EXHIBIT 4.54
                                                                    ------------


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                              AMENDED AND RESTATED
                        SHAREHOLDER RIGHTS PLAN AGREEMENT




                                     BETWEEN




                                   NEXEN INC.


                                       and



                            CIBC MELLON TRUST COMPANY
                                 as Rights Agent





                           Dated as of April 27, 2005



                (amending and restating the Amended and Restated
                       Shareholder Rights Plan Agreement
                               dated May 2, 2002)



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<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

                                    ARTICLE 1
                                   DEFINITIONS

1.1      Definitions...........................................................2
1.2      Currency ............................................................11
1.3      Acting Jointly or in Concert.........................................11
1.4      Control  ............................................................11
1.5      Holder of Rights and Trust Units.....................................12
1.6      References to this Agreement.........................................12

                                    ARTICLE 2
                                   THE RIGHTS

2.1      Legend on Common Share Certificates..................................12
2.2      Initial Exercise Price; Exercise of Rights;
            Detachment of Rights..............................................13
2.3      Adjustments to Exercise Price; Number of Rights......................14
2.4      Date on Which Exercise is Effective..................................17
2.5      Execution, Authentication, Delivery and Dating of
            Rights Certificates...............................................17
2.6      Registration, Registration of Transfer and Exchange..................18
2.7      Mutilated, Destroyed, Lost and Stolen Rights Certificates............18
2.8      Persons Deemed Owners................................................19
2.9      Delivery and Cancellation of Certificates............................19
2.10     Agreement of Rights Holders..........................................19

                                    ARTICLE 3
         ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS

3.1      Flip-in Event........................................................20

                                    ARTICLE 4
                                THE RIGHTS AGENT

4.1      General  ............................................................21
4.2      Merger, Amalgamation or Consolidation or Change of
            Name of Rights Agent..............................................22
4.3      Duties of Rights Agent...............................................22
4.4      Change of Rights Agent...............................................23

                                    ARTICLE 5
                                  MISCELLANEOUS

5.1      Redemption and Termination...........................................24
5.2      Expiration...........................................................26
5.3      Issuance of New Rights Certificates..................................26
5.4      Supplements and Amendments...........................................26
5.5      Fractional Rights and Fractional Shares..............................27
5.6      Rights of Action.....................................................28
5.7      Holder of Rights Not Deemed a Shareholder............................28
5.8      Notice of Proposed Actions...........................................28
5.9      Notices  ............................................................28
5.10     Costs of Enforcement.................................................29
5.11     Successors...........................................................29
5.12     Benefits of this Agreement...........................................29
5.13     Descriptive Headings.................................................30


                                      -i-
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                                TABLE OF CONTENTS
                                  (continued)

                                                                            PAGE

5.14     Governing Law........................................................30
5.15     Language ............................................................30
5.16     Counterparts.........................................................30
5.17     Severability.........................................................30
5.18     Effective Date.......................................................30
5.19     Shareholder Review...................................................30
5.20     Regulatory Approvals.................................................31
5.21     Declaration as to Non-Canadian and Non-U.S. Holders..................31
5.22     Determinations and Actions by the Board of Directors.................31





                                      -ii-
<PAGE>

                              AMENDED AND RESTATED
                        SHAREHOLDER RIGHTS PLAN AGREEMENT

         THIS AMENDED AND RESTATED  SHAREHOLDER RIGHTS PLAN AGREEMENT made as of
the 27th day of April,  2005  (amending  and  restating the Amended and Restated
Shareholder Rights Plan Agreement dated May 2, 2002).

BETWEEN:

                  NEXEN  INC.,  a body  corporate  organized  under  the laws of
                  Canada (hereinafter referred to as the "CORPORATION")

                                                               OF THE FIRST PART

                                     - and -

                  CIBC MELLON TRUST COMPANY,  a trust company existing under the
                  laws of Canada (hereinafter referred to as the "RIGHTS AGENT")

                                                              OF THE SECOND PART

         WHEREAS the  Corporation and the Rights Agent entered into an agreement
dated  August 6, 1999  respecting  a  shareholder  rights  plan,  as amended and
restated on May 2, 2002,  (the  "ORIGINAL  PLAN") that would be effective at the
latest until the close of business on the date on which the 2005 annual  meeting
of the shareholders of the Corporation  terminates unless a resolution ratifying
the  continued  existence of the Original  Plan was approved by the  Independent
Shareholders (as defined in the Original Plan);

         AND WHEREAS the board of  directors of the  Corporation  (the "BOARD OF
DIRECTORS")  has determined  that it is advisable to continue the rights plan by
adopting  an  amended  and  restated  shareholder  rights  plan to  take  effect
immediately upon receipt of approval of the Independent Shareholders, to conform
to current  practices and to effect the continued  distribution  of rights under
the Original Plan as further  amended and restated herein (the "RIGHTS PLAN") to
ensure,  to the extent  possible,  that all  shareholders of the Corporation are
treated  fairly in  connection  with any  take-over  offer or bid for the common
shares of the Corporation, and to ensure that the Board of Directors is provided
with sufficient time to evaluate  unsolicited  take-over bids and to explore and
develop alternatives to maximize shareholder value;

         AND  WHEREAS,  in order to  continue  the  Rights  Plan,  the  Board of
Directors has:

         (a)      confirmed the distribution of one right (a "RIGHT") in respect
                  of each Common Share (as hereinafter  defined)  outstanding at
                  the close of business on August 6, 1999 (the  "RECORD  Time"),
                  such  distribution  having been made to shareholders of record
                  at the Record Time; and

         (b)      confirmed  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  (as   hereinafter   defined)  and  the
                  Expiration Time (as hereinafter defined);

         AND WHEREAS each Right entitles the holder thereof after the Separation
Time to purchase securities of the Corporation pursuant to the terms and subject
to the conditions set forth herein;

         AND WHEREAS the  Corporation  desires to confirm the appointment of the
Rights  Agent to act on  behalf  of the  Corporation,  and the  Rights  Agent is
willing to so act, in  connection  with the  issuance,  transfer,  exchange  and
replacement of Rights  Certificates  (as hereinafter  defined),  the exercise of
Rights and other matters referred to herein;


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                                      -2-


         NOW  THEREFORE in  consideration  of the  premises  and the  respective
agreements set forth herein, the parties hereby agree as follows:

                                   ARTICLE 1
                                  DEFINITIONS

1.1      DEFINITIONS

         For purposes of this  Agreement,  the following terms have the meanings
indicated:

         (a)      "ACQUIRING PERSON" shall mean any Person who is the Beneficial
                  Owner of 20% or more of the  outstanding  Common Shares of the
                  Corporation;  provided,  however,  that  the  term  "Acquiring
                  Person" shall 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   Common  Shares  of  the
                           Corporation  as a result of any one or a  combination
                           of:

                           (A)     an   acquisition   or   redemption   by   the
                                   Corporation   of   Common   Shares   of   the
                                   Corporation  which, by reducing the number of
                                   Common  Shares  outstanding,   increases  the
                                   proportionate   number   of   Common   Shares
                                   Beneficially  Owned by such  Person to 20% or
                                   more of the Common Shares of the  Corporation
                                   then outstanding;

                           (B)     share   acquisitions   made   pursuant  to  a
                                   Permitted Bid ("PERMITTED BID ACQUISITIONS");

                           (C)     share  acquisitions  (1) in  respect of which
                                   the  Board  of   Directors   has  waived  the
                                   application   of  Section  3.1   pursuant  to
                                   subsections 5.1(b),  5.1(c) or 5.1(d); or (2)
                                   which were made on or prior to the  Effective
                                   Date;  or (3) which were made  pursuant  to a
                                   dividend    reinvestment    plan    of    the
                                   Corporation;  or (4)  pursuant to the receipt
                                   or   exercise   of   rights   issued  by  the
                                   Corporation  to all the holders of the Common
                                   Shares  (other  than  holders  resident  in a
                                   jurisdiction   where  such   distribution  is
                                   restricted  or  impracticable  as a result of
                                   applicable  law) to subscribe for or purchase
                                   Common  Shares  or  Convertible   Securities,
                                   provided   that  such  rights  are   acquired
                                   directly  from the  Corporation  and not from
                                   any other person and provided that the Person
                                   does not thereby acquire a greater percentage
                                   of Common Shares or Convertible Securities so
                                   offered  than  the  Person's   percentage  of
                                   Common  Shares  or   Convertible   Securities
                                   beneficially  owned immediately prior to such
                                   acquisition;    or   (5)    pursuant   to   a
                                   distribution  by the  Corporation  of  Common
                                   Shares   or   Convertible   Securities   made
                                   pursuant to a  prospectus,  provided that the
                                   Person  does not  thereby  acquire  a greater
                                   percentage  of Common  Shares or  Convertible
                                   Securities   so  offered  than  the  Person's
                                   percentage  of Common  Shares or  Convertible
                                   Securities   beneficially  owned  immediately
                                   prior to such acquisition; or (6) pursuant to
                                   a distribution  by the  Corporation of Common
                                   Shares or Convertible  Securities by way of a
                                   private  placement or a  securities  exchange
                                   takeover bid circular or upon the exercise by
                                   an  individual   employee  of  stock  options
                                   granted  under  a  stock  option  plan of the
                                   Corporation or rights to purchase  securities
                                   granted  under a share  purchase  plan of the
                                   Corporation,  provided that (i) all necessary
                                   stock  exchange  approvals  for such  private
                                   placement,   stock   option   plan  or  share
                                   purchase  plan  have been  obtained  and such
                                   private placement, stock option plan or share
                                   purchase  plan  complies  with the  terms and
                                   conditions  of such  approvals  and (ii) such
                                   Person does not become the  Beneficial  Owner

<PAGE>
                                      -3-


                                   of  more  than  25%  of  the  Common   Shares
                                   outstanding    immediately   prior   to   the
                                   distribution,     and    in    making    this
                                   determination  the Common Shares to be issued
                                   to such Person in the  distribution  shall be
                                   deemed  to be held by such  Person  but shall
                                   not be  included in the  aggregate  number of
                                   outstanding  Common Shares  immediately prior
                                   to the  distribution;  or (7)  pursuant to an
                                   amalgamation,   merger  or  other   statutory
                                   procedure  requiring   shareholder   approval
                                   ("EXEMPT ACQUISITIONS");

                           (D)     the  acquisition  of Common  Shares  upon the
                                   exercise of Convertible  Securities  received
                                   by such Person  pursuant  to a Permitted  Bid
                                   Acquisition, Exempt Acquisition or a Pro Rata
                                   Acquisition (as defined below)  ("CONVERTIBLE
                                   SECURITY ACQUISITIONS"); or

                           (E)     acquisitions as a result of a stock dividend,
                                   a stock  split or  other  event  pursuant  to
                                   which such Person receives or acquires Common
                                   Shares or Convertible  Securities on the same
                                   PRO RATA basis as all other holders of Common
                                   Shares   of  the  same   class   ("PRO   RATA
                                   ACQUISITIONS");

                           provided,  however, that if a Person shall become the
                           Beneficial  Owner of 20% or more of the Common Shares
                           of the Corporation  then outstanding by reason of any
                           one or a  combination  of (i) share  acquisitions  or
                           redemptions by the  Corporation or (ii) Permitted Bid
                           Acquisitions  or (iii)  Exempt  Acquisitions  or (iv)
                           Convertible  Security  Acquisitions  or (v) Pro  Rata
                           Acquisitions  and, after such share  acquisitions  or
                           redemptions   by  the   Corporation,   Permitted  Bid
                           Acquisitions,   Exempt   Acquisitions,    Convertible
                           Security Acquisitions or Pro Rata Acquisitions,  such
                           Person  subsequently  becomes the Beneficial Owner of
                           more than an additional 1.00% of the number of Common
                           Shares  of the  Corporation  outstanding  other  than
                           pursuant  to  any  one  or  a  combination  of  share
                           acquisitions   or   redemptions   of  shares  by  the
                           Corporation,   Permitted  Bid  Acquisitions,   Exempt
                           Acquisitions,  Convertible  Security  Acquisitions or
                           Pro  Rata  Acquisitions,  then as of the  date of any
                           such   acquisition   such  Person   shall  become  an
                           "Acquiring Person";

                  (iii)    for a period of 10 days  after  the  Disqualification
                           Date, any Person who becomes the Beneficial  Owner of
                           20% or more of the  outstanding  Common  Shares  as a
                           result  of such  Person  becoming  disqualified  from
                           relying  on  clause  1.1(e)(B)  solely  because  such
                           Person  makes or  announces  an  intention  to make a
                           Take-over  Bid,  either alone,  through such Person's
                           Affiliates or  Associates or by acting  jointly or in
                           concert  with any other  Person.  For the purposes of
                           this  definition,  "DISQUALIFICATION  DATE" means the
                           first date of public  announcement that any Person is
                           making or intends  to make a  Take-over  Bid,  either
                           alone, through such Person's Affiliates or Associates
                           or by acting  jointly  or in  concert  with any other
                           Person; or

                  (iv)     an  underwriter  or member of a  banking  or  selling
                           group that  becomes  the  Beneficial  Owner of 20% or
                           more  of  the  Common  Shares  in  connection  with a
                           distribution  of  securities  by way of prospectus or
                           private placement.

         (b)      "AFFILIATE",  used to indicate a relationship with a specified
                  Person,  shall  mean a Person  that  directly,  or  indirectly
                  through one or more intermediaries, controls, or is controlled
                  by, or is under common control with, such specified Person.

         (c)      "AMENDMENT DATE" means April 27, 2005.

