto, Ontario
                                            M5H 3P5

and if given by registered mail shall be deemed to have been received by the
party to whom it was addressed on the date falling four (4) business days
following the date upon which it has been deposited in the post office with
postage and cost of registration prepaid, and if personally delivered to an
adult during normal business hours, when so delivered, and if given by other
communication


<PAGE>
                                     -46-


the third (3rd) business hour after transmission and confirmation of receipt.
Provided that any of the above-named parties may change the address designated
from time to time, by notice in writing to the other party hereto.

         IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the 5th day of June, 2003.

MARSOL CANADA CORPORATION                      FIRST TREASURY FINANCIAL INC.

Per:                                           Per:
    --------------------------------               ---------------------------
    [Authorized Signing Officer]                   [Authorized Signing Officer]

Per:                                           Per:
    --------------------------------               ---------------------------
    [Authorized Signing Officer]                   [Authorized Signing Officer]


MARSULEX INC.

Per:
    --------------------------------
    [Authorized Signing Officer]

Per:
    ---------------------------------
    [Authorized Signing Officer]


WP/ARM/17111-126/002/ar



<PAGE>



                                 SCHEDULE "A"
                                 REAL PROPERTY


PLAN 5157TR

PLANT SITE CONTAINING 835.27 HECTARES (2,064 ACRES) MORE OR LESS EXCEPTING
THEREOUT:

                                    HECTARES       (ACRES)    MORE OR LESS
A) PLAN 3677TR-TOWER SITE           1.485          3.67       (N.E. 6)
B) PLAN 7821106-STATION SITE        0.166          0.41       (S.W. 7)
C) PLAN 7821055-STATION SITE        0.085          0.21       (S.W. 7)
D) PLAN 8120252-PLANT SITE          5.58           13.78      (N.W. 6 & E1/21)
E) PLAN 8721201-STATION SITE        1.008          2.49       (N.3. 6)
F) PLAN 9823790-ROAD                4.20           10.37      (N.W. 6)
                                    5.87           14.51      (N.E. 6)

EXCEPTING THEREOUT ALL MINES AND MINERALS AND THE RIGHT TO WORK THE SAME.




<PAGE>


                                 SCHEDULE "B"
                            PERMITTED ENCUMBRANCES

MARSULEX INC.

ONTARIO

<TABLE>
<CAPTION>

        Registration Number                      Secured Party                Collateral
        -------------------                      -------------                ----------

<S>     <C>                                     <C>                           <C>
1.      20000710 1317 1715 5923 (863622819)      Xerox Canada Ltd.            Equipment, Other

        Expiry date: July 10, 2005

2.      19990629 1404 1715 3404 (852537654)      Xerox Canada Ltd.            Equipment, Other

        Expiry date: June 29, 2004

3.      19990503 1342 1398 9090 (850604949)      MTC Leasing Inc.             Equipment

        Expiry date: May 3, 2004                                              Mailing machine 21272-54547

                                                                              Box 13 completed
4.      29970306 1906 1529 9746 (828919935)      Textron Financial            Equipment, Leasing
                                                 Corporation (Canada)
        Expiry date: March 6, 2007                                            Amended by 19970326 1936 1529 7968 to add
                                                 Assigned by 19971103 0921    motor vehicle description - 1996 Western S02
        New debtor added by 20011204 1818 1531   2013 1036 to Hitachi Credit  Triaxle Trailer 2W9NAE2U7V2013174
        2481 - Chemtrade Logistics Inc.          Canada Inc.

                                                 Amended by 19990323 1830
                                                 1531 4241 to reflect change
                                                 of name of secured party to
                                                 Associates Capital Limited

5.      19960927 1919 1529 2636 (825233994)      Rentway Inc.                 Equipment, MV included - 1 1996 Western Rock
                                                                              Bit Company MC331 Tanker 2W9NAE2U1T2013166
        Expiry date: September 27, 2003

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

<S>     <C>                                     <C>                           <C>

6.      19921001 2147 1513 2942 (802487232)      PHH Canada Inc.              Equipment, Other, MV included

