Exhibit 1.3

[LOGO] Industry Canada Industrie Canada

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Certificate                                                       Certificat
of Amendment                                                      de modification

Canada Business                                                   Loi canadienne sur
Corporations Act                                                  les societes par actions

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<C>                                                               <C>
MITEL NETWORKS CORPORATION

CORPORATION MITEL NETWORKS                                                          385460-4

------------------------------------------------                  ------------------------------------------------
Name of corporation - Denomination de la societe                  Corporation number-Numero de la societe

I hereby certify that the articles of the above-named             |_|   Je certifie que les statuts de la societe susmentionee
corporation were amended:                                               ont ete modifies:

a)  under section 13 of the Canada Business Corporations Act      |_|   a)  en vertu de l'article 13 de la Loi canadienne sur
    in accordance with the attached notice;                                 les societes par actions, conformement a 1'avis
                                                                            ci-joint

b)  under section 27 of the Canada Business Corporations Act      |_|   b)  en vertu de l'article 27 de la Loi canadienne sur
    as set out in the attached articles of amendment                        les societes par actions, tel qu'il est indique
    designating a series of shares;                                         dans les clauses modificatrices ci-jointes
                                                                            designant une serie d'actions;

c)  under section 179 of the Canada Business Corporations         |X|   c)  en vertu de Particle 179 de la Loi canadienne sur
    Act as set out in the attached articles of amendment;                   les societes par actions, tel qu'il est indique
                                                                            dans les clauses modificatrices ci-jointes;

d)  under section 191 of the Canada Business Corporations               d)  en vertu de Particle 191 de la Loi canadienne sur les
    Act as set out in the attached articles of                              societes par actions, tel qu'il est indique dans les
    reorganization;                                                         clauses de reorganisation ci-jointes;

                                                                  April 23, 2004 I le 23 avril 2004

                    Director - Directeur                          Date of Amendment - Date de modification

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Canada [logo]
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[LOGO] Industry Canada Industrie Canada

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<CAPTION>
                                                                                FORM 4                       FORMULE 4
                                                                        ARTICLES OF AMENDMENT                 CLAUSES
       Canada Business             Loi canadienne sur les                (SECTION 27 OR 177)               MODIFICATRICES
       Corporations Act            societes par actions                                              (ARTICLES 27 OU 177)

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<C>                                                               <C>
1 - Name of corporation - Denomination de la societe              2- Corporation No. - N(degree)de la societe

      Mitel Networks Corporation
      Corporation Mitel Networks                                        385460-4

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3- The articles of the above-named corporation are amended        Les statuts de la societe mentionnee ci-dessus sont modifies
as follows:                                                       de la facon suivante

      (a)   To designate a series of Class A Convertible Preferred Shares to be known as Class A Convertible Preferred Shares,
            Series 1.

      (b)   To provide that the Class A Convertible Preferred Shares, Series 1 shall have the rights, privileges, restrictions
            and conditions as set forth in the attached Schedule "A" which forms part of this document.

      (c)   To designate a series of Class B Convertible Preferred Shares to be known as Class B Convertible Preferred Shares,
            Series 1.

      (b)   To provide that the Class B Convertible Preferred Shares, Series 1 shall have the rights, privileges, restrictions
            and conditions as set forth in the attached Schedule "B" which forms part of this document.

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<CAPTION>
Date                               Signature                               4. - Capacity of - En qualite de

<C>                                <C>
April 23, 2004
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FOR DEPARTMENTAL USE ONLY          Printed Name - nom en lettres moulees
A fusage du ministere seulement

Filed    >  April 23, 2004
Deposee
------------------------------------------------------------------------
IC 3069 (2001/11)
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                            - 2 -
<PAGE>

                                  SCHEDULE "A"
                                       TO
                              ARTICLES OF AMENDMENT

                           MITEL NETWORKS CORPORATION
                               (the "Corporation")

The first  series of Class A  Convertible  Preferred  Shares of the  Corporation
shall consist of an unlimited  number of shares which shall be designated as the
Class A  Convertible  Preferred  Shares,  Series 1 (the  "Series A Shares")  and
which,  in  addition  and subject to the rights,  privileges,  restrictions  and
conditions  attached  to the Class A  Convertible  Preferred  Shares as a class,
shall have attached thereto the rights, privileges,  restrictions and conditions
set forth herein.