         (d)      "ASSOCIATE"   of  a  specified   individual   shall  mean  any
                  individual  to whom such  specified  individual  is married or
                  with whom such  specified  individual  is living in a conjugal
                  relationship,  outside  marriage,  or  any  relative  of  such
                  specified  individual  or said spouse who has the same home as
                  such specified individual.

<PAGE>
                                      -4-


         (e)      A Person shall be deemed the "BENEFICIAL  OWNER",  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  (A) upon  the  exercise  of any  Convertible
                           Securities,   or  (B)  pursuant  to  any   agreement,
                           arrangement  or  understanding,  in either case where
                           such right is exercisable  within a period of 60 days
                           and whether or not on condition  or the  happening of
                           any contingency (other than (1) customary  agreements
                           with and between  underwriters  and banking  group or
                           selling group members with respect to a  distribution
                           to the public or pursuant to a private  placement  of
                           securities, or (2) pursuant to a pledge of securities
                           in the ordinary course of business); and

                  (iii)    any securities  which are  Beneficially  Owned within
                           the meaning of clauses 1.1(e)(i) or (ii) above by any
                           other Person with which such Person is acting jointly
                           or in concert;

                  provided,  however,  that a Person  shall  not be  deemed  the
                  "Beneficial  Owner", or to have "Beneficial  Ownership" of, or
                  to "Beneficially Own", any security:

                           (A)     where  (1) the  holder of such  security  has
                                   agreed to  deposit  or tender  such  security
                                   pursuant to a Permitted  Lock-up Agreement to
                                   a Take-over Bid made by such Person or any of
                                   such Person's Affiliates or Associates or any
                                   other   Person    referred   to   in   clause
                                   1.1(e)(iii),  or (2) such  security  has been
                                   deposited or tendered pursuant to a Take-over
                                   Bid  made  by  such  Person  or any  of  such
                                   Person's  Affiliates  or  Associates  or  any
                                   other   Person    referred   to   in   clause
                                   1.1(e)(iii),  in each case until the earliest
                                   time at which any such  tendered  security is
                                   accepted   unconditionally   for  payment  or
                                   exchange or is taken up and paid for;

                           (B)     where  such  Person,  any  of  such  Person's
                                   Affiliates  or Associates or any other Person
                                   referred to in clause 1.1(e)(iii), holds such
                                   security   provided  that  (1)  the  ordinary
                                   business of any such Person (the  "INVESTMENT
                                   MANAGER")    includes   the   management   of
                                   investment funds for others and such security
                                   is  held  by the  Investment  Manager  in the
                                   ordinary  course  of  such  business  in  the
                                   performance  of  such  Investment   Manager's
                                   duties for the  account of any other  Person,
                                   including  the   acquisition  or  holding  of
                                   securities  for  non-discretionary   accounts
                                   held on  behalf  of a client  by a broker  or
                                   dealer registered under applicable securities
                                   laws,   or  (2)  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 or in  relation to other
                                   accounts  and  holds  such  security  in  the
                                   ordinary   course  of  such  duties  for  the
                                   estates of deceased or incompetent Persons or
                                   for such other  accounts,  or (3) such Person
                                   (the "PLAN TRUSTEE") is the  administrator or
                                   trustee of one or more pension funds or plans
                                   (each a "PLAN")  registered  under applicable
                                   laws and holds such security for the purposes
                                   of its  activity as such,  or (4) such Person
                                   is a  Plan  or  is a  Person  established  by
                                   statute (the  "STATUTORY  BODY") 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, insurance plans
                                   (other than plans  administered  by insurance
                                   companies)  or various  public  bodies or (5)
                                   such Person is a Crown agent or agency or (6)
                                   such Person (the "MANAGER") is the manager or
                                   trustee of a mutual fund ("MUTUAL FUND") that
                                   is  registered  or  qualified  to  issue  its
                                   securities to investors  under the securities
                                   laws of any province of Canada or the laws of

<PAGE>
                                      -5-


                                   the  United  States of America or is a Mutual
                                   Fund;  provided  in any of the  above  cases,
                                   that  the  Investment   Manager,   the  Trust
                                   Company,  the Plan  Trustee,  the  Plan,  the
                                   Statutory  Body,  the Crown  agent or agency,
                                   the Manager or the Mutual  Fund,  as the case
                                   may be, is not then making a Take-over Bid or
                                   has not announced a current intention to make
                                   a  Take-over  Bid,  other  than an  Offer  to
                                   Acquire  Common  Shares  or other  securities
                                   pursuant to a distribution by the Corporation
                                   or by means of ordinary  market  transactions
                                   (including  pre-arranged  trades entered into
                                   in the  ordinary  course of  business of such
                                   Person)  executed through the facilities of a
                                   stock exchange,  securities  quotation system
                                   or organized  over-the-counter market, alone,
                                   through its  Affiliates  or  Associates or by
                                   acting  jointly or in concert  with any other
                                   Person; or

                           (C)     because  such Person is a client of or has an
                                   account with the same  Investment  Manager as
                                   another   Person   on   whose   account   the
                                   Investment  Manager holds such  security,  or
                                   where  such  Person  is a client of or has an
                                   account  with  the  same  Trust   Company  as
                                   another  Person  on whose  account  the Trust
                                   Company  holds such  security,  or where such
                                   Person is a Plan and has a Plan  Trustee  who
                                   is also a Plan  Trustee for  another  Plan on
                                   whose  account  the Plan  Trustee  holds such
                                   security; or

                           (D)     where  such  Person  is  (i) a  client  of an
                                   Investment Manager and such security is owned
                                   at  law  or  in  equity  by  the   Investment
                                   Manager,  or  (ii)  an  account  of  a  Trust
                                   Company and such  security is owned at law or
                                   in equity by the  Trust  Company,  or (iii) a
                                   Plan and such  security is owned at law or in
                                   equity by the Plan Trustee; or

                           (E)     where 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.

                  For purposes of this Agreement, the percentage of Common
                  Shares Beneficially Owned by any Person, shall be and be
                  deemed to be the product determined by the formula:

                  100 x A/B

                  Where:

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

                  B   =    the number of votes for the election of all directors
                           generally attaching to all outstanding Common Shares.

                  For the purposes of the foregoing formula, where any Person is
                  deemed to Beneficially Own unissued Common Shares which may be
                  acquired  pursuant  to  Convertible  Securities,  such  Common
                  Shares  shall be deemed to be  outstanding  for the purpose of
                  calculating the percentage of Common Shares Beneficially Owned
                  by such Person in both the numerator and the denominator,  but
                  no other unissued Common Shares which may be acquired pursuant
                  to any other outstanding Convertible Securities shall, for the
                  purposes of that calculation, be deemed to be outstanding.

         (f)      "BUSINESS  DAY"  shall  mean any day  other  than a  Saturday,
                  Sunday  or  a  day  that  is  treated  as  a  holiday  at  the
                  Corporation's principal executive offices in Calgary, Canada.

<PAGE>
                                      -6-


         (g)      "BUSINESS  CORPORATIONS  ACT" shall  mean the CANADA  BUSINESS
                  CORPORATIONS  ACT, R.S.C.  1985, c. C-44, as amended,  and the
                  regulations  thereunder,  and any comparable or successor laws
                  or regulations thereto.

         (h)      "CANADIAN-U.S.  EXCHANGE  RATE"  shall  mean on any  date  the
                  inverse of the U.S. Canadian Exchange Rate.

         (i)      "CANADIAN DOLLAR  EQUIVALENT" of any amount which is expressed
                  in United  States  dollars  shall mean on any day the Canadian
                  dollar  equivalent  of such amount  determined by reference to
                  the Canadian-U.S. Exchange Rate on such date.

         (j)      "CLOSE OF  BUSINESS"  on any given date shall mean the time on
                  such date (or, if such date is not a Business Day, the time on
                  the next  succeeding  Business Day) at which the office of the
                  transfer  agent for the  Common  Shares in the City of Calgary
                  (or,  after the  Separation  Time,  the  offices of the Rights
                  Agent in the City of Calgary) becomes closed to the public.

         (k)      "COMMON SHARES OF THE  CORPORATION"  and "COMMON SHARES" shall
                  mean the common shares in the capital stock of the Corporation
                  as constituted as at the Amendment Date and any other share of
                  the   Corporation   into  which  such  common  shares  may  be
                  subdivided, consolidated, reclassified or changed from time to
                  time.

         (l)      "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 the Permitted Bid or another  Competing  Permitted
                           Bid;

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

                  (iii)    contains,  and the take-up and payment for securities
                           tendered or deposited  is subject to, an  irrevocable
                           and unqualified  provision that no Common Shares will
                           be taken up or paid for pursuant to the Take-over Bid
                           prior to the close of business on the date that is no
                           earlier  than the later of (1) the  earliest  date on
                           which Common Shares may be taken up or paid for under
                           any Permitted Bid or Competing  Permitted Bid that is
                           then in  existence  and (2) 35 days  (or  such  other
                           minimum  period  of  days  as  may be  prescribed  by
                           applicable  law in  Alberta)  after  the  date of the
                           Take-over Bid  constituting  the Competing  Permitted
                           Bid.

         (m)      "CONVERTIBLE  SECURITIES"  means,  at any time, any securities
                  issued by the  Corporation  from time to time  (other than the
                  Rights)  carrying any exercise,  conversion or exchange  right
                  pursuant to which the holder thereof may acquire Common Shares
                  or other  securities which are convertible into or exercisable
                  or exchangeable for Common Shares.

         (n)      "CONVERTIBLE SECURITY  ACQUISITIONS" has the meaning set forth
                  in the definition of "Acquiring Person" herein.

         (o)      "CO-RIGHTS  AGENTS"  shall  have  the  meaning  set  forth  in
                  subsection 4.1(a).

         (p)      "EFFECTIVE DATE" shall mean the close of business on August 6,
                  1999.

         (q)      "EXEMPT   ACQUISITION"  has  the  meaning  set  forth  in  the
                  definition of "Acquiring Person" herein.

         (r)      "EXERCISE  PRICE"  shall  mean,  as  of  any  date  after  the
                  Amendment  Date,  the price at which a holder may purchase the
                  securities  issuable  upon  exercise  of one  whole  Right  in

<PAGE>
                                      -7-


                  accordance  with the terms hereof and,  subject to  adjustment
                  thereof in  accordance  with the terms  hereof,  the  Exercise
                  Price shall be:

                  (i)      until the  Separation  Time, an amount equal to three
                           times the Market Price, from time to time, per Common
                           Share; and

                  (ii)     from and after the  Separation  Time, an amount equal
                           to three times the Market Price, as at the Separation
                           Time, per Common Share.

         (s)      "EXPANSION  FACTOR"  shall  have  the  meaning  set  forth  in
                  subsection 2.3(a)(x).

         (t)      "EXPIRATION TIME" shall mean the earlier of:

                  (i)      the Termination Time; and

                  (ii)     the   termination   of  the  annual  meeting  of  the
                           shareholders of the Corporation in the year 2008;

                  provided,  however,  that  if the  resolution  referred  to in
                  Section  5.19  is  approved  by  Independent  Shareholders  in
                  accordance  with  Section  5.19 at or  prior  to  such  annual
                  meeting,  "EXPIRATION  TIME"  means  the  earlier  of (i)  the
                  Termination  Time  and  (ii)  the  termination  of the  annual
                  meeting of the  shareholders  of the  Corporation  in the year
                  2011.

         (u)      "FIDUCIARY"  shall mean a trust company  registered  under the
                  trust company legislation of Canada or any province thereof, a
                  trust  company  organized  under  the laws of any state of the
                  United  States,  a  portfolio  manager  registered  under  the
                  securities  legislation  of one or more provinces of Canada or
                  an  investment  adviser  registered  under the  United  States
                  Investment  Advisers  Act  of  1940  or any  other  securities
                  legislation  of the  United  States or any state of the United
                  States.

         (v)      A  "FLIP-IN   EVENT"  shall  mean  a   transaction   occurring
                  subsequent to the date of this  Agreement as a result of which
                  any Person shall become an Acquiring Person provided, however,
                  that a Flip-in  Event shall be deemed to occur at the close of
                  business  on the tenth day (or such  later day as the Board of
                  Directors of the  Corporation  may determine)  after the Stock
                  Acquisition Date.

         (w)      "INDEPENDENT  SHAREHOLDERS"  shall mean holders of outstanding
                  Common Shares of the  Corporation  excluding (i) any Acquiring
                  Person; or (ii) any Person (other than a Person referred to in
                  clause  1.1(e)(B))  that is making or has  announced a current
                  intention  to make a  Take-over  Bid for Common  Shares of the
                  Corporation   (including  a  Permitted   Bid  or  a  Competing
                  Permitted  Bid) but excluding any such Person if the Take-over
                  Bid so  announced  or made by such Person has been  withdrawn,
                  terminated or, expired; or (iii) any Affiliate or Associate of
                  such Acquiring  Person or a Person referred to in clause (ii);
                  or (iv) any Person  acting  jointly  or in  concert  with such
                  Acquiring  Person or a Person  referred to in clause (ii);  or
                  (v) a Person who is a trustee of any  employee  benefit  plan,
                  share  purchase  plan,  deferred  profit  sharing  plan or any
                  similar  plan or trust for the  benefit  of  employees  of the
                  Corporation  or a Subsidiary  of the  Corporation,  unless the
                  beneficiaries  of the plan or trust direct the manner in which
                  the Common Shares are to be voted or direct whether the Common
                  Shares are to be tendered to a Take-over Bid.