        Expiry date: October 1, 2004                                          Amended by 19990910 1043 1529 1539 to add
        (originally 1996)                                                     general collateral description to
                                                                              registration: All present and future motor
        Renewed for 3 years by 19960905 1855                                  vehicles (including, without limitation,
        1529 9932                                                             passenger automobiles, trucks, truck
                                                                              tractors, truck trailers, truck chassis, or
        Renewed for 5 years by 19990910 1043                                  truck bodies), automotive equipment
        1529 1538                                                             (including, without limitation, trailers,
                                                                              boxes and refrigeration units) and
        Partial discharge registered by 2000525                               materials-handling equipment leased from time
        1828 1531 2020 - to discharge 1997                                    to time by the secured party to the debtor,
        Chrysler Intrepid                                                     together with all present and future
                                                                              attachments, accessions, appurtenances,
        Amended by 20010312 1436 1530 6074 to                                 accessories and replacement parts, and all
        update serial number collateral                                       proceeds of or relating to any of the
        description:                                                          foregoing
        1 2000 Ford Ranger 1FTYR10U3YTB49286
                                                                              Further amended by 20000403 1437 1530 5758 to
        Partial discharge registered by                                       add serial number collateral description:
        20010529 1811 1531 1574 - to discharge                                1 1997 Chrysler Intrepid
        1997 Vision and 1999 Ford Windstar                                    2C3HH46F7VH663748;
                                                                              1 1998 Dodge RAM
        Amended by 20010803 1803 1531 6179 to                                 3B7HC12Y8WG109734;
        add additional debtors: Chemtrade                                     1 1997 Vision 2E3HD56F2VH657766;
        Logistics Income Fund                                                 1 1999 Ford Windstar
                                                                              2FMZA5143XBB33228;
        Amended by 20010809 1037 1529 8459 to                                 1 1999 Pontiac Grand Prix
        add additional debtor: Chemtrade                                      1G2WJ52M3XF328612
        Logistics Inc.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

<S>     <C>                                     <C>                           <C>

7.      19920731 2204 1513 0908 (802278045)      PHH Canada Inc.              Equipment, Other, MV included

        Expiry date: July 31, 2005 (originally                                Amended by 19990910 1043 1529 1549 to add
        1997)                                                                 general collateral description to
                                                                              registration: All present and future motor
        Renewed for 3 years by 19970624 1855                                  vehicles (including, without limitation,
        1531 8633                                                             passenger automobiles, trucks, truck
                                                                              tractors, truck trailers, truck chassis, or
        Renewed for 5 years by 20000613 1806                                  truck bodies), automotive equipment
        1531 2083                                                             (including, without limitation, trailers,
                                                                              boxes and refrigeration units) and
        Amended by 20010803 1803 1531 6180 to                                 materials-handling equipment leased from time
        add additional debtors: Chemtrade                                     to time by the secured party to the debtor,
        Logistics Income Fund                                                 together with all present and future
                                                                              attachments, accessions, appurtenances,
        Amended by 20010809 1037 1529 8460 to                                 accessories and replacement parts, and all
        include additional debtors: Chemtrade                                 proceeds of or relating to any of the
        Logistics Inc.                                                        foregoing

BRITISH COLUMBIA

        Registration Number                      Secured Party                Collateral
        -------------------                      -------------                ----------

1.      874118A                                  First Treasury Financial     All present and after acquired personal
                                                 Inc.                         property

        Expiry date: February 10, 2023

2.      49801A                                   GE Railcar Services Inc.     Rolling Stock Cars

        Expiry date: November 5, 2011

3.      8830542                                  General Electric Capital     Suzuki Grand Vitara
                                                 Vehicle and Equipment
        Expiry date: May 20, 2004                Leasing Inc.

                                                 GE Capital Vehicle and
                                                 Equipment Leasing Inc.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

<S>     <C>                                     <C>                           <C>

4.      7575294                                  PHH Vehicle Management       Motor Vehicles, (including, without
                                                 Services Inc.                limitation, passenger automobiles, trucks,
        Expiry date: March 31, 2003                                           truck tractors, truck trailers, truck
                                                                              chassis, or truck bodies), automotive
        Debtors: Marsulex Inc.; Chemtrade                                     equipment (including, without limitation,
        Logistics Inc.; Chemtrade Logistics                                   trailers, boxes and refrigeration units) and
        Income Fund                                                           materials-handling equipment leased from time
                                                                              to time by the secured party to the debtor,
                                                                              together with all present and future
                                                                              attachments, accessions, appurtenances,
                                                                              accessories and replacement parts, and all
                                                                              proceeds of or relating to any of the
                                                                              foregoing

ALBERTA

        Registration Number                      Secured Party                Collateral
        -------------------                      -------------                ----------

1.      03021021922                              First Treasury Financial     All present and after acquired personal
                                                 Inc.                         property of the debtor
        Expiry date: February 10, 2023

2.      02081603876                              Capital Industrial Sales &   1986 Clark GPS30MB GP138MB02046425FA
                                                 Services
        Expiry date: February 16, 2003

