SHAREHOLDER RIGHTS PLAN AGREEMENT

            THIS AGREEMENT dated as of September 21, 1999,

B E T W E E N:

                        TLC THE LASER CENTER INC., a corporation incorporated
                        under the laws of Ontario (the "Corporation")

                        - and -

                        CIBC MELLON TRUST COMPANY, a trust company incorporated
                        under the laws of Canada, as Rights Agent (the "Rights
                        Agent")

            WHEREAS the Board of Directors has determined that it is advisable
and in the best interests of the Corporation to adopt a Shareholder Rights Plan
(the "Shareholder Rights Plan");

            AND WHEREAS in connection with the implementation of the Shareholder
Rights Plan, the Board of Directors has:

      (a)   authorized and declared a distribution of one right (a "Right")
            effective at the Record Time in respect of each Common Share
            outstanding at that time; and

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

            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 has appointed 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, the exercise of Rights and other matters referred to herein,

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

                           ARTICLE 1. - INTERPRETATION

1.1.  Certain Definitions

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

<PAGE>
                                     - 2 -


      (a)   "Acquiring Person" means any Person who, after the date hereof,
            becomes the Beneficial Owner of 20% or more of the outstanding
            Voting Shares, but does not include:

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

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

                  (A)   a Voting Share Reduction;

                  (B)   a Permitted Bid Acquisition;

                  (C)   an Exempt Acquisition;

                  (D)   a Pro Rata Acquisition; or

                  (E)   a Convertible Security Acquisition;

                  provided,however, that if a Person becomes the Beneficial
                  Owner of 20% or more of the outstanding Voting Shares by
                  reason of a Voting Share Reduction, a Permitted Bid
                  Acquisition, an Exempt Acquisition or a Pro Rata Acquisition,
                  and thereafter becomes the Beneficial Owner of an additional
                  1% of the Voting Shares then outstanding (other than pursuant
                  to a Voting Share Reduction, a Permitted Bid Acquisition, an
                  Exempt Acquisition, or a Pro Rata Acquisition or a Convertible
                  Security Acquisition), then, as of the date that such Person
                  becomes the Beneficial Owner of such additional Voting Shares,
                  such Person shall be an "Acquiring Person";

            (iii) for the period of 10 days after the Disqualification Date (as
                  defined below), any Person who becomes the Beneficial Owner of
                  20% or more of the outstanding Voting Shares as a result of
                  such Person becoming disqualified from relying on Clause
                  1.1(e)(v) solely because such Person makes or proposes to make
                  a Take-over Bid, either alone 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 makes or is intending to
                  make a Take-over Bid including, without limitation, a report
                  filed pursuant to Section 101 of the Securities Act or Section
                  13(d) of the 1934 Exchange Act; or

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

<PAGE>
                                     - 3 -


      (b)   "Affiliate", when used to indicate a relationship with a specified
            Person, means 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)   "Agreement" means this shareholder rights plan agreement, as it may
            be amended, modified or supplemented from time to time hereafter.

      (d)   "Associate", when used to indicate a relationship with a specified
            Person, means any relative of such specified Person who has the same
            home as such specified Person, or any person to whom such specified
            Person is married, or any person with whom such specified Person is
            living in a conjugal relationship outside marriage, or other person
            who has the same home as such specified Person.

      (e)   A Person shall be deemed the "Beneficial Owner", and to have
            "Beneficial Ownership" of, and to "Beneficially Own":

            (i)   any securities of which such Person or any Affiliate or
                  Associate of such Person is the owner in law or 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 Security provided
                        that they are exercisable immediately or within a period
                        of 60 days and whether or not on condition or the
                        happening of any contingency; or

                  (B)   pursuant to any agreement, arrangement or understanding,
                        if such right is exercisable immediately or within a
                        period of 60 days and whether or not on condition or the
                        happening of any contingency (other than customary
                        agreements with and between underwriters and banking
                        group or selling group members with respect to a
                        distribution of securities or pursuant to a pledge of
                        securities in the ordinary course of business); and

            (iii) any securities that are Beneficially Owned within the meaning
                  of Clauses 1.1(e)(i) or (ii) hereof by any other Person with
                  whom 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:

            (iv)  because such security has been deposited or tendered, without
                  any prior agreement (other than a Lock-up Agreement) or
                  arrangement in respect thereof, pursuant to any tender or
                  exchange offer or take-over bid made by

<PAGE>
                                     - 4 -


                  such Person or made by any Affiliate or Associate of such
                  Person or made by any other Person acting jointly or in
                  concert with such Person, unless such deposited or tendered
                  security has been taken up or paid for, whichever shall first
                  occur;

            (v)   because:

                  (A)   such Person, or any of the Affiliates or Associates of
                        such Person or any other Person acting jointly or in
                        concert with such Person, holds such security, provided
                        that the ordinary course of business of any such Person
                        (the "Fund Manager") includes the management of
                        investment funds for others and such security is held by
                        the Fund Manager in the ordinary course of such business
                        in the performance of such Fund Manager's duties for the
                        account of any other Person (a "Client");

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

                  (C)   such Person (the "Plan Administrator") is the
                        administrator or the trustee of one or more pension
                        funds or plans (a "Plan") registered under the laws of
                        Canada or any province thereof or the laws of the United
                        States of America or any state thereof;

                  (D)   such Person (the "Crown Agent") is established by
                        statute for purposes that included, and the ordinary
                        business or activity of such Person includes, the
                        management of investment funds for employee benefit
                        plans, pension plans, insurance plans, or various public
                        bodies; or

                  (E)   such Person is a Plan;

                  provided,however, that in any of the foregoing cases the Fund
                  Manager, the Trust Company, the Plan Administrator, the Crown
                  Agent or the Plan, as the case may be, is not then making and
                  has not then announced an intention to make a Take-over Bid,
                  alone or by acting jointly or in concert with any other
                  Person, other than an Offer to Acquire (X) pursuant to a
                  distribution by the Corporation, (Y) by means of a Permitted
                  Bid, or (Z) by means of market transactions made in the
                  ordinary course of the business

<PAGE>
                                     - 5 -


                  of such Person (including pre-arranged trades entered into in
                  the ordinary course of business of such Person) executed
                  through the facilities of a stock exchange or organized
                  over-the-counter market;

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

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

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

      (f)   "Board of Directors" means the board of directors of the
            Corporation.

      (g)   "Business Day" means any day other than a Saturday, Sunday or a day
            on which chartered banks in the City of Toronto are authorized or
            obliged by law to close.

      (h)   "Canadian Dollar Equivalent" of any amount which is expressed in
            United States dollars means, on any date, the Canadian dollar
            equivalent of such amount determined by multiplying such amount by
            the U.S.-Canadian Exchange Rate in effect on such date.

      (i)   "Canadian-U.S. Exchange Rate" means, on any date, the inverse of the
            U.S.-Canadian Exchange Rate in effect on such date.

      (j)   "Close of Business" on any given date means the time on such date
            (or, if such date is not a Business Day, the time on the next
            succeeding Business Day) at which the office of the transfer agent
            for the Common Shares in the City of Toronto (or, after the
            Separation Time, the office of the Rights Agent in the City of
            Toronto), closes to the public.

      (k)   "Common Shares" means the common shares in the capital of the
            Corporation and "common shares", when used with reference to any
            Person other than the Corporation, means the class or classes of
            shares (or similar equity interests) with

<PAGE>
                                     - 6 -


            the greatest per share voting power entitled to vote generally in
            the election of all directors of such other Person or the equity
            securities or other equity interest having power (whether or not
            exercised) to control or direct the management of such other Person
            or, if such other Person is a Subsidiary of another Person, the
            Person or Persons which ultimately control such first-mentioned
            other Person.

      (l)   "Company Act" means the Business Corporations Act (Ontario), R.S.O.
            1990, c.B.16, as amended, and the regulations made thereunder, as
            now in effect or as the same may from to time be amended, re-enacted
            or replaced.

      (m)   "Competing Permitted Bid" means a Take-over Bid that:

            (i)   is made while another Permitted Bid is in existence; and

            (ii)  satisfies all the components of the definition of a Permitted
                  Bid, except that the reference to 60 days in Clause (ii) of
                  the definition of a Permitted Bid shall be satisfied for the
                  purposes of this Clause 1.1(m)(ii) if the Take-over Bid
                  contains, and the take up and payment for securities tendered
                  or deposited thereunder is subject to, an irrevocable and
                  unqualified condition that no Voting Shares shall be taken up
                  or paid for pursuant to the Competing Permitted Bid prior to
                  the later of:

                  (A)   the date which is 21 days after the date the Competing
                        Permitted Bid is made; and

                  (B)   the 60th day after the earliest of any other Permitted
                        Bid that is then outstanding, provided that the expiry
                        of the Competing Permitted Bid shall not occur at a time
                        of day that is prior to the time of expiry of any other
                        Permitted Bid on such day.