         (x)      "MARKET  PRICE" per security of any  securities on any date of
                  determination  shall  mean the  average  of the daily  Closing
                  Price Per Security of such securities (determined as described
                  below) on each of 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  2.3  hereof  shall have
                  caused  the price  used to  determine  the  Closing  Price Per
                  Security on any Trading  Day not to be fully  comparable  with
                  the price used to determine  the Closing Price Per Security on
                  such date of determination or, if the date of determination is
                  not a Trading Day, on the immediately  preceding  Trading Day,
                  each such price so used shall be  appropriately  adjusted in a

<PAGE>
                                      -8-


                  manner analogous to the applicable  adjustment provided for in
                  Section 2.3 hereof in order to make it fully  comparable  with
                  the price per security used to determine the Closing Price Per
                  Security  on such  date of  determination  or,  if the date of
                  determination  is  not  a  Trading  Day,  on  the  immediately
                  preceding Trading Day. The "Closing Price Per Security" of any
                  securities on any date shall be:

                  (i)      the closing board lot sale price or, if such price is
                           not  available,  the  average of the  closing bid and
                           asked prices,  for such securities as reported by the
                           principal  Canadian  stock  exchange  on  which  such
                           securities  are listed or admitted to trading,  or if
                           for any reason neither of such prices is available on
                           such day or the securities are not listed or admitted
                           to trading on a Canadian stock exchange,  the closing
                           board  lot  sale  price  or,  if  such  price  is not
                           available,  the  average of the closing bid and asked
                           prices, for such securities as reported by such other
                           securities exchange or national securities  quotation
                           system  on  which  such   securities  are  listed  or
                           admitted  for trading on which the largest  number of
                           such  securities were traded during the most recently
                           completed calendar year;

                  (ii)     if, for any reason,  none of such prices is available
                           on such  date or the  securities  are not  listed  or
                           admitted to trading on a Canadian  stock  exchange or
                           other securities exchange or on a national securities
                           quotation system,  the last sale price, or in case no
                           sale  takes  place on such date,  the  average of the
                           high bid and low asked prices for such  securities in
                           the   over-the-counter   market,  as  quoted  by  any
                           reporting  system  then  in use (as  selected  by the
                           Board of Directors); or

                  (iii)    if the  securities  are not  listed  or  admitted  to
                           trading as contemplated in clause  1.1(x)(i) or (ii),
                           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  Closing  Price  Per  Security
                           cannot  be   determined   in   accordance   with  the
                           foregoing,  the  Closing  Price Per  Security of such
                           securities on such date shall mean the fair value per
                           share of such  securities  on such date as determined
                           in  good  faith  by  an  internationally   recognized
                           investment  dealer or investment  banker with respect
                           to the fair value per share of such securities.

                  The Market Price shall be  expressed in Canadian  dollars and,
                  if initially  determined in respect of any day forming part of
                  the 20  consecutive  Trading  Day period in question in United
                  States dollars,  such amount shall be translated into Canadian
                  dollars at the Canadian Dollar Equivalent thereof.

         (y)      "1933 SECURITIES ACT" shall mean the SECURITIES ACT of 1933 of
                  the United States,  as amended,  and the rules and regulations
                  thereunder,   and  any   comparable   or  successor   laws  or
                  regulations thereto.

         (z)      "1934 EXCHANGE ACT" shall mean the SECURITIES  EXCHANGE ACT of
                  1934 of the  United  States,  as  amended,  and the  rules and
                  regulations  thereunder,  and any comparable or successor laws
                  or regulations thereto.

         (aa)     "OFFER TO ACQUIRE" shall include:

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

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

                  or any combination  thereof, and the Person accepting an offer
                  to sell  shall be deemed to be making an offer to  acquire  to
                  the Person that made the offer to sell.

<PAGE>
                                      -9-


         (bb)     "OFFEROR'S  SECURITIES" means Common Shares Beneficially Owned
                  on the date of an Offer to Acquire by any Person who is making
                  a Take-over Bid and "OFFEROR" means a Person who has announced
                  a current intention to make or is making a Take-over Bid.

         (cc)     "PERMITTED  BID"  means a  Take-over  Bid made by a Person  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 record of
                           Common Shares, other than the Offeror;

                  (ii)     the Take-over Bid shall  contain,  and the provisions
                           for  the  take-up  and  payment  for  Common   Shares
                           tendered or deposited thereunder shall be subject to,
                           an  irrevocable  and  unqualified  condition  that no
                           Common  Shares shall be taken up or paid for pursuant
                           to the  Take-over  Bid prior to the close of business
                           on a date  which is not less  than 60 days  following
                           the date of the Take-over Bid;

                  (iii)    the  Take-over  Bid  shall  contain  irrevocable  and
                           unqualified provisions that, unless the Take-over Bid
                           is withdrawn, Common Shares may be deposited pursuant
                           to the  Take-over  Bid at any time prior to the close
                           of business  on the date of first  take-up or payment
                           for  Common   Shares  and  that  all  Common   Shares
                           deposited  pursuant  to  the  Take-over  Bid  may  be
                           withdrawn  at any time prior to the close of business
                           on such date;

                  (iv)     the Take-over Bid shall  contain an  irrevocable  and
                           unqualified  condition  that  more  than  50%  of the
                           outstanding   Common   Shares  held  by   Independent
                           Shareholders,  determined as at the close of business
                           on the date of first  take-up or  payment  for Common
                           Shares under the Take-over  Bid, must be deposited to
                           the  Take-over  Bid and not withdrawn at the close of
                           business on the date of first  take-up or payment for
                           Common Shares; and

                  (v)      the Take-over Bid shall  contain an  irrevocable  and
                           unqualified  provision  that in the  event  that more
                           than 50% of the then  outstanding  Common Shares held
                           by Independent Shareholders shall have been deposited
                           to the  Take-over  Bid  and not  withdrawn  as at the
                           close of  business  on the date of first  take-up  or
                           payment for Common  Shares under the  Take-over  Bid,
                           the Offeror will make a public  announcement  of that
                           fact  and the  Take-over  Bid  will  remain  open for
                           deposits  and  tenders of Common  Shares for not less
                           than 10  Business  Days from the date of such  public
                           announcement;

                  provided  that if a  Take-over  Bid  constitutes  a  Competing
                  Permitted  Bid, the term  "Permitted  Bid" shall also mean the
                  Competing Permitted Bid.

         (dd)     "PERMITTED BID  ACQUISITIONS" has the meaning set forth in the
                  definition of "Acquiring Person" herein.

         (ee)     "PERMITTED LOCK-UP AGREEMENT" means an agreement (the "LOCK-UP
                  AGREEMENT") between a Person and one or more holders of Common
                  Shares  (each such holder  herein  referred to as a "LOCKED-UP
                  PERSON") (the terms of which are publicly disclosed and a copy
                  of  which  is made  available  to the  public  (including  the
                  Corporation)  not later than the date of the  Lock-up  Bid (as
                  defined  below),  or if the Lock-up Bid has been made prior to
                  the date of the  Lock-up  Agreement  not later  than the first
                  Business  Day  following  the date of the  Lock-up  Agreement)
                  pursuant to which each  Locked-up  Person agrees to deposit or
                  tender the Common  Shares  held by such  holder to a Take-over
                  Bid (the  "LOCK-UP  BID")  made by the  Person  or any of such
                  Person's Affiliates or Associates or any other Person referred
                  to in clause 1.1(e)(iii), provided that:

                  (i)      the Lock-up Agreement permits the Locked-up Person to
                           withdraw its Common Shares from the Lock-up Agreement
                           in order to deposit  or tender  the Common  Shares to
                           another   Take-over   Bid  or  to   support   another

<PAGE>
                                      -10-


                           transaction prior to the Common Shares being taken up
                           and  paid for  under  the  Lock-up  Bid at a price or
                           value per  Common  Share  that  exceeds  the price or
                           value per Common Share offered under the Lock-up Bid;
                           or

                  (ii)     the Lock-up Agreement permits the Locked-up Person to
                           withdraw its Common Shares from the Lock-up Agreement
                           in order to deposit  or tender  the Common  Shares to
                           another   Take-over   Bid  or  to   support   another
                           transaction prior to the Common Shares being taken up
                           and paid for under  the  Lock-up  Bid at an  offering
                           price for each Common  Share that  exceeds by as much
                           as or more than a specified  amount  (the  "SPECIFIED
                           AMOUNT")  the  offering  price for each Common  Share
                           contained  in or  proposed  to be  contained  in  the
                           Lock-up  Bid and that does not by its  terms  provide
                           for a Specified Amount that is greater than 7% of the
                           offering  price   contained  in  or  proposed  to  be
                           contained in the Lock-up Bid;

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

                  (iii)    no  "break-up"   fees,   "top-up"  fees,   penalties,
                           expenses or other  amounts  that exceed in  aggregate
                           the greater of:

                           (A)     2.5%   of  the   price   or   value   of  the
                                   consideration  payable  under the Lock-up Bid
                                   to a Locked-up Person; and

                           (B)     50% of the amount by which the price or value
                                   of the consideration  received by a Locked-up
                                   Person  under   another   Take-over   Bid  or
                                   transaction exceeds the price or value of the
                                   consideration that the Locked-up Person would
                                   have received under the Lock-up Bid;

                           shall be  payable  by such  Locked-up  Person  if the
                           Locked-up  Person  fails to deposit or tender  Common
                           Shares to the Lock-up Bid, or withdraws Common Shares
                           previously  tendered  thereto  in order to deposit or
                           tender such Common Shares to another Take-over Bid or
                           support another transaction.

         (ff)     "PERSON"  shall  mean  any  individual,   firm,   partnership,
                  association,  trust, trustee,  personal  representative,  body
                  corporate, corporation, unincorporated organization, syndicate
                  or other entity.

         (gg)     "PRO  RATA  ACQUISITION"  has the  meaning  set  forth  in the
                  definition of "Acquiring Person" herein.

         (hh)     "RECORD  TIME"  shall mean the close of  business on August 6,
                  1999.

         (ii)     "REDEMPTION  PRICE" has the  meaning  set forth in  subsection
                  5.1(a) herein.

         (jj)     "RIGHTS  CERTIFICATE"  shall mean,  after the Separation Time,
                  the certificate  representing the Rights  substantially in the
                  form of Exhibit A hereto;

         (kk)     "SECURITIES  ACT" shall  mean the  SECURITIES  ACT  (Alberta),
                  R.S.A. 2000, c. S-4, and the rules and regulations thereunder,
                  each as may be amended from time to time,  and any  comparable
                  or successor laws, rules or regulations thereto.

         (ll)     "SEPARATION  TIME"  shall  mean the close of  business  on the
                  tenth Business Day after the earlier of:

                  (i)      the Stock Acquisition Date;

<PAGE>
                                      -11-


                  (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 Take-over
                           Bid  which  is  a  Permitted  Bid  so  long  as  such
                           Take-over Bid  continues to satisfy the  requirements
                           of a Permitted Bid),  provided that, if any Take-over
                           Bid  referred  to in this  clause  (ii)  expires,  is
                           cancelled, terminated or otherwise withdrawn prior to
                           the  Separation  Time,  such  Take-over  Bid shall be
                           deemed,  for  purposes  of this  subsection  1.1(ll),
                           never to have been made; and

                  (iii)    the date upon  which a  Permitted  Bid ceases to be a
                           Permitted Bid;

                  or  such  later  date as may be  determined  by the  Board  of
                  Directors acting in good faith provided that, if the foregoing
                  results in the Separation Time being prior to the Record Time,
                  the Separation  Time shall be the Record Time and if the Board
                  of Directors  determines  pursuant to Section 5.1 to waive the
                  application of Section 3.1 to a Flip-in Event,  the Separation
                  Time in respect of such Flip-in Event shall be deemed never to
                  have occurred.

         (mm)     "STOCK  ACQUISITION  DATE" shall mean the first date of public
                  announcement  (which,  for purposes of this definition,  shall
                  include,  without  limitation,  a  report  filed  pursuant  to
                  Section 176 of the  SECURITIES  ACT or Section 13(d) under the
                  1934 EXCHANGE ACT) by the  Corporation or an Acquiring  Person
                  that a Person has become an Acquiring Person.

         (nn)     "SUBSIDIARY"   of  any   specified   Person   shall  mean  any
                  corporation  or  other  entity  controlled  by such  specified
                  Person.

         (oo)     "TAKE-OVER  BID"  means an Offer to Acquire  Common  Shares or
                  securities  convertible  into Common Shares,  where the Common
                  Shares  subject  to the Offer to  Acquire,  together  with the
                  Common Shares into which the  securities  subject to the Offer
                  to Acquire  are  convertible,  and the  Offeror's  Securities,
                  constitute  in the  aggregate  20% or more of the  outstanding
                  Common Shares at the date of the Offer to Acquire.

         (pp)     "TERMINATION  TIME"  shall mean the time at which the right to
                  exercise Rights shall terminate  pursuant to Section 5.1, 5.18
                  or 5.19 hereof.

         (qq)     "TRADING DAY", when used with respect to any securities, shall
                  mean  a day on  which  the  securities  exchange  or  national
                  securities  quotation  system  on which  such  securities  are
                  listed or admitted  to trading on which the largest  number of
                  such securities were traded during the most recently completed
                  calendar year is open for the  transaction  of business or, if
                  the  securities  are not listed or  admitted to trading on any
                  securities exchange, a Business Day.

         (rr)     "U.S. CANADIAN EXCHANGE RATE" shall mean on any date:

                  (i)      if on such  date the Bank of Canada  sets an  average
                           noon spot rate of exchange  with a conversion  of one
                           United  States  dollar into  Canadian  dollars,  such
                           rate;

                  (ii)     in any  other  case,  the rate for such  date for the
                           conversion  of one United States dollar into Canadian
                           dollars which is calculated in the manner which shall
                           be determined by the Board of Directors  from time to
                           time acting in good faith.