        Garage Keepers Lien

3.      01103127245                              GE Railcar Services Inc.     Rolling Stock Cars

        Expiry date: October 31, 2011

4.      99092012279                              Ikon Office Solutions, Inc.  Canon LC9000S Fax UYG35518

        Expiry date: September 20, 2003

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


<S>     <C>                                      <C>                          <C>

5.      98033109376                              PHH Vehicle Management       "Motor vehicles (including, without
                                                 Services Inc.                limitation, truck tractors, truck trailers,
        Expiry date: March 31, 2003                                           truck chassis or truck bodies), automotive
                                                                              equipment (including, without limitation,
        Debtors: Marsulex Inc.                                                trailers, boxes and refrigeration units) and
                                                                              materials-handling equipment leased by the
        Additional debtors added by 01080322504                               debtor from the secured party together with
        - Chemtrade Logistics Income Fund;                                    all attachments, accessions, appurtenances,
        Chemtrade Logistics Inc.                                              accessories or replacement parts.  Proceeds -
                                                                              all of the debtor's present and after
                                                                              acquired personal property including,
                                                                              without limitation, goods, securities,
                                                                              instruments, documents of title, chattel
                                                                              paper, intangibles and money.

                                                                              1995 Dodge 3B7HC13Y5SM143642;
                                                                              1997 Vision 2E3HD56F3VH657761;
                                                                              2001 Chevrolet Venture
                                                                              1GNDX03E01D164810;
                                                                              2001 Honda Accord
                                                                              1HGCG55411A809926

SASKATCHEWAN

        Registration Number                      Secured Party                Collateral
        -------------------                      -------------                ----------

1.      117348834                                GE Railcar Services Inc.     Rolling stock cars

        Expiry date: November 14, 2011

MARSOL CANADA CORPORATION

None


</TABLE>

<PAGE>


                                 SCHEDULE "C"
                             ENVIRONMENTAL REPORTS


Nil



<PAGE>


                                  SCHEDULE "D"
                                    ACTIONS


Nil



<PAGE>


                                  SCHEDULE "E"
                 FORM OF CERTIFICATE OF CHIEF FINANCIAL OFFICER
                        (pursuant to Section 5.1(e)(iv)

                       COMPLIANCE CERTIFICATE (QUARTERLY)

TO:      First Treasury Financial Inc. (Lender)

FROM:    Chief Financial Officer, Marsol Canada Corporation (Borrower)

         Pursuant to the terms and conditions outlined in the Loan Agreement
dated June   , 2003 between the Borrower and the Lender at section 5.1(e)(iv),
we provide and attest to the following information for the fiscal quarter
ended                              being the                    quarter of
our fiscal year.

CONDITIONS/COVENANTS ($000):

All covenants set out in this schedule are determined on the basis of the
consolidated financial statements of the Borrower and measured quarterly
unless otherwise stated.

1)       SECTION 5.3(a) BURDEN COVERAGE SHALL NOT REDUCE BELOW 1.3 :1:

         (Yes ____ or No ____ ).

         CALCULATION



2)       The Borrower is in compliance with Sections 5.1 and 5.2 of the Loan
         Agreement

         (Yes ____ or No ____ ).

         If no specify section which is not in compliance with explanation:

3)       Source Deductions are all current: (Yes ____ or No ____ )

4)       Attach an explanation for any covenant breaches.

The undersigned, having the authority to complete and execute this
Certificate, declares this information to be true and accurate, understanding
that FTFI relies on this information to provide its Credit Facilities.

DATED this       day of       , 2003

By:
   ------------------------------------

per:
    -----------------------------------
      (signature)




<PAGE>


                                  SCHEDULE "F"
                              SYNCRUDE AGREEMENTS


1.        License agreement between Syncrude Canada Ltd. and Marsulex Inc. for
          an ammonium sulphate scrubber process, dated as of December 29,
          2000.

2.        Ammonium Sulphate Process Guarantee agreement between Marsulex Inc.
          and Syncrude Canada Ltd., dated as of December 29, 2000.

3.        Lease agreement made pursuant to the Land Titles Act (Alberta)
          between Marsulex Inc. as tenant and Syncrude Canada Ltd. as
          representative of an agent for the landlords, dated December 29,
          2000.

4.        Disposal agreement between Syncrude Canada Ltd. and Marsulex Inc.,
          made December 29, 2000, Syncrude operates an oil sands plant near
          Mildred Lake, Alberta.