      (n)   A corporation is "controlled" by another Person if:

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

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

            and "controls", "controlling" and "under common control with" shall
            be interpreted accordingly.

      (o)   "Convertible Security" means any right (regardless of whether such
            right constitutes a security) to acquire Voting Shares and any
            securities issued by the Corporation from time to time (other than
            the Rights) carrying any exercise,

<PAGE>
                                     - 7 -


            conversion or exchange right (whether such right is exercisable
            immediately or within a period of 60 days thereafter and whether or
            not on condition or the happening of any contingency).

      (p)   "Convertible Security Acquisition" means the acquisition of Voting
            Shares upon the exercise of Convertible Securities received by a
            Person pursuant to a Permitted Bid Acquisition, an Exempt
            Acquisition or a Pro Rata Acquisition.

      (q)   "Effective Date" shall have the meaning attributed thereto in
            Section 5.19.

      (r)   "Election to Exercise" has the meaning attributed thereto in Clause
            2.2(d)(i).

      (s)   "Exempt Acquisition" means an acquisition:

            (i)   in respect of which the Board of Directors has waived the
                  application of Section 3.1 hereof pursuant to the provisions
                  of Subsections 5.1(b), 5.1(c) or 5.1(d) hereof;

            (ii)  which was made pursuant to a dividend reinvestment plan of the
                  Corporation;

            (iii) which was made pursuant to a distribution by the Corporation
                  of Voting Shares or Convertible Securities made pursuant to a
                  prospectus; or

            (iv)  pursuant to a distribution by the Corporation of Voting Shares
                  or Convertible Securities by way of a private placement by the
                  Corporation, provided that:

                  (A)   all necessary stock exchange approvals for such private
                        placement have been obtained and such private placement
                        complies with the terms and conditions of such
                        approvals; and

                  (B)   the purchaser does not become the Beneficial Owner of
                        more than 25% of the Voting Shares outstanding
                        immediately prior to the private placement (and in
                        making this determination, the securities to be issued
                        to such purchaser pursuant to the private placement
                        shall be deemed to be held by such purchaser but shall
                        not be included in the aggregate number of outstanding
                        Voting Shares immediately prior to the private
                        placement).

      (t)   "Exercise Price" means, as of any date, the price at which a holder
            of a Right may purchase the securities issuable upon exercise of one
            whole Right. Until adjustment thereof in accordance with the terms
            hereof, the Exercise Price shall be $200.

<PAGE>
                                     - 8 -


      (u)   "Expiration Time" shall mean the earlier of:

            (i)   the Termination Time;

            (ii)  the Close of Business on the date of the first annual meeting
                  of shareholders of the Corporation held after the Effective
                  Date if the resolution referred to in Section 5.20 in respect
                  of the annual meeting referred to in clause (i) of Section
                  5.20 is submitted to the Independent Shareholders for their
                  consideration and approval and is not approved by the
                  Independent Shareholders in accordance with Section 5.20 at
                  such annual meeting;

            (iii) the Close of Business on the date of the first annual meeting
                  of shareholders of the Corporation held in the year 2002 if
                  the resolution referred to in Section 5.20 in respect of the
                  annual meeting referred to in clause (ii) of Section 5.20 is
                  submitted to the Independent Shareholders for their
                  consideration and approval and is not approved by the
                  Independent Shareholders in accordance with Section 5.20 at
                  such annual meeting; and

            (iv)  the Close of Business on September 21, 2004.

      (v)   "Flip-in Event" means any transaction or event in or pursuant to
            which any Person becomes an Acquiring Person.

      (w)   "Independent Shareholders" means holders of Voting Shares of the
            Corporation, but shall not include:

            (i)   any Acquiring Person or any Offeror, other than a Person
                  referred to in Clause (v) of Subsection 1.1(e);

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

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

            (iv)  any employee benefit plan, stock 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 any such plan or
                  trust direct the manner in which the Voting Shares are to be
                  voted or direct whether the Voting Shares are to be tendered
                  to a Take-over Bid.

      (x)   "Lock-up Agreement" means an agreement between an Offeror and
            another Person (the "Locked-up Person") whereby the Locked-up Person
            agrees to deposit or tender the Voting Shares held by the Locked-up
            Person to the Offeror's Take-

<PAGE>
                                     - 9 -


            over Bid, where the agreement permits: (i) the Locked-up Person to
            withdraw the Voting Shares from the agreement in order to tender or
            deposit the Voting Shares to another Take-over Bid, or to support
            another transaction, that provides for a purchase price for each
            Voting Share that is higher than, or provides a value for each
            Voting Share that is greater than, the purchase price contained in
            or proposed to be contained in, and is made for at least the same
            number of Voting Shares as, the Take-over Bid that the Locked-up
            Person has agreed to deposit or tender Voting Shares to pursuant to
            the Lock-up Agreement, and for greater certainty, the Lock-up
            Agreement may contain a right of first refusal or require a period
            of delay to give the Offeror an opportunity to at least match a
            higher price in another Take-over Bid or transactions or other
            similar limitation on a Locked-up Person's right to withdraw Voting
            Shares from the Lock-up Agreement and not tender such voting shares
            to the Take-over Bid to which the Locked-up Person has agreed to
            deposit or tender, so long as the limitation does not preclude the
            exercise by the Locked-up Person of the right to withdraw Voting
            Shares in sufficient time to tender to the other Take-over Bid or
            participate in the other transaction; and (ii) does not provide for
            any "break-up fees", "top-up fees", penalties, expense reimbursement
            or other amounts that exceed in the aggregate the greater of:

            (i)   the cash equivalent of 2.5% of the price or value payable
                  under the Take-over Bid to a Locked-up Person; and

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

            to be paid by a Locked-up Person pursuant to the Lock-up Agreement
            in the event the Locked-up Person fails to deposit or tender Voting
            Shares to the Take-over Bid or withdraws Voting Shares in order to
            tender to another Take-over Bid or participate in another
            transaction;

      (y)   "Market Price" per security of any securities on any date of
            determination means the average of the daily closing prices 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 closing prices used to determine
            the Market Price on any Trading Day not to be fully comparable with
            the closing price on the Trading Day immediately preceding such date
            of determination, each such closing price so used shall be
            appropriately adjusted in a manner analogous to the applicable
            adjustment provided for in Section 2.3 in order to make it fully
            comparable with the closing price on the Trading Day immediately
            preceding such date of

<PAGE>
                                     - 10 -


            determination. The closing price per security of any securities on
            any date shall be:

            (i)   the closing board lot sale price or, in case no such sale
                  takes place on such date, the average of the closing bid and
                  asked prices for each of such securities as reported by the
                  principal Canadian stock exchange on which such securities are
                  listed or admitted to trading;

            (ii)  if for any reason none of such prices is available on such day
                  or the securities are not listed or posted for trading on a
                  Canadian stock exchange, the last sale price or, in case no
                  such sale takes place on such date, the average of the closing
                  bid and asked prices for each of such securities as reported
                  by the principal national United States securities exchange on
                  which such securities are listed or admitted to trading;

            (iii) if for any reason none of such prices is available on such day
                  or the securities are not listed or admitted to trading on a
                  Canadian stock exchange or a national United States securities
                  exchange, 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 each of such securities in the over-the-counter market, as
                  quoted by any reporting system then in use; or

            (iv)  if for any reason none of such prices is available on such day
                  or the securities are not listed or admitted to trading on a
                  Canadian stock exchange or a national United States securities
                  exchange or quoted by any such reporting system, the average
                  of the closing bid and asked prices as furnished by a
                  professional market maker selected by the Board of Directors
                  making a market in the securities;

            provided,however, that if for any reason none of such prices is
            available on such day, the closing price per security of such
            securities on such date means the fair value per security of such
            securities on such date as determined by a nationally recognized
            investment dealer or investment banker with respect to the fair
            value per security 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 on such date at the Canadian Dollar
            Equivalent thereof.

      (z)   "1934 Exchange Act" means the Securities Exchange Act of 1934 of the
            United States, as amended, and the rules and regulations thereunder
            as now in effect or as the same may from time to time be amended,
            re-enacted or replaced.