         (ss)     "U.S.  DOLLAR  EQUIVALENT" of any amount which is expressed in
                  Canadian  dollars  shall  mean on any day  the  United  States
                  dollar  equivalent  of such amount  determined by reference to
                  the U.S.-Canadian Exchange Rate on such date.

1.2      CURRENCY

         All sums of money which are referred to in this Agreement are expressed
in lawful money of Canada.

<PAGE>
                                      -12-


1.3      ACTING JOINTLY OR IN CONCERT

         For  purposes  of this  Agreement,  a Person  is acting  jointly  or in
concert with another  Person if such Person has any  agreement,  arrangement  or
understanding  (whether  formal or informal and whether or not in writing)  with
such other  Person to  acquire,  or Offer to Acquire,  any Common  Shares of the
Corporation (other than (A) customary  agreements with and between  underwriters
and banking  group or selling group  members with respect to a  distribution  of
securities  by way of  prospectus  or private  placement,  or (B)  pursuant to a
pledge of securities in the ordinary course of business).

1.4      CONTROL

         A Person is "CONTROLLED" by another Person or two or more other Persons
acting jointly or in concert if:

         (a)      in the case of a body corporate,  securities  entitled to vote
                  in the election of directors of such body  corporate  carrying
                  more than 50% of the votes for the election of  directors  are
                  held,  directly  or  indirectly,  by or for the benefit of the
                  other Person or Persons  acting  jointly or in concert and the
                  votes carried by such  securities are entitled,  if exercised,
                  to elect a  majority  of the board of  directors  of such body
                  corporate; or

         (b)      in the case of a Person  which is not a body  corporate,  more
                  than 50% of the voting or equity  interests of such entity are
                  held,  directly  or  indirectly,  by or for the benefit of the
                  other Person or Persons

and  "CONTROLS",   "CONTROLLING"  and  "UNDER  COMMON  CONTROL  WITH"  shall  be
interpreted accordingly.

1.5      HOLDER OF RIGHTS

         As used in this Agreement,  unless the context otherwise requires,  the
term "HOLDER" of any Rights shall mean the registered holder of such Rights (or,
prior to the Separation Time, the associated Common Shares).

1.6      REFERENCES TO THIS AGREEMENT

         In this  Agreement,  unless  otherwise  provided  herein and unless the
context otherwise requires,  references to "THIS AGREEMENT",  "HEREIN", "HEREBY"
and "HEREUNDER" mean this Amended and Restated Shareholder Rights Plan Agreement
dated April 27, 2005 between the Corporation and the Rights Agent as amended and
supplemented from time to time.

                                   ARTICLE 2
                                   THE RIGHTS

2.1      LEGEND ON COMMON SHARE CERTIFICATES

         Certificates for the Common Shares, including without limitation Common
Shares issued upon the  conversion of Convertible  Securities,  issued after the
Record Time but prior to the earlier of the  Separation  Time and the Expiration
Time shall  evidence  one Right for each Common Share  represented  thereby and,
commencing as soon as reasonably  practicable  after the Record Time, shall have
impressed on, printed on, written on or otherwise affixed to them (i) the legend
set forth in  Section  2.1 of the  Original  Plan,  or the  legend  set forth in
Section 2.1 of the Amended and Restated  Shareholder Rights Plan Agreement dated
May 2, 2002,  which  legends  shall be deemed to be amended for all  purposes to
read the same as the following legend, or (ii) the following legend:

                  Until the Separation  Time (as defined in the Rights
                  Agreement referred to below),  this certificate also
                  evidences  and entitles the holder hereof to certain
                  Rights  as set  forth  in an  Amended  and  Restated
                  Shareholder  Rights Plan Agreement dated as of April
                  27, 2005  (amending  and  restating  the Amended and
                  Restated Shareholder Rights Plan Agreement dated May
                  2, 2002),  as such may from time to time be amended,

<PAGE>
                                 -13-


                  restated,    varied   or   replaced   (the   "Rights
                  Agreement"),  between Nexen Inc. (the "Corporation")
                  and CIBC Mellon Trust Company as Rights  Agent,  the
                  terms of which  are  hereby  incorporated  herein by
                  reference  and,  a copy of  which  is on file at the
                  registered  office of the  Corporation.  In  certain
                  circumstances, as set forth in the Rights Agreement,
                  such  Rights may be amended,  redeemed,  may expire,
                  may  become  void (if,  in certain  cases,  they are
                  "Beneficially  Owned" by an "Acquiring  Person",  as
                  such terms are defined in the Rights Agreement, or a
                  transferee  thereof) 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 practicable,  after the receipt of a written
                  request therefor.

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

2.2      INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS

         (a)      Subject to  adjustment  as herein  set forth,  each Right will
                  entitle the holder  thereof,  after the  Separation  Time,  to
                  purchase,   for  the  Exercise   Price,  or  its  U.S.  Dollar
                  Equivalent  as at the Business Day  immediately  preceding the
                  day   of   exercise   of  the   Right,   one   Common   Share.
                  Notwithstanding  any other  provision of this  Agreement,  any
                  Rights  held  by the  Corporation  or any of its  Subsidiaries
                  shall be void.

         (b)      Until the Separation Time,

                  (i)      no Right may be exercised; and

                  (ii)     each Right will be evidenced by the  certificate  for
                           the associated  Common Share and will be transferable
                           only  together  with,  and will be  transferred  by a
                           transfer of, such associated share.

         (c)      After the Separation  Time and prior to the  Expiration  Time,
                  the Rights (i) may be exercised; and (ii) will be transferable
                  independent   of  Common   Shares.   Promptly   following  the
                  Separation  Time the Rights  Agent will mail to each holder of
                  record of  Common  Shares as of the  Separation  Time and,  in
                  respect of each  Convertible  Security  converted  into Common
                  Shares after the  Separation  Time and prior to the Expiration
                  Time  promptly   after  such   conversion  to  the  holder  so
                  converting  (other than an Acquiring Person and, 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) at such  holder's  address as shown by
                  the  records  of  the  Corporation  (the  Corporation   hereby
                  agreeing to furnish copies of such records to the Rights Agent
                  for this purpose),  (x) a Rights Certificate with registration
                  particulars  appropriately completed,  representing the number
                  of  Rights  held by such  holder  at the  Separation  Time 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 or with any rule or  regulation  made
                  pursuant  thereto or with any rule or  regulation of any stock
                  exchange or  securities  quotation  system on which the Rights
                  may from time to time be listed or  traded,  or to  conform to
                  usage, and (y) a disclosure statement describing the Rights.

         (d)      Rights may be  exercised  in whole or in part on any  Business
                  Day (or on any  other  day  which,  in the  city at  which  an
                  Election  to  Exercise  (as   hereinafter   defined)  is  duly
                  submitted  to  the  Rights  Agent  in  accordance   with  this
                  Agreement, is not a Saturday,  Sunday or a day that is treated
                  as a holiday in such city) after the Separation Time and prior
                  to the  Expiration  Time by submitting to the Rights Agent (at
                  its  office  in the City of  Calgary,  Canada  or at any other

<PAGE>
                                 -14-


                  office of the Rights Agent in the cities  designated from time
                  to time for  that  purpose  by the  Corporation),  the  Rights
                  Certificate  evidencing  such Rights together with an Election
                  to Exercise (an "ELECTION TO EXERCISE")  substantially  in the
                  form  attached  to  the  Rights  Certificate  duly  completed,
                  accompanied by payment by certified cheque,  banker's draft or
                  money order payable to the order of the Rights Agent, of a sum
                  equal to the Exercise Price multiplied by the number of Rights
                  being exercised and a sum sufficient to cover any transfer tax
                  or charge  which may be payable  in  respect  of any  transfer
                  involved in the transfer or delivery of Rights Certificates or
                  the issuance or delivery of certificates  for Common Shares in
                  a name  other  than  that of the  holder of the  Rights  being
                  exercised.

         (e)      Upon receipt of a Rights  Certificate,  with a duly  completed
                  Election to Exercise  (which does not indicate that the holder
                  so exercising is an Acquiring  Person)  accompanied by payment
                  as set forth in subsection 2.2(d) above, the Rights Agent will
                  thereupon promptly:

                  (i)      requisition   from   the   transfer   agent   or  any
                           co-transfer  agent of the Common Shares  certificates
                           for the number of Common Shares to be purchased  (the
                           Corporation   hereby   irrevocably   authorizing  its
                           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 and, after receipt,  deliver
                           such cash to or to the order of the registered holder
                           of the Rights Certificate;

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

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

         (f)      In case the holder of any Rights shall  exercise 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.

         (g)      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 shares  delivered  upon
                           exercise of Rights shall,  at the time of delivery of
                           the  certificates for such shares (subject to payment
                           of  the   Exercise   Price),   be  duly  and  validly
                           authorized,  executed, issued and delivered and 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 BUSINESS CORPORATIONS ACT, the SECURITIES ACT,
                           the securities acts or comparable legislation of each
                           of the other provinces of Canada, the 1933 SECURITIES
                           ACT and the 1934  EXCHANGE  ACT,  and the  rules  and
                           regulations  thereunder or any other  applicable law,
                           rule or regulation,  in connection  with the issuance
                           and  delivery  of the  Rights  Certificates  and  the
                           issuance of any shares upon exercise of Rights;

                  (iii)    use  reasonable  efforts to cause all  shares  issued
                           upon exercise of Rights to be listed on the principal
                           exchanges or traded in the  over-the-counter  markets
                           on which the shares were traded  immediately prior to
                           the Stock Acquisition Date;

                  (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 from time to time be  sufficient  to permit  the
                           exercise in full of all outstanding Rights; and

<PAGE>
                                 -15-


                  (v)      pay when due and  payable  any and all  Canadian  and
                           United States federal, provincial, and state transfer
                           taxes (for greater certainty not including any income
                           taxes or capital  gains of the  holder or  exercising
                           holder  or  any  liability  of  the   Corporation  to
                           withhold  tax) and  charges  which may be  payable in
                           respect of the  original  issuance or delivery of the
                           Rights   Certificates  or  certificates  for  shares,
                           provided that the  Corporation  shall not be required
                           to pay  any  transfer  tax  or  charge  which  may be
                           payable in respect of any  transfer  involved  in the
                           transfer or delivery  of Rights  Certificates  or the
                           issuance or delivery of certificates  for shares in a
                           name  other  than that of the  holder  of the  Rights
                           being transferred or exercised.

2.3      ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS

         The  Exercise  Price,  the  number  and kind of  securities  subject to
purchase  upon exercise of each Right and the number of Rights  outstanding  are
subject to adjustment from time to time as provided in this Section 2.3.

         (a)      In the  event  the  Corporation  shall at any time  after  the
                  Amendment Date and prior to the Expiration Time:

                  (i)      declare  or  pay a  dividend  on  the  Common  Shares
                           payable in Common  Shares (or other  capital stock or
                           securities  exchangeable  for or convertible  into or
                           giving  a right to  acquire  Common  Shares  or other
                           capital  stock)  other than  pursuant to any optional
                           stock dividend program, dividend reinvestment plan or
                           a  dividend  payable  on  Common  Shares in lieu of a
                           regular periodic cash dividend;

                  (ii)     subdivide  or  change  the  then  outstanding  Common
                           Shares into a greater number of Common Shares;

                  (iii)    combine or change the then outstanding  Common Shares
                           into a smaller number of Common Shares; or

                  (iv)     issue any Common  Shares (or other  capital  stock or
                           securities  exchangeable  for or convertible  into or
                           giving  a right to  acquire  Common  Shares  or other
                           capital  stock)  in  respect  of,  in  lieu  of or in
                           exchange   for   existing    Common   Shares   in   a
                           reclassification,   amalgamation,  merger,  statutory
                           arrangement or consolidation,

                  the Exercise Price and the number of Rights  outstanding,  or,
                  if the payment or effective  date  therefor  shall occur after
                  the Separation Time, the securities  purchasable upon exercise
                  of Rights shall be adjusted in the manner set forth below.  If
                  the Exercise Price and number of Rights  outstanding are to be
                  adjusted  (x)  the   Exercise   Price  in  effect  after  such
                  adjustment  shall  be equal to the  Exercise  Price in  effect
                  immediately prior to such adjustment  divided by the number of
                  Common  Shares  (or  other  capital  stock)  (the   "EXPANSION
                  FACTOR") that a holder of one Common Share  immediately  prior
                  to such dividend, subdivision, change, combination or issuance
                  would hold  thereafter as a result  thereof and (y) each Right
                  held prior to such  adjustment  shall  become  that  number of
                  Rights equal to the Expansion 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 shares issued
                  in respect of such dividend, subdivision,  change, combination
                  or issuance,  so that each such Common Share (or other capital
                  stock) will have exactly one Right  associated with it. If the
                  securities  purchasable  upon  exercise  of  Rights  are to be
                  adjusted,  the  securities  purchasable  upon exercise of each
                  Right after such  adjustment  will be the number of securities
                  that a holder of the securities  purchasable  upon exercise of
                  one Right  immediately  prior to such  dividend,  subdivision,
                  change,  combination  or issuance  would hold  thereafter as a
                  result  thereof.  If after the Amendment Date and prior to the
                  Expiration  Time the  Corporation  shall  issue any  shares of
                  capital stock other than Common  Shares in a transaction  of a
                  type  described in clause  2.3(a)(i)  or (iv),  shares of such
                  capital stock shall be treated herein as nearly  equivalent to
                  Common Shares as may be practicable and appropriate  under the
                  circumstances  and the  Corporation and the Rights Agent agree

<PAGE>
                                      -16-


                  to amend this Agreement in order to effect such treatment.  If
                  an event occurs which would require an  adjustment  under both
                  this  Section  2.3 and  Section  3.1  hereof,  the  adjustment
                  provided  for in this  Section 2.3 shall be in addition to and
                  shall be made prior to any  adjustment  required  pursuant  to
                  Section 3.1 hereof.  Adjustments pursuant to subsection 2.3(a)
                  shall be made  successively,  whenever an event referred to in
                  subsection 2.3(a) occurs.