<PAGE>


                                  SCHEDULE "G"
                              MARSULEX AGREEMENTS


Service Performance Agreement between Marsulex and the Lender dated as of June
5, 2003




<PAGE>


                                  SCHEDULE "H"
                           DISBURSEMENT TRUST ACCOUNT






Disbursement Trust Account located at:

The Toronto-Dominion Bank



Account No.

Transit No. :



<PAGE>


                                  SCHEDULE "I"
                                    PROJECT

By the terms of the Syncrude Agreements and an engineering services agreement
dated December 13, 1999, entered into between Syncrude Canada Ltd. ("SCL") and
the Guarantor, the Guarantor agreed to construct, own, operate and maintain an
ammonium sulphate fertilizer plant (the "Fertilizer Plant") at the SCL
refinery at Mildred Lake, Alberta. This project is part of a refinery
expansion by SCL to reduce ammonia and sulfur emissions released during the
refining of oil sands bitumen into crude oil. The Fertilizer Plant will
convert slurry produced by a flue gas desulphurization unit into a saleable
fertilizer product. The Guarantor assigned all of the rights and assets of the
Fertilizer Plant to the Borrower. The Borrower and SCL will work together to
maximize revenue by optimizing the marketing and distribution of the finished
fertilizer product. The Borrower will administer any contract with the
marketer and distributor of the product fertilizer including collecting and
accounting for the revenue derived from the sale of the product and paying all
marketing fees. In return, SCL will pay the Borrower a disposal fee for
processing the slurry into saleable fertilizer.





<PAGE>


                                  SCHEDULE "J"
                   LIST OF ASSETS AND CHIEF EXECUTIVE OFFICES

Marsulex Inc.

1.       111 Gordon Baker Road
         Suite 300
         Toronto, Ontario
         M2H 3R1

         with assets located in British Columbia, Alberta and Saskatchewan,
         Oregon, Ohio and Illinois


Marsol Canada Corporation

1.       111 Gordon Baker Road
         Suite 300
         Toronto, Ontario
         M2H 3R1

         with assets located in Alberta






<PAGE>


                                  SCHEDULE "K"
                 PROGRESS CLAIM: REQUEST FOR DISBURSEMENT FORM

                      PROGRESS CLAIM: REQUEST FOR ADVANCE

TO:      FIRST TREASURY FINANCIAL INC. ("Lender")

                                       Date:                             o

                                       Advance:                          o

                                       Requested Advance Date:           o


FROM:    MARSOL CANADA CORPORATION ("Borrower")


The Borrower hereby requests an advance from the "Disbursement Trust Account"
(the "Advance") of o dollars ($o), pursuant to the terms of the Loan Agreement
dated Juneo, 2003 (the "Loan Agreement") between the Borrower and the Lender
for work completed as part of the Project. Such amount represents costs
attributable to work completed, less holdbacks and other amounts required to
be withheld under the Builders Lien Act (Alberta). Attached, as Exhibit 1 is
the Progress Report Certificate of the Independent Engineer. Terms used herein
with initial capital letters and not defined herein shall have the meanings
ascribed to them in the Loan Agreement.

The Borrower hereby certifies to the Lender that:

1.       The representations and warranties of the Borrower contained in the
         Loan Agreement are true and accurate in all respects as of the date
         hereof, except to the extent that they specifically relate to a prior
         date.

2.       No event or condition has occurred and is continuing or would result
         from this Disbursement which constitutes, or which could reasonably be
         expected to result in, an Event of Default by the Borrower under the
         Loan Agreement.

3.       The Project has not been damaged by fire or other casualty and no part
         of the Project has been expropriated and no proceedings therefor are
         pending.

4.       Construction of the Project is progressing satisfactorily so as to
         ensure the timely completion thereof on or prior to the dates required
         under the agreement with Syncrude Inc., and is in accordance with the
         Plans and Specifications.

5.       The requirements of the Builders Lien Act (Alberta) are being met and
         no lien has been registered and no notice of a lien has been received
         by the Borrower.

6.       Any and all funds previously received by advance from the Disbursement
         Trust Account have been expended or are being held in trust solely for
         the purpose of paying costs for the Project; no item or construction
         cost previously certified to the Lender in a Request for a Advance
         remains unpaid as of the date of this certificate (except to the
         extent so held in trust); and no part of said

<PAGE>

         funds has been nor any part of the funds to be received pursuant to
         this Request for Advance shall be used for any other purpose.