<PAGE>
                                     - 11 -


      (aa)  "1933 Securities Act" means the Securities Act of 1933 of the United
            States, as amended and the rules and regulations thereunder as now
            in effect or as the same may from time to time be amended,
            re-enacted or replaced.

      (bb)  "Offer to Acquire" includes:

            (i)   an offer to purchase or a solicitation of an offer to sell
                  Voting Shares, or a public announcement of an intention to
                  make such an offer or solicitation; and

            (ii)  an acceptance of an offer to sell Voting 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.

      (cc)  "Offeror" means a Person who has announced (and has not withdrawn)
            an intention to make, or who has made (and has not withdrawn), a
            Take-over Bid, and any Person who is an Affiliate, Associate or who
            is acting jointly or in concert with such first mentioned Person,
            but does not include a Person who has completed a Permitted Bid, a
            Competing Permitted Bid or an Exempt Acquisition.

      (dd)  "Offeror's Securities" means the aggregate of the Voting Shares
            Beneficially Owned on the date of a Take-over Bid by an Offeror.

      (ee)  "Permitted Bid" means a Take-over Bid made by an Offeror that is
            made by means of a Take-over Bid circular and which also complies
            with the following additional provisions:

            (i)   the Take-over Bid is made to all holders of record of Voting
                  Shares of the Corporation;

            (ii)  the Take-over Bid contains, and the take up and payment for
                  securities tendered or deposited thereunder shall be subject
                  to, an irrevocable, non-waivable, and unqualified condition
                  that no Voting Shares of the Corporation shall be taken up or
                  paid for pursuant to the Take-over Bid prior to the Close of
                  Business on the date which is not less than 60 days following
                  the date of the Take-over Bid and unless, at such date, more
                  than 50% of the Voting Shares held by Independent Shareholders
                  have been deposited pursuant to the Take-over Bid and not
                  withdrawn;

            (iii) the Take-over Bid contains an irrevocable and unqualified
                  provision that, unless the Take-over Bid is withdrawn, Voting
                  Shares of the Corporation may be deposited pursuant to the
                  Take-over Bid at any time during the period of time described
                  in Clause (ii) of this Subsection 1.1(ee) and that

<PAGE>
                                     - 12 -


                  any Voting Shares deposited pursuant to the Take-over Bid may
                  be withdrawn until taken up and paid for; and

            (iv)  the Take-over Bid contains an irrevocable and unqualified
                  provision that in the event that the condition set forth in
                  Clause (ii) of this Subsection 1.1(ee) is satisfied, the
                  Person making the Take-over Bid will make a public
                  announcement of that fact and the Take-over Bid will remain
                  open for deposits and tenders of Voting Shares for not less
                  than 10 days from the date of the public announcement that
                  such condition has been satisfied.

      (ff)  "Permitted Bid Acquisition" means an acquisition of Voting Shares
            made pursuant to a Permitted Bid or a Competing Permitted Bid.

      (gg)  "Person" includes any individual, firm, partnership, association,
            trust, trustee, executor, administrator, legal personal
            representative, government, governmental body or authority, group
            (as such term is used in Rule 13d-5 under the 1934 Exchange Act, as
            in effect on the date of this Agreement), corporation or other
            incorporated or unincorporated organization.

      (hh)  "Pro Rata Acquisition" means an acquisition as a result of:

            (i)   a stock dividend or a stock split or other event pursuant to
                  which a Person receives or acquires Voting Shares or
                  Convertible Securities on the same pro rata basis as all other
                  holders of Voting Shares of the same class; or

            (ii)  any other event pursuant to which all holders of Voting Shares
                  of the Corporation are entitled to receive Voting Shares or
                  Convertible Securities on a pro rata basis, including, without
                  limiting the generality of the foregoing, pursuant to the
                  receipt or exercise of rights issued by the Corporation and
                  distributed to all the holders of a series or class of Voting
                  Shares to subscribe for or purchase Voting Shares or
                  Convertible Securities of the Corporation, provided that such
                  rights are acquired directly from the Corporation and not from
                  any other Person.

      (ii)  "Record Time" means the Close of Business on October 4, 1999.

      (jj)  "Redemption Price" has the meaning attributed thereto in Subsection
            5.1(a).

      (kk)  "Regular Periodic Cash Dividend" means cash dividends paid on the
            Common Shares at regular intervals in any fiscal year of the
            Corporation to the extent that such cash dividends do not exceed in
            the aggregate in any fiscal year, the greatest of:

<PAGE>
                                     - 13 -


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

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

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

      (ll)  "Rights Certificate" means the certificates representing the Rights
            after the Separation Time which shall be substantially in the form
            attached hereto as Exhibit A.

      (mm)  "Securities Act" means the Securities Act, R.S.O. 1990, c. S.5, as
            amended, and the regulations made thereunder, as now in effect or as
            the same may from time to time be amended, re-enacted or replaced.

      (nn)  "Separation Time" means the Close of Business on the tenth Trading
            Day after the earlier of:

            (i)   the Stock Acquisition Date; and

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

            or such later date as may from time to time be determined by the
            Board of Directors, provided that if any such Take-over Bid expires,
            is cancelled, is terminated or is otherwise withdrawn prior to the
            Separation Time, such offer shall be deemed, for the purposes of
            this Subsection 1.1(nn), never to have been made, and provided
            further that if the Board of Directors determines pursuant to
            Subsections 5.1(b), 5.1(c) or 5.1(d) hereof to waive the application
            of Section 3.1 hereof to a Flip-in Event, the Separation Time in
            respect of such Flip-in Event shall be deemed never to have
            occurred.

      (oo)  "Stock Acquisition Date" means the first date of public announcement
            (which for purposes of this definition includes, without limitation,
            a report filed pursuant to Section 101 of the Securities Act or
            Section 13(d) of the 1934 Exchange Act) of facts indicating that a
            Person has become an Acquiring Person.

      (pp)  "Subsidiary". A corporation is deemed to be a Subsidiary of another
            corporation if:

<PAGE>
                                     - 14 -


            (i)   it is controlled by:

                  (A)   that other corporation; or

                  (B)   that other corporation and one or more corporations each
                        of which is controlled by that other corporation; or

                  (C)   two or more corporations each of which is controlled by
                        that other; or

            (ii)  it is a Subsidiary of a corporation that is that other's
                  Subsidiary.

      (qq)  "Take-over Bid" means an Offer to Acquire Voting Shares or
            securities convertible into Voting Shares, where the Voting Shares
            subject to the Offer to Acquire, together with the Voting Shares
            into which the securities subject to the Offer to Acquire are
            convertible or exchangeable, and the Offeror's Securities,
            constitute in the aggregate 20% or more of the outstanding Voting
            Shares at the date of the Offer to Acquire.

      (rr)  "Termination Time" means the time at which the right to exercise
            Rights shall terminate pursuant to Section 5.1.

      (ss)  "Trading Day", when used with respect to any securities, means any
            day on which the principal Canadian or United States securities
            exchange (as determined by the Board of Directors) on which such
            securities are listed or admitted to trading is open for the
            transaction of business or, if the securities are not listed or
            admitted to trading on any Canadian or United States securities
            exchange, a Business Day.

      (tt)  "U.S.-Canadian Exchange Rate" means, on any date:

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

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

      (uu)  "U.S. Dollar Equivalent" of any amount which is expressed in
            Canadian dollars means, on any date, the United States dollar
            equivalent of such amount determined by multiplying such amount by
            the Canadian-U.S. Exchange Rate in effect on such date.

<PAGE>
                                     - 15 -


      (vv)  "Voting Shares" means the Common Shares of the Corporation and any
            other shares of capital stock or voting interests of the Corporation
            entitled to vote generally in the election of directors and "voting
            shares", when used with reference to any Person other than the
            Corporation, means common shares of such other Person and any other
            shares of capital stock or voting interests of such other Person
            entitled to vote generally in the election of the directors of such
            other person.

      (ww)  "Voting Share Reduction" means an acquisition by the Corporation or
            a Subsidiary of the Corporation or the redemption by the Corporation
            of Voting Shares of the Corporation which by reducing the number of
            Voting Shares of the Corporation outstanding increases the
            proportionate number of Voting Shares Beneficially Owned by any
            Person.

1.2.  Currency

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

1.3.  Number and Gender

            Wherever the context so requires, terms used herein importing the
singular number only shall include the plural and vice versa and words importing
any one gender shall include all others.