                  In the  event  the  Corporation  shall at any time  after  the
                  Amendment  Date and  prior to the  Separation  Time  issue any
                  Common Shares  otherwise than in a transaction  referred to in
                  the  preceding  paragraph,  each such  Common  Share so issued
                  shall  automatically  have one new Right  associated  with it,
                  which Right shall be evidenced by the certificate representing
                  such Common Share.

         (b)      In the  event  the  Corporation  shall at any time  after  the
                  Amendment Date and prior to the  Expiration  Time fix a record
                  date for the making of a distribution to all holders of Common
                  Shares  of  rights or  warrants  entitling  them (for a period
                  expiring  within 45 calendar  days after such record  date) to
                  subscribe  for  or  purchase   Common  Shares  (or  securities
                  convertible  into or  exchangeable  for or carrying a right to
                  purchase or subscribe for Common Shares) at a price per Common
                  Share (or, if a security  convertible into or exchangeable for
                  or  carrying  a right to  purchase  or  subscribe  for  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 90% of the Market  Price per Common  Share on such record
                  date,  the Exercise  Price shall be adjusted in the manner set
                  forth below.  The  Exercise  Price in effect after such record
                  date  shall  equal the  Exercise  Price in effect  immediately
                  prior to such record date  multiplied by a fraction,  of which
                  the numerator shall be the number of Common Shares outstanding
                  on such record date plus the number of Common Shares which 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 and of which the denominator  shall 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
                  such  subscription  price is  satisfied in whole or in part by
                  consideration  in a form  other  than  cash the  value of such
                  consideration  shall  be as  determined  in good  faith by the
                  Board of Directors whose determination shall be described in a
                  statement  filed with the Rights Agent and shall be binding on
                  the Rights Agent and the holders of Rights.

                  Such  adjustment  shall be made  successively  whenever such a
                  record date is fixed.  For purposes of this paragraph (b), the
                  granting of the right to purchase  Common  Shares  pursuant to
                  any dividend or interest  reinvestment  plan and/or any Common
                  Share  purchase  plan  providing  for  the   reinvestment   of
                  dividends or interest payable on securities of the Corporation
                  and/or the  investment of periodic  optional  payments  and/or
                  employee  benefit or  similar  plans (so long as such right to
                  purchase is in no case  evidenced by the delivery of rights or
                  warrants) shall not be deemed to constitute an issue of rights
                  or warrants by the Corporation; provided, however, that in the
                  case of any dividend or interest  reinvestment plan, the right
                  to purchase  Common Shares is at a price per share of not less
                  than 90% of the current market price per share  (determined as
                  provided in such plans) of the Common Shares.

         (c)      In the  event  the  Corporation  shall at any time  after  the
                  Amendment Date and prior to the  Expiration  Time fix a record
                  date for the making of a distribution to all holders of Common
                  Shares of evidences of  indebtedness  or assets  (other than a
                  regular  periodic  cash  dividend or a dividend paid in Common
                  Shares) or rights or warrants  entitling them to subscribe for
                  or  purchase  Common  Shares  (or  Convertible  Securities  in
                  respect of Common  Shares) at a price per Common Share (or, in
                  the case of a Convertible Security in respect of Common Shares
                  having a conversion or exercise price per share (including the
                  price  required  to  be  paid  to  purchase  such  Convertible
                  Security)  less than 90% of the Market  Price per Common Share

<PAGE>
                                      -17-


                  on such record date (excluding those referred to in subsection
                  2.3(b)),  the  Exercise  Price shall be adjusted in the manner
                  set forth  below.  The  Exercise  Price in effect  after  such
                  record  date  shall  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 Corporation) of the portion of the assets, evidences of
                  indebtedness,   rights  or  warrants  so  to  be   distributed
                  applicable to each of the securities purchasable upon exercise
                  of  one  Right  (such  determination  to  be  described  in  a
                  statement  filed with the Rights Agent shall be binding on the
                  Rights Agent and the holders of the Rights).  Such  adjustment
                  shall be made  successively  whenever  such a  record  date is
                  fixed.

         (d)      Each  adjustment  made  pursuant to this  Section 2.3 shall be
                  made as of:

                  (i)      the  payment  or  effective  date for the  applicable
                           dividend,   subdivision,   change,   combination   or
                           issuance,  in the case of an adjustment made pursuant
                           to paragraph (a) above; and

                  (ii)     the  record  date  for  the  applicable  dividend  or
                           distribution,  in  the  case  of an  adjustment  made
                           pursuant to paragraph (b) or (c) above,

                  subject  to   readjustment   to  reverse   the  same  if  such
                  distribution shall not be made.

         (e)      In the  event  the  Corporation  shall at any time  after  the
                  Amendment  Date and  prior to the  Expiration  Time  issue any
                  shares of capital stock (other than Common Shares),  or rights
                  or warrants to  subscribe  for or  purchase  any such  capital
                  stock, or securities  convertible into or exchangeable for any
                  such capital  stock,  in a  transaction  referred to in clause
                  (a)(i) or (a)(iv) above, or if the Corporation  shall take any
                  other  action  (other than the issue of Common  Shares)  which
                  might have a negative effect on the holders of Rights,  if the
                  Board of Directors  acting in good faith  determines  that the
                  adjustments  contemplated by paragraphs (a), (b) and (c) above
                  are not  applicable  or will  not  appropriately  protect  the
                  interests  of the  holders  of  Rights,  the  Corporation  may
                  determine what other adjustments to the Exercise Price, number
                  of Rights  and/or  securities  purchasable  upon  exercise  of
                  Rights   would  be   appropriate   and,  if  the   adjustments
                  contemplated   by  paragraphs  (a),  (b)  and  (c)  above  are
                  applicable,  notwithstanding such paragraphs,  the adjustments
                  so  determined  by the  Corporation,  rather than  adjustments
                  contemplated  by paragraphs  (a), (b) and (c) above,  shall be
                  made.  The  Corporation  and the Rights Agent shall amend this
                  Agreement in accordance with subsections 5.4(b) and 5.4(c), as
                  the case may be, to provide for such adjustments.

         (f)      Each  adjustment  to the Exercise  Price made pursuant to this
                  Section 2.3 shall be calculated to the nearest cent.  Whenever
                  an adjustment  to the Exercise  Price is made pursuant to this
                  Section 2.3, the Corporation shall:

                  (i)      promptly  prepare a  certificate  setting  forth such
                           adjustment  and  a  brief   statement  of  the  facts
                           accounting for such adjustment; and

                  (ii)     promptly  file  with the  Rights  Agent and with each
                           transfer  agent for the Common  Shares a copy of such
                           certificate  and mail a brief summary thereof to each
                           holder of Rights who requests a copy.

                  Failure to file such  certificate  or cause such summary to be
                  mailed as aforesaid,  or any defect therein,  shall not affect
                  the validity of any such adjustment or change.

         (g)      Subject to Section  5.3,  irrespective  of any  adjustment  or
                  change in the  securities  purchasable  upon  exercise  of the
                  Rights,  the Rights  Certificates  theretofore  and thereafter
                  issued may continue to express the  securities so  purchasable
                  which were expressed in the initial Rights Certificates issued
                  hereunder.

<PAGE>
                                      -18-


2.4      DATE ON WHICH EXERCISE IS EFFECTIVE

         Each person in whose name any  certificate  for Common Shares is issued
upon the  exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Common Shares represented  thereby, and such certificate
shall 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 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 Common Share transfer books of the  Corporation
are closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Common Share transfer books of the Corporation are open.

2.5      EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES

         (a)      The Rights  Certificates  shall be  executed  on behalf of the
                  Corporation  by any  one of its  Chairman  of the  Board,  the
                  President,  the Chief Executive  Officer,  the Chief Financial
                  Officer,  any Vice  President,  the  Treasurer,  any Assistant
                  Treasurer,  the  Secretary or any  Assistant  Secretary of the
                  Corporation.  The  signature  of any of these  officers on the
                  Rights  Certificates  may  be  manual  or  facsimile.   Rights
                  Certificates  bearing the manual or  facsimile  signatures  of
                  individuals  who were at any time the proper  officers  of the
                  Corporation shall bind the Corporation,  notwithstanding  that
                  such  individuals  or any of them  have  ceased  to hold  such
                  offices  prior to the  countersignature  and  delivery of such
                  Rights Certificates.  Promptly after the Corporation learns of
                  the Separation  Time, the  Corporation  will notify the Rights
                  Agent  of  such   Separation  Time  and  will  deliver  Rights
                  Certificates  executed by the  Corporation to the Rights Agent
                  for  countersignature,  and the Rights Agent shall countersign
                  (manually or by facsimile  signature in a manner  satisfactory
                  to the Corporation)  and mail such Rights  Certificates to the
                  holders of the Rights pursuant to subsection 2.2(c) hereof. No
                  Rights  Certificate  shall  be  valid  for any  purpose  until
                  countersigned by the Rights Agent as aforesaid.

         (b)      Each   Rights   Certificate   shall  be  dated   the  date  of
                  countersignature thereof.

2.6      REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE

         (a)      The Corporation  will cause to be kept a register (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  "Rights   Registrar"  for  the  purpose  of
                  maintaining  the  Rights  Register  for  the  Corporation  and
                  registering Rights and transfers of Rights as herein provided.
                  In the  event  that the  Rights  Agent  shall  cease to be the
                  Rights  Registrar,  the  Rights  Agent  will have the right to
                  examine the Rights Register at all reasonable times.

         (b)      After the Separation  Time and prior to the  Expiration  Time,
                  upon surrender for registration of transfer or exchange of any
                  Rights   Certificate,   and  subject  to  the   provisions  of
                  subsection  2.6(d) below, the Corporation  shall execute,  and
                  the Rights Agent shall 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.

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

         (d)      Every  Rights  Certificate  surrendered  for  registration  of
                  transfer or exchange shall 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

<PAGE>
                                      -19-


                  new Rights Certificate under this Section 2.6, 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.

2.7      MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES

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

         (b)      If there shall be delivered to the  Corporation and the Rights
                  Agent prior to the  Expiration  Time (i) evidence of ownership
                  of any Rights Certificate, (ii) evidence to their satisfaction
                  of the  destruction,  loss or theft of any Rights  Certificate
                  and (iii) such  security  or  indemnity  as may be required by
                  each of them in their sole discretion to save each of them and
                  any of their agents  harmless,  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  shall  execute  and upon its  request  the Rights
                  Agent  shall  countersign  and  deliver,  in lieu of any  such
                  destroyed,  lost or 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  2.7,  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) connected therewith.

         (d)      Every new Rights  Certificate  issued pursuant to this Section
                  2.7  in  lieu  of  any   destroyed,   lost  or  stolen  Rights
                  Certificate shall evidence an original additional  contractual
                  obligation of the  Corporation,  whether or not the destroyed,
                  lost  or  stolen  Rights  Certificate  shall  be at  any  time
                  enforceable  by  anyone,  and  shall  be  entitled  to all the
                  benefits of this Agreement  equally and  proportionately  with
                  any and all other Rights, duly issued hereunder.

2.8      PERSONS DEEMED OWNERS

         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 whatsoever.

2.9      DELIVERY AND CANCELLATION OF CERTIFICATES

         All Rights  Certificates  surrendered  upon exercise or for redemption,
registration  of transfer or exchange  shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case,  shall
be promptly  cancelled  by the Rights  Agent.  The  Corporation  may at any time
deliver 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  shall be
promptly  cancelled  by  the  Rights  Agent.  No  Rights  Certificate  shall  be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9,  except as expressly  permitted by this Agreement.
The Rights Agent shall,  subject to applicable law, destroy all cancelled Rights
Certificates and deliver a certificate of destruction to the Corporation.

2.10     AGREEMENT OF RIGHTS HOLDERS

         Every holder of Rights by accepting  the same  consents and agrees with
the Corporation and the Rights Agent and with every other holder of Rights:

<PAGE>
                                      -20-


         (a)      to  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 all Rights held;

         (b)      that,  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;

         (c)      that, after the Separation Time, the Rights  Certificates will
                  be  transferable  only  on the  Rights  Register  as  provided
                  herein.

         (d)      that 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
                  (notwithstanding 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  whatsoever,  and neither the Corporation nor
                  the  Rights  Agent  shall be  affected  by any  notice  to the
                  contrary;

         (e)      that such holder of Rights has waived his right to receive any
                  fractional  Rights or any fractional shares upon exercise of a
                  Right (except as provided herein);

         (f)      that,  subject to the  provisions of Section 5.4,  without the
                  approval of any holder of Rights or Common Shares and upon the
                  sole authority of the Board of Directors  acting in good faith
                  this  Agreement  may be  supplemented  or amended from time to
                  time as provided herein; and

         (g)      that,  notwithstanding  anything  in  this  Agreement  to  the
                  contrary,  neither the  Corporation nor the Rights Agent shall
                  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  promulgated or enacted by any  governmental  authority,
                  prohibiting  or  otherwise  restraining  performance  of  such
                  obligation.


