<PAGE>

                                                                    Exhibit 4.13


                              SAND TECHNOLOGY INC.


                                       AND


                            CIBC MELLON TRUST COMPANY
                                 AS RIGHTS AGENT




                    -----------------------------------------

                        SHAREHOLDER RIGHTS PLAN AGREEMENT

                    -----------------------------------------





                                November 17, 2003








<PAGE>


                                TABLE OF CONTENTS



<TABLE>
<CAPTION>

<S>       <C>                                                                                                    <C>
ARTICLE 1 INTERPRETATION......................................................................................... 2
    1.1      CERTAIN DEFINITIONS................................................................................. 2
    1.2      CURRENCY............................................................................................16
    1.3      DESCRIPTIVE HEADINGS................................................................................16
    1.4      REFERENCES TO AGREEMENT.............................................................................16
    1.5      CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF OUTSTANDING VOTING SHARES...........16
    1.6      ACTING JOINTLY OR IN CONCERT........................................................................17

ARTICLE 2 THE RIGHTS.............................................................................................17
    2.1      LEGEND ON CERTIFICATES..............................................................................17
    2.2      EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES...............................18
    2.3      REGISTRATION, TRANSFER AND EXCHANGE.................................................................18
    2.4      MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES...........................................19
    2.5      PERSONS DEEMED OWNERS OF RIGHTS.....................................................................20
    2.6      DELIVERY AND CANCELLATION OF CERTIFICATES...........................................................20
    2.7      AGREEMENT OF RIGHTS HOLDERS.........................................................................21
    2.8      RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER..................................................22

ARTICLE 3 EXERCISE OF THE RIGHTS.................................................................................22
    3.1      INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS....................................22
    3.2      ADJUSTMENTS TO EXERCISE PRICE: NUMBER OF RIGHTS.....................................................26
    3.3      DATE ON WHICH EXERCISE IS EFFECTIVE.................................................................32

ARTICLE 4 ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS.........................................32
    4.1      FLIP-IN EVENT.......................................................................................32

ARTICLE 5 THE RIGHTS AGENT.......................................................................................34
    5.1      GENERAL.............................................................................................34
    5.2      MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT............................................35
    5.3      DUTIES OF RIGHTS AGENT..............................................................................36
    5.4      CHANGE OF RIGHTS AGENT..............................................................................38

ARTICLE 6 MISCELLANEOUS..........................................................................................39
    6.1      REDEMPTION AND WAIVER...............................................................................39
    6.2      EXPIRATION..........................................................................................41
    6.3      ISSUANCE OF NEW RIGHTS CERTIFICATES.................................................................41
    6.4      FRACTIONAL RIGHTS AND FRACTIONAL SHARES.............................................................41
    6.5      SUPPLEMENTS AND AMENDMENTS..........................................................................41
    6.6      RIGHTS OF ACTION....................................................................................44
    6.7      NOTICE OF PROPOSED ACTIONS..........................................................................44
    6.8      NOTICES.............................................................................................44

</TABLE>


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<TABLE>
<CAPTION>

<S> <C>      <C>                                                                                                <C>
    6.9      COSTS OF ENFORCEMENT................................................................................46
    6.10     SUCCESSORS..........................................................................................46
    6.11     BENEFITS OF THIS AGREEMENT..........................................................................46
    6.12     GOVERNING LAW.......................................................................................46
    6.13     COUNTERPARTS........................................................................................46
    6.14     SEVERABILITY........................................................................................46
    6.15     EFFECTIVE DATE......................................................................................47
    6.16     SHAREHOLDER APPROVAL................................................................................47
    6.17     DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS................................................47
    6.18     TIME OF THE ESSENCE.................................................................................47
    6.19     REGULATORY APPROVALS................................................................................47
    6.20     DECLARATION AS TO NON-CANADIAN AND NON-UNITED STATES HOLDERS........................................48
    6.21     FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS..........................................................48
    6.22     LANGUAGE............................................................................................48

</TABLE>


<PAGE>


THIS SHAREHOLDER RIGHTS PLAN AGREEMENT is dated as of November 17, 2003.


BETWEEN:                         SAND TECHNOLOGY INC., a corporation existing
                                 under the laws of Canada

                                 (hereinafter referred to as the "CORPORATION")


AND:                             CIBC MELLON TRUST COMPANY,  a trust company
                                 existing under the laws of Canada,  as
                                 rights agent

                                 (hereinafter referred to as the "RIGHTS AGENT")


RECITALS:

A.       The Board of Directors of the Corporation has determined that it is
         advisable for and in the best interests of the Corporation to adopt a
         shareholder rights plan (the "RIGHTS PLAN").

B.       In order to implement the Rights Plan, the Board of Directors of the
         Corporation has authorized:

         (i)      the issuance, effective at 4:00 p.m. (Eastern time) on
                  November 17, 2003, of one right (a "RIGHT") in respect of each
                  Common Share of the Corporation outstanding at 4:00 p.m.
                  (Eastern time) on November 17, 2003 (the "RECORD TIME"); and

         (ii)     the issuance of one Right in respect of each Common Share
                  issued after the Record Time and prior to the earlier of the
                  Separation Time and the Expiration Time.

C.       Each Right entitles its holder, after the Separation Time, to purchase
         securities of the Corporation pursuant to the terms and subject to the
         conditions set forth in this agreement.

D.       The Corporation wishes to appoint the Rights Agent to act on behalf of
         the Corporation and holders of Rights, and the Rights Agent is willing
         to so act, in connection with the issuance, transfer, exchange and
         replacement of Rights Certificates, the exercise of Rights and other
         matters referred to in this agreement.


<PAGE>
                                       -2


NOW THEREFORE, in consideration of the premises and the respective covenants and
agreements set forth in this agreement, the parties agree as follows:

                                   ARTICLE 1
                                 INTERPRETATION

1.1      CERTAIN DEFINITIONS

         For the purpose of this agreement:

         (a)      "ACQUIRING PERSON" means any Person who is or becomes the
                  Beneficial Owner of 20% or more of the outstanding Voting
                  Shares; provided, however, that the term "ACQUIRING PERSON"
                  will not include:

                  (i)      the Corporation or any Subsidiary of the Corporation;

                  (ii)     any Person who becomes the Beneficial Owner of 20% or
                           more of the outstanding Voting Shares of the
                           Corporation as a result of any one or any combination
                           of:

                           (A)      a Voting Share Reduction;

                           (B)      a Permitted Bid Acquisition;

                           (C)      an Exempt Acquisition;

                           (D)      a Pro Rata Acquisition; or

                           (E)      a Convertible Security Acquisition;

                           provided, however, that if a Person becomes the
                           Beneficial Owner of 20% or more of the Voting Shares
                           then outstanding by reason of one or any combination
                           of a Voting Share Reduction, a Permitted Bid
                           Acquisition, an Exempt Acquisition, a Pro Rata
                           Acquisition or a Convertible Security Acquisition and
                           thereafter such Person, while such Person is the
                           Beneficial Owner of 20% or more of the Voting Shares
                           then outstanding, increases the number of Voting
                           Shares beneficially owned by such Person by more than
                           1.0% of the number of Voting Shares outstanding
                           (other than pursuant to one or any combination of a
                           Voting Share Reduction, a Permitted Bid Acquisition,
                           an Exempt Acquisition, a Pro Rata Acquisition or a
                           Convertible Security Acquisition) then, as of the
                           date such Person becomes the Beneficial Owner of such
                           additional outstanding Voting Shares, such Person
                           will be an "ACQUIRING PERSON";


<PAGE>
                                      -3-


                           (iii)    an underwriter or member of a banking or
                                    selling group acting in such capacity that
                                    becomes the Beneficial Owner of 20% or more
                                    of the Voting Shares in connection with a
                                    distribution of securities of the
                                    Corporation;

         (b)      "AFFILIATE", when used to indicate a relationship with a
                  specified corporation, means a Person who directly, or
                  indirectly through one or more intermediaries, controls, or is
                  controlled by, or is under common control with, such specified
                  corporation;

         (c)      "ASSOCIATE", when used to indicate a relationship with a
                  Person, means a spouse of that Person, any Person who resides
                  in the same home as that Person and to whom that Person is
                  married or with whom that Person is living in a conjugal
                  relationship outside marriage, a child of that Person or a
                  relative of that Person if the relative has the same home as
                  that Person;

         (d)      a Person will be deemed the "BENEFICIAL OWNER" of, and to have
                  "BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN":

                  (i)      any securities as to which such Person or any of such
                           Person's Affiliates or Associates is the owner at law
                           or in equity;

                  (ii)     any securities as to which such Person or any of such
                           Person's Affiliates or Associates has the right to
                           acquire (whether such right is exercisable
                           immediately or within a period of 60 days thereafter
                           and whether or not upon the occurrence of a
                           contingency) pursuant to any agreement, arrangement,
                           pledge or understanding, whether or not in writing,
                           (other than customary agreements with and between
                           underwriters or banking group or selling group
                           members with respect to a distribution of securities
                           and other than pledges of securities in the ordinary
                           course of the pledgee's business) or upon the
                           exercise of any conversion right, exchange right,
                           share purchase right (other than a Right), warrant or
                           option; and

                  (iii)    any securities which are Beneficially Owned within
                           the meaning of clauses (i) or (ii) by any other
                           Person with whom such Person is acting jointly or in
                           concert;

                           provided, however, that a Person will not be deemed
                           the "BENEFICIAL OWNER" of, or to have "BENEFICIAL
                           OWNERSHIP" of, or to "BENEFICIALLY OWN", any security
                           because:


<PAGE>
                                      -4-


                  (iv)     such security has been or agreed to be deposited or
                           tendered pursuant to a Lock-up Agreement or is
                           otherwise deposited or tendered pursuant to any
                           Take-over Bid made by such Person, any Affiliate or
                           Associate of such Person or any Person acting jointly
                           or in concert with such Person until such deposited
                           security has been taken up or paid for, whichever
                           occurs first;

                  (v)      such Person or any Affiliate or Associate of such
                           Person or any other Person acting jointly or in
                           concert with such Person holds such security and:

                           (A)      the ordinary business of any such Person
                                    (the "FUND MANAGER") includes the management
                                    of investment funds for others and such
                                    security is held by the Fund Manager in the
                                    ordinary course of such business in the
                                    performance of the Fund Manager's duties for
                                    the account of any other Person (a
                                    "CLIENT"), including a non-discretionary
                                    account held on behalf of a Client by a
                                    broker or dealer registered under applicable
                                    laws;

                           (B)      such Person (the "TRUST COMPANY") is
                                    licensed to carry on the business of a trust
                                    company under applicable laws and, as such,
                                    acts as trustee or administrator or in a
                                    similar capacity in relation to the estates
                                    of deceased or incompetent Persons (each, an
                                    "ESTATE ACCOUNT") or in relation to other
                                    accounts (each, an "OTHER ACCOUNT") and
                                    holds such security in the ordinary course
                                    of such duties for Estate Accounts or Other
                                    Accounts;

                           (C)      such Person (the "PLAN ADMINISTRATOR") is
                                    the administrator or the trustee of one or
                                    more pension funds or plans (a "PLAN")
                                    registered under the laws of Canada or any
                                    province thereof or the laws of the United
                                    States of America or any state thereof and
                                    such security is held by the Plan
                                    Administrator or the Plan in the ordinary
                                    course of the Plan Administrator's or Plan's
                                    activities;

                           (D)      such Person (the "STATUTORY BODY") is
                                    established by statute for purposes that
                                    include, and the ordinary business or
                                    activity of such Person includes, the
                                    management of investment funds for employee
                                    benefit plans, pension plans and insurance
                                    plans of various public bodies and such
                                    security is held by the Statutory Body in
                                    the ordinary course of the management of
                                    such investment funds;


<PAGE>
                                      -5-


                           (E)      such Person is a Crown Agent or agency (a
                                    "CROWN AGENT"); or

                           (F)      such Person is a Plan;

                           provided, however, that in any of the foregoing
                           cases, the Fund Manager, the Trust Company, the Plan
                           Administrator, the Statutory Body, the Crown Agent or
                           the Plan, as the case may be, is not then making a
                           Take-over Bid, has not then announced an intention to
                           make a Take-over Bid and is not then acting jointly
                           or in concert with any other Person who is making a
                           Take-over Bid or who has announced a current
                           intention to make a Take-over Bid, other than an
                           Offer to Acquire Voting Shares or other securities
                           (1) pursuant to a distribution by the Corporation,
                           (2) by means of a Permitted Bid or a Competing
                           Permitted Bid or (3) by means of market transactions
                           made in the ordinary course of business of such
                           Person (including pre-arranged trades entered into in
                           the ordinary course of business of such Person)
                           executed through the facilities of a stock exchange
                           or organized over-the-counter market;

                  (vi)     such Person is (A) a Client of the same Fund Manager
                           as another Person on whose account the Fund Manager
                           holds such security, (B) an Estate Account or Other
                           Account of the same Trust Company as another Person
                           on whose account the Trust Company holds such
                           security or (C) a Plan with the same Plan
                           Administrator as another Plan on whose account the
                           Plan Administrator holds such security;

                  (vii)    such Person is (A) a Client of a Fund Manager and
                           such security is owned at law or in equity by the
                           Fund Manager, (B) an Estate Account or Other Account
                           of a Trust Company and such security is owned at law
                           or in equity by the Trust Company or (C) a Plan and
                           such security is owned at law or in equity by the
                           Plan Administrator; or

                  (viii)   because such Person is the registered holder of
                           securities as a result of carrying on the business of
                           or acting as a nominee of a securities depositary.