1.4.  Sections and Headings

            The division of this Agreement into Articles, Sections, Subsections,
Clauses and Subclauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms "this Agreement", "hereof", "hereunder" and similar
expressions refer to this Agreement and not to any particular Article, Section
or other portion hereof and include any agreement or instrument supplemental or
ancillary hereto. Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles, Sections, Subsections,
Clauses and Subclauses are to Articles, Sections, Subsections, Clauses and
Subclauses of this Agreement.

1.5.  Statutory References

            Unless the context otherwise requires, any reference herein to a
specific Section, Subsection, Clause or Rule of any act or regulation shall be
deemed to refer to the same as it may be amended, re-enacted or replaced or, if
repealed and there shall be no replacement therefor, to the same as it is in
effect on the date of this Agreement.

<PAGE>
                                     - 16 -


1.6.  Acting Jointly or in Concert

            For the purposes of this Agreement, a Person is acting jointly or in
concert with every Person who is a party to an agreement, commitment or
understanding, whether formal or informal, with the first Person or any
Associate or Affiliate of such Person to acquire or make an Offer to Acquire
Voting Shares of the Corporation (other than a Lock-up Agreement or customary
agreements with and between underwriters or banking group members or selling
group members with respect to a distribution of securities or to a pledge of
securities in the ordinary course of business).

1.7.  Determination of Percentage Ownership

            For purposes of this Agreement, the percentage of Voting 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 aggregate number of votes for the election of all directors
            generally attaching to the Voting Shares Beneficially Owned by such
            Person; and

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

            For purposes of this Agreement, in determining the percentage of the
outstanding Voting Shares with respect to which a Person is or is deemed to be
the Beneficial Owner, all unissued Voting Shares as to which such Person is
deemed the Beneficial Owner shall be deemed outstanding.

                             ARTICLE 2. - THE RIGHTS

2.1.  Legend on Common Share Certificates

      (a)   Certificates for Common Shares issued after the Record Time but
            prior to the earlier of (i) the Separation Time and (ii) the
            Expiration Time, shall, subject to Subsection 2.3(j), also evidence
            one Right for each Common Share represented thereby and shall have
            impressed on, printed on, written on or otherwise affixed to them
            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
                  the Shareholder Rights Plan Agreement dated as of September
                  21, 1999 (the

<PAGE>
                                     - 17 -


                  "Rights Agreement"), between the Corporation and CIBC Mellon
                  Trust Company, as Rights Agent, the terms of which are
                  incorporated herein by reference and a copy of which is on
                  file at the principal office of the Corporation. Under certain
                  circumstances, as set forth in the Rights Agreement, such
                  Rights may be amended or 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 promptly after the receipt of
                  a written request therefor."

      (b)   Certificates representing Common Shares that are issued and
            outstanding at the Record Time shall evidence one Right for each
            Common Share evidenced thereby, notwithstanding the absence of the
            foregoing legend, until the earlier of (i) the Separation Time and
            (ii) 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 and prior to the
            Expiration Time, to purchase one Common Share for the Exercise
            Price, or the U.S. Dollar Equivalent of the Exercise Price, as at
            the Business Day immediately preceding the Separation Time (which
            Exercise Price and number of Common Shares are subject to adjustment
            as set forth below). 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) the Rights shall not be exercisable
            and no Right may be exercised and (ii) for administrative purposes,
            each Right will be evidenced by the certificate for the associated
            Common Share registered in the name of the holder thereof and will
            be transferable only together with, and will be transferred by a
            transfer of, such associated Common Share.

      (c)   From and after the Separation Time and prior to the Expiration Time,
            the Rights may be exercised and the registration and transfer of the
            Rights shall be separate from and independent of Common Shares.
            Promptly following the Separation Time, the Corporation will issue
            and the Rights Agent will mail to each holder of record of Common
            Shares as of the Separation Time (other than an Acquiring Person
            and, 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
            on the records of the

<PAGE>
                                     - 18 -


            Corporation (the Corporation hereby agreeing to furnish copies of
            such records to the Rights Agent for this purpose):

            (i)   a Rights Certificate, in substantially the form set out in
                  Exhibit "A" hereto, 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, regulation or
                  judicial or administrative order made pursuant thereto or with
                  any rule or regulation of any stock exchange or quotation
                  system or self-regulatory organization on which the Rights may
                  from time to time be listed or traded, or to conform to usage;
                  and

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

            provided that such materials shall not be sent to (A) an Acquiring
            Person; or (B) to a holder of record (a "Nominee") of Common Shares
            or securities convertible into Common Shares in respect of any
            Rights Beneficially Owned by the Acquiring Person; and the
            Corporation may require any Nominee or suspected Nominee to provide
            such information and documentation as the Corporation may reasonably
            require for such purpose.

      (d)   Rights may be exercised in whole or in part on any Business Day
            after the Separation Time and prior to the Expiration Time by
            submitting to the Rights Agent at its principal office in the City
            of Toronto:

            (i)   the Rights Certificate evidencing such Rights, with an
                  election to exercise (an "Election to Exercise") substantially
                  in the form attached to the Rights Certificate appropriately
                  completed and duly executed by the holder or his executors or
                  administrators or other legal personal representatives or his
                  or their attorney duly appointed by an instrument in writing
                  in form and executed in a manner satisfactory to the Rights
                  Agent; and

            (ii)  payment by certified cheque or money order payable to the
                  order of the Corporation, 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 an Election to Exercise
            appropriately completed and duly executed, which does not indicate
            that such Right is null and

<PAGE>
                                     - 19 -


            void as provided by Subsection 3.1(b), accompanied by payment as set
            forth in Clause 2.2(d)(ii), the Rights Agent (unless otherwise
            instructed in writing by the Corporation) will thereupon promptly:

            (i)   requisition from the transfer agent of the Common Shares
                  certificates for the number of Common Shares to be purchased
                  (the Corporation hereby irrevocably agreeing to authorize such
                  transfer agent to comply with all such requisitions);

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

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

            (iv)  after receipt of such cash, deliver such cash to, or to the
                  order of, the registered holder of the Rights Certificate; and

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

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

      (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 Common Shares delivered upon exercise of
                  Rights shall, at the time of delivery of the certificates for
                  such Common Shares (subject to payment of the Exercise Price),
                  be duly and validly authorized, executed, issued and delivered
                  as fully paid and non-assessable;

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

            (iii) use reasonable efforts to cause all Common Shares of the
                  Corporation issued upon exercise of Rights to be listed upon
                  issuance on the stock exchange(s) where the Common Shares may
                  be listed at that time;

<PAGE>
                                     - 20 -


            (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;

            (v)   pay when due and payable, any and all Canadian and United
                  States federal, provincial and state taxes (not in the nature
                  of income or withholding taxes) and charges which may be
                  payable in respect of the original issuance or delivery of the
                  Rights Certificates or certificates for Common Shares issued
                  upon exercise of Rights, provided that the Corporation shall
                  not be required to pay any transfer tax or charge which may be
                  payable in respect of any transfer of Rights or the issuance
                  or delivery of certificates for Common Shares issued upon
                  exercise of Rights in a name other than that of the holder of
                  the rights being exercised; and

            (vi)  after the Separation Time, except as permitted by Section 5.1
                  or Section 5.4 hereof, not take (or permit any Subsidiary of
                  the Corporation to take) any action if at the time such action
                  is taken it is reasonably foreseeable that such action will
                  diminish substantially or otherwise eliminate the benefits
                  intended to be afforded by the Rights.

2.3.  Adjustments to Exercise Price; Number of Rights

      (a)   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. Fractional interests in securities resulting
            from such adjustments are subject to Section 5.5.

      (b)   In the event that the Corporation at any time after the Record Time
            and prior to the Expiration Time:

            (i)   declares or pays a dividend on the Common Shares payable in
                  Common Shares (or other securities exchangeable for or
                  convertible into or giving a right to acquire Common Shares)
                  other than pursuant to any dividend reinvestment plan;

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

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

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

<PAGE>
                                     - 21 -


                  the Exercise Price and the number of Rights outstanding shall
                  be adjusted as follows:

                        (A)   the Exercise Price in effect after such adjustment
                              will be equal to the Exercise Price in effect
                              immediately prior to such adjustment divided by
                              the number of Common Shares (the "Adjustment
                              Factor") that a holder of one Common Share
                              immediately prior to such dividend, subdivision,
                              change, consolidation or issuance would hold
                              thereafter as a result thereof (assuming the
                              exercise of all such exchange or conversion
                              rights, if any); and

                        (B)   each Right held prior to such adjustment will
                              become that number of Rights equal to the
                              Adjustment Factor, and the adjusted number of
                              Rights will be deemed to be distributed 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, consolidation
                              or issuance, so that each such Common Share will
                              have exactly one Right associated with it.