                                   ARTICLE 3
         ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS

3.1      FLIP-IN EVENT

         (a)      Subject to  subsections  3.1(b),  5.1(b),  5.1(c) and  5.1(d),
                  hereof,  in the  event  that  prior to the  Expiration  Time a
                  Flip-in  Event shall occur,  the  Corporation  shall take such
                  action as shall be necessary to ensure and provide,  within 10
                  Business  Days  thereafter  or such  longer  period  as may be
                  required  to  satisfy  the   requirements  of  the  applicable
                  securities acts or comparable  legislation so that,  except as
                  provided  below,  each Right shall  thereafter  constitute the
                  right to purchase from the Corporation,  upon exercise thereof
                  in  accordance  with the terms  hereof,  that number of Common
                  Shares of the Corporation  having an aggregate Market Price on
                  the date of  consummation  or 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  adjustment
                  provided  for in Section 2.3 in the event that after such date
                  of  consummation or occurrence an event of a type analogous to
                  any of the events described in Section 2.3 shall have occurred
                  with respect to such Common Shares).

         (b)      Notwithstanding  the foregoing or any other provisions of this
                  Agreement,  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 or the Stock  Acquisition  Date
                  by:

<PAGE>
                                      -21-


                  (i)      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); or

                  (ii)     a  transferee,  direct or  indirect,  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) in a transfer made
                           after   the   date   hereof,   whether   or  not  for
                           consideration,  that the Board of Directors acting in
                           good  faith  has   determined  is  part  of  a  plan,
                           arrangement or scheme of an Acquiring Person, (or any
                           Affiliate or  Associate of an Acquiring  Person) that
                           has the purpose or effect of  avoiding  clause (i) of
                           this subsection 3.1(b),

                  shall  become  void and any holder of such  Rights  (including
                  transferees)  shall thereafter have no right, to exercise such
                  Rights  under any  provision of this  Agreement  and shall not
                  have any other  rights  whatsoever  in respect of such Rights,
                  whether under any provision of this Agreement or otherwise.

         (c)      Any Rights  Certificate  that represents  Rights  Beneficially
                  Owned by a Person  described in either  clauses (i) or (ii) of
                  subsection  3.1(b) or  transferred  to any nominee of any such
                  Person,  and any  Rights  Certificate  issued  upon  transfer,
                  exchange,  replacement  or  adjustment  of  any  other  Rights
                  Certificate  referred to in this  sentence,  shall contain the
                  following legend:

                           "The  Rights  represented  by  this  Rights
                           Certificate  were  Beneficially  Owned by a
                           Person who was an  Acquiring  Person or who
                           was  an  Affiliate  or an  Associate  of an
                           Acquiring Person (as such terms are defined
                           in the  Rights  Agreement)  or  was  acting
                           jointly  or in  concert  with  any of them.
                           This  Rights  Certificate  and  the  Rights
                           represented hereby shall become void in the
                           circumstances   specified   in   subsection
                           3.1(b) of the Rights Agreement.",

                  provided  that  the  Rights  Agent  shall  not  be  under  any
                  responsibility  to ascertain the existence of facts that would
                  require the imposition of such legend but shall be required to
                  impose  such  legend  only  if  instructed  to do  so  by  the
                  Corporation  or if a holder fails to certify upon  transfer or
                  exchange in the space provided on the Rights  Certificate that
                  such  holder  is not an  Acquiring  Person,  an  Affiliate  or
                  Associate  thereof  or a Person  acting  jointly or in concert
                  with any of them.


                                   ARTICLE 4
                                THE RIGHTS AGENT

4.1      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  such  co-Rights  Agents  (the
                  "CO-RIGHTS  AGENTS") as it may deem  necessary  or  desirable,
                  subject to the consent of the Rights Agent, acting reasonably.
                  In the event the  Corporation  appoints one or more  Co-Rights
                  Agents,   the  respective  duties  of  the  Rights  Agent  and
                  Co-Rights  Agents shall be as the  Corporation  may  determine
                  with the approval of the Rights Agent and Co-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
                  reasonably  incurred in the  execution and  administration  of
                  this Agreement and the exercise and  performance of its duties
                  hereunder   (including   the   reasonable   fees   and   other
                  disbursements  of any expert retained by the Rights Agent with
                  the  approval  of the  Corporation,  such  approval  not to be
                  unreasonably   withheld).   The  Corporation  also  agrees  to
                  indemnify the Rights Agent, its directors, officers, employees
                  and agents for, and to hold them harmless  against,  any loss,
                  liability,  cost, claim, action,  damage or expense,  incurred
                  without negligence, bad faith or wilful misconduct on the part

<PAGE>
                                      -22-


                  of the Rights Agent or its directors,  officers, employees and
                  agents for  anything  done,  suffered or omitted by the Rights
                  Agent  in  connection  with  the  acceptance,   execution  and
                  administration   of  this   Agreement  and  the  exercise  and
                  performance of its duties  hereunder,  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 removal of the Rights Agent.

         (b)      The  Rights  Agent  shall  be  protected  and  shall  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.

         (c)      The Corporation shall inform the Rights Agent, in a reasonably
                  timely  manner,  of events  which may  materially  affect  the
                  administration  of this Agreement by the Rights Agent.  At any
                  time,  upon  request,  the  Corporation  shall  provide to the
                  Rights  Agent an  incumbency  certificate  with respect to the
                  current directors and officers of the Corporation.

4.2      MERGER, AMALGAMATION OR CONSOLIDATION 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  hereto,  provided  that  such
                  corporation  would be eligible for  appointment as a successor
                  Rights Agent under the  provisions  of Section 4.4 hereof.  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; 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 shall 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 shall not have 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 shall have the
                  full force provided in the Rights Certificates and in this
                  Agreement.

4.3      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,
shall 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  (such

<PAGE>
                                      -23-


                  approval not to be  unreasonably  withheld) and at the expense
                  of the  Corporation,  consult  with such other  experts as the
                  Rights  Agent  shall  consider  necessary  or  appropriate  to
                  properly  carry out the duties and  obligations  imposed under
                  this  Agreement  and the Rights Agent shall be entitled to act
                  and 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  be  herein
                  specifically  prescribed)  may be  deemed  to be  conclusively
                  proved and  established  by a  certificate  signed by a person
                  believed by the Rights  Agent to be the Chairman of the Board,
                  the  President,   the  Chief  Executive  Officer,   the  Chief
                  Financial  Officer,  any Vice  President,  the Treasurer,  any
                  Assistant Treasurer,  the Secretary or any Assistant Secretary
                  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.

         (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  3.1(b) hereof) or
                  any  adjustment  required  under the provisions of Section 2.3
                  hereof 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 2.3 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 Common  Shares will,  when issued,
                  be duly and validly authorized, executed, issued and delivered
                  and fully paid and non-assessable.

         (f)      The  Corporation   agrees  that  it  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  believed by the Rights Agent to be
                  the Chairman of the Board, the President,  the Chief Executive
                  Officer, the Chief Financial Officer, any Vice President,  the
                  Secretary or any  Assistant  Secretary or the Treasurer or any
                  Assistant  Treasurer of the Corporation,  and to apply to such
                  persons  for advice or  instructions  in  connection  with its
                  duties,  and it shall not be liable  for any  action  taken or
                  suffered by it in good faith in reliance upon  instructions of
                  any such person;  it is understood  that  instructions  to the
                  Rights  Agent  shall,   except  where  circumstances  make  it
                  impracticable or the Rights Agent otherwise  agrees,  be given
                  in writing and, where not in writing,  such instructions shall
                  be confirmed in writing as soon as reasonably  possible  after
                  the giving of such instructions.

<PAGE>
                                      -24-


         (h)      The Rights Agent and any shareholder or stockholder, 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  Rights  Agent
                  under this Agreement. Nothing herein shall preclude the Rights
                  Agent from acting in any other capacity for the Corporation or
                  for any other legal entity.

         (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,  omission,  default,  neglect or  misconduct  of any such
                  attorneys  or  agents  or for  any  loss  to  the  Corporation
                  resulting  from any such act,  omission,  default,  neglect or
                  misconduct,  provided  reasonable  care was  exercised  in the
                  selection and continued employment thereof.

4.4      CHANGE OF RIGHTS AGENT

         The Rights  Agent may resign and be  discharged  from its duties  under
this  Agreement  upon 60 days' notice (or such lesser notice as is acceptable to
the Corporation) in writing mailed to the Corporation and to each transfer agent
of Common  Shares by  registered  or certified  mail,  and to the holders of the
Rights in  accordance  with Section 5.9. The  Corporation  may remove the Rights
Agent  upon 30 days'  notice in writing  given to the  Rights  Agent and to each
transfer  agent of the Common  Shares (by personal  delivery,  or  registered or
certified  mail).  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,  then
the resigning Rights Agent, at the expense of the Corporation,  or any 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,  shall 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 Alberta.  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 shall, upon the receipt of
all outstanding fees and expenses,  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  4.4,
however, or any defect therein, shall 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 5
                                  MISCELLANEOUS

5.1      REDEMPTION AND TERMINATION

         (a)      The Board of  Directors  acting in good  faith  may,  with the
                  prior consent of holders of Common Shares or of the holders of
                  Rights given in accordance with  subsection  5.1(f) or 5.1(g),
                  as the case may be, at any time prior to the  occurrence  of a
                  Flip-in Event as to which the  application  of Section 3.1 has
                  not been waived  pursuant to the  provisions  of this  Section
                  5.1,  elect to  redeem  all but not less  than all of the then
                  outstanding  Rights at a  redemption  price of  $0.000001  per
                  Right  appropriately  adjusted  in a manner  analogous  to the
                  applicable adjustment provided for in Section 2.3 in the event
                  that an  event  of the  type  analogous  to any of the  events
                  described in Section 2.3 shall have occurred (such  redemption
                  price being herein referred to as the "REDEMPTION PRICE").

         (b)      The Board of  Directors  acting in good  faith  may,  with the
                  prior  consent  of the  holders  of  Common  Shares  given  in
                  accordance  with  subsection  5.1(f),  determine,  at any time
                  prior to the  occurrence  of a  Flip-in  Event as to which the
                  application  of Section  3.1 has not been  waived  pursuant to
                  this Section 5.1, if such Flip-in  Event would occur by reason

<PAGE>
                                      -25-


                  of an acquisition of Common Shares  otherwise than pursuant to
                  a Take-over  Bid made by means of a Take-over  Bid circular to
                  all holders of record of Common Shares and  otherwise  than in
                  the circumstances set forth in subsection 5.1(d), to waive the
                  application of Section 3.1 to such Flip-in Event. In the event
                  that the Board of Directors  proposes such a waiver, the Board
                  of  Directors  shall  extend  the  Separation  Time  to a date
                  subsequent  to and not more than ten Business  Days  following
                  the meeting of shareholders called to approve such waiver.

         (c)      The Board of Directors  acting in good faith may, prior to the
                  occurrence of a Flip-in Event as to which the  application  of
                  Section 3.1 has not been waived under this clause,  determine,
                  upon prior written  notice to the Rights  Agent,  to waive the
                  application of Section 3.1 to that Flip-in Event provided that
                  the Flip-in  Event  would  occur by reason of a Take-over  Bid
                  made by means of a Take-over  Bid circular sent to all holders
                  of record of Common Shares; further provided that if the Board
                  waives the application of Section 3.1 to such a Flip-in Event,
                  the Board of  Directors  shall be deemed  to have  waived  the
                  application   of  Section  3.1  to  any  other  Flip-in  Event
                  occurring  by reason of any  Take-over  Bid made by means of a
                  Take-over  Bid  circular  to all  holders  of record of Common
                  Shares which is made prior to the expiry of any  Take-over Bid
                  in  respect  of which a waiver  is, or is deemed to have been,
                  granted under this subsection 5.1(c).

         (d)      The Board of Directors acting in good faith may, in respect of
                  any Flip-in Event waive the application of Section 3.1 to that
                  Flip-in Event,  provided that both of the following conditions
                  are satisfied:

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

                  (ii)     such  Acquiring  Person has  reduced  its  Beneficial
                           Ownership  of Common  Shares such that at the time of
                           waiver  pursuant to this  subsection  5.1(d) it is no
                           longer an Acquiring Person.

         (e)      Where,  pursuant to a Permitted Bid, a Competing Permitted Bid
                  or a Take-over  Bid in respect of which the Board of Directors
                  has  waived,  or  is  deemed  to  have  waived,   pursuant  to
                  subsection  5.1(c),  the  application of Section 3.1, a Person
                  acquires   outstanding  Common  Shares,   then  the  Board  of
                  Directors  shall  immediately  upon the  consummation  of such
                  acquisition without further formality and without any approval
                  under  subsections  5.4(b) or (c) be deemed to have elected to
                  redeem the Rights at the Redemption Price.

         (f)      If a redemption of Rights  pursuant to subsection  5.1(a) or a
                  waiver of a Flip-in  Event  pursuant to  subsection  5.1(b) is
                  proposed  at any  time  prior  to the  Separation  Time,  such
                  redemption  or waiver shall be  submitted  for approval to the
                  holders of Common  Shares.  Such  approval  shall be deemed to
                  have been given if the redemption or waiver is approved by the
                  affirmative   vote  of  a  majority   of  the  votes  cast  by
                  Independent  Shareholders represented in person or by proxy at
                  a  meeting  of  such  holders  duly  held in  accordance  with
                  applicable laws and the Corporation's by-laws.