<PAGE>
                                      -6-


         (e)      "BOARD OF DIRECTORS" means the board of directors of the
                  Corporation or, if duly constituted and whenever duly
                  empowered, any committee of the board of directors of the
                  Corporation;

         (f)      "BUSINESS DAY" means any day other than a Saturday, a Sunday
                  or a day on which banking institutions in Montreal, Quebec are
                  authorized or obligated by law to close;

         (g)      "CLOSE OF BUSINESS" on any given date means the time on such
                  date (or, if such date is not a Business Day, the time on the
                  next Business Day) at which the principal office in Montreal,
                  Quebec of the transfer agent for the Common Shares (or, after
                  the Separation Time, the office of the Rights Agent) is closed
                  to the public;

         (h)      "COMMON SHARE" means the Class A Common Shares of the
                  Corporation and any other shares of the Corporation into which
                  such shares may be subdivided, consolidated, reclassified or
                  changed;

         (i)      "COMMON SHARES", when used with reference to any Person other
                  than the Corporation, means the class or classes of shares (or
                  similar equity interest) with the greatest per share (or
                  similar interest) voting power entitled to vote generally in
                  the election of all directors of such other Person;

         (j)      "COMPETING PERMITTED BID" means a Take-over Bid that:

                  (i)      is made after a Permitted Bid or another Competing
                           Permitted Bid has been made and prior to the expiry
                           of that Permitted Bid or Competing Permitted Bid (in
                           this definition, the "PRIOR BID");

                  (ii)     satisfies all components of the definition of
                           Permitted Bid other than the requirement set out in
                           clause (ii) of that definition; and

                  (iii)    contains, and the take up and payment for securities
                           rendered or deposited under the Take-over Bid is
                           subject to, irrevocable and unqualified conditions
                           that:

                           (A)      no Voting Shares will be taken up or paid
                                    for pursuant to the Take-over Bid (1) prior
                                    to the close of business on a date that is
                                    no earlier than the later of the date which
                                    is 35 days (or such other minimum deposit
                                    period for a take-over bid as is provided in
                                    the Securities Act) after the date the
                                    Take-over Bid is made and the 60th day after
                                    the date of the Prior Bid that is then
                                    outstanding and (2) then only if, at the
                                    close of


<PAGE>
                                      -7-


                                    business on the date Voting Shares are first
                                    taken up or paid for, more than 50% of the
                                    then outstanding Voting Shares held by
                                    Independent Shareholders have been deposited
                                    or tendered pursuant to such Take-over Bid
                                    and not withdrawn; and

                           (B)      if the requirement in clause (iii)(A)(2) is
                                    satisfied, the Offeror will make a public
                                    announcement of that fact and the Take-over
                                    Bid will remain open for deposits and
                                    tenders of Voting Shares for a period of at
                                    least 10 Business Days after the date of the
                                    announcement;

         (k)      "CONTROLLED": a corporation is controlled by another Person or
                  two or more Persons acting jointly or in concert if:

                  (i)      securities entitled to vote in the election of
                           directors carrying more than 50% of the votes for the
                           election of the directors are held, directly or
                           indirectly, by or for the benefit of the other Person
                           or two or more Persons acting jointly or in concert;
                           and

                  (ii)     the votes carried by such securities are entitled, if
                           exercised, to elect a majority of the board of
                           directors of such corporation;

                  and "CONTROLS", "CONTROLLING" and "UNDER COMMON CONTROL WITH"
                  will be interpreted accordingly;

         (l)      "CONVERTIBLE SECURITIES" means any securities issued by the
                  Corporation (including rights, warrants and options, but
                  excluding the Rights) carrying any purchase, exercise,
                  conversion or exchange rights, pursuant to which the holder of
                  Convertible Securities may acquire Voting Shares or other
                  securities convertible into or exercisable or exchangeable for
                  Voting Shares (in each case, whether such right is exercisable
                  immediately or after a specified period and whether or not on
                  condition or the happening of any contingency);

         (m)      "CONVERTIBLE SECURITY ACQUISITION" means the acquisition of
                  Voting Shares on the exercise, conversion or exchange of
                  Convertible Securities acquired by any Person pursuant to a
                  Permitted Bid Acquisition, Exempt Acquisition or Pro Rata
                  Acquisition;

         (n)      "CO-RIGHTS AGENT" has the meaning ascribed to it in subsection
                  5.1.(a);



<PAGE>
                                      -8-


         (o)      "CORPORATIONS ACT" means the CANADA BUSINESS CORPORATIONS ACT,
                  as it may be amended, and the regulations made thereunder, and
                  any successor laws or regulations thereto;

         (p)      "DIVIDEND PAID IN THE ORDINARY COURSE" means cash dividends
                  paid in any financial year of the Corporation to the extent
                  that such cash dividends do not exceed, in the aggregate, the
                  greatest of:

                  (i)      200% of the aggregate amount of cash dividends
                           declared payable by the Corporation on the Common
                           Shares in its immediately preceding financial year;

                  (ii)     300% of the arithmetic average of the aggregate
                           amounts f cash dividends declared payable by the
                           Corporation on the Common Shares in its three
                           immediately preceding financial years; and

                  (iii)    100% of the aggregate consolidated net income of the
                           Corporation, before extraordinary items, for its
                           immediately preceding financial year;

         (q)      "ELECTION TO EXERCISE" has the meaning ascribed to it in
                  clause 3.1(e)(ii);

         (r)      "EXEMPT ACQUISITION" means an acquisition of Voting Shares:

                  (i)      in respect of which the Board of Directors has waived
                           the application of section 4.1 pursuant to section
                           6.1;

                  (ii)     pursuant to a distribution by the Corporation of
                           Voting Shares or Convertible Securities (and the
                           conversion or exchange of such securities) pursuant
                           to a prospectus, registration statement or similar
                           document (provided that the purchaser does not
                           thereby Beneficially Own a greater percentage of the
                           Voting Shares or Convertible Securities so offered
                           than the percentage of Voting Shares or Convertible
                           Securities beneficially owned by the purchaser
                           immediately prior to that distribution) or by way of
                           private placement provided that, in the case of a
                           private placement, all necessary stock exchange
                           approvals for the private placement have been
                           obtained and the private placement complies with the
                           terms and conditions of those approvals and the
                           purchaser does not become the Beneficial Owner of
                           more than 25% of the Voting Shares outstanding
                           immediately prior to the private placement (and in
                           making this determination, the securities to be
                           issued to that purchaser pursuant to the private
                           placement will be deemed to be held by that purchaser
                           but will not be included in the aggregate


<PAGE>
                                      -9-


                           number of outstanding Voting Shares immediately prior
                           to the private placement); and

                  (iii)    pursuant to an amalgamation, merger or other
                           statutory procedure requiring shareholder approval;

         (s)      "EXERCISE PRICE" means, as of any date, the price at which a
                  holder of a Right may purchase the securities issuable upon
                  exercise of such Right and, until adjustment thereof in
                  accordance with the terms hereof, the Exercise Price will be
                  $100;

         (t)      "EXPANSION FACTOR" has the meaning ascribed to it in
                  subsection 3.2(a);

         (u)      "EXPIRATION TIME" means earlier of:

                  (i)      the Termination Time; and

                  (ii)     subject to section 6.15, the close of the annual
                           meeting of shareholders of the Corporation in 2005
                           and every two-year anniversary thereafter and so on
                           unless the continuation of this agreement for each
                           such two-year period (or other period approved by the
                           Independent Shareholders) is approved in accordance
                           with section 6.16;

         (v)      "FLIP-IN EVENT" means a transaction in or pursuant to which
                  any Person becomes an Acquiring Person;

         (w)      "HOLDER" has the meaning ascribed to it in section 2.5;

         (x)      "INDEPENDENT SHAREHOLDERS" means holders of Voting Shares
                  other than Voting Shares Beneficially Owned by:

                  (i)      an Acquiring Person;

                  (ii)     an Offeror, other than a Person described in any one
                           or more of paragraphs (A) through (E) of clause
                           1.1(d)(v);

                  (iii)    any Associate or Affiliate of such Acquiring Person
                           or Offeror;

                  (iv)     any Person acting jointly or in concert with such
                           Acquiring Person or Offeror; and

                  (v)      any employee benefit plan, stock purchase plan,
                           deferred profit sharing plan and any other similar
                           plan or trust for the benefit of


<PAGE>
                                      -10-


                           employees of the Corporation or a Subsidiary of the
                           Corporation, unless the beneficiaries of the plan or
                           trust direct the manner in which the Voting Shares
                           are to be voted or direct whether the Voting Shares
                           are to be tendered to a Take-over Bid;

         (y)      "LOCK UP AGREEMENT" means an agreement between an Offeror, any
                  Affiliate or Associate of the Offeror or any other Person
                  acting jointly or in concert with the Offeror and a Person
                  (the "LOCKED-UP PERSON") who is not an Affiliate or Associate
                  of the Offeror or a Person acting jointly or in concert with
                  the Offeror whereby the Locked-up Person agrees to deposit or
                  tender Voting Shares held by the Locked-up Person to the
                  Offeror's Take-over Bid or to any Take-over Bid made by an
                  Affiliate or Associate of the Offeror or made by any other
                  Person acting jointly or in concert with the Offeror (the
                  "LOCK-UP BID"), where the agreement:

                  (i)      (A) permits the Locked-up Person to withdraw the
                           Voting Shares in order to tender or deposit the
                           Voting Shares to another Take-over Bid or to support
                           another transaction that contains an offering price
                           for each Voting Share that exceeds, or provides a
                           value for each Voting Share that is greater than, the
                           offering price contained or proposed to be contained
                           in the Lock-up Bid; or

                           (B) permits the Locked-up Person to withdraw the
                           Voting Shares in order to tender or deposit the
                           Voting Shares to another Take-over Bid or to support
                           another transaction that contains an offering price
                           for each Voting Share that exceeds, or provides a
                           value for each Voting Share that is greater than, the
                           offering price contained in or proposed to be
                           contained in the Lock-up Bid by as much or more than
                           a specified amount (the "SPECIFIED AMOUNT") where the
                           Specified Amount is not greater than 7% of the
                           offering price that is contained or proposed to be
                           contained in the Lock-up Bid; and

                  (ii)     does not provide for any "break-up fees", "top-up
                           fees", "termination fees", penalties, expenses or
                           other amounts that exceed in the aggregate the
                           greater of (A) the cash equivalent of 2.5% of the
                           price or value payable to the Locked-up Person under
                           the Take-over Bid and (B) one-half of the increased
                           price or value that is paid pursuant to another
                           Take-over Bid or transaction, if the Locked-up Person
                           fails to tender Voting Shares pursuant thereto or
                           withdraws Voting Shares previously tendered in order
                           to accept the other Take-over Bid or support the
                           other transaction;

                  and for greater clarity, the agreement may contain a right of
                  first refusal or require a period of delay to give the Person
                  who made the Lock-up Bid an


<PAGE>
                                      -11-


                  opportunity to match a higher price in another Take-over Bid
                  or other similar limitation on a Locked-up Person's right to
                  withdraw Voting Shares from the agreement, so long as the
                  limitation does not preclude the exercise by the Locked-up
                  Person of the right to withdraw Voting Shares during the
                  period for acceptance of the other Take-over Bid or
                  transaction;

         (z)      "MARKET PRICE" per share of any securities on any date of
                  determination means the average of the weighted average sale
                  price per share of such securities (determined as described
                  below) for the 20 consecutive Trading Days through and
                  including the Trading Day immediately preceding such date;
                  provided, however, that if an event of a type analogous to any
                  of the events described in section 3.2 have caused the sale
                  prices in respect of any Trading Day used to determine the
                  Market Price not to be fully comparable with the sale prices
                  on such date of determination or, if the date of determination
                  is not a Trading Day, on the immediately preceding Trading
                  Day, each such sale price so used will be appropriately
                  adjusted in a manner analogous to the applicable adjustment
                  provided for in section 3.2 in order to make it fully
                  comparable with the sale price on such date of determination
                  or, if the date of determination is not a Trading Day, on the
                  immediately preceding Trading Day. The weighted average sale
                  price per share of any securities on any date will be
                  determined by dividing the aggregate sale price of all
                  securities sold on the principal stock exchange in Canada on
                  which such securities are listed and posted for trading
                  divided by the total number of securities so sold except that:

                  (i)      if for any reason such prices are not available on
                           such day or the securities are not listed and posted
                           for trading on any stock exchange in Canada, the
                           Market Price will be calculated using the sale prices
                           for such securities as reported in the principal
                           consolidated transaction reporting system with
                           respect to securities listed or admitted to trading
                           on the principal national securities exchange in the
                           United States on which such securities are listed or
                           admitted to trading;

                  (ii)     if for any reason such prices are not available on
                           such day or the securities are not listed and posted
                           for trading on a stock exchange in Canada or a
                           national securities exchange in the United States,
                           the Market Price will be calculated using the sale
                           prices for such securities in the over-the-counter
                           market, as reported by The Canadian Dealing Network
                           Inc., or such other comparable system then in use; or


<PAGE>
                                      -12-


                  (iii)    if on any such date the securities are not quoted by
                           any such organization, the Market Price will be
                           calculated using the average of the closing bid and
                           asked prices as furnished by a professional market
                           maker making a market in the securities;

                  provided, however, that if on any such date the securities are
                  not traded on any exchange or in the over-the-counter market
                  and the price referred to in clause (iii) is not available,
                  the weighted average trading price per share of such
                  securities on such date will mean the fair value per share of
                  such securities on such date as determined by a nationally or
                  internationally recognized investment dealer or investment
                  banker chosen by the Board of Directors;

         (aa)     "NOMINEE" has the meaning attributed to it in subsection
                  3.1(d);

         (bb)     "OFFER TO ACQUIRE" includes:

                  (i)      an offer to purchase, or a solicitation of an offer
                           to sell; and

                  (ii)     an acceptance of an offer to sell, whether or not
                           such offer to sell has been solicited,

                  or any combination thereof, and the Person accepting an offer
                  to sell will be deemed to be making an offer to acquire to the
                  Person who made the offer to sell;

         (cc)     "OFFEROR" means a Person who has announced a current intention
                  to make or who is making a Take-over Bid;

         (dd)     "OFFEROR'S SECURITIES" means Voting Shares Beneficially Owned
                  by an Offeror on the date of a Take-over Bid;

         (ee)     "PERMITTED BID" means a Take-over Bid which is made by means
                  of a take-over bid circular and which also complies with the
                  following additional provisions:

                  (i)      the Take-over Bid is made to all holders of Voting
                           Shares other than the Offeror;

                  (ii)     the Take-over Bid contains, and the take-up and
                           payment for securities tendered or deposited
                           thereunder is subject to, an irrevocable and
                           unqualified condition that no Voting Shares will be
                           taken-up or paid for pursuant to the Take-over Bid
                           prior to the close of business on the date which is
                           not less than 60 days after the


<PAGE>
                                      -13-


                           date of the Take-over Bid and only if at such date
                           more than 50% of the Voting Shares held by
                           Independent Shareholders have been deposited or
                           tendered pursuant to the Take-over Bid and not
                           withdrawn;