      (c)   Adjustments pursuant to Subsection 2.3(b) shall be made
            successively, whenever an event referred to in Subsection 2.3(b)
            occurs.

      (d)   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 pursuant to Section 3.1 hereof.

      (e)   In the event the Corporation shall at any time after the Record Time
            and prior to the Separation Time issue any Common Shares otherwise
            than in a transaction referred to in Subsection 2.3(b), 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.

      (f)   In the event that the Corporation at any time after the Record Time
            and prior to the Expiration Time fixes a record date for the making
            of a distribution to substantially 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, in the case of 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 per share (including the price required to be paid to
            purchase such convertible or exchangeable security or right)) less
            than

<PAGE>
                                     - 22 -


            90 per cent of the Market Price per Common Share on such record
            date, the Exercise Price shall be adjusted. The Exercise Price in
            effect after such record date will 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 per Common Share 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 to be so offered are initially convertible, exchangeable
            or exercisable). In case such subscription price may be paid in a
            consideration part or all of which will be in a form other than
            cash, the value of such consideration shall be as determined in good
            faith by the Board of Directors. To the extent that such rights or
            warrants are not exercised prior to the expiration thereof, the
            Exercise Price shall be readjusted to the Exercise Price which would
            then be in effect based on the number of Common Shares (or
            securities convertible into or exchangeable for Common Shares)
            actually issued upon the exercise of such rights. For purposes of
            this Agreement, the granting of the right to purchase Common Shares
            (whether from treasury shares or otherwise) pursuant to any dividend
            reinvestment plan and/or any share purchase plan (so long as such
            right to purchase is in no case evidenced by the delivery of rights
            or warrants by the Corporation) shall not be deemed to constitute an
            issue of rights or warrants by the Corporation; provided, however,
            that, in the case of any dividend reinvestment plan or share
            purchase plan, the right to purchase Common Shares is at a price per
            share of not less than 90 per cent of the current market price per
            Common Share (determined in accordance with such plans) of the
            Common Shares.

      (g)   In the event that the Corporation at any time after the Record Time
            and prior to the Expiration Time fixes a record date for the making
            of a distribution to substantially 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 but including any
            dividend payable in securities other than Common Shares) or rights
            or warrants entitling them 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, in the case of 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 per share (including the price required to be paid to
            purchase such convertible or exchangeable security or right) less
            than 90 per cent of the Market Price per Common Share on such record
            date (excluding rights or warrants

<PAGE>
                                     - 23 -


            referred to in Subsection 2.3(f)), the Exercise Price in effect
            after such record date shall be equal to the Exercise Price in
            effect immediately prior to such record date less the fair market
            value (as determined by the Board of Directors) of the portion of
            the assets, evidences of indebtedness, rights or warrants so to be
            distributed applicable to a Common Share.

      (h)   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, consolidation or issuance, in the case of
                  an adjustment made pursuant to Subsection 2.3(b); and

            (ii)  the record date for the applicable dividend or distribution,
                  in the case of an adjustment made pursuant to Subsections
                  2.3(f) or (g).

      (i)   In the event that the Corporation shall at any time after the Record
            Time 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 Clauses 2.3(b)(i) or (iv), if the Board of Directors
            acting in good faith determines that the adjustments contemplated by
            Subsections 2.3(b), (f) or (g) in connection with such transaction
            will not appropriately protect the interests of the holders of
            Rights, the Corporation may, subject to Section 5.4, determine what
            other adjustments to the Exercise Price, number of Rights and/or
            securities purchasable upon exercise of Rights would be appropriate
            and, notwithstanding Subsections 2.3(b), (f) and (g), such
            adjustments, rather than the adjustments contemplated by Subsections
            2.3(b), (f) and (g), shall be made. The Corporation and the Rights
            Agent shall amend this Agreement as appropriate to provide for such
            adjustments.

      (j)   Notwithstanding anything herein to the contrary, no adjustment of
            the Exercise Price shall be required unless such adjustment would
            require an increase or decrease of at least one per cent in such
            Exercise Price; provided, however, that any adjustments which by
            reason of this Subsection 2.3(j) are not required to be made shall
            be carried forward and taken into account in any subsequent
            adjustment. All adjustments made pursuant to this Section 2.3 shall
            be made to the nearest cent or to the nearest one hundredth of a
            Common Share or a Right, as the case may be.

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

<PAGE>
                                     - 24 -


      (l)   Unless the Corporation shall have exercised its election, as
            provided in Subsection 2.3(m), upon each adjustment of an Exercise
            Price as a result of the calculations made in Subsections 2.3(f) and
            (g), each Right outstanding immediately prior to the making of such
            adjustment shall thereafter evidence the right to purchase, at the
            adjusted Exercise Price, that number of Common Shares obtained by:

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

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

      (m)   The Corporation may elect on or after the date of any adjustment of
            an Exercise Price to adjust the number of Rights, in lieu of any
            adjustment in the number of Common Shares purchasable upon the
            exercise of a Right. Each of the Rights outstanding after the
            adjustment in the number of Rights shall be exercisable for the
            number of Common Shares for which a Right was exercisable
            immediately prior to such adjustment. Each Right held of record
            prior to such adjustment of the number of Rights shall become the
            number of Rights obtained by dividing the relevant Exercise Price in
            effect immediately prior to adjustment of the relevant Exercise
            Price by the relevant Exercise Price in effect immediately after
            adjustment of the relevant Exercise Price. The Corporation shall
            make a public announcement of its election to adjust the number of
            Rights, indicating the record date for the adjustment, and, if known
            at the time, the amount of the adjustment to be made. This record
            date may be the date on which the relevant Exercise Price is
            adjusted or any day thereafter, but, if the Rights Certificates have
            been issued, shall be at least 10 calendar days later than the date
            of the public announcement. If Rights Certificates have been issued,
            upon each adjustment of the number of Rights pursuant to this
            Subsection 2.3(m) the Corporation shall, as promptly as practicable,
            cause to be distributed to holders of record of Rights Certificates
            on such record date, Rights Certificates evidencing, subject to
            Section 5.5, the additional Rights to which such holders shall be
            entitled as a result of such adjustment, or, at the option of the
            Corporation, shall cause to be distributed to such holders of record
            in substitution and replacement for the Rights Certificates held by
            such holders prior to the date of adjustment, and upon surrender
            thereof, if required by the Corporation, new Rights Certificates
            evidencing all the Rights to which such holders shall be entitled
            after such adjustment. Rights Certificates so to be distributed
            shall be issued, executed and countersigned in the manner provided
            for herein and may bear, at the option of the Corporation, the
            relevant adjusted Exercise Price and shall be registered in the
            names of holders of record of Rights Certificates on the record date
            specified in the public announcement.

<PAGE>
                                     - 25 -


      (n)   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.

      (o)   In any case in which this Section 2.3 shall require that an
            adjustment in an Exercise Price be made effective as of a record
            date for a specified event, the Corporation may elect to defer until
            the occurrence of such event the issuance to the holder of any Right
            exercised after such record date of the number of Common Shares and
            other securities of the Corporation, if any, issuable upon such
            exercise over and above the number of Common Shares and other
            securities of the Corporation, if any, issuable upon such exercise
            on the basis of the relevant Exercise Price in effect prior to such
            adjustment; provided, however, that the Corporation shall deliver to
            such holder a due bill or other appropriate instrument evidencing
            such holder's right to receive such additional Common Shares
            (fractional or otherwise) or other securities upon the occurrence of
            the event requiring such adjustment.

      (p)   Notwithstanding anything in this Section 2.3 to the contrary, the
            Corporation shall be entitled to make such reductions in the
            Exercise Price, in addition to those adjustments expressly required
            by this Section 2.3, as and to the extent that in its good faith
            judgment the Board of Directors shall determine to be advisable in
            order that any (i) subdivision or consolidation of the Common
            Shares, (ii) issuance wholly for cash of any Common Shares at less
            than the applicable Market Price, (iii) issuance wholly for cash of
            any Common Shares or securities that by their terms are exchangeable
            for or convertible into or give a right to acquire Common Shares,
            (iv) stock dividends or (v) issuance of rights, options or warrants
            referred to in this Section 2.3, hereafter made by the Corporation
            to holders of its Common Shares, subject to applicable taxation
            laws, shall not be taxable to such shareholders.