         (g)      If a redemption  of Rights  pursuant to  subsection  5.1(a) is
                  proposed  at  any  time  after  the  Separation   Time,   such
                  redemption  shall be submitted  for approval to the holders of
                  Rights.  Such  approval  shall be deemed to have been given if
                  the  redemption is approved by holders of Rights by a majority
                  of the votes  cast by the  holders  of Rights  represented  in
                  person or by proxy at and  entitled  to vote at a  meeting  of
                  such holders.  For the purposes hereof, each outstanding Right
                  (other than Rights which are Beneficially  Owned by any Person
                  referred to in clauses (i) to (v) inclusive of the  definition
                  of  Independent  Shareholders)  shall be entitled to one vote,
                  and the procedures for the calling, holding and conduct of the
                  meeting  shall  be  those,  as  nearly  as may be,  which  are
                  provided  in  the  Corporation's   by-laws  and  the  BUSINESS
                  CORPORATIONS  ACT with respect to meetings of  shareholders of
                  the Corporation.

<PAGE>
                                      -26-


         (h)      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 may
                  elect to redeem all the  outstanding  Rights at the Redemption
                  Price.  Notwithstanding such redemption, all of the provisions
                  of this Agreement shall continue to apply as if the Separation
                  Time  had not  occurred  and it shall  be  deemed  not to have
                  occurred and Rights shall remain  attached to the  outstanding
                  Common  Shares,   subject  to  and  in  accordance   with  the
                  provisions of this Agreement.

         (i)      If the Board of Directors  elects or is deemed to have elected
                  to redeem the Rights,  and, in circumstances  where subsection
                  5.1(a) is  applicable,  such  redemption  is  approved  by the
                  holders  of  Common   Shares  or  the  holders  of  Rights  in
                  accordance with subsection  5.1(f) or (g), as the case may be,
                  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.

         (j)      Within 10 Business Days of the Board of Directors  electing or
                  having been deemed to have elected to redeem the Rights or, if
                  subsection  5.1(a) is applicable within 10 Business Days after
                  the  holders of Common  Shares or the  holders of Rights  have
                  approved a redemption of Rights in accordance  with subsection
                  5.1(f) or 5.1(g),  as the case may be, the  Corporation  shall
                  give  notice  of   redemption  to  the  holders  of  the  then
                  outstanding  Rights by mailing such notice to each such holder
                  at its last  address as it appears  upon the  register  of the
                  Rights Agent or, prior to the Separation Time, on the register
                  of the transfer agent 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.  Each such
                  notice  of  redemption  will  state  the  method  by which the
                  payment of the Redemption  Price will be made. 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  5.1 or in  connection  with the  purchase of
                  Common Shares prior to the Separation Time.

         (k)      The Corporation shall give prompt written notice to the Rights
                  Agent of any waiver of the  application of Section 3.1 made by
                  the Board of Directors under this Section 5.1.

5.2      EXPIRATION

         No Person  shall  have any  rights  pursuant  to this  Agreement  or in
respect of any Right  after the  Expiration  Time,  except  the Rights  Agent as
specified in subsection 4.1(a) of this Agreement.

5.3      ISSUANCE OF NEW RIGHTS CERTIFICATES

         Notwithstanding  any of the  provisions  of  this  Agreement  or of the
Rights to the contrary,  the  Corporation  may, at its option,  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 of or kind or class
of shares  purchasable  upon  exercise  of Rights  made in  accordance  with the
provisions of this Agreement.

5.4      SUPPLEMENTS AND AMENDMENTS

         (a)      The  Corporation  may make  amendments  to this  Agreement  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 thereunder. The Corporation may, prior to the date
                  of the  shareholders'  meeting  referred  to in Section  5.18,
                  supplement,   amend,  vary,  rescind  or  delete  any  of  the
                  provisions  of this  Agreement  without  the  approval  of any
                  holders of Rights or Common Shares (whether or not such action
                  would materially adversely affect the interests of the holders
                  of Rights  generally)  where the Board of Directors  acting in
                  good  faith  deems  such  action   necessary   or   desirable.
                  Notwithstanding  anything in this Section 5.4 to the contrary,
                  no  such   supplement  or  amendment  shall  be  made  to  the
                  provisions of Article 4 except with the written concurrence of
                  the Rights Agents to such supplement or amendment.

<PAGE>
                                      -27-


         (b)      Subject to subsection  5.4(a),  the Corporation  may, with the
                  prior consent of the holders of Common Shares, obtained as set
                  forth  below,  at  any  time  prior  to the  Separation  Time,
                  supplement,   amend,  vary,  rescind  or  delete  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 shall 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 be voted at a meeting  of the  holders  of Common
                  Shares duly called and held in compliance with applicable laws
                  and the articles and by-laws of the Corporation.

         (c)      The Corporation  may, with the prior consent of the holders of
                  Rights,   at  any  time  on  or  after  the  Separation  Time,
                  supplement,   amend,  vary,  rescind  or  delete  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
                  amendment,   variation  or  deletion  shall  be  made  to  the
                  provisions of Article 4 except with the written concurrence of
                  the Rights Agent thereto. Such consent shall be deemed to have
                  been  given  if  such  amendment,  variation  or  deletion  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  held in  accordance  with  subsection
                  5.4(d)  and  representing  50% plus one of the  votes  cast in
                  respect thereof.

         (d)      Any  approval of the holders of Rights shall 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) shall be entitled to one vote, and
                  the  procedures  for the  calling,  holding and conduct of the
                  meeting  shall  be  those,  as  nearly  as may be,  which  are
                  provided  in  the  Corporation's   by-laws  and  the  BUSINESS
                  CORPORATIONS  ACT with respect to meetings of  shareholders of
                  the Corporation.

         (e)      Any  amendments  made by the  Corporation  to  this  Agreement
                  pursuant to  subsection  5.4(a) which are required to maintain
                  the  validity of this  Agreement  as a result of any change in
                  any  applicable  legislation,  rules or regulation  thereunder
                  shall:

                  (i)      if made before the  Separation  Time, be submitted to
                           the  shareholders  of the  Corporation  at  the  next
                           meeting of shareholders and the shareholders  may, by
                           the  majority  referred  to  in  subsection   5.4(b),
                           confirm or reject such amendment;

                  (ii)     if made after the  Separation  Time,  be submitted to
                           the  holders  of Rights at a meeting to be called for
                           on a date not later than  immediately  following  the
                           next meeting of  shareholders  of the Corporation and
                           the holders of Rights may,  by  resolution  passed by
                           the  majority  referred  to  in  subsection   5.4(d),
                           confirm or reject such amendment.

                  Any such  amendment  shall 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  shareholders
                  or  the  holders  of  Rights  or  is  not   submitted  to  the
                  shareholders  or  holders  of  Rights as  required,  then such
                  amendment  shall  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  resolution of
                  the  Board  of   Directors   to  amend   this   Agreement   to
                  substantially   the  same  effect  shall  be  effective  until
                  confirmed by the shareholders or holders of Rights as the case
                  may be.

         (f)      The Corporation  shall be required to provide the Rights Agent
                  with  notice in writing of any such  amendment,  recission  or
                  variation to this Agreement as referred to in this Section 5.4
                  within five days of  effecting  such  amendment,  recission or
                  variation.

<PAGE>
                                      -28-


         (g)      Any  supplement  or  amendment to this  Agreement  pursuant to
                  subsection  5.4(b)  through  5.4(e)  shall be  subject  to the
                  receipt  of  any  requisite   approval  or  consent  from  any
                  governmental or regulatory  authority having jurisdiction over
                  the Corporation,  including  without  limitation any requisite
                  approval  of stock  exchanges  on which the Common  Shares are
                  listed.

5.5      FRACTIONAL RIGHTS AND FRACTIONAL SHARES

         (a)      The  Corporation  shall not be required to issue  fractions of
                  Rights or to distribute  Rights  Certificates  which  evidence
                  fractional  Rights.  After the Separation  Time there shall be
                  paid to the registered holders of the Rights Certificates with
                  regard to which fractional Rights would otherwise be issuable,
                  an amount in cash  equal to the same  fraction  of the  Market
                  Price of a whole Right in lieu of such fractional Rights as of
                  the date such  fractional  Rights would otherwise be issuable.
                  The Rights Agent shall have no obligation to make any payments
                  in lieu of fractional Rights unless the Corporation shall have
                  provided the Rights Agent with the  necessary  funds to pay in
                  full all amounts payable in accordance with subsection 2.2(e).

         (b)      The  Corporation  shall not be  required  to issue  fractional
                  Common  Shares upon  exercise  of the Rights or to  distribute
                  certificates which evidence  fractional Common Shares. In lieu
                  of issuing fractional Common Shares, the Corporation shall pay
                  to the registered  holder of Rights  Certificates  at the time
                  such Rights are  exercised  as herein  provided,  an amount in
                  cash equal to the same  fraction  of the  Market  Price of one
                  Common  Share at the date of such  exercise.  The Rights Agent
                  shall  have no  obligation  to make  any  payments  in lieu of
                  fractional  Common  Shares unless the  Corporation  shall have
                  provided the Rights Agent with the  necessary  funds to pay in
                  full all amounts payable in accordance with subsection 2.2(e).

5.6      RIGHTS OF ACTION

         Subject to the terms of this Agreement,  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,  may, on such  holder's own behalf and for such holder's own benefit and
the benefit of other holders of Rights,  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,  or
Rights to which he is entitled,  in the manner provided in this Agreement and in
such holder's Rights Certificate. 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.

5.7      HOLDER OF RIGHTS NOT DEEMED A SHAREHOLDER

         No holder,  as such,  of any Rights shall be entitled to vote,  receive
dividends or be deemed for any purpose the holder of Common  Shares or any other
securities  which may at any time be  issuable on the  exercise  of Rights,  nor
shall  anything  contained  herein or in any Rights  Certificate be construed to
confer  upon  the  holder  of any  Rights,  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 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 (except as provided in Section
5.8 hereof), or to receive dividends or subscription rights or otherwise,  until
such  Rights,  or  Rights to which  such  holder is  entitled,  shall  have been
exercised in accordance with the provisions hereof.

5.8      NOTICE OF PROPOSED ACTIONS

         In case the  Corporation  shall propose after the  Separation  Time and
prior to the Expiration Time:

         (a)      to  effect  or  permit  (in  cases  where  the   Corporation's
                  permission is required) any Flip-in Event; or


<PAGE>
                                      -29-


         (b)      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  shall give to each holder of a Right,
in accordance with Section 5.9 hereof, a notice of such proposed  action,  which
shall specify the date on which such Flip-in Event, liquidation, dissolution, or
winding  up is to take  place,  and  such  notice  shall be so given at least 10
Business  Days  prior to the  date of  taking  of such  proposed  action  by the
Corporation.

5.9      NOTICES

         Notices  or  demands  to be  given  or made  in  connection  with  this
Agreement  by the  Rights  Agent or by the  holder  of any  Rights  to or on the
Corporation  shall be  sufficiently  given or made if delivered or sent by mail,
postage  prepaid or by fax (with,  in the case of fax, an  original  copy of the
notice or demand sent by first class mail,  postage prepaid,  to the Corporation
following the giving of the notice or demand by fax),  addressed  (until another
address is filed in writing with the Rights Agent) as follows:

                  Nexen Inc.
                  801 - 7th Avenue S.W.
                  Calgary, Alberta
                  T2P 3P7
                  Attention:    Senior Vice-President,
                                General Counsel and Secretary
                  Fax:          (403) 699-5743

Notices or demands to be given or made in connection  with this Agreement by the
Corporation  or by the holder of any Rights to or on the Rights  Agent  shall be
sufficiently given or made if delivered or sent by mail, postage prepaid,  or by
fax (with,  in the case of fax, an original copy of the notice or demand sent by
first class mail,  postage prepaid,  to the Rights Agent following the giving of
the  notice or demand by fax),  addressed  (until  another  address  is filed in
writing with the Corporation) as follows:

                  CIBC Mellon Trust Company
                  600, 333 - 7th Avenue S.W.
                  Calgary, Alberta
                  T2P 2Z1
                  Attention:    Manager, Client Services
                  Fax:          (403) 264-2100

Notices or demands to be given or made in connection  with this Agreement by the
Corporation  or the  Rights  Agent to or on the  holder of any  Rights  shall be
sufficiently  given or made if  delivered  or sent by first class mail,  postage
prepaid,  or by fax (with, in the case of fax, an original copy of the notice or
demand sent by first class mail,  postage prepaid,  to such holder following the
giving of the notice or demand by fax),  addressed to such holder at the address
of such holder as it appears  upon the register of the Rights Agent or, prior to
the Separation Time, on the register of the Corporation for the Common Shares.

Any notice given or made in accordance  with this Section 5.9 shall be deemed to
have  been  given  and to  have  been  received  on the day of  delivery,  if so
delivered,  on the third  Business  Day  (excluding  each day during which there
exists any general  interruption  of postal  service  due to strike,  lockout or
other cause)  following  the mailing  thereof,  if so mailed,  and on the day of
faxing  (provided  such  sending  is during  the  normal  business  hours of the
addressee on a Business Day and if not, on the first  Business Day  thereafter).
Each of the  Corporation  and the Rights  Agent may from time to time change its
address for notice by notice to the other given in the manner aforesaid.

If mail  service  is or is  threatened  to be  interrupted  at a time  when  the
Corporation  or the Rights Agent wishes to give a notice or demand  hereunder to
or on the  holders of the  Rights,  the  Corporation  or the  Rights  Agent may,
notwithstanding  the foregoing  provisions of this Section 5.9, give such notice
by means,  of publication  once in each of two successive  weeks in the business
section of the  Financial  Post and, so long as the  Corporation  has a transfer
agent  in the  United  States,  in a  daily  publication  in the  United  States

<PAGE>
                                      -30-


designated by the Corporation,  or in such other  publication or publications as
may be designated by the  Corporation and notice so published shall be deemed to
have been given on the date on which the first publication of such notice in any
such publication has taken place.