                  (iii)    the Take-over Bid contains an irrevocable and
                           unqualified provision that, unless the Take-over Bid
                           is withdrawn, Voting Shares may be deposited pursuant
                           to such Take-over Bid at any time during the period
                           of time between the date of the Take-over Bid and the
                           date on which the Voting Shares subject to the
                           Take-over Bid may be taken-up and paid for and that
                           any Voting Shares deposited pursuant to the Take-over
                           Bid may be withdrawn until taken-up and paid for; and

                  (iv)     the Take-over Bid contains an irrevocable and
                           unqualified provision that, if on the date on which
                           Voting Shares may be taken up and paid for more than
                           50% of the Voting Shares held by Independent
                           Shareholders have been deposited or tendered pursuant
                           to the Take-over Bid and not withdrawn, the Offeror
                           will make a public announcement of that fact and the
                           Take-over Bid will remain open for deposits and
                           tenders of Voting Shares for not less than 10
                           Business Days from the date of such public
                           announcement;

         (ff)     "PERMITTED BID ACQUISITION" means an acquisition of Voting
                  Shares made pursuant to a Permitted Bid or a Competing
                  Permitted Bid;

         (gg)     "PERSON" includes any individual, body corporate, firm,
                  partnership, association, trust, trustee, executor,
                  administrator, legal personal representative, group,
                  unincorporated organization, syndicate, government or
                  governmental agency or instrumentality or other entity;

         (hh)     "PRO RATA ACQUISITION" means:

                  (i)      the acquisition of Voting Shares as a result of a
                           stock dividend, a stock split or other event pursuant
                           to which a Person receives or acquires Voting Shares
                           on the same proportionate basis as all other holders
                           of the same class of Voting Shares;

                  (ii)     the acquisition of Voting Shares pursuant to any
                           dividend reinvestment plan or other plan made
                           available by the Corporation to holders of all its
                           Voting Shares (other than holders resident in any
                           jurisdiction where participation in such plan is
                           restricted or impractical to the Corporation as a
                           result of applicable law); or


<PAGE>
                                      -14-


                  (iii)    the receipt and/or exercise of rights (other than the
                           Rights) issued by the Corporation to all the holders
                           of a class of Voting Shares to subscribe for or
                           purchase Voting Shares (other than holders resident
                           in any jurisdiction where the distribution or
                           exercise of such rights is restricted or impractical
                           as a result of applicable law), provided that such
                           rights are acquired directly from the Corporation and
                           not from any other Person.

         (ii)     "RECORD TIME" has the meaning ascribed to it in the recitals;

         (jj)     "REDEMPTION PRICE" has the meaning ascribed to it in
                  subsection 6.1(a);

         (kk)     "RIGHT" has the meaning ascribed to it in the recitals;

         (ll)     "RIGHTS CERTIFICATES" means the certificates representing the
                  Rights after the Separation Time, which are to be
                  substantially in the form attached as Exhibit A;

         (mm)     "RIGHTS PLAN" has the meaning ascribed to it in the recitals;

         (nn)     "RIGHTS REGISTER" and "RIGHTS REGISTRAR" have the respective
                  meanings ascribed to them in subsection 2.3(a);

         (oo)     "SECURITIES ACT" means the Securities Act (Quebec), as
                  amended, and the regulations and rules thereunder, and any
                  comparable or successor laws or regulations thereto;

         (pp)     "SEPARATION TIME" means, subject to subsection 6.1(c), the
                  close of business on the tenth Trading Day after the earlier
                  of:

                  (i)      the Stock Acquisition Date; and

                  (ii)     the date of the commencement of, or first public
                           announcement of the intent of any Person (other than
                           the Corporation or any Subsidiary of the Corporation)
                           to commence, a Take-over Bid (other than a Permitted
                           Bid or a Competing Permitted Bid);

                  or such later time as may be determined by the Board of
                  Directors; provided that (x) if the foregoing results in the
                  Separation Time being prior to the Record Time, the Separation
                  Time will be the Record Time, (y) if any Take-over Bid
                  referred to in clause (ii) expires or is cancelled, terminated
                  or otherwise withdrawn prior to the Separation Time, such
                  Take-over Bid will be deemed, for the purposes of this
                  definition, never to have been made, (z) if the Board of
                  Directors determines pursuant to


<PAGE>
                                      -15-


                  section 6.1 to waive the application of section 4.1 to have a
                  Flip-in Event, the Separation Time in respect of that Flip-in
                  Event will be deemed never to have occurred ;

         (qq)     "STOCK ACQUISITION DATE" means the date of the first public
                  announcement (which, for purposes of this definition, includes
                  the filing of a report pursuant to section 147.11 of the
                  Securities Act or section 13(d) of the U.S. Exchange Act) by
                  the Corporation or an Acquiring Person of facts indicating
                  that a Person has become an Acquiring Person;

         (rr)     "SUBSIDIARY" of a Person has the meaning ascribed to it in the
                  Corporations Act;

         (ss)     "TAKE-OVER BID" means an Offer to Acquire Voting Shares or
                  securities convertible into or exchangeable for Voting Shares,
                  where the Voting Shares subject to the Offer to Acquire,
                  together with the Voting Shares into which the securities
                  subject to the Offer to Acquire are convertible or
                  exchangeable, together with the Offeror's Securities,
                  constitute, in the aggregate, 20% or more of the Voting Shares
                  outstanding on the date of the Offer to Acquire;

         (tt)     "TERMINATION TIME" means the time at which the right to
                  exercise Rights will terminate pursuant to subsection 6.1(f);

         (uu)     "TRADING DAY", when used with respect to any securities, means
                  a day on which the principal Canadian securities exchange on
                  which such securities are listed or admitted to trading is
                  open for the transaction of business or, if the securities are
                  not listed or admitted to trading on any Canadian securities
                  exchange, a Business Day;

         (vv)     "U.S. EXCHANGE ACT" means the United States Securities
                  Exchange Act of 1934, as amended, and the rules and
                  regulations thereunder as from time to time in effect;

         (ww)     "VOTING SHARES" means the Common Shares and any other shares
                  in the capital of the Corporation to which are attached a
                  right to vote for the election of directors generally; and

         (xx)     "VOTING SHARE REDUCTION" means an acquisition or redemption by
                  the Corporation or a Subsidiary of the Corporation of Voting
                  Shares which, by reducing the number of Voting Shares
                  outstanding, increases the percentage of outstanding Voting
                  Shares Beneficially Owned by any Person to 20% or more of the
                  Voting Shares outstanding.


<PAGE>
                                      -16-


1.2      CURRENCY

         All sums of money which are referred to in this agreement are expressed
         in lawful money of Canada, unless otherwise specified.

1.3      DESCRIPTIVE HEADINGS

         Descriptive headings are for convenience only and are not to affect the
         meaning or construction of any of the provisions of this agreement.

1.4      REFERENCES TO AGREEMENT

         References to "THIS AGREEMENT", "HERETO", "HEREIN", "HEREBY",
         "HEREUNDER", "HEREOF" and similar expressions refer to this agreement,
         as amended or supplemented from time to time, and not to any particular
         Article, section, subsection, clause or other portion hereof and
         include any and every instrument supplemental or ancillary hereto.

1.5      CALCULATION OF NUMBER AND PERCENTAGE OF BENEFICIAL OWNERSHIP OF
         OUTSTANDING VOTING SHARES

         (a)      For the purposes of this agreement, in determining the
                  percentage of the outstanding Voting Shares of the Corporation
                  with respect to which a Person is or is deemed to be the
                  Beneficial Owner, all unissued Voting Shares of the
                  Corporation of which such Person is deemed to be the
                  Beneficial Owner will be deemed to be outstanding.

         (b)      The percentage of outstanding Voting Shares of the Corporation
                  Beneficially Owned by any Person, for the purposes of this
                  agreement, will be deemed to be the product determined by the
                  formula:

                                     100 x A
                                     -------
                                        B
                  where:

                      A       =      the aggregate number of votes for the
                                     election of all directors generally
                                     attaching to the outstanding Voting Shares
                                     Beneficially Owned by such Person; and

                      b       =      the aggregate number of votes for the
                                     lection of all directors generally
                                     attaching to all outstanding Voting Shares.

<PAGE>
                                      -17-


1.6      ACTING JOINTLY OR IN CONCERT

         For purposes of this agreement, a Person is acting jointly or in
         concert with every other Person who has any agreement, arrangement,
         commitment or understanding (whether formal or informal and whether or
         not in writing) with the first Person, or with any other Person acting
         jointly or in concert with the first Person, to acquire or Offer to
         Acquire any Voting Shares or securities convertible into or
         exchangeable for Voting Shares (other than customary agreements with
         and between underwriters or banking group members or selling group
         members with respect to a distribution of securities and other than
         pledges of securities in the ordinary course of the pledgee's
         business).

                                   ARTICLE 2
                                   THE RIGHTS

2.1      LEGEND ON CERTIFICATES

         Certificates for Common Shares issued after the Record Time but prior
         to the earlier of the Separation Time and the Expiration Time will
         evidence, in addition to the Common Shares, but subject to section 3.2,
         one Right for each Common Share evidenced thereby and will have
         impressed, printed or written on or otherwise affixed to them
         substantially the following legend:

                  UNTIL THE SEPARATION TIME (AS DEFINED IN THE RIGHTS AGREEMENT
                  REFERRED TO BELOW), THIS CERTIFICATE ALSO EVIDENCES AND
                  ENTITLES THE HOLDER OF THIS CERTIFICATE TO CERTAIN RIGHTS AS
                  SET FORTH IN A SHAREHOLDER RIGHTS PLAN AGREEMENT DATED AS OF
                  NOVEMBER 17, 2003 (AS THE SAME MAY BE AMENDED OR SUPPLEMENTED
                  FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF, THE
                  "RIGHTS AGREEMENT") BETWEEN SAND TECHNOLOGY INC. (THE
                  "CORPORATION") AND CIBC MELLON TRUST COMPANY, AS RIGHTS AGENT,
                  THE TERMS OF WHICH ARE INCORPORATED HEREIN BY REFERENCE AND A
                  COPY OF WHICH MAY BE INSPECTED DURING NORMAL BUSINESS HOURS AT
                  THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION. UNDER
                  CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
                  SUCH RIGHTS MAY BE AMENDED, REDEEMED OR TERMINATED, MAY
                  EXPIRE, MAY BECOME VOID (IF, IN CERTAIN CASES, THEY ARE
                  "BENEFICIALLY OWNED" BY AN "ACQUIRING PERSON", WHETHER
                  CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR ANY
                  SUBSEQUENT


<PAGE>
                                      -18-


                  HOLDER) OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND MAY
                  NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE CORPORATION
                  WILL MAIL OR ARRANGE FOR THE MAILING OF A COPY OF THE RIGHTS
                  AGREEMENT TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE AS
                  SOON AS IS PRACTICABLE AFTER RECEIPT OF A WRITTEN REQUEST
                  THEREFOR.

         Certificates representing Common Shares that are issued and outstanding
         at the Record Time will evidence one Right for each Common Share
         evidenced thereby, despite the absence of the foregoing legend until
         the earlier of the Separation Time and the Expiration Time.

2.2      EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES

         (a)      The Rights Certificates will be executed on behalf of the
                  Corporation by the Chairman of the Board, the President, the
                  Chief Executive Officer, Chief Financial Officer or the
                  Secretary. The signatures of such officers may be mechanically
                  reproduced in facsimile on the Rights Certificates, and when
                  so reproduced will be valid and binding on the Corporation
                  even though the Persons whose signatures are so reproduced may
                  not hold office at the time the Rights Certificates are
                  issued.

         (b)      Promptly after the Separation Time, the Corporation will
                  notify the Rights Agent in writing of the Separation Time and
                  will deliver Rights Certificates executed by the Corporation
                  to the Rights Agent for countersignature and disclosure
                  statements describing the Rights, and the Rights Agent will
                  countersign such Rights Certificates in a manner satisfactory
                  to the Corporation and deliver such Rights Certificates and
                  disclosure statements to the holders of the Rights pursuant to
                  subsection 3.1(d). No Rights Certificate will be valid for any
                  purpose until countersigned by the Rights Agent.

         (c)      Each Rights Certificate will be dated the date it is
                  countersigned.

2.3      REGISTRATION, TRANSFER AND EXCHANGE

         (a)      After the Separation Time, the Corporation will cause a
                  register to be kept (the "RIGHTS REGISTER") in which, subject
                  to such reasonable regulations as it may prescribe, the
                  Corporation will provide for the registration and transfer of
                  Rights. The Rights Agent is hereby appointed the "RIGHTS
                  REGISTRAR" for the purpose of maintaining the Rights Register
                  for the Corporation and registering Rights and transfers of
                  Rights as provided in


<PAGE>
                                      -19-


                  this agreement. If the Rights Agent ceases to be the Rights
                  Registrar, the Rights Agent will have the right to examine the
                  Rights Register at all reasonable times. After the Separation
                  Time and prior to the Expiration Time, upon surrender for
                  registration of transfer or exchange of any Rights
                  Certificate, but subject to subsection (c) and subsection
                  4.1(b), the Corporation will execute, and the Rights Agent
                  will manually countersign and deliver, in the name of the
                  holder or the designated transferee or transferees, as
                  required pursuant to the holder's instructions, one or more
                  new Rights Certificates evidencing the same aggregate number
                  of Rights as did the Rights Certificates so surrendered.

         (b)      All Rights issued upon any registration of transfer or
                  exchange of Rights Certificates will be valid obligations of
                  the Corporation, and such Rights will be entitled to the same
                  benefits under this agreement as the Rights surrendered upon
                  such registration of transfer or exchange.

         (c)      Every Rights Certificate surrendered for registration of
                  transfer or exchange will be duly endorsed, or be accompanied
                  by a written instrument of transfer in form satisfactory to
                  the Corporation or the Rights Agent, as the case may be, duly
                  executed by the holder thereof or such holder's attorney duly
                  authorized in writing. As a condition to the issuance of any
                  new Rights Certificate under this section 2.3, the Corporation
                  may require the payment of a sum sufficient to cover any tax
                  or other governmental charge that may be imposed in relation
                  thereto and any other expenses (including the fees and
                  expenses of the Rights Agent) in connection therewith.

2.4      MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES

         (a)      If a mutilated Rights Certificate is surrendered to the Rights
                  Agent prior to the Expiration Time, the Corporation will
                  execute and the Rights Agent will countersign and deliver in
                  exchange therefor a new Rights Certificate evidencing the same
                  number of Rights as the Rights Certificate so surrendered.