      (q)   The Corporation covenants and agrees that, after the Separation
            Time, it will not, except as permitted by Section 5.1 or 5.4, take
            (or permit any Subsidiary of the Corporation to take) any action if
            at the time such action is taken it is reasonably foreseeable that
            such action will diminish substantially or otherwise eliminate the
            benefits intended to be afforded by the Rights.

      (r)   Whenever an adjustment to the Exercise Price or a change in the
            securities purchasable upon exercise of the Rights is made pursuant
            to this Section 2.3, the Corporation shall promptly:

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

<PAGE>
                                     - 26 -


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

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

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 on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered (together with an appropriately
completed and duly executed Election to Exercise) and payment of the Exercise
Price for such Rights (and any applicable transfer taxes or charges payable by
such Person hereunder) was made in accordance with Subsection 2.2(d); 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 holder of record 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 its Chief Executive Officer, its Chief Financial
            Officer or its Secretary. 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.

      (b)   Promptly following 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 will countersign (manually or
            by facsimile signature in a manner satisfactory to the Corporation)
            and deliver such Rights Certificates to the holders of the Rights
            pursuant to Subsection 2.2(c). No Rights Certificate shall be valid
            for any purpose until countersigned by the Rights Agent as
            aforesaid.

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

2.6.  Registration, Registration of Transfer and Exchange

      (a)   After the Separation Time, 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.

<PAGE>
                                     - 27 -


            The Rights Agent is hereby appointed "Rights Registrar" for the
            purpose of maintaining the Rights Register for the Corporation and
            registering Rights and transfers and exchanges 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) and
            3.1(b), the Corporation will execute, and the Rights Agent will
            countersign, deliver and register, 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 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 and any other expenses (including the
            fees and expenses of the Rights Agent) connected therewith.

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 to their satisfaction of
            the destruction, loss or theft of any Rights Certificate and (ii)
            such security or indemnity as may be required by them 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

<PAGE>
                                     - 28 -


            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 a 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

            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 such Rights
Certificate (or, prior to the Separation Time, such Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever. As used in this Agreement, unless the context otherwise
requires, the term "holder" of any Rights means the registered holder of such
Rights (or, prior to the Separation Time, the associated Common Shares).

2.9.  Delivery and Cancellation of Certificates

            All Rights Certificates surrendered upon exercise or for redemption,
or for 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 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 such Rights, consents and
agrees with the Corporation and the Rights Agent and with every other holder of
Rights that:

<PAGE>
                                     - 29 -


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

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

      (d)   prior to due presentment of a Rights Certificate (or, prior to the
            Separation Time, the associated Common Share certificate) for
            registration of transfer, the Corporation, the Rights Agent and any
            agent of the Corporation or the Rights Agent may deem and treat the
            person in whose name the Rights Certificate (or, prior to the
            Separation Time, the associated Common Share certificate) is
            registered as the absolute owner thereof and of the Rights evidenced
            thereby (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)   such holder is not entitled to receive any fractional Rights or
            fractional Common Shares upon the exercise of Rights;

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

      (g)   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 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

3.1.  Flip-In Event

      (a)   Subject to Subsection 3.1(b) and Section 5.1, in the event that
            prior to the Expiration Time a Flip-in Event shall occur, each Right
            shall constitute, effective from and after the Close of Business on
            the tenth Trading Day following the Stock

<PAGE>
                                     - 30 -


            Acquisition Date, 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 anything in this Agreement to the contrary, upon the
            occurrence of any Flip-in Event, any Rights that are or were
            Beneficially Owned on or after the earlier of the Separation Time
            and the Stock Acquisition Date by:

            (i)   an Acquiring Person (or any Affiliate or Associate of 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 of Rights, direct or indirect, from an Acquiring
                  Person where such a transferee becomes a transferee
                  concurrently with or subsequent to the Acquiring Person
                  becoming such in a transfer that the Board of Directors has
                  determined is part of a plan, arrangement or scheme of an
                  Acquiring Person that has the purpose or effect of avoiding
                  Clause 3.1(b)(i),

            shall become null and void without any further action 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 have no other rights whatsoever with respect to such
            Rights, whether under any provision of this Agreement or otherwise.
            The holder of any Rights represented by a Rights Certificate which
            is submitted to the Rights Agent upon exercise or for registration
            of transfer or exchange which does not contain the necessary
            certifications set forth in the Rights Certificate establishing that
            such Rights are not void under this Subsection 3.1(b) shall be
            deemed to be an Acquiring Person for the purposes of this Subsection
            3.1(b) and such Rights shall become null and void.

      (c)   Any Rights Certificate that represents Rights Beneficially Owned by
            a Person described in clause 3.1(b)(i) or (ii) 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:

<PAGE>
                                     - 31 -


            "The Rights represented by this Rights Certificate were Beneficially
            Owned by a Person who was an Acquiring Person or an Affiliate or an
            Associate of an Acquiring Person (as such terms are defined in the
            Shareholders Rights Plan Agreement) or who was acting jointly or in
            concert with an Acquiring Person or an Affiliate or an Associate of
            an Acquiring Person. This Rights Certificate and the Rights
            represented hereby are void or shall become void in the
            circumstances specified in subsection 3.1(b) of the Shareholders
            Rights Plan 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 impose such legend only if
            instructed so to do by the Corporation or in writing or if a holder
            fails to certify upon transfer or exchange in the space provided on
            the Rights Certificate that such holder is not a Person described in
            such legend. The issuance of a Rights Certificate without the legend
            referred to in this Subsection 3.1(c) shall be of no effect on the
            provisions of Subsection 3.1(b).

      (d)   After the Separation Time, the Corporation shall do all such acts
            and things as are necessary and within its power to ensure
            compliance with the provisions of this Section 3.1 including,
            without limitation, all such acts and things as may be required to
            satisfy the requirements of the Company Act, the Securities Act and
            the securities laws or comparable legislation in each of the
            provinces of Canada and in any other jurisdiction where the
            Corporation is subject to such laws and the rules of the stock
            exchanges where the Common Shares are listed at such time, in
            respect of the issue of Common Shares upon the exercise of Rights in
            accordance with this Agreement.

                          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 ("Co-Rights Agents") as it may deem necessary or
            desirable, subject to the approval of the Rights Agent. In the event
            the Corporation appoints one or more Co-Rights Agents, the
            respective duties of the Rights Agents and Co-Rights Agents shall be
            as the Corporation may determine with the approval of the Rights
            Agent and the 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
            incurred in the administration and execution of this Agreement and
            the exercise and performance of its duties hereunder (including the
            fees and disbursements of any expert or advisor retained by the
            Rights Agent). The Corporation also agrees to

<PAGE>
                                     - 32 -


            indemnify the Rights Agent, its directors, officers, employees and
            agents for, and to hold it harmless against, any loss, liability, or
            expense incurred without negligence, bad faith or wilful misconduct
            on the part of the Rights Agent, for anything done or omitted by the
            Rights Agent in connection with the acceptance and administration of
            this Agreement, including but not limited to the costs and expenses
            of defending against any claim of liability, which right to
            indemnification will survive the termination of this Agreement and
            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 and, at any time upon request,
            shall provide to the Rights Agent an incumbency certificate
            certifying the then current officers of the Corporation.

4.2.  Merger 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.

<PAGE>
                                     - 33 -


      (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 retain and 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 approval not to be
            unreasonably withheld), 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. Any remuneration so paid by the
            Rights Agent shall be repaid to the Rights Agent in accordance with
            Section 4.1(a).

      (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 President
            and Chief Executive Officer or the Chief Financial Officer of the
            Corporation and delivered to the Rights Agent. 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

<PAGE>
                                     - 34 -


            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:

            (i)   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);

            (ii)  any breach by the Corporation of any covenant or condition
                  contained in this Agreement or in any Rights Certificate;

            (iii) any change in the exercisability of the Rights (including the
                  Rights becoming void pursuant to Subsection 3.1(b));

            (iv)  any adjustment required under the provisions of Section 2.3;

            (v)   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 Subsection
                  2.3(o) hereof describing any such adjustment); or

            (vi)  will not 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 written
            instructions with respect to the performance of its duties hereunder
            from any Person believed by the Rights Agent to be the Chief
            Executive Officer, the Chief Financial Officer, the Secretary or a
            Vice-President 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 accordance with instructions of any such person.