5.10     COSTS OF ENFORCEMENT

         The Corporation  agrees that if the Corporation  fails to fulfil any of
its obligations pursuant to this Agreement,  then the Corporation will reimburse
the holder of any  Rights  for the costs and  expenses  (including  legal  fees)
incurred by such holder in actions to enforce his rights  pursuant to any Rights
or this Agreement.

5.11     SUCCESSORS

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

5.12     BENEFITS OF THIS AGREEMENT

         Nothing  in this  Agreement  shall 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 shall be for the sole and exclusive  benefit of the  Corporation,  the
Rights Agent and the holders of the Rights.

5.13     DESCRIPTIVE HEADINGS

         Descriptive  headings appear herein for convenience  only and shall not
control or affect the meaning or construction of any of the provisions hereof.

5.14     GOVERNING LAW

         This Agreement and each Right issued  hereunder shall be deemed to be a
contract  made under the laws of the  Province of Alberta  and for all  purposes
shall 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.

5.15     LANGUAGE

         Les parties aux  presentes ont exige que la presente  convention  ainsi
que tous les  documents  et avis qui s'y  rattachent  et/ou  qui en  decouleront
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.

5.16     COUNTERPARTS

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

5.17     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  shall  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>
                                      -31-


5.18     EFFECTIVE DATE

         Notwithstanding  its amendment and  restatement  as of the date hereof,
this  Agreement   (subject  to  receipt  of  the  approval  of  the  Independent
Shareholders  as set  forth  below) is  effective  from the  Effective  Date and
replaces and  supersedes the Original Plan. If this Agreement is not approved by
resolution  passed by a majority of the votes cast by  Independent  Shareholders
who vote in respect  of  reconfirmation  of the  Original  Plan as  amended  and
restated  herein at a meeting of shareholders to be held not later than the date
on which the 2005 annual meeting of shareholders of the Corporation  terminates,
then the  Original  Plan and this  Agreement  and all  outstanding  Rights shall
terminate  and be void and of no further  force and effect on and from that date
which is the earlier of (a) the date of  termination  of the  meeting  called to
consider the  confirmation  of the Original Plan as amended and restated  herein
under this  Section  5.18,  and (b) the date of  termination  of the 2005 annual
meeting of shareholders of the Corporation.

5.19     SHAREHOLDER REVIEW

         At  or  prior  to  the  annual  meeting  of  the  shareholders  of  the
Corporation  in 2008,  provided that a Flip-in  Event has not occurred  prior to
such time,  the Board of  Directors  shall  submit a  resolution  ratifying  the
continued existence of this Agreement to the Independent  Shareholders for their
consideration  and, if thought advisable,  approval.  Unless the majority of the
votes cast by Independent  Shareholders  who vote in respect of such  resolution
are voted in favour of the continued  existence of this Agreement,  the Board of
Directors  shall,  immediately  upon the  confirmation  by the  Chairman of such
shareholders' meeting of the results of the votes on such resolution and without
further  formality,  be deemed to elect to redeem the  Rights at the  Redemption
Price.

5.20     REGULATORY APPROVALS

         Any obligation of the  Corporation or action or event  contemplated  by
this  Agreement  shall be subject to the  receipt of any  requisite  approval or
consent from any  governmental  or regulatory  authority.  Without  limiting the
generality  of the  foregoing,  any  issuance  or  delivery  of debt  or  equity
securities (other than  non-convertible debt securities) of the Corporation upon
the exercise of Rights and any amendment or supplement to this  Agreement  shall
be  subject to the prior  consent of the  Toronto  Stock  Exchange  or any other
exchange upon which the Common Shares of the Corporation may be listed.

5.21     DECLARATION AS TO NON-CANADIAN AND NON-U.S. HOLDERS

         If in the  opinion  of the  Board of  Directors  (who may rely upon the
advice of counsel),  any action or event  contemplated  by this Agreement  would
require  compliance  with the  securities  laws or comparable  legislation  of a
jurisdiction  outside Canada and the United States of America,  its  territories
and  possessions,  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 without limitation 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  (but
reserving  to the  Fiduciary or to the  Fiduciary  and the  Corporation,  as the
Corporation may determine,  absolute  discretion  with respect  thereto) and the
sale thereof and remittance of the proceeds of such sale, if any, to the Persons
entitled  thereto.  In no event  shall 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 a province or territory thereof and the United States of America
and any state thereof in which such issue or delivery would be unlawful  without
registration of the relevant Persons or securities for such purposes.

5.22     DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS

         All actions and determinations (including all omissions with respect to
the foregoing) which are done or made by the Board of Directors pursuant to this
Agreement, in good faith, shall not subject any member of the Board of Directors
to any liability whatsoever to the holders of the Rights.

<PAGE>
                                      -32-



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


                                     NEXEN INC.


                                     PER:  /s/ John B. Mcwilliams
                                           ------------------------------------
                                           Name:  John B. McWilliams, Q.C.
                                           Title: Senior Vice President
                                                  General Counsel and Secretary


                                     PER:
                                           ------------------------------------
                                           Name:
                                           Title:


                                     CIBC MELLON TRUST COMPANY



                                     PER:  /s/ Norma Blasetti
                                           ------------------------------------
                                           Name:  Norma Blasetti
                                           Title: Manager, Client Relations


                                     PER:  /s/ Frances Van Der Basch
                                           ------------------------------------
                                           Name:  Frances Van Der Basch
                                           Title: Manager, Client Relations



<PAGE>

                                    EXHIBIT A
                           FORM OF RIGHTS CERTIFICATE

Certificate No. _________                                      __________ Rights

THE RIGHTS ARE SUBJECT TO REDEMPTION,  AT THE OPTION OF THE CORPORATION,  ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. IN CERTAIN CIRCUMSTANCES  (SPECIFIED IN
SUBSECTION  3.1(b) OF THE RIGHTS  AGREEMENT),  RIGHTS  BENEFICIALLY  OWNED BY AN
ACQUIRING  PERSON OR  TRANSFEREE  OF AN ACQUIRING  PERSON OR ITS  AFFILIATES  OR
ASSOCIATES  (AS SUCH TERMS ARE  DEFINED IN THE RIGHTS  AGREEMENT)  OR ANY PERSON
ACTING JOINTLY OR IN CONCERT WITH ANY OF THEM MAY BECOME VOID .

                               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 Amended and Restated  Shareholder  Rights Plan Agreement dated
as  of  April  27,  2005  (amending  and  restating  the  Amended  and  Restated
Shareholder  Rights Plan Agreement  dated May 2, 2002), as such may from time to
time be amended,  restated, varied or replaced, (the "RIGHTS AGREEMENT") between
Nexen   Inc.,   a   corporation   organized   under  the  laws  of  Canada  (the
"CORPORATION"),  and CIBC Mellon Trust  Company,  a trust  company  incorporated
under the laws of Canada, as Rights Agent (the "RIGHTS AGENT"), which term shall
include any successor Rights Agent under the Rights Agreement,  to purchase from
the  Corporation at any time after the Separation  Time (as such term is defined
in the  Rights  Agreement)  and  prior to the  Expiration  Time (as such term is
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 duly  executed to the Rights Agent at its principal  office in the City
of Calgary or in such other cities as may be designated by the Corporation  from
time to time.  Until  adjustment  thereof in certain  events as  provided in the
Rights Agreement, the Exercise Price shall be: (i) until the Separation Time, an
amount  equal to three  times the  Market  Price (as such term is defined in the
Rights Agreement),  from time to time, per Common Share; and (ii) from and after
the Separation  Time, an amount equal to three times the Market Price, as at the
Separation Time, per Common Share.

         In certain circumstances described in the Rights Agreement,  the number
of Common  Shares which each Right  entitles the  registered  holder  thereof to
purchase shall be adjusted as provided in the Rights Agreement.

         This Rights Certificate is subject to all of the terms,  provisions and
conditions of the Rights  Agreement  which terms,  provisions and conditions are
hereby  incorporated  herein by  reference  and made a part  hereof 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 shall be exercised in part,
the  registered  holder  shall be entitled to receive,  upon  surrender  hereof,
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this  Certificate may be redeemed by the Corporation at a redemption price of
$0.000001  per Right,  subject to adjustment  in certain  events,  under certain
circumstances at its option.

         No  fractional  Common  Shares will be issued upon the  exercise of any
Rights  evidenced  hereby,  but in lieu thereof a cash payment will be made,  as
provided in the Rights Agreement.

<PAGE>
                                      -2-


         No holder of this  Rights  Certificate,  as such,  shall be entitled to
vote or  receive  dividends  or be deemed for any  purpose  the holder of Common
Shares or of any other  securities  which may at any time be  issuable  upon the
exercise hereof,  nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder  hereof,  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 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  (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Rights evidenced by this Rights  Certificate shall have been exercised
as provided in the Rights Agreement.

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

         WITNESS  the  facsimile   signature  of  the  proper  officers  of  the
Corporation and its corporate seal.


Date:
        ______________________________

NEXEN INC.


By:
        ______________________________
        Authorized Officer


Countersigned:

CIBC MELLON TRUST COMPANY


By:
        ______________________________
        Authorized Signature


<PAGE>

                               FORM OF ASSIGNMENT

(To be executed by the registered  holder if such holder desires to transfer the
Rights represented by this Rights Certificate.)


         FOR VALUE RECEIVED ____________________________________________________


hereby sells, assigns
and transfers to _______________________________________________________________
                          (Please print name and address of transferee)


the Rights  represented  by this Rights  Certificate,  together  with all right,
title and interest  therein,  and hereby  irrevocably  constitutes  and appoints
____________________________________as  attorney,  to transfer the within Rights
on the books of the Corporation, with full power of substitution.

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 a Canadian  Schedule 1 chartered  bank, a major
Canadian trust company, a member of a recognized stock exchange or a member of a
recognized Medallion Program (STAMP, MSP or SEMP).

________________________________________________________________________________
                            (To be completed if true)

The undersigned hereby represents, for the benefit of 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 or an Affiliate or Associate thereof or by any Person acting
jointly or in concert with any of the foregoing (all capitalized terms are used
as defined in the Rights Agreement).

Dated: ________________________         ________________________________________
                                        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.)


                                   NOTICE

         In the event the  certification set forth above in the Form of Election
to Exercise is not completed upon exercise of the Right(s)  evidenced  hereby or
in the event that the certification set forth above in the Form of Assignment is
not  completed  upon  the  assignment  of the  Right(s)  evidenced  hereby,  the
Corporation  will deem the  Beneficial  Owner of the Right(s)  evidenced by this
Rights  Certificate  to be an  Acquiring  Person or an  Affiliate  or  Associate
thereof  or a Person  acting  jointly  or in  concert  with any of them (each as
defined in the Rights Agreement) and, in the case of an assignment, will affix a
legend to that effect on any Rights  Certificates  issued in  exchange  for this
Rights Certificate.

<PAGE>


                   (To be attached to each Rights Certificate)


                          FORM OF ELECTION TO EXERCISE


TO:      NEXEN INC.


The undersigned  hereby  irrevocably  elects to exercise  ______________________
whole Rights  represented  by the attached  Rights  Certificate  to purchase the
Common Shares (or other  securities  or property)  issuable upon the exercise of
such Rights and requests that certificates for such shares (or other, securities
or title to such property) be issued in the name of:


                                    ___________________________________________
                                    (Name)


                                    ___________________________________________
                                    (Street)


                                    ___________________________________________
                                    (City and State or Province)


                                    ___________________________________________
                                    (Country, Postal Code or Zip Code)


                                    ___________________________________________
                                    SOCIAL INSURANCE, SOCIAL SECURITY OR
                                    OTHER TAXPAYER IDENTIFICATION NUMBER



<PAGE>


If such number of Rights shall not be 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)

                                    ______________________________________
                                    (Street)

                                    ______________________________________
                                    (City and State or Province)

                                    ______________________________________
                                    (Country, Postal Code or Zip Code)

                                    ______________________________________
                                    SOCIAL INSURANCE, SOCIAL SECURITY OR
                                    OTHER TAXPAYER IDENTIFICATION NUMBER


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 a Canadian Schedule 1 chartered bank, a major
Canadian trust company, a member of a recognized stock exchange or a member of a
recognized Medallion Program (STAMP, MSP or SEMP).

________________________________________________________________________________
                            (To be completed if true)

The undersigned hereby represents,  for the benefit of 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 or an Affiliate or Associate thereof or by any Person acting
jointly or in concert with any of the foregoing (all capitalized  terms are used
as defined in the Rights Agreement).

Dated: ________________________         ________________________________________
                                        Signature

                                   NOTICE

In the  event  the  certification  set forth  above in the Form of  Election  to
Exercise is not completed upon exercise of the Right(s)  evidenced  hereby or in
the event that the  certification  set forth above in the Form of  Assignment is
not  completed  upon  the  assignment  of the  Right(s)  evidenced  hereby,  the
Corporation  will deem the  Beneficial  Owner of the Right(s)  evidenced by this
Rights  Certificate to be an Acquiring Person, an Affiliate or Associate thereof
or a Person  acting  jointly or in concert  with any of them (each as defined in
the Rights Agreement) and, in the case of an assignment,  will affix a legend to
that  effect on any  Rights  Certificates  issued in  exchange  for this  Rights
Certificate.