         (b)      If there will be delivered to the Corporation and the Rights
                  Agent prior to the Expiration Time (i) evidence to their
                  satisfaction of the destruction, loss or theft of any Rights
                  Certificate and (ii) such security or indemnity as may be
                  required by each of them to indemnify each of them and any of
                  their agents, then, in the absence of notice to the
                  Corporation or the Rights Agent that such Rights Certificate
                  has been acquired by a BONA FIDE purchaser, the Corporation
                  will execute, and upon its request the Rights Agent will
                  countersign and deliver, in lieu of any such destroyed, lost
                  or


<PAGE>
                                      -20-


                  stolen Rights Certificate, a new Rights Certificate evidencing
                  the same number of Rights as did the Rights Certificate so
                  destroyed, lost or stolen.

         (c)      As a condition to the issuance of any new Rights Certificate
                  under this section 2.4, the Corporation may require the
                  payment of a sum sufficient to cover any tax or other
                  governmental charge that may be imposed in relation thereto
                  and any other expenses (including the fees and expenses of the
                  Rights Agent) in connection therewith.

         (d)      Every new Rights Certificate issued pursuant to this section
                  2.4 in lieu of any destroyed, lost or stolen Rights
                  Certificate will evidence a contractual obligation of the
                  Corporation, whether or not the destroyed, lost or stolen
                  Rights Certificate is at any time enforceable by anyone, and
                  will be entitled to all the benefits of this agreement equally
                  and proportionately with any and all other Rights duly issued
                  by the Corporation under this agreement.

2.5      PERSONS DEEMED OWNERS OF RIGHTS

         The Corporation, the Rights Agent and any agent of the Corporation or
         the Rights Agent may deem and treat the Person in whose name a Rights
         Certificate (or, prior to the Separation Time, the associated Common
         Share certificate) is registered as the absolute owner thereof and of
         the Rights evidenced thereby for all purposes. As used in this
         agreement, unless the context otherwise requires, the term "HOLDER" of
         any Rights will mean the registered holder of such Rights (or, prior to
         the Separation Time, of the associated Common Shares).

2.6      DELIVERY AND CANCELLATION OF CERTIFICATES

         All Rights Certificates surrendered upon exercise or for redemption,
         registration of transfer or exchange, if surrendered to any Person
         other than the Rights Agent, will be delivered to the Rights Agent and,
         in any case, will be promptly cancelled by the Rights Agent. The
         Corporation may deliver at any time to the Rights Agent for
         cancellation any Rights Certificates previously countersigned and
         delivered hereunder which the Corporation may have acquired in any
         manner whatsoever, and all Rights Certificates so delivered will be
         promptly cancelled by the Rights Agent. No Rights Certificate will be
         countersigned in lieu of or in exchange for any Rights Certificates
         cancelled as provided for in this section 2.6, except as expressly
         permitted by this agreement. The Rights Agent will destroy all
         cancelled Rights Certificates and deliver a certificate of destruction
         to the Corporation on request.


<PAGE>
                                      -21-


2.7      AGREEMENT OF RIGHTS HOLDERS

         Every holder of Rights, by accepting a Right, consents and agrees with
         the Corporation and the Rights Agent and with every other holder of
         Rights that:

         (a)      it will be bound by and subject to the provisions of this
                  agreement, as amended from time to time in accordance with the
                  terms hereof, in respect of the Rights held;

         (b)      prior to the Separation Time, each Right will be transferable
                  only together with, and will be transferred by a transfer of,
                  the associated Common Share certificate representing such
                  Right;

         (c)      after the Separation Time, the Rights Certificates will be
                  transferable only upon registration of the transfer on the
                  Rights Register as provided in this agreement;

         (d)      prior to due presentment of a Rights Certificate (or, prior to
                  the Separation Time, the associated Common Share certificate)
                  for registration of transfer, the Corporation, the Rights
                  Agent and any agent of the Corporation or the Rights Agent may
                  deem and treat the Person in whose name the Rights Certificate
                  (or, prior to the Separation Time, the associated Common Share
                  certificate) is registered as the absolute owner thereof and
                  of the Rights evidenced thereby (despite any notations of
                  ownership or writing on such Rights Certificate or the
                  associated Common Share certificate made by anyone other than
                  the Corporation or the Rights Agent) for all purposes, and
                  neither the Corporation nor the Rights Agent will be affected
                  by any notice to the contrary;

         (e)      it has waived any right and is not entitled to receive any
                  fractional Rights or any fractional Common Shares upon
                  exercise of a Right;

         (f)      subject to section 6.5, without the approval of the holders of
                  Voting Shares or Rights and on the sole authority of the Board
                  of Directors, this agreement may be amended or supplemented
                  from time to time as provided in this agreement; and

         (g)      notwithstanding anything in this agreement to the contrary,
                  neither the Corporation nor the Rights Agent will have any
                  liability to any holder of a Right or any other Person as a
                  result of its inability to perform any of its obligations
                  under this agreement by reason of any preliminary or permanent
                  injunction or other order, decree or ruling issued by a court
                  of competent jurisdiction or by a governmental, regulatory or
                  administrative agency or commission, or any statute, rule,
                  regulation or executive order


<PAGE>
                                      -22-


                  promulgated or enacted by a governmental authority,
                  prohibiting or otherwise restraining performance of such
                  obligations.

2.8      RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER

         No holder, as such, of any Right or Rights Certificate will be entitled
         to vote or receive dividends as, or be deemed for any purpose to be, a
         holder of any Common Share which may at any time be issuable on the
         exercise of such Right, nor will anything contained herein or in any
         Rights Certificate be construed or deemed to confer on the holder of
         any Right or Rights Certificate, as such, any of the rights, titles,
         benefits or privileges of a shareholder of the Corporation or any right
         to vote at any meeting of shareholders of the Corporation whether for
         the election of directors or otherwise or on any matter submitted to
         shareholders of the Corporation at any meeting thereof, or to give or
         withhold consent to any action of the Corporation, or to receive notice
         of any meeting or other action affecting any shareholder of the
         Corporation, except as expressly provided herein, or to receive
         dividends, distributions or subscription rights, or otherwise, until
         the Right or Rights evidenced by any Rights Certificate will have been
         duly exercised in accordance with the terms and provisions hereof.

                                   ARTICLE 3
                             EXERCISE OF THE RIGHTS

3.1      INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS

         (a)      Subject to adjustment as set forth in this agreement, from and
                  after the Separation Time and prior to the Expiration Time,
                  each Right will entitle the holder thereof to purchase one
                  Common Share for the Exercise Price (which Exercise Price and
                  number of Common Shares are subject to adjustment as set forth
                  below).

         (b)      Until the Separation Time:

                  (i)      the Rights are not exercisable and may not be
                           exercised; and

                  (ii)     each Right will be evidenced by the certificate for
                           the associated Common Share registered in the name of
                           the holder thereof (which certificate will also be
                           deemed to be a Rights Certificate) and will be
                           transferable only together with, and will be
                           transferred by a transfer of, such associated Common
                           Share.

         (c)      From and after the Separation Time and prior to the Expiration
                  Time:


<PAGE>
                                      -23-


                  (i)      the Rights will be exercisable; and

                  (ii)     the registration and transfer of the Rights will be
                           separate from and independent of the Common Shares.

         (d)      Promptly following the Separation Time, the Corporation will
                  prepare and the Rights Agent will mail to each holder of
                  record of Common Shares as of the Separation Time (other than
                  an Acquiring Person and other than, in respect of any Rights
                  Beneficially Owned by such Acquiring Person which are not held
                  of record by such Acquiring Person, the holder of record of
                  such Rights (a "NOMINEE")), at such holder's address as shown
                  by the records of the Corporation (and the Corporation will
                  furnish copies of such records to the Rights Agent for this
                  purpose):

                  (i)      a Rights Certificate representing the number of
                           Rights held by such holder at the Separation Time in
                           substantially the form of Exhibit A, appropriately
                           completed, and having such marks of identification or
                           designation and such legends, summaries or
                           endorsements printed thereon as the Corporation may
                           deem appropriate and as are not inconsistent with the
                           provisions of this agreement, or as may be required
                           to comply with any law, rule, regulation or judicial
                           or administrative order or with any rule or
                           regulation made pursuant thereto or with any rule or
                           regulation of any stock exchange or quotation system
                           on which the Rights may be listed or traded from time
                           to time, or to conform to usage; and

                  (ii)     a disclosure statement prepared by the Corporation
                           describing the Rights;

                  provided that a Nominee will be sent the materials provided
                  for in clauses (i) and (ii) only in respect of all Common
                  Shares held of record by it which are not Beneficially Owned
                  by an Acquiring Person. In order for the Corporation to
                  determine whether any Person is holding Common Shares which
                  are Beneficially Owned by another Person, the Corporation may
                  require the first-mentioned Person to furnish any information
                  and documentation as the Corporation deems necessary or
                  appropriate to make that determination.

         (e)      Rights may be exercised in whole or in part on any Business
                  Day after the Separation Time and prior to the Expiration Time
                  by submitting to the Rights Agent at its principal office in
                  the city of Montreal or any other office of the Rights Agent
                  designated for that purpose from time to time by the
                  Corporation:


<PAGE>
                                      -24-


                  (i)      the Rights Certificate evidencing such Rights;

                  (ii)     an election to exercise such Rights (an "ELECTION TO
                           EXERCISE") substantially in the form attached to the
                           Rights Certificate duly completed and executed by the
                           holder or his or her executors or administrators or
                           other personal representatives or his, her or their
                           legal attorney duly appointed by an instrument in
                           writing in form and executed in a manner satisfactory
                           to the Rights Agent; and

                  (iii)    by certified cheque, banker's draft or money order
                           payable to the order of the Rights Agent, of a sum
                           equal to the applicable Exercise Price multiplied by
                           the number of Rights being exercised and an amount
                           sufficient to cover any tax or other governmental
                           charge which may be payable in respect of any
                           transfer or delivery of Rights Certificates or the
                           issuance or delivery of certificates for the relevant
                           Common Shares in a name other than that of the holder
                           of the Rights being exercised.

         (f)      Upon receipt of the Rights Certificate which is accompanied by
                  a completed Election to Exercise that does not indicate that
                  such Right is null and void as provided by subsection 4.1(b)
                  and payment as set forth in subsection 3.1(e), the Rights
                  Agent (unless otherwise instructed by the Corporation if the
                  Corporation is of the opinion that the Rights cannot be
                  exercised in accordance with this agreement) will promptly:

                  (i)      requisition from the transfer agent of the Common
                           Shares, certificates representing the number of such
                           Common Shares (rounded down to the nearest whole
                           number of Common Shares) to be purchased (the
                           Corporation hereby irrevocably authorizes such
                           transfer agent to comply with all such requisitions);

                  (ii)     when appropriate, requisition from the Corporation
                           the amount of cash to be paid in lieu of issuing
                           fractional Common Shares;

                  (iii)    after receipt of the Common Share certificates,
                           deliver them to, or to the order of, the registered
                           holder of such Rights Certificate, registered in such
                           name or names as may be designated by such holder;

                  (iv)     when appropriate, after receipt, deliver such cash
                           referred to in clause (ii) above to or to the order
                           of the registered holder of the Rights Certificate;
                           and


<PAGE>
                                      -25-


                  (v)      tender to the Corporation all payments received on
                           exercise of the Rights.

         (g)      In case the holder of any Rights exercises less than all the
                  Rights evidenced by such holder's Rights Certificate, a new
                  Rights Certificate evidencing the Rights remaining unexercised
                  will be issued by the Rights Agent to such holder or to such
                  holder's duly authorized assigns.

         (h)      The Corporation covenants and agrees that it will:

                  (i)      take all such action as may be necessary and within
                           its power to ensure that all Common Shares delivered
                           upon exercise of Rights, at the time of delivery of
                           the certificates representing such Common Shares
                           (subject to payment of the Exercise Price), will be
                           duly and validly authorized, issued and delivered as
                           fully paid and non-assessable;

                  (ii)     take all such action as may be necessary and within
                           its power to comply with any applicable requirements
                           of the Corporations Act, the Securities Act and the
                           securities legislation of each of the other provinces
                           of Canada and any other applicable law, rule or
                           regulation in connection with the issuance and
                           delivery of the Rights Certificates and the issuance
                           of any Common Shares upon exercise of Rights;

                  (iii)    use reasonable efforts to cause all Common Shares
                           issued on exercise of Rights to be listed on the
                           principal exchanges or over-the-counter markets on
                           which the Common Shares are then listed or traded;

                  (iv)     cause to be reserved and kept available out of its
                           authorized and unissued Common Shares the number of
                           Common Shares that, as provided in this agreement,
                           will be sufficient from time to time to permit the
                           exercise in full of all outstanding Rights; and

                  (v)      pay when due and payable any Canadian and United
                           States federal and provincial and state transfer
                           taxes and charges (for greater certainty, not in the
                           nature of income or withholding taxes) which may be
                           payable in respect of the original issuance or
                           delivery of the Rights Certificates, provided that
                           the Corporation will not be required to pay any tax
                           or other governmental charge which may be payable in
                           respect of any transfer or delivery of Rights
                           Certificates or the issuance or delivery of
                           certificates for Common Shares in a


<PAGE>
                                      -26-


                           name other than that of the holder of the Rights
                           being transferred or exercised.

3.2      ADJUSTMENTS TO EXERCISE PRICE: NUMBER OF RIGHTS

         The Exercise Price, the number of Common Shares or other securities
         subject to purchase on the exercise of each Right and the number of
         Rights outstanding are subject to adjustment from time to time as
         provided in this section 3.2.

         (a)      If the Corporation at any time after the Record Time and prior
                  to the Expiration Time:

                  (i)      declares or pays a dividend on the Common Shares
                           payable in Common Shares (or other securities
                           exchangeable for or convertible into or giving a
                           right to acquire Common Shares) other than pursuant
                           to any dividend reinvestment program and other than a
                           dividend payable in Common Shares (or other
                           securities exchangeable for or convertible into or
                           giving a right to acquire Common Shares) in lieu of
                           (and having a value no greater than) a dividend paid
                           in the ordinary course;

                  (ii)     subdivides or changes the outstanding Common Shares
                           into a greater number of Common Shares;

                  (iii)    combines or changes the outstanding Common Shares
                           into a smaller number of Common Shares; or

                  (iv)     issues any Common Shares (or other securities
                           exchangeable for or convertible into or giving a
                           right to acquire Common Shares) in respect of, in
                           lieu of, or in exchange for existing Common Shares;

                  the Exercise Price and the number of Rights outstanding (or,
                  if the payment or effective date therefor occurs after the
                  Separation Time, the securities purchasable on exercise of
                  Rights) will be adjusted in the following manner.