<PAGE>
                                     - 35 -


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

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 the 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, mailed to the Rights Agent and to the
transfer agent of the Common Shares by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.9. If the Rights Agent should
resign or be removed or otherwise become incapable of acting, the Corporation
will appoint a successor to the Rights Agent. If the Corporation fails to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of any Rights (which holder shall,
with such notice, submit such holder's Rights Certificate for inspection by the
Corporation), then the holder of any Rights may (at the Corporation's expense)
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. 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 payment in full of any outstanding amounts
owing by the Corporation to the Rights Agent under this Agreement, 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

<PAGE>
                                     - 36 -


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 Waiver

      (a)   The Board of Directors acting in good faith, with prior shareholder
            approval, may, at its option and at any time prior to the occurrence
            of a Flip-in Event, elect to redeem all but not less than all of the
            then outstanding Rights at a redemption price of $0.0001 per Right
            appropriately adjusted in a manner analogous to the applicable
            adjustment provided for in Section 2.3 in the event that an event of
            the type analogous to any of the events descried in Section 2.3
            shall have occurred (such redemption price being herein referred to
            as the "Redemption Price").

      (b)   The Board of Directors shall waive the application of Section 3.1 in
            respect of the occurrence of any Flip-in Event if the Board of
            Directors has determined, following the Stock Acquisition Date and
            prior to the Separation Time, that a Person became an Acquiring
            Person by inadvertence and without any intention to become, or
            knowledge that it would become, an Acquiring Person under this
            Agreement and, in the event that such a waiver is granted by the
            Board of Directors, such Stock Acquisition Date shall be deemed not
            to have occurred. Any such waiver pursuant to this Subsection 5.1(b)
            may only be given on the condition that such Person, within 30 days
            after the foregoing determination by the Board of Directors or such
            later date as the Board of Directors may determine (the "Disposition
            Date"), has reduced its Beneficial Ownership of Voting Shares such
            that the Person is no longer an Acquiring Person. If the Person
            remains an Acquiring Person at the Close of Business on the
            Disposition Date, the Disposition Date shall be deemed to be the
            date of occurrence of a further Stock Acquisition Date and Section
            3.1 shall apply thereto.

      (c)   The Board of Directors acting in good faith may, prior to the
            occurrence of the relevant Flip-in Event upon prior written notice
            delivered to the Rights Agent, determine to waive the application of
            Section 3.1 to a Flip-in Event that may occur by reason of a
            Take-over Bid made by means of a Take-over Bid circular to all
            holders of record of Voting Shares, provided that if the Board of
            Directors waives the application of Section 3.1 in respect of a
            Take-over Bid pursuant to this Subsection 5.1(c), the Board of
            Directors shall also be deemed to have waived the application of
            Section 3.1 in respect of any other Take-over Bid made by means of a
            circular to all holders of record of Voting Shares 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).
<PAGE>
                                     - 37 -


      (d)   The Board of Directors may, prior to the Close of Business on the
            tenth Trading Day following a Stock Acquisition Date or such later
            Business Day as they may from time to time determine, upon prior
            written notice delivered to the Rights Agent, waive the application
            of Section 3.1 to the related Flip-in Event, provided that the
            Acquiring Person has reduced its Beneficial Ownership of Voting
            Shares (or has entered into a contractual arrangement with the
            Corporation, acceptable to the Board of Directors, to do so within
            10 days of the date on which such contractual arrangement is entered
            into or such later date as the Board of Directors may determine)
            such that at the time the waiver becomes effective pursuant to this
            Subsection 5.1(d) such Person is no longer an Acquiring Person. In
            the event of such a waiver becoming effective prior to the
            Separation Time, for the purposes of this Agreement, such Flip-in
            Event shall be deemed not to have occurred.

      (e)   Where a Person acquires, pursuant to a Permitted Bid, a Competing
            Permitted Bid or an Exempt Acquisition as a result of a waiver
            granted under Subsection 5.1(c), outstanding Voting Shares, other
            than Voting Shares Beneficially Owned by such Person at the date of
            the Permitted Bid, the Competing Permitted Bid or the Exempt
            Acquisition as a result of a waiver granted under Subsection 5.1(c),
            then the Corporation shall immediately upon the consummation of such
            acquisition redeem the Rights at the Redemption Price.

      (f)   If the Board of Directors elects or the Corporation is obliged to
            redeem the Rights, the right to exercise the Rights will thereupon
            without further action and without notice terminate and the only
            right thereafter of the holder of a Right shall be to receive the
            Redemption Price. Within 10 days of the Board of Directors electing
            or being deemed to have elected to redeem the Rights, the
            Corporation shall give notice of such redemption to the holders of
            the then outstanding Rights. Each such notice of redemption shall
            state the method by which the payment of the Redemption Price shall
            be made.

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) hereof.

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 or kind or class of
shares purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
<PAGE>
                                     - 38 -


5.4.  Supplements and Amendments

      (a)   The Corporation may from time to time supplement or amend this
            Agreement without the approval of any holders of Rights or Voting
            Shares (i) to correct any clerical or typographical error or to
            maintain the validity of the Agreement as a result of a change in
            any applicable legislation, regulations or rules thereunder or (ii)
            prior to the first shareholder meeting referred to in Section 5.20.

      (b)   Any amendment, variation or deletion made by the Board of Directors
            pursuant to Subsection 5.4(a) shall:

            (i)   if made prior to the Separation Time, be submitted to the
                  holders of Voting Shares at the next meeting of shareholders
                  of the Corporation and the holders of Voting Shares may, by
                  resolution passed by a majority of the votes cast by
                  Independent Shareholders who vote in respect of such
                  amendment, variation or deletion, confirm or reject such
                  amendment or supplement; or

            (ii)  if made after the Separation Time, be submitted to the holders
                  of Rights at a meeting to be held on a date not later than the
                  date of the next meeting of shareholders of the Corporation
                  and the holders of Rights may, by resolution passed by a
                  majority of the votes cast by the holders of Rights which have
                  not become void pursuant to Subsection 3.1(b) who vote in
                  respect of such amendment, variation or deletion, confirm or
                  reject such amendment or supplement.

      (c)   Any amendment, variation or deletion pursuant to Subsection 5.4(a)
            shall be effective from the date of the resolution of the Board of
            Directors adopting such amendment, variation or deletion and shall
            continue in effect until it ceases to be effective (as in this
            paragraph described). If an amendment, variation or deletion
            pursuant to Subsection 5.4(a) is rejected by the holders of Voting
            Shares or the holders of Rights or is not submitted to the holders
            of Voting Shares or the holders of Rights as required pursuant to
            Clause 5.4(b)(i) or (ii), then such amendment, variation or deletion
            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, vary or
            delete any provision of this Agreement to substantially the same
            effect shall be effective until confirmed by the holders of Voting
            Shares or the holders of Rights, as the case may be.

      (d)   The Corporation may, with the prior consent of the holders of Voting
            Shares obtained as set forth below, at any time prior to the
            Separation Time, amend, vary or rescind any of the provisions of
            this Agreement and the Rights (whether or not
<PAGE>
                                     - 39 -


            such action would materially adversely affect the interest 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 Voting Shares duly called and held in
            compliance with applicable laws and the articles and by-laws of the
            Corporation.

      (e)   The Corporation may, with the prior consent of the holders of Rights
            obtained as set forth below, at any time after the Separation Time,
            amend, vary or rescind any of the provisions of this Agreement and
            the Rights (whether or not such action would materially adversely
            affect the interest 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 the holders of Rights (other than any holder of
            Rights whose Rights have become null and void pursuant to the
            provisions hereof) present or represented at and entitled to be
            voted at a meeting of the holders of Rights. For the purposes,
            hereof, the procedures for the calling, holding and conduct of a
            meeting of the holders of Rights shall be those, as nearly as may
            be, which are provided in the Corporation's by-laws with respect to
            meetings of its shareholders.

      (f)   For greater certainty, neither the exercise by the Board of
            Directors of any power or discretion conferred on it hereunder nor
            the making by the Board of Directors of any determination or the
            granting of any waiver it is permitted to make or give hereunder
            shall constitute an amendment, variation or deletion of the
            provisions of this Agreement or the Rights, for purposes of this
            Section 5.4 or otherwise.

      (g)   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 Agent to
            such supplement or amendment. The Corporation shall be required to
            provide the Rights Agent with notice in writing of any such
            amendment, variation or deletion to this Agreement as referred to in
            this Section 5.4 within 5 days of effecting such amendment,
            variation or deletion.

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 Certificate with regard to which
            fractional Rights would otherwise be issuable, an amount in cash
            equal to the same fraction of the Market Value of a whole Right in
            lieu of such fractional Rights.