7.       The Project Cost Summary follows, including calculation of the
         Advance requested :

         ------------------------------------------------------------------
         Project Budget                                        $56,553,425
         ------------------------------------------------------------------
         Latest estimate of Project Cost                                $o
         ------------------------------------------------------------------
         Projected Overruns (if any)                                    $o
         ------------------------------------------------------------------

         ------------------------------------------------------------------
         Costs to Date                                                  $o
         ------------------------------------------------------------------
         Less holdbacks                                                 $o
         ------------------------------------------------------------------

         ------------------------------------------------------------------
         Less Equity in Project (Cash and L.C.[NTD: what                $o
         letter of credit is this?])
         ------------------------------------------------------------------
         Less total of previous Advances                                $o
         ------------------------------------------------------------------
         Less Projected Overruns (if any)                               $o
         ------------------------------------------------------------------
         Plus Holdbacks to be Released (if any)                         $o
         ------------------------------------------------------------------
         Current request for Advance                                    $o
         ------------------------------------------------------------------


8.       The contracts listed in Exhibit 1:

         (a)      have been certified as substantially complete and a period of
                  45 days has elapsed with no notice of lien being received or
                  registered; or

         (b)      the rights of all potential lien claimants thereunder have
                  expired in accordance with the Builders Lien Act (Alberta).

         Therefore holdbacks in the amount of $ o can now be released, and such
         amount has been included in the Advance requested.

                                          MARSOL CANADA CORPORATION


                                          Per:
                                              --------------------------------
                                          Name:
                                          Title:




<PAGE>


                                   Exhibit 1

           PROGRESS REPORT CERTIFICATE [No.] OF INDEPENDENT ENGINEER

                                                    Date:                   o


TO:       FIRST TREASURY FINANCIAL INC. ("Lender")

CC:       MARSOL CANADA CORPORATION ("Borrower")

FROM:     BURNS AND ROE ENTERPRISES, INC. ("Independent Engineer")


The Borrower is requesting an advance from the "Disbursement Trust Account"
for work completed to [Month] o, 2003, as part of the construction of the
Fertilizer Plant at Fort McMurray (the "Project") pursuant to the terms of the
Loan Agreement dated Juneo, 2003 (the "Loan Agreement") between the Borrower
and the Lender.

Such amount represents costs attributable to work completed, less holdbacks
and other amounts required to be withheld under the Builders Lien Act
(Alberta) and in relation to which a request for disbursement has not
previously been made. Terms used herein with initial capital letters and not
defined herein shall have the meanings ascribed to them in the Loan Agreement.

The Independent Engineer hereby certifies to the Lender that:

1.       The Project has not been damaged by fire or other casualty and no part
         of the Project has been expropriated and no proceedings therefor are
         pending.

2.       Construction of the Project is progressing satisfactorily so as to
         ensure the timely completion thereof on or prior to the dates required
         under the agreement with Syncrude Inc., and is in accordance with the
         plans and specifications.

3.       The requirements of the Builders Lien Act (Alberta) are being met and
         nothing has occurred subsequent to the date of the Loan Agreement
         which has resulted or may result in the creation of any lien (other
         than Permitted Encumbrances as defined in the Loan Agreement), charge
         or encumbrance upon the Project

4.       The Project Costs to the date of the Advance Request are summarized as
         follows:

         ------------------------------------------------------------------
         Project Budget                                        $56,553,425
         ------------------------------------------------------------------
         Latest estimate of Project Cost                                $o
         ------------------------------------------------------------------
         Projected Overruns (if any)                                    $o
         ------------------------------------------------------------------

         ------------------------------------------------------------------
         Costs to Date                                                  $o
         ------------------------------------------------------------------
         Less holdbacks                                                 $o
         ------------------------------------------------------------------
         Plus Holdbacks to be Released (if any)                         $o
         ------------------------------------------------------------------


<PAGE>



         Net Costs to Date                                              $o
         ------------------------------------------------------------------

5.       The work for which the disbursement from the Disbursement Trust
         Account is requested is outlined in Exhibit 1 to this report.

6.       The contracts listed in Exhibit A

         (a)      have been certified as substantially complete and a period of
                  45 days has elapsed with no notice of lien being received or
                  registered; or

         (b)      the rights of all potential lien claimants thereunder have
                  expired in accordance with the Builders Lien Act (Alberta).

         Therefore holdbacks in the amount of $_________________ can now be
         released, and such amount has been included in the Advance requested.


                                           BURNS AND ROE ENTERPRISES, INC.


                                           Per:
                                               -----------------------------
                                           Name:
                                           Title:



                                   EXHIBIT A

[List of contracts for which lien rights have expired and for which holdback
money is requested for release]



s