                  If the Exercise Price and number of Rights are to be adjusted
                  (y) the Exercise Price in effect after such adjustment will be
                  equal to the Exercise Price in effect immediately prior to
                  such adjustment divided by the number of Common Shares (or
                  other securities of the Corporation) (the "EXPANSION FACTOR")
                  that a holder of one Common Share immediately prior to such
                  dividend, subdivision, combination, change or issuance would
                  hold thereafter as a result thereof and (z) each Right held
                  prior to such adjustment will become that number of Rights
                  equal to the Expansion


<PAGE>
                                      -27-


                  Factor, and the adjusted number of Rights will be deemed to be
                  allocated among the Common Shares with respect to which the
                  original Rights were associated (if they remain outstanding)
                  and the securities of the Corporation issued in respect of
                  such dividend, subdivision, consolidation, change or issuance,
                  so that each such Common Share (or other security of the
                  Corporation) will have exactly one Right associated with it.

                  For greater certainty, if the securities purchasable upon
                  exercise of Rights are to be adjusted, the securities
                  purchasable on exercise of each Right after such adjustment
                  will be the securities that a holder of the securities
                  purchasable on exercise of one Right immediately prior to such
                  dividend, subdivision, consolidation, change or issuance would
                  hold thereafter as a result thereof.

                  Adjustments pursuant to this subsection will be made
                  successively whenever an event referred to in this subsection
                  occurs.

         (b)      If the Corporation at any time after the Record Time and prior
                  to the Expiration Time fixes a record date for the issuance of
                  rights, options or warrants to all or substantially all
                  holders of Common Shares entitling them to subscribe for or
                  purchase (for a period expiring within 45 calendar days after
                  such record date) Common Shares (or securities convertible
                  into or exchangeable for or carrying a right to acquire Common
                  Shares) at a price per Common Share (or, if a security
                  convertible into or exchangeable for or carrying a right to
                  acquire Common Shares, having a conversion, exchange or
                  exercise price, including the price required to be paid to
                  purchase such convertible or exchangeable security or right,
                  per share) less than 95% of the Market Price per Common Share
                  on the second Trading Day immediately preceding such record
                  date, the Exercise Price in respect of the Rights to be in
                  effect after such record date will be determined by
                  multiplying the Exercise Price in respect of the Rights in
                  effect immediately prior to such record date by a fraction (i)
                  the numerator of which will be the number of Common Shares
                  outstanding on such record date, plus the number of Common
                  Shares that the aggregate offering price of the total number
                  of Common Shares so to be offered (and/or the aggregate
                  initial conversion, exchange or exercise price of the
                  convertible or exchangeable securities or rights so to be
                  offered (including the price required to be paid to purchase
                  such convertible or exchangeable securities or rights)) would
                  purchase at such Market Price per Common Share and (ii) the
                  denominator of which will be the number of Common Shares
                  outstanding on such record date, plus the number of additional
                  Common Shares to be offered for subscription or purchase (or
                  into which the convertible or exchangeable securities or
                  rights so to be offered are initially convertible,
                  exchangeable or exercisable). In case


<PAGE>
                                      -28-


                  such subscription price may be paid by delivery of
                  consideration, part or all of which is in a form other than
                  cash, the value of such consideration will be as determined in
                  good faith by the Board of Directors, whose determination will
                  be described in a statement filed with the Rights Agent and
                  will be binding on the Rights Agent and the holders of the
                  Rights. Such adjustment will be made successively whenever
                  such a record date is fixed. To the extent that such rights,
                  options or warrants are not exercised prior to the expiration
                  thereof, the Exercise Price will be readjusted to the Exercise
                  Price which would then be in effect based on the number of
                  Common Shares (or securities convertible into or exchangeable
                  for Common Shares) actually issued on exercise of such rights,
                  options or warrants.

         (c)      For purpose of this agreement, the granting of the right to
                  purchase Common Shares (whether from treasury or otherwise)
                  pursuant to a dividend reinvestment plan or any employee
                  benefit, stock option or similar plans will be deemed not to
                  constitute an issue of rights, options or warrants by the
                  Corporation; provided, however, that, in all such cases, the
                  right to purchase Common Shares is at a price per share of not
                  less than 90% of the then current market price per share
                  (determined as provided in such plans) of the Common Shares.

         (d)      If the Corporation at any time after the Record Time and prior
                  to the Expiration Time fixes a record date for a distribution
                  to all or substantially all holders of Common Shares
                  (including any such distribution made in connection with a
                  merger in which the Corporation is the continuing corporation)
                  of (i) evidences of indebtedness or assets, including cash
                  (other than a dividend paid in the ordinary course or a
                  dividend paid in Common Shares, but including any dividend
                  payable in securities other than Common Shares), (ii) rights,
                  options or warrants entitling them to subscribe for or
                  purchase Common Shares (or securities convertible into or
                  exchangeable for or carrying a right to acquire Common Shares)
                  (excluding those referred to in subsection 3.2(b)) at a price
                  per Common Share (or, if a security convertible into or
                  exchangeable for or carrying a right to acquire Common Shares,
                  having a conversion, exchange or exercise price, including the
                  price required to be paid to purchase such convertible or
                  exchangeable security or right, per share) that is less than
                  95% of the Market Price per Common Share on the second Trading
                  Day immediately preceding such record date or (iii) other
                  securities of the Corporation, the Exercise Price will be
                  adjusted as follows. The Exercise Price in effect after such
                  record date will equal the Exercise Price in effect
                  immediately prior to such record date less the fair market
                  value (as determined in good faith by the Board of Directors)
                  of the portion of the evidences of indebtedness, assets,
                  rights, options or warrants or other


<PAGE>
                                      -29-


                  securities so to be distributed applicable to the securities
                  purchasable on exercise of one Right. Such adjustments will be
                  made successively whenever such a record date is fixed and, if
                  such distribution is not so made, the Exercise Price in
                  respect of the Rights will be adjusted to be the Exercise
                  Price in respect of the Rights which would have been in effect
                  if such record date had not been fixed.

         (e)      Notwithstanding anything in this agreement to the contrary, no
                  adjustment of the Exercise Price will be required unless such
                  adjustment would require an increase or decrease of at least
                  1% in the Exercise Price; provided, however, that any
                  adjustments which by reason of this subsection are not
                  required to be made will be carried forward and taken into
                  account in any subsequent adjustment. All calculations under
                  section 3.2 will be made to the nearest cent or to the nearest
                  ten-thousandth of a Common Share or other share, as the case
                  may be.

         (f)      If as a result of an adjustment made pursuant to section 4.1,
                  the holder of any Right thereafter exercised will become
                  entitled to receive any shares other than Common Shares,
                  thereafter the number of such other shares so receivable upon
                  exercise of any Right and the applicable Exercise Price
                  thereof will be subject to adjustment from time to time in a
                  manner and on terms as nearly equivalent as is practicable to
                  the provisions with respect to the Common Shares contained in
                  this section 3.2, and the provisions of this agreement with
                  respect to the Common Shares will apply on like terms to any
                  such other shares.

         (g)      All Rights originally issued by the Corporation subsequent to
                  any adjustment made to the Exercise Price will evidence the
                  right to purchase, at the adjusted Exercise Price, the number
                  of Common Shares purchasable from time to time hereunder upon
                  exercise of the Rights, all subject to further adjustment as
                  provided herein.

         (h)      Unless the Corporation has exercised its election as provided
                  in subsection (i), upon each adjustment of an Exercise Price
                  as a result of the calculations made in subsections (b) and
                  (d), each Right outstanding immediately prior to the making of
                  such adjustment will thereafter evidence the right to
                  purchase, at the adjusted Exercise Price, that number of
                  Common Shares obtained by:

                  (i)      multiplying (A) the number of Common Shares covered
                           by a Right immediately prior to such adjustment by
                           (B) the Exercise Price in effect immediately prior to
                           such adjustment; and


<PAGE>
                                      -30-


                  (ii)     dividing the product so obtained by the Exercise
                           Price in effect immediately after such adjustment.

         (i)      The Corporation may elect on or after the date of any
                  adjustment of an Exercise Price to adjust the number of
                  Rights, in lieu of any adjustment in the number of Common
                  Shares purchasable upon the exercise of a Right. Each of the
                  Rights outstanding after the adjustment in the number of
                  Rights will be exercisable for the number of Common Shares for
                  which such a Right was exercisable immediately prior to such
                  adjustment. Each Right held of record prior to such adjustment
                  of the number of Rights will become that number of Rights
                  (calculated to the nearest one ten-thousandth) obtained by
                  dividing the relevant Exercise Price in effect immediately
                  prior to adjustment of the relevant Exercise Price by the
                  relevant Exercise Price in effect immediately after adjustment
                  of the relevant Exercise Price. The Corporation will make a
                  public announcement of its election to adjust the number of
                  Rights, indicating the record date for the adjustment, and, if
                  known at the time, the amount of the adjustment to be made.
                  This record date may be the date on which the relevant
                  Exercise Price is adjusted or any day thereafter, but, if the
                  Rights Certificates have been issued, will be at least 10 days
                  later than the date of the public announcement. If Rights
                  Certificates have been issued, upon each adjustment of the
                  number of Rights pursuant to this subsection, the Corporation,
                  as promptly as is practicable, will cause to be distributed to
                  holders of record of Rights Certificates on such record date,
                  Rights Certificates evidencing, subject to section 6.4, the
                  additional Rights to which such holders will be entitled as a
                  result of such adjustment, or, at the option of the
                  Corporation, will cause to be distributed to such holders of
                  record in substitution and replacement for the Rights
                  Certificates held by such holders prior to the date of
                  adjustment, and upon surrender thereof, if required by the
                  Corporation, new Rights Certificates evidencing all the Rights
                  to which such holders will be entitled after such adjustment.
                  Rights Certificates to be so distributed will be issued,
                  executed and countersigned in the manner provided for herein
                  and may bear, at the option of the Corporation, the relevant
                  adjusted Exercise Price and will be registered in the names of
                  holders of record of Rights Certificates on the record date
                  specified in the public announcement.

         (j)      Irrespective of any adjustment or change in an Exercise Price
                  or the number of Common Shares issuable upon the exercise of
                  the Rights, the Rights Certificates previously and thereafter
                  issued may continue to express the relevant Exercise Price per
                  Common Share and the number of Common Shares which were
                  expressed in the initial Rights Certificates issued hereunder.


<PAGE>
                                      -31-


         (k)      In any case in which this section 3.2 requires that an
                  adjustment in an Exercise Price be made effective as of a
                  record date for a specified event, the Corporation may elect
                  to defer, until the occurrence of such event, the issuance to
                  the holder of any Right exercised after such record date of
                  the number of Common Shares and other securities of the
                  Corporation, if any, issuable upon such exercise over and
                  above the number of Common Shares and other securities of the
                  Corporation, if any, issuable upon such exercise on the basis
                  of the relevant Exercise Price in effect prior to such
                  adjustment; provided, however, that the Corporation delivers
                  to such holder a due bill or other appropriate instrument
                  evidencing such holder's right to receive such additional
                  Common Shares or other securities upon the occurrence of the
                  event requiring such adjustment.

         (l)      Notwithstanding anything in this section 3.2 to the contrary,
                  the Corporation will be entitled to make such reductions in
                  the Exercise Price, in addition to those adjustments expressly
                  required by this section 3.2, as and to the extent that in its
                  good faith judgment the Board of Directors determines to be
                  advisable in order that any (i) consolidation or subdivision
                  of Common Shares, (ii) issuance wholly for cash of any Common
                  Share or securities that by their terms are convertible into
                  or exchangeable for Common Shares, (iii) stock dividends or
                  (iv) issuance of rights, options or warrants referred to in
                  this section 3.2, hereafter made by the Corporation to holders
                  of its Common Shares, will not be taxable to such
                  shareholders.

         (m)      The Corporation covenants and agrees that, after the
                  Separation Time, except as permitted by section 6.1 or 6.5, it
                  will not take (or permit any Subsidiary of the Corporation to
                  take) any action if at the time such action is taken it is
                  reasonably foreseeable that such action would diminish
                  substantially or otherwise eliminate the benefits intended to
                  be afforded by the Rights.

         (n)      Whenever an adjustment to the Exercise Price or a change in
                  the securities purchasable upon exercise of the Rights is made
                  pursuant to this section 3.2, the Corporation will promptly:

                  (i)      file with the Rights Agent and with the transfer
                           agent for the Common Shares a certificate specifying
                           the particulars of such adjustment or change; and

                  (ii)     cause notice of the particulars of such adjustment or
                           change to be given to the holders of the Rights.


<PAGE>
                                      -32-


                  The failure to file such certificate or cause such notice to
                  be given as aforesaid, or any defect therein, will not affect
                  the validity of any such adjustment or change.

3.3      DATE ON WHICH EXERCISE IS EFFECTIVE

         Each Person in whose name any certificate for Common Shares is issued
         upon the exercise of Rights will be deemed for all purposes to have
         become the holder of record of the Common Share represented thereby on,
         and such certificate will be dated, the date upon which the Rights
         Certificate evidencing such Rights was duly surrendered (together with
         a duly completed Election to Exercise) and payment of the relevant
         Exercise Price for such Rights (and any applicable transfer taxes and
         other governmental charges payable by the exercising holder hereunder)
         was made; provided, however, that if the date of such surrender and
         payment is a date upon which the relevant Common Share transfer books
         of the Corporation are closed, such Person will be deemed to have
         become the holder of record of such Common Shares on, and such
         certificate will be dated, the next succeeding Business Day on which
         the relevant Common Share transfer books of the Corporation are open.

                                   ARTICLE 4
         ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS

4.1      FLIP-IN EVENT

         (a)      Subject to subsection 4.1(b) and section 6.1, if prior to the
                  Expiration Time a Flip-in Event occurs, each Right will
                  constitute, effective on and after the later of its date of
                  issue and the close of business on the tenth Trading Day
                  following the Stock Acquisition Date, the right to purchase
                  from the Corporation, upon payment of the relevant Exercise
                  Price and otherwise exercising such Right in accordance with
                  the terms hereof, that number of Common Shares (rounded down
                  to the nearest whole number of Common Shares) having an
                  aggregate Market Price on the date of occurrence of such
                  Flip-in Event equal to twice the Exercise Price for an amount
                  in cash equal to the Exercise Price (such right to be
                  appropriately adjusted in a manner analogous to the applicable
                  adjustments provided for in section 3.2 if, after such date of
                  occurrence, an event of a type analogous to any of the events
                  described in section 3.2 has occurred with respect to the
                  Common Share).