      (b)   The Corporation shall not be required to issue fractional Common
            Shares upon exercise of the Rights or to distribute certificates
            which evidence fractional
<PAGE>
                                     - 40 -


            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
            Value of one Common Share.

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 in the
manner provided in such holder's Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement.

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 such 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 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 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, a notice of such proposed action, which shall specify
the date on which such liquidation, dissolution, or winding up is to take place,
and such notice shall be so given at least 20 Business Days prior to the date of
taking of such proposed action by the Corporation.
<PAGE>
                                     - 41 -


5.9.  Notices

            Notices or demands authorized or required by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights to or on the
Corporation shall be sufficiently given or made if delivered or sent by
facsimile transmission addressed (until another address is filed in writing with
the Rights Agent) as follows:

            TLC Laser Center Inc.
            5600 Explorer Drive, Suite 301
            Mississauga, Ontario
            L4W 4Y2

            Facsimile No.: (905) 602-7956
            Attention:     General Counsel

            with a copy to:

            Tory Tory DesLauriers & Binnington
            Suite 3000, Aetna Tower
            P.O. Box 270
            Toronto-Dominion Centre
            Toronto, Ontario
            M5K 1N2

            Facsimile No.: (416) 865-7380
            Attention:     David A. Chaikof

            Any notice or demand authorized or required by this Agreement to be
given or made by the Corporation or by the holder of any Rights to or on the
Rights Agent shall be sufficiently given or made if delivered or sent by
facsimile transmission addressed (until another address is filed in writing with
the Corporation) as follows:

            CIBC Mellon Trust Company
            320 Bay Street
            Ground Floor
            Toronto, Ontario
            M5H 4A6

            Facsimile No.: (416) 643-5570
            Attention:     Vice President, Client Services

Notices or demands authorized or required by this Agreement to be given or made
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, addressed to such holder at the address of such holder as it appears on
the Rights Register or, prior to the Separation Time, on
<PAGE>
                                     - 42 -


the registry books of the Corporation for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.

5.10. Costs of Enforcement

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

5.11. Regulatory Approvals

            Any obligation of the Corporation or action or event contemplated by
this Agreement, or any amendment to 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 to
this Agreement shall be subject to the prior consent of The Toronto Stock
Exchange and any other exchange requiring prior approval.

5.12. 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, 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 any province or
territory thereof and the United States of America in which such issue or
delivery would be unlawful without registration of the relevant Persons or
securities for such purposes.

5.13. Successors

            All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
<PAGE>
                                     - 43 -


5.14. 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.

5.15. Governing Law

            This Agreement and each Right issued hereunder shall be deemed to be
a contract made under the laws of the Province of Ontario 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 the such
province.

5.16. 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 coulent 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 English.

5.17. 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.

5.18. Severability

            If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and any extent, be 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.

5.19. Effective Date

            This Agreement shall be effective on and from the date hereof (the
"Effective Date").

5.20. Shareholder Review

            At each of (i) an annual or special meeting of shareholders of the
Corporation held after the Effective Date which must be no later than six months
from the date hereof, and (ii) an
<PAGE>
                                     - 44 -


annual or special meeting of shareholders of the Corporation to be held in the
year 2002, provided that a Flip-in Event has not occurred prior to such time,
the Board of Directors shall submit a resolution to the Independent Shareholders
for their consideration and approval, ratifying the continued existence of this
Agreement after each such meeting. If a majority of the votes cast by
Independent Shareholders who vote in respect of such resolution at such meeting
are not voted in favour of ratifying the continued existence of this Agreement,
then the Board of Directors shall immediately upon the confirmation by the
Chairman of such shareholders' meeting of the result of the vote on such
resolution without further formality be deemed to have elected to redeem the
Rights at the Redemption Price.

5.21. Time of the Essence

            Time shall be of the essence hereof.

5.22. Determinations and Actions by the Board of Directors

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

5.23. Fiduciary Duties of the Board of Directors

            For greater certainty, nothing contained herein shall be construed
to suggest or imply that the Board of Directors shall not be entitled to
recommend that holders of Voting Shares reject or accept any Take-over Bid or
take any other action (including, without limitation, the commencement,
prosecution, defence or settlement of any litigation and the submission of
additional or alternative Take-over Bids or other proposals to the Shareholders
of the Corporation) with respect to any Take-over Bid or otherwise that the
Board of Directors believes is necessary or appropriate in the exercise of its
fiduciary duties.
<PAGE>
                                     - 45 -


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

                                        TLC THE LASER CENTER INC.

                                        Per: "Ronald Kelly"
                                             -----------------------------------
                                             Name:  Ronald Kelly
                                             Title: General Counsel

                                        Per: "Peter Kestelic"
                                             -----------------------------------
                                             Name:  Peter Kestelic
                                             Title: Chief Financial Officer


                                        CIBC MELLON TRUST COMPANY

                                        Per: "Michael Brady"
                                             -----------------------------------
                                             Name:  Michael Brady
                                             Title: Authorized Signatory

                                        Per: "Bruce Cornish"
                                             -----------------------------------
                                             Name:  Bruce Cornish
                                             Title: Authorized Signatory
<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 SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN SUBSECTION 3.1(b) OF SUCH AGREEMENT), RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON, CERTAIN RELATED PARTIES OF AN
ACQUIRING PERSON OR A TRANSFEREE OF AN ACQUIRING PERSON OR ANY SUCH RELATED
PARTIES WILL BECOME VOID WITHOUT FURTHER ACTION.

                               Rights Certificate

This certifies that _________________________________ is the registered holder
of the number of Rights set forth above, each of which entitles the registered
holder thereof, subject to the terms, provisions and conditions of the
Shareholder Rights Plan Agreement dated as of September 21, 1999 (the "Rights
Agreement") between TLC The Laser Center Inc., a corporation incorporated under
the laws of Ontario (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 and prior to the Expiration Time (as such terms are defined in the Rights
Agreement), one fully paid common share of the Corporation (a "Common Share") at
the Exercise Price referred to below, upon presentation and surrender of this
Rights Certificate, together with the Form of Election to Exercise appropriately
completed and duly executed, to the Rights Agent at its principal office in the
City of Toronto. Until adjustment thereof in certain events as provided in the
Rights Agreement, the Exercise Price shall be $200 per Right (payable in cash,
certified cheque or money order payable to the order of the Corporation).

            In certain circumstances described in the Rights Agreement, each
Right evidenced hereby may entitle the registered holder thereof to receive more
or less than one Common Share (or a combination thereof), 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 head office of the Corporation and
are available upon written request.

            This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent in the City of
Toronto, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor 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 $0.0001 per Right, subject to adjustment in certain events.

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

            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 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
<PAGE>
                                     - ii -


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
any meeting 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.

            DATED:


                                        TLC THE LASER CENTER INC.

                                        Per: ___________________________________
                                             Chief Executive Officer

                                        Per: ___________________________________
                                             Chief Financial Officer


                                        Countersigned:

                                        CIBC MELLON TRUST COMPANY

                                        Per: ___________________________________
                                             Authorized Signature
<PAGE>

                          FORM OF ELECTION TO EXERCISE

TO:   TLC LASER CENTER INC.

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


__________________________________
Name

__________________________________
Address

__________________________________
City and Province/State

__________________________________
Social Insurance No. or other taxpayer
identification number

            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

__________________________________
Address

__________________________________
City and Province/State

__________________________________
Social Insurance No. or other taxpayer
identification number


Date:_____________________________      Signature  _____________________________

__________________________________                (Signature must correspond to
                                                  name as Signature Guaranteed
                                                  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 member firm of a recognized stock
exchange in Canada, a registered national securities exchange in the United
States, a member of the Investment Dealers Association of Canada or National
Association of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in Canada or the United States.

                            (To be completed if true)

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


                                        ________________________________________
                                        Signature
<PAGE>

                               FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

________________________________________________________________________________
(Please print name and address of transferee)

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


Date:_____________________________      Signature  _____________________________


__________________________________                (Signature must correspond to
                                                  name as Signature Guaranteed
                                                  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 member firm of a recognized stock
exchange in Canada, a registered national securities exchange in the United
States, a member of the Investment Dealers Association of Canada or National
Association of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in Canada or the United States.

                            (To be completed if true)

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


                                        ________________________________________
                                        Signature
<PAGE>

                                     NOTICE

            In the event that the certifications set forth above in the Forms of
Election to Exercise and Assignment are not completed, the Corporation shall
deem the Beneficial Owner of the Rights represented by this Rights Certificate
to be an Acquiring Person (as defined in the Rights Agreement) and, accordingly,
such Rights shall be null and void.