         (b)      Notwithstanding anything in this agreement to the contrary,
                  upon the occurrence of any Flip-in Event, any Rights that are
                  or were Beneficially Owned on or after the earlier of the
                  Separation Time and the Stock Acquisition Date by (i) an
                  Acquiring Person (or any Affiliate or Associate of


<PAGE>
                                      -33-


                  an Acquiring Person or any Person acting jointly or in concert
                  with an Acquiring Person or any Affiliate or Associate of an
                  Acquiring Person); or (ii) a transferee or other successor in
                  title, directly or indirectly, (a "TRANSFEREE") of Rights held
                  by an Acquiring Person (or any Affiliate or Associate of an
                  Acquiring Person or any Person acting jointly or in concert
                  with an Acquiring Person or any Affiliate or Associate of an
                  Acquiring Person) in a transfer that the Board of Directors
                  has determined is part of a plan, arrangement or scheme of an
                  Acquiring Person (or any Affiliate or Associate of an
                  Acquiring Person or any Person acting jointly or in concert
                  with an Acquiring Person or any Affiliate or Associate of an
                  Acquiring Person) that has the purpose or effect of avoiding
                  clause (i), will become null and void without any further
                  action, and any holder of such Rights (including any
                  Transferee) will not have any right whatsoever to exercise
                  such Rights and will not have thereafter any other rights
                  whatsoever with respect to such Rights, whether under any
                  provision of this agreement or otherwise. The holder of any
                  Rights represented by a Rights Certificate which is submitted
                  to the Rights Agent on exercise or for registration of
                  transfer or exchange which does not contain the necessary
                  certifications set forth in the Rights Certificate
                  establishing that such Rights are not void under this
                  subsection will be deemed to be an Acquiring Person for the
                  purpose of this section 4.1 and such Rights will be null and
                  void.

         (c)      Any Rights Certificate that represents Rights Beneficially
                  Owned by a Person described in clause (b)(i) or (ii) or
                  transferred to any nominee of any such Person, and any Rights
                  Certificate issued on transfer, exchange, replacement or
                  adjustment of any other Rights Certificate referred to in this
                  sentence, will contain the following legend:

                          THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
                          OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS AN
                          ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
                          ACQUIRING PERSON OR A PERSON ACTING JOINTLY OR IN
                          CONCERT WITH ANY OF THEM (AS SUCH TERMS ARE DEFINED IN
                          THE SHAREHOLDER RIGHTS PLAN AGREEMENT). THIS RIGHTS
                          CERTIFICATE AND THE RIGHTS REPRESENTED BY THIS
                          CERTIFICATE WILL BE VOID IN THE CIRCUMSTANCES
                          SPECIFIED IN SUBSECTION 4.1(b) OF THE SHAREHOLDER
                          RIGHTS PLAN AGREEMENT.

                  The Rights Agent will not be under any responsibility to
                  ascertain the existence of facts that would require the
                  inclusion of that legend, but will be required to include the
                  legend only if instructed to do so by the


<PAGE>
                                      -34-


                  Corporation in writing or if a holder fails to certify on
                  transfer or exchange in the space provided on the Rights
                  Certificate that it is not an Acquiring Person or other Person
                  referred to in the legend. The issuance of a Rights
                  Certificate without the legend referred to in this subsection
                  will not affect the application of subsection (b).

         (d)      From and after the Separation Time, the Corporation will do
                  all such acts and things as will be necessary and within its
                  power to ensure compliance with the provisions of this section
                  4.1, including all such acts and things as may be required to
                  satisfy the requirements of the Corporations Act and the
                  Securities Act or comparable legislation of any other
                  applicable jurisdiction and the rules of any stock exchange
                  where the Common Shares may then be listed or traded in
                  respect of the issuance of Common Shares upon the exercise of
                  Rights in accordance with this agreement.

         (e)      Notwithstanding any other provision of this agreement, any
                  Rights held by the Corporation or any of its Subsidiaries will
                  be void.

                                   ARTICLE 5
                                THE RIGHTS AGENT

5.1      GENERAL

         (a)      The Corporation hereby appoints the Rights Agent to act as
                  agent for the Corporation and the holders of Rights in
                  accordance with the terms and conditions hereof, and the
                  Rights Agent hereby accepts such appointment. The Corporation
                  may from time to time appoint one or more co-rights agents
                  (each, a "CO-RIGHTS AGENT") as it may deem necessary or
                  desirable, subject to the approval of the Rights Agent. In the
                  event the Corporation appoints one or more Co-Rights Agents,
                  the respective duties of the Rights Agents and Co-Rights
                  Agents will be as the Corporation may determine with the
                  approval of the Rights Agent. The Corporation agrees to pay to
                  the Rights Agent reasonable compensation for all services
                  rendered by it hereunder and, from time to time, on demand of
                  the Rights Agent, its reasonable expenses and counsel fees and
                  other disbursements incurred in the administration and
                  execution of this agreement and the exercise and performance
                  of its duties hereunder (including the fees and disbursements
                  of any expert or advisor retained by the Rights Agent with the
                  approval of the Corporation, acting reasonably). The
                  Corporation also agrees to indemnify the Rights Agent, its
                  officers, directors and employees for, and to hold it and them
                  harmless against, any loss, liability cost, claim, action,
                  damage or expense, incurred without negligence, bad faith or
                  wilful misconduct on the part of the Rights Agent, for
                  anything done or omitted by the Rights Agent in connection
                  with the


<PAGE>
                                      -35-


                  acceptance and administration of this agreement, including the
                  costs and expenses of defending against any claim of
                  liability, which right to indemnification will survive the
                  termination of this agreement or the resignation or the
                  removal of the Rights Agent.

         (b)      The Corporation will inform the Rights Agent in a reasonably
                  timely manner of events which may materially affect the
                  administration of this agreement by the Rights Agent and at
                  any time, upon request, will provide to the Rights Agent an
                  incumbency certificate with respect to the then current
                  directors of the Corporation, provided that failure to inform
                  the Rights Agent of any such events, or any defect therein,
                  will not affect the validity of any action taken hereunder in
                  relation to such events.

         (c)      The Rights Agent will be protected and will incur no liability
                  for or in respect of any action taken, suffered or omitted by
                  it in connection with its administration of this agreement in
                  reliance upon any certificate for Common Shares, Rights
                  Certificate, certificate for other securities of the
                  Corporation, instrument of assignment or transfer, power of
                  attorney, endorsement, affidavit, letter, notice, direction,
                  consent, certificate, statement or other paper or document
                  believed by it to be genuine and to be signed, executed and,
                  where necessary, verified or acknowledged, by the proper
                  Person or Persons.

5.2      MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT

         (a)      Any corporation into which the Rights Agent or any successor
                  Rights Agent may be merged or amalgamated or with which it may
                  be consolidated, or any corporation resulting from any merger,
                  amalgamation or consolidation to which the Rights Agent or any
                  successor Rights Agent is a party, or any corporation
                  succeeding to the shareholder or stockholder services business
                  of the Rights Agent or any successor Rights Agent, will be the
                  successor to the Rights Agent under this agreement without the
                  execution or filing of any paper or any further act on the
                  part of any of the parties, provided that such corporation
                  would be eligible for appointment as a successor Rights Agent
                  under the provisions of section 5.4. In case at the time such
                  successor Rights Agent succeeds to the agency created by this
                  agreement any of the Rights Certificates have been
                  countersigned but not delivered, any such successor Rights
                  Agent may adopt the countersignature of the predecessor Rights
                  Agent and deliver such Rights Certificates so countersigned;
                  and in case at that time any of the Rights Certificates have
                  not been countersigned, any successor Rights Agent may
                  countersign such Rights Certificates either in the name of the
                  predecessor Rights Agent or in the name of the successor
                  Rights Agent;


<PAGE>
                                      -36-


                  and in all such cases such Rights Certificates will have the
                  full force provided in the Rights Certificates and in this
                  agreement.

         (b)      In case at any time the name of the Rights Agent is changed
                  and at such time any of the Rights Certificates have been
                  countersigned but not delivered, the Rights Agent may adopt
                  the countersignature under its prior name and deliver Rights
                  Certificates so countersigned; and in case at that time any of
                  the Rights Certificates have not been countersigned, the
                  Rights Agent may countersign such Rights Certificates either
                  in its prior name or in its changed name; and in all such
                  cases such Rights Certificates will have the full force
                  provided in the Rights Certificates and in this agreement.

5.3      DUTIES OF RIGHTS AGENT

         The Rights Agent undertakes the duties and obligations imposed by this
         agreement upon the following terms and conditions, by all of which the
         Corporation and the holders of Rights Certificates, by their acceptance
         thereof, will be bound:

         (a)      the Rights Agent may consult with legal counsel (who may be
                  legal counsel for the Corporation) and the opinion of such
                  counsel will be full and complete authorization and protection
                  to the Rights Agent as to any action taken or omitted by it in
                  good faith and in accordance with such opinion; the Rights
                  Agent may also, with the approval of the Corporation (where
                  such approval may reasonably be obtained and such approval not
                  to be unreasonably withheld), consult with such other experts
                  as the Rights Agent considers necessary or appropriate to
                  properly carry out the duties and obligations imposed under
                  the agreement and the Rights Agent will be entitled to rely in
                  good faith on the advice of any such expert;

         (b)      whenever in the performance of its duties under this agreement
                  the Rights Agent deems it necessary or desirable that any fact
                  or matter be proved or established by the Corporation prior to
                  taking or suffering any action hereunder, such fact or matter
                  (unless other evidence in respect thereof is specifically
                  prescribed in this agreement) may be deemed to be conclusively
                  proved and established by a certificate signed by a Person
                  believed by the Rights Agent to be a senior officer of the
                  Corporation and delivered to the Rights Agent; and such
                  certificate will be full authorization to the Rights Agent for
                  any action taken or suffered in good faith by it under the
                  provisions of this agreement in reliance upon such
                  certificate;

         (c)      the Rights Agent will be liable hereunder only for its own
                  negligence, bad faith or wilful misconduct;


<PAGE>
                                      -37-


         (d)      the Rights Agent will not be liable for or by reason of any of
                  the statements of fact or recitals contained in this agreement
                  or in the certificates for Common Shares or the Rights
                  Certificates (except its countersignature thereof) or be
                  required to verify the same, but all such statements and
                  recitals are and will be deemed to have been made by the
                  Corporation only;

         (e)      the Rights Agent will not be under any responsibility in
                  respect of the validity of this agreement or the execution and
                  delivery hereof (except the due authorization, execution and
                  delivery hereof by the Rights Agent) or in respect of the
                  validity or execution of any Common Share certificate or
                  Rights Certificate (except its countersignature thereof); nor
                  will it be responsible for any breach by the Corporation of
                  any covenant or condition contained in this agreement or in
                  any Rights Certificate; nor will it be responsible for any
                  change in the exercisability of the Rights (including the
                  Rights becoming void pursuant to subsection 4.1(b)) or any
                  adjustment required under the provisions of section 3.2 or
                  responsible for the manner, method or amount of any such
                  adjustment or the ascertaining of the existence of facts that
                  would require any such adjustment (except with respect to the
                  exercise of Rights after receipt of the certificate
                  contemplated by section 3.2 describing any such adjustment);
                  nor will it by any act hereunder be deemed to make any
                  representation or warranty as to the authorization of any
                  Common Shares to be issued pursuant to this agreement or any
                  Rights or as to whether any Shares will, when issued, be duly
                  and validly authorized, executed, issued and delivered as
                  fully paid and non-assessable;

         (f)      the Corporation will perform, execute, acknowledge and deliver
                  or cause to be performed, executed, acknowledged and delivered
                  all such further and other acts, instruments and assurances as
                  may reasonably be required by the Rights Agent for the
                  carrying out or performing by the Rights Agent of the
                  provisions of this agreement;

         (g)      the Rights Agent is hereby authorized and directed to accept
                  instructions with respect to the performance of its duties
                  hereunder from any Person designated in writing by the
                  Corporation, and to apply to such Persons for advice or
                  instructions in connection with its duties, and it will not be
                  liable for any action taken or suffered by it in good faith in
                  accordance with the instructions of any such Person; it is
                  understood that instructions to the Rights Agent will, except
                  where circumstances make it impracticable or the Rights Agent
                  otherwise agrees, be given in writing and, where not in
                  writing, such instructions will be confirmed in writing as
                  soon as reasonably possible after the giving of such
                  instructions;


<PAGE>
                                      -38-


         (h)      the Rights Agent and any shareholder, director, officer or
                  employee of the Rights Agent may buy, sell or deal in Common
                  Shares, Rights or other securities of the Corporation or
                  become pecuniarily interested in any transaction in which the
                  Corporation may be interested, or contract with or lend money
                  to the Corporation or otherwise act as fully and freely as
                  though it were not the Rights Agent under this agreement.
                  Nothing herein will preclude the Rights Agent from acting in
                  any other capacity for the Corporation or for any other legal
                  entity; and

         (i)      the Rights Agent may execute and exercise any of the rights or
                  powers hereby vested in it or perform any duty hereunder
                  either itself or by or through its attorneys or agents, and
                  the Rights Agent will not be answerable or accountable for any
                  act, default, neglect or misconduct of any such attorneys or
                  agents or for any loss to the Corporation resulting from any
                  such act, default, neglect or misconduct, provided reasonable
                  care was exercised in the selection and continued employment
                  thereof.

5.4      CHANGE OF RIGHTS AGENT

         The Rights Agent may resign and be discharged from its duties under
         this agreement upon 60 days' notice in writing (or such lesser notice
         as is acceptable to the Corporation) mailed to the Corporation and to
         each transfer agent of Common Shares by registered or certified mail,
         and to the holders of Rights in accordance with section 6.8, all of
         which will be at the Corporation's expense. The Corporation may remove
         the Rights Agent upon 30 days' notice in writing, mailed to the Rights
         Agent and to each transfer agent of the Common Shares by registered or
         certified mail, and to the holders of the Rights in accordance with
         section 6.8. If the Rights Agent should resign or be removed or
         otherwise become incapable of acting, the Corporation will appoint a
         successor to the Rights Agent. If the Corporation fails to make such
         appointment within a period of 30 days after such removal or after it
         has been notified in writing of such resignation or incapacity by the
         resigning or incapacitated Rights Agent or by the holder of any Rights
         (which holder, with such notice, must submit such holder's Rights
         Certificate for inspection by the Corporation), then by prior written
         notice to the Corporation, the resigning Rights Agent (at the
         Corporation's expense) or the holder of any Rights may apply to any
         court of competent jurisdiction for the appointment of a new Rights
         Agent. Any successor Rights Agent, whether appointed by the Corporation
         or by such a court, must be a corporation incorporated under the laws
         of Canada or a province thereof authorized to carry on the business of
         a trust company in the Province of Quebec. After appointment, the
         successor Rights Agent will be vested with the same powers, rights,
         duties and responsibilities as if it had been originally named as
         Rights Agent without further act or deed; but the predecessor Rights
         Agent, upon payment by the


<PAGE>
                                      -39-


         Corporation to the predecessor Rights Agent of all outstanding fees and
         expenses owing by the Corporation to the predecessor Rights Agent
         pursuant to this agreement, will deliver and transfer to the successor
         Rights Agent any property at the time held by it hereunder and execute
         and deliver any further assurance, conveyance, act or deed necessary
         for the purpose. Not later than the effective date of any such
         appointment, the Corporation will file notice thereof in writing with
         the predecessor Rights Agent and each transfer agent of the Common
         Shares, and mail a notice thereof in writing to the holders of the
         Rights. Failure to give any notice provided for in this section 5.4,
         however, or any defect therein, will not affect the legality or
         validity of the resignation or removal of the Rights Agent or the
         appointment of the successor Rights Agent, as the case may be.

                                    ARTICLE 6
                                  MISCELLANEOUS

6.1      REDEMPTION AND WAIVER

         (a)      Until the occurrence of a Flip-in Event as to which the
                  application of section 4.1 has not been waived pursuant to
                  this section 6.1, the Board of Directors may elect to redeem
                  all but not less than all of the then outstanding Rights at a
                  redemption price of $0.0001 per Right, appropriately adjusted
                  in a manner analogous to the applicable adjustment provided
                  for in section 3.2, if an event of the type analogous to any
                  of the events described in section 3.2 have occurred (such
                  redemption price being herein referred to as the "REDEMPTION
                  PRICE").

         (b)      Until the occurrence of a Flip-in Event as to which the
                  application of section 4.1 has not been waived pursuant to
                  this section 6.1, upon written notice to the Rights Agent, the
                  Board of Directors, may determine to waive the application of
                  section 4.1 to any Flip-in Event.

         (c)      Notwithstanding subsection (b), upon written notice to the
                  Rights Agent, the Board of Directors may waive the application
                  of section 4.1 in respect of any Flip-in Event, provided that
                  both of the following conditions are satisfied:

                  (i)      the Board of Directors has determined that the Person
                           became an Acquiring Person by inadvertence and
                           without any intention to become, or knowledge that it
                           would become, an Acquiring Person; and


<PAGE>
                                      -40-


                  (ii)     such Person has reduced its Beneficial Ownership of
                           Voting Shares such that at the time of the granting
                           of a waiver pursuant to this subsection, such Person
                           is no longer an Acquiring Person;

                  In the event of any such waiver, for the purposes of this
                  agreement, such Flip-in Event will be deemed not to have
                  occurred and the Separation Time will be deemed not to have
                  occurred as a result of such Person having inadvertently
                  become an Acquiring Person.

         (d)      The Board of Directors will be deemed to have elected to
                  redeem, without further formality, the Rights at the
                  Redemption Price on the date that a Person who has made a
                  Permitted Bid, a Competing Permitted Bid or Take-over Bid in
                  respect of which the Board of Directors has waived, or is
                  deemed to have waived, pursuant to this section 6.1 the
                  application of section 4.1, takes up and pays for Voting
                  Shares pursuant to the terms and conditions of such Permitted
                  Bid, Competing Permitted Bid or Take-over Bid, as the case may
                  be.

         (e)      Where a Take-over Bid that is not a Permitted Bid is withdrawn
                  or otherwise terminated after the Separation Time has occurred
                  and prior to the occurrence of a Flip-in Event, the Board of
                  Directors may elect to redeem all the then outstanding Rights
                  without the consent of the holders of Voting Shares or the
                  holders of Rights, as the case may be, at the Redemption Price
                  and reissue Rights under this agreement to holders of record
                  of Common Shares immediately following the time of such
                  redemption and, thereafter, all of the provisions of this
                  agreement will continue in full force and effect and such
                  Rights, without any further formality, will be attached to the
                  outstanding Common Shares in the same manner as prior to the
                  occurrence of such Separation Time.

         (f)      If the Board of Directors elects or is deemed to have elected
                  to redeem the Rights, the right to exercise the Rights will
                  thereupon, without further action and without notice,
                  terminate, and the only right thereafter of the holders of
                  Rights will be to receive the Redemption Price.

         (g)      Within 10 days after the Board of Directors electing or having
                  been deemed to have elected to redeem the Rights, the
                  Corporation will give notice of redemption to the holders of
                  the then outstanding Rights by issuing a press release, at
                  least once, in both Canada and the United States. The notice
                  of redemption will state, among other things, that a holder of
                  Rights shall be entitled to its PRO RATA portion of the
                  Redemption Price by requesting such payment in writing from
                  the Corporation at the address set out in section 6.8 on or
                  before the expiration of one year following the giving of the
                  notice of redemption. The Corporation shall be


<PAGE>
                                      -41-


                  deemed to have validly redeemed all of the Rights upon the
                  publication of the notice of redemption as contemplated
                  herein. The Corporation may not redeem, acquire or purchase
                  for value any Rights at any time in any manner other than that
                  specifically set forth in this section 6.1, and other than in
                  connection with the purchase of Common Shares prior to the
                  Separation Time.

6.2      EXPIRATION

         No Person will have any rights pursuant to this agreement or in respect
         of any Right after the Expiration Time, except the Rights Agent as
         specified in section 5.1.

6.3      ISSUANCE OF NEW RIGHTS CERTIFICATES

         Notwithstanding any of the provisions of this agreement or of the
         Rights to the contrary, the Corporation, at its option, may issue new
         Rights Certificates evidencing Rights in such form as may be approved
         by the Board of Directors to reflect any adjustment or change in the
         number or kind or class of securities purchasable upon exercise of
         Rights made in accordance with the provisions of this agreement.

6.4      FRACTIONAL RIGHTS AND FRACTIONAL SHARES

         (a)      The Corporation will not be required to issue fractions of
                  Rights or to distribute Rights Certificates which evidence
                  fractional Rights. The number of Rights issued at any time
                  shall be rounded down to the nearest whole number of Rights.

         (b)      The Corporation will not be required to issue fractions of
                  Common Shares upon exercise of the Rights as all such Common
                  Shares will be rounded down to the nearest whole number of
                  Common Shares.

6.5      SUPPLEMENTS AND AMENDMENTS

         (a)      The Corporation may make amendments to this agreement from
                  time to time to correct any clerical or typographical error or
                  which are required to maintain the validity of this agreement
                  as a result of any change in any applicable legislation, rules
                  or regulations or decision of a court or regulatory authority.
                  The Corporation, at or prior to the meeting of shareholders of
                  the Corporation, or any adjournment or postponement thereof,
                  to be held for shareholders of the Corporation to consider
                  and, if deemed advisable, to adopt a resolution approving,
                  ratifying and confirming this agreement and the Rights issued
                  pursuant thereto, may


<PAGE>
                                      -42-


                  supplement or amend this agreement without the approval of any
                  holders of Rights or Voting Shares in order to make any
                  changes which the Board of Directors acting in good faith may
                  deem necessary or desirable to make this agreement effective
                  (provided such action would not materially adversely affect
                  the interests of the holders of Rights generally).
                  Notwithstanding anything in this section 6.5 to the contrary,
                  no such supplement or amendment may be made to the provisions
                  of Article 5 except with the written concurrence of the Rights
                  Agent to such supplement or amendment.

         (b)      Subject to subsection (a), the Corporation, with the prior
                  consent of the holders of Voting Shares obtained as set forth
                  below, at any time prior to the Separation Time, may
                  supplement or amend any of the provisions of this agreement
                  and the Rights (whether or not such action would materially
                  adversely affect the interests of the holders of Rights
                  generally). Such consent will be deemed to have been given if
                  the action requiring such approval is authorized by the
                  affirmative vote of a majority of the votes cast by
                  Independent Shareholders present or represented at and
                  entitled to vote at a meeting of the holders of Voting Shares
                  duly called and held in compliance with applicable laws and
                  the Corporation's by-laws.

         (c)      Subject to subsection (a), the Corporation, with the prior
                  consent of the holders of Rights, at any time on or after the
                  Separation Time, may supplement or amend any of the provisions
                  of this agreement and the Rights (whether or not such action
                  would materially adversely affect the interests of the holders
                  of Rights generally), provided that no such supplement or
                  amendment may be made to the provisions of Article 5 except
                  with the written concurrence of the Rights Agent thereto.

         (d)      Any approval of the holders of Rights will be deemed to have
                  been given if the action requiring such approval is authorized
                  by the affirmative votes of the holders of Rights present or
                  represented at and entitled to be voted at a meeting of the
                  holders of Rights and representing a majority of the votes
                  cast in respect thereof. For the purposes hereof, each
                  outstanding Right (other than Rights which are void pursuant
                  to the provisions hereof) will be entitled to one vote, and
                  the procedures for the calling, holding and conduct of the
                  meeting will be those, as nearly as may be, which are provided
                  in the Corporation's by-laws and the Corporations Act with
                  respect to meetings of shareholders of the Corporation.

         (e)      Any amendments made by the Corporation to this agreement
                  pursuant to subsection (a) which are required to maintain the
                  validity of this agreement shall:


<PAGE>
                                      -43-


                  (i)      if made before the Separation Time, be submitted to
                           the holders of Voting Shares of the Corporation at
                           the next meeting of shareholders and the holders of
                           Voting Shares may, by the majority referred to in
                           subsection (b), may confirm or reject such amendment;
                           and

                  (ii)     if made after the Separation Time, be submitted to
                           the holders of Rights at a meeting to be called for a
                           date not later than immediately following the next
                           meeting of shareholders of the Corporation and the
                           holders of Rights, by resolution passed by the
                           majority referred to in subsection (d), may confirm
                           or reject such amendment.

                  Any such amendment will be effective from the date of the
                  resolution of the Board of Directors adopting such amendment,
                  until it is confirmed or rejected or until it ceases to be
                  effective (as described in the next sentence) and, where such
                  amendment is confirmed, it continues in effect in the form so
                  confirmed. If such amendment is rejected by the holders of
                  Voting Shares or the holders of Rights or is not submitted to
                  the holders of Voting Shares or holders of Rights as required,
                  then such amendment will cease to be effective from and after
                  the termination of the meeting at which it was rejected or to
                  which it should have been but was not submitted or from and
                  after the date of the meeting of holders of Rights that should
                  have been but was not held, and no subsequent amendment to
                  this agreement to substantially the same effect will be
                  effective until confirmed by the shareholders or holders of
                  Rights, as the case may be.

         (f)      The Corporation will give notice in writing to the Rights
                  Agent of any amendment or supplement to this agreement
                  pursuant to this section 6.5 within five Business Days of the
                  date of any such amendment or supplement, provided that
                  failure to give such notice, or any defect therein, will not
                  affect the validity of any such supplement or amendment.

         (g)      For greater certainty, neither the exercise by the Board of
                  Directors of any power or discretion conferred on it under
                  this agreement nor the making by the Board of Directors of any
                  determination or the granting of any waiver it is permitted to
                  make or give under this agreement will constitute an
                  amendment, variation or rescission of the provisions of this
                  agreement or Rights for purposes of this section 6.5 or
                  otherwise.


<PAGE>
                                      -44-


6.6      RIGHTS OF ACTION

         Subject to the terms of this agreement, all rights of action in respect
         of this agreement, other than rights of action vested solely in the
         Rights Agent, are vested in the respective holders of the Rights; and
         any holder of any Rights, without the consent of the Rights Agent or of
         the holder of any other Rights, on such holder's own behalf and for
         such holder's own benefit and the benefit of other holders of Rights,
         may enforce, and may institute and maintain, any suit, action or
         proceeding against the Corporation to enforce, or otherwise act in
         respect of, such holder's right to exercise such holder's Rights in the
         manner provided in such holder's Rights Certificate and in this
         agreement. Without limiting the foregoing or any remedies available to
         the holders of Rights, it is specifically acknowledged that the holders
         of Rights would not have an adequate remedy at law for any breach of
         this agreement and will be entitled to specific performance of the
         obligations under, and injunctive relief against, actual or threatened
         violations of the obligations of any Person subject to, this agreement.

6.7      NOTICE OF PROPOSED ACTIONS

         If the Corporation proposes after the Separation Time and prior to the
         Expiration Time to effect the liquidation, dissolution or winding-up of
         the Corporation or the sale of all or substantially all of the
         Corporation's assets, then, in each such case, the Corporation will
         give to each holder of a Right, in accordance with section 6.8, a
         notice of such proposed action. The notice must specify the date on
         which such liquidation, dissolution, winding-up or sale is to take
         place, and such notice must be so given at least 20 Business Days prior
         to the date of taking such proposed action.

6.8      NOTICES

         (a)      Notices or demands authorized or required by this agreement to
                  be given or made by the Rights Agent or by the holder of any
                  Rights to or on the Corporation will be sufficiently given or
                  made if delivered or sent by facsimile or by first-class mail,
                  postage prepaid, addressed (until another facsimile number or
                  address is filed in writing with the Rights Agent) as follows:

                  Sand Technology Inc.
                  215 Redfern Avenue, Suite 410
                  Westmount, Quebec H3Z 3L5
                  Attention:  Chairman of the Board
                  Facsimile:  (514) 939-3477


<PAGE>
                                      -45-


         (b)      Notices or demands authorized or required by this agreement to
                  be given or made by the Corporation or by the holder of any
                  Rights to or on the Rights Agent will be sufficiently given or
                  made if delivered or sent by facsimile or by first-class mail,
                  postage prepaid, addressed (until another facsimile number or
                  address is filed in writing with the Corporation) as follows:

                  CIBC Mellon Trust Company
                  2001 University Street, Suite 1600
                  Montreal, Quebec H3A 2A6
                  Attention:  Manager, Client Relations
                  Facsimile:  (514) 285-3640

         (c)      Notices or demands authorized or required by this agreement to
                  be given or made by the Corporation or the Rights Agent to or
                  on behalf of the holder of any Rights will be sufficiently
                  given or made if delivered or sent by first-class mail,
                  postage prepaid, addressed to such holder at the address of
                  such holder as it appears upon the registry books of the
                  Rights Agent or, prior to the Separation Time, on the registry
                  books of the Corporation for the Common Shares. Any notice
                  which is mailed in the manner herein provided will be deemed
                  given, whether or not the holder receives the notice.

         (d)      Notices will be deemed to have been received as follows:

                  (i)      in the case of personal delivery, on the day of
                           delivery, unless delivered on a day that is not a
                           Business Day or after 4:00 p.m. on the day of
                           delivery, in which case notice will be deemed to have
                           been received on the next Business Day;

                  (ii)     in the case of facsimile, on the Business Day of
                           transmission if transmitted before 4:00 p.m. on that
                           Business Day or, otherwise, on the next Business Day
                           following the day of transmission; and

                  (iii)    in the case of first class mail, on the fifth
                           Business Day following mailing.

         (e)      Any accidental error, omission or failure in giving or
                  delivering or mailing any such notice will not invalidate or
                  otherwise prejudicially affect any action or proceeding
                  founded thereon.


<PAGE>
                                      -46-


6.9      COSTS OF ENFORCEMENT

         The Corporation agrees that, if it or any other Person the securities
         of which are purchasable upon exercise of Rights fails to fulfil any of
         its obligations pursuant to this agreement, then the Corporation or
         such Person will reimburse the holder of any Rights for the costs and
         expenses (including reasonable legal fees) incurred by such holder in
         actions to enforce the holder's rights pursuant to any Rights or this
         agreement.

6.10     SUCCESSORS

         All the covenants and provisions of this agreement by or for the
         benefit of the Corporation or the Rights Agent bind and enure to the
         benefit of their respective successors and assigns hereunder.

6.11     BENEFITS OF THIS AGREEMENT

         Nothing in this agreement will be construed to give to any Person other
         than the Corporation, the Rights Agent and the holders of the Rights
         any legal or equitable right, remedy or claim under this agreement; but
         this agreement will be for the sole and exclusive benefit of the
         Corporation, the Rights Agent and the holders of the Rights.

6.12     GOVERNING LAW

         This agreement and each Right issued hereunder will be deemed to be a
         contract made under the laws of the Province of Quebec and for all
         purposes will be governed by and construed in accordance with the laws
         of such province applicable to contracts to be made and performed
         entirely within such province.

6.13     COUNTERPARTS

         This agreement may be executed in any number of counterparts and each
         of such counterparts for all purposes will be deemed to be an original,
         and all such counterparts together will constitute one and the same
         instrument.

6.14     SEVERABILITY

         If any term or provision hereof or the application thereof to any
         circumstance is, in any jurisdiction and to any extent, invalid or
         unenforceable, such term or provision will be ineffective as to such
         jurisdiction to the extent of such invalidity or unenforceability
         without invalidating or rendering unenforceable the remaining terms and
         provisions hereof or the application of such term or provision to
         circumstances other than those as to which it is held invalid or
         unenforceable.


<PAGE>
                                      -47-


6.15     EFFECTIVE DATE

         This agreement is in force in accordance with its terms from November
         17, 2003. If the Rights Plan is not ratified by resolution passed by a
         majority of the votes cast by Independent Shareholders present or
         represented by proxy at a meeting of shareholders of the Corporation
         held on or before December 31, 2003, then, unless a Flip-in Event (as
         to which the application of section 4.1 has not been waived pursuant to
         section 6.1) has occurred on or prior to such date, this agreement and
         any then outstanding Rights, without further formality, will be of no
         further force or effect as at such date.

6.16     SHAREHOLDER APPROVAL

         At each annual meeting of shareholders of the Corporation commencing in
         2005 and every two-year anniversary thereafter and so on, provided that
         a Flip-in Event has not occurred prior to such time (other than a
         Flip-in Event in respect of which the application of section 4.1 has
         been waived pursuant to section 6.1), the board of directors may submit
         a resolution to the Independent Shareholders for their consideration
         and approval ratifying this agreement (as may be amended and restated)
         and its continued existence after each such meeting. If a majority of
         the votes cast by Independent Shareholders present or represented by
         proxy at any such meeting are not voted in favour of this agreement and
         its continued existence, then the board of directors, immediately upon
         confirmation by the chair of such shareholders meeting of the results
         of the vote on such resolution, without further formality, will be
         deemed to have elected to redeem the Rights at the Redemption Price.

6.17     DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS

         All actions, calculations and determinations (including all omissions
         with respect to the foregoing) which are done or made by the Board of
         Directors in good faith in connection with this agreement will not
         subject the Board of Directors or any director of the Corporation to
         any liability to the holders of the Rights.

6.18     TIME OF THE ESSENCE

         Time will be of the essence of this agreement.

6.19     REGULATORY APPROVALS

         Any obligation of the Corporation or action contemplated by this
         agreement, including any amendment hereto, will be subject to the
         receipt of any requisite approval or consent from any applicable
         regulatory authority, including any


<PAGE>
                                      -48-


         necessary approvals of the Nasdaq National Market, the Toronto Stock
         Exchange or any other stock exchange.

6.20     DECLARATION AS TO NON-CANADIAN AND NON-UNITED STATES HOLDERS

         If in the opinion of the Board of Directors (who may rely on the advice
         of legal counsel) any action or event contemplated by this agreement
         would require compliance by the Corporation with the securities laws or
         comparable legislation of a jurisdiction outside Canada or the United
         States, the Board of Directors acting in good faith may take such
         actions as it may deem appropriate to ensure that such compliance is
         not required, including establishing procedures for the issuance to a
         Canadian resident fiduciary of Rights or securities issuable on
         exercise of Rights, the holding thereof in trust for the Persons
         entitled thereto and the sale thereof and remittance of the proceeds of
         such sale (if any) to the Persons entitled thereto. In no event will
         the Corporation or the Rights Agent be required to issue or deliver
         Rights or securities issuable on exercise of Rights to Persons who are
         citizens, residents or nationals of any jurisdiction other than Canada
         and the United States of America in which such issue or delivery would
         be unlawful without registration of the relevant Persons or securities
         for such purposes.

6.21     FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS

         For greater certainty, this agreement will not be construed to suggest
         or imply that the Board of Directors is not entitled to recommend that
         holders of Voting Shares reject or accept any Take-over Bid (whether or
         not such Take-over Bid is a Permitted Bid or a Competing Permitted Bid)
         or take any other action (including the commencement, prosecution,
         defense or settlement of any litigation) with respect to any Take-over
         Bid or otherwise that the Board of Directors believes is necessary or
         appropriate in the exercise of its fiduciary duties.

6.22     LANGUAGE

         Les parties aux presentes ont exige que la presente convention ainsi
         que tous les documents et avis qui s'y rattachent ou qui en decoulent
         soient rediges en langue anglaise. The parties hereto have required
         that this agreement and all documents and notices related thereto
         and/or resulting therefrom be drawn up in the English language.


<PAGE>
                                      -49-


IN WITNESS WHEREOF, the parties have caused this agreement to be duly executed
as of the date first written above.


        SAND TECHNOLOGY INC.                     CIBC MELLON TRUST COMPANY

By:  /s/ Arthur Ritchie                     By:  /s/ M. Bynoe
     -------------------------------             -------------------------------
     Arthur Ritchie,                             Authorized Signatory
     Chairman of the Board,                      Monica Bynoe
     President and Chief Executive
     Officer
                                            Date: December 9, 2003

Date: December 8, 2003                      By:  /s/ Steve Gilbert
                                                 -------------------------------
                                                 Authorized Signatory
                                                 Steve Gilbert

                                            Date: December 9, 2003

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                                    EXHIBIT A

                           FORM OF RIGHTS CERTIFICATE

Certificate No.______________                                 ___________ Rights


                               RIGHTS CERTIFICATE

This certifies that __________________ is the registered holder of the number of
Rights set forth above, each of which entitles the registered holder thereof,
subject to the terms, provisions and conditions of the Shareholder Rights Plan
Agreement dated as of April o, 2003, as the same may be amended, restated or
supplemented from time to time (the "RIGHTS AGREEMENT") between Sand Technology
Inc. (the "CORPORATION"), and CIBC Mellon Trust Company, as rights agent (the
"RIGHTS AGENT", which term includes any successor Rights Agent under the Rights
Agreement), to purchase from the Corporation at any time after the Separation
Time and prior to the Expiration Time (as such terms are defined in the Rights
Agreement), one fully paid Common Share of the Corporation (a "Common Share") at
the Exercise Price referred to below, upon presentation and surrender of this
Rights Certificate together with the Form of Election to Exercise and
Declaration of Ownership duly executed and submitted to the Rights Agent at its
principal office in the city of Montreal or any other office of the Rights Agent
designated for that purpose from time to time by the Rights Agent. The Exercise
Price initially is $100 per Right and will be subject to adjustment in certain
events as provided in the Rights Agreement.

In certain circumstances described in the Rights Agreement, each Right evidenced
hereby may entitle the registered holder thereof to purchase or receive assets,
debt securities or shares in the capital of the Corporation other than Common
Shares, or more or less than one Common Share, all as provided in the Rights
Agreement.

This Rights Certificate is subject to all of the terms and conditions of the
Rights Agreement which terms and conditions are incorporated in this Rights
Certificate by reference and made a part of this Rights Certificate and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights Certificates. Copies
of the Rights Agreement are on file at the registered office of the Corporation
and are available upon written request.

This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate is exercised in part, the registered
holder will be entitled to receive, upon surrender of this Rights Certificate,
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.

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                                      -2-

Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Rights Certificate may be, and under certain circumstances are required to be,
redeemed by the Corporation at a redemption price of $0.0001 per Right, subject
to adjustment in certain events.

Fractional Common Shares will not be issued upon the exercise of any Right or
Rights evidenced hereby as all such Common Shares will be rounded down to the
nearest whole number of Common Shares.

No holder of this Rights Certificate, as such, will be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other shares of the Corporation which may at any time be issuable upon the
exercise hereof, nor will anything contained in the Rights Agreement or in this
Rights Certificate be construed to confer upon the holder of this Rights
Certificate, as such, any of the rights of a shareholder of the Corporation or
any right to vote for the election of directors or upon any matter submitted to
shareholders of the Corporation at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders of the Corporation (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Rights evidenced by this Rights Certificate have been exercised as
provided in the Rights Agreement.

This Rights Certificate will not be valid or obligatory for any purpose until it
will have been manually countersigned by the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Corporation.


Date: _________________


                                                    SAND TECHNOLOGY INC.

                                            By: ________________________________


                                            By: ________________________________


Countersigned:
                                                 CIBC MELLON TRUST COMPANY

                                            By: ________________________________
                                                Authorized Signature



<PAGE>



                          FORM OF ELECTION TO EXERCISE
                   (to be attached to each Rights Certificate)


TO:   Sand Technology Inc.

The undersigned hereby irrevocably elects to exercise ___________________ whole
Rights represented by the attached Rights Certificate to purchase the Common
Shares issuable upon the exercise of such Rights and requests that certificates
for such Common Shares be issued to:



                 _______________________________________________________________
                 Name



                 _______________________________________________________________
                 Address



                 _______________________________________________________________
                 City and Province



                 _______________________________________________________________
                 Social Insurance Number or other taxpayer identification number


If such number of Rights are not all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:



                 _______________________________________________________________
                 Name



                 _______________________________________________________________
                 Address



                 _______________________________________________________________
                 City and Province



                 _______________________________________________________________
                 Social Insurance Number or other taxpayer identification number

Dated:
       __________________________________    ___________________________________
                                                        Signature

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                                      -2-

Signature Guaranteed:

(Signature must correspond to name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.)

Signature must be guaranteed by an Eligible Institution being either a Canadian
Schedule I chartered bank or major trust company in Canada, a member of the
Securities Transfer Agents Medallion Program (STAMP), a member of the Stock
Exchange Medallion Program (SEMP) or a member of the New York Stock Exchange,
Inc. Medallion Signature Program (MSP). Members of these programs are usually
members of a recognized stock exchange in Canada and the United States, members
of the Investment Dealers Association of Canada, member of the National
Association of Securities Dealers of banks and trust companies in the United
States.

The undersigned hereby represents, for the benefit of the Corporation and all
holders of Rights and Common Shares, that the Rights evidenced by this Rights
Certificate are not, and, to the knowledge of the undersigned, have never been,
Beneficially Owned by an Acquiring Person, an Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with an Acquiring
Person or with an Associate or Affiliate of an Acquiring Person (as such terms
are defined in the Rights Agreement).


                                       ________________________________________
                                                      Signature



<PAGE>

                               FORM OF ASSIGNMENT

FOR VALUE RECEIVED _____________________________________________

hereby sells, assigns and transfers unto________________________________________

________________________________________________________________________________
(please print name and address of transferee)

________________________________________________________________________________
the Rights represented by this Rights Certificate, together with all right,
title and interest therein.

Dated: ____________________________

Signature Guaranteed:                    _______________________________________
                                           Signature
                                           (Signature must correspond to name as
                                           written upon the face of this Rights
                                           Certificate in every particular,
                                           without alteration or enlargement or
                                           any change whatsoever.)

Signature must be guaranteed by an Eligible Institution being either a Canadian
Schedule I chartered bank or major trust company in Canada, a member of the
Securities Transfer Agents Medallion Program (STAMP), a member of the Stock
Exchange Medallion Program (SEMP) or a member of the New York Stock Exchange,
Inc. Medallion Signature Program (MSP). Members of these programs are usually
members of a recognized stock exchange in Canada and the United States, members
of the Investment Dealers Association of Canada, member of the National
Association of Securities Dealers of banks and trust companies in the United
States.

The undersigned hereby represents, for the benefit of the Corporation and all
holders of Rights and Common Shares, that the Rights evidenced by this Rights
Certificate are not, and, to the knowledge of the undersigned, have never been,
Beneficially Owned by an Acquiring Person, an Affiliate or Associate of an
Acquiring Person or any Person acting jointly or in concert with an Acquiring
Person or with an Associate or Affiliate of an Acquiring Person (as such terms
are defined in the Rights Agreement).


                                       ________________________________________
                                       Signature



<PAGE>



                                     NOTICE


If the certification set forth above in the Form of Election to Exercise or the
Form of Assignment is not completed, the Corporation reserves the right to treat
the Beneficial Owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and accordingly such Rights will be null and void.