                                   ARTICLE 1
                                 INTERPRETATION

1.1 Definitions

For purposes of these Series A Share provisions:

      (a)   "Act" means the Canada Business Corporations Act.

      (b)   "Additional  Common Shares" means the Common Shares,  if any, issued
            or issuable pursuant to Section 5.4 or Section 5.5.

      (c)   "Affiliate" of a Person means any Person that would be considered to
            be an  "affiliated  entity"  of such  first-mentioned  Person  under
            Ontario Securities Commission Rule 45-501 - Exempt Distributions, as
            in effect on the Original Issuance Date.

      (d)   "Aggregate   Preference   Redemption  Amount"  means  the  Series  A
            Preference Redemption Amount plus the Series B Preference Redemption
            Amount.

      (e)   "Aggregate  Participation  Redemption  Amount"  means  the  Series A
            Participation  Redemption  Amount  plus the  Series B  Participation
            Redemption Amount.

      (f)   "Available Funds" has the meaning set out in Section 7.1(a)(i).

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

      (h)   "Business  Day" means any day,  other than a Saturday or Sunday,  on
            which  chartered  banks in Ottawa,  Ontario are open for  commercial
            banking business during normal banking hours.

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                                     - 2 -


      (i)   "Change of Control Event" means:

            (i)   the  sale,   lease,   exclusive   and   irrevocable   licence,
                  abandonment,   transfer  or  other   disposition   of  all  or
                  substantially all of the assets of the Corporation to a Person
                  other than a Person that is an Affiliate  of the  Corporation;
                  or

            (ii)  (A)  an   amalgamation   of  the   Corporation   with  another
                  corporation (other than with a Subsidiary of the Corporation),
                  (B) a statutory  arrangement  involving the Corporation or (C)
                  any other transaction involving the Corporation,  whether by a
                  single  transaction  or series of  transactions,  pursuant  to
                  which, in the case of (A), (B) or (C) above,

                  (1)   any  Person,   together  with  his  or  its   Affiliates
                        hereafter  acquires  the direct or indirect  "beneficial
                        ownership"  (as defined in the Act) of all of the issued
                        and   outstanding   shares   in  the   capital   of  the
                        Corporation; and

                  (2)   the   nature   of  the   transaction   (or   series   of
                        transactions) is such that the consideration (whether in
                        the  form of cash,  securities  or  other  property)  in
                        connection   with  such   transaction   (or   series  of
                        transactions)  would not be received by the shareholders
                        of the Corporation,

            provided, however, that the Series A Majority Holders shall have the
            right, on behalf of all Series A Holders,  to waive the treatment of
            any of such event as a "Change of Control Event"  (provided that any
            such  waiver  must be in  writing  signed by the  Series A  Majority
            Holders and shall only be  effective as to the  particular  event in
            respect of which the waiver is executed).

      (j)   "Class A Preferred  Shares" means the Class A Convertible  Preferred
            Shares in the capital of the Corporation,  the first series of which
            are the Series A Shares.

      (k)   "Class B Preferred  Shares" means the Class B Convertible  Preferred
            Shares in the capital of the Corporation,  the first series of which
            are the Series B Shares.

      (l)   "Common Share Offering" means the offering, issuance and sale by the
            Corporation  of Common  Shares  within nine  months of the  Original
            Issuance  Date for an  aggregate  purchase  price  of not more  than
            $10,000,000.

      (m)   "Common  Shares"  means  the  common  shares in the  capital  of the
            Corporation.

      (n)   "Consideration Per Share" means:

            (i)   in respect of the issuance of Common  Shares,  an amount equal
                  to:

                  (A)   the total consideration  received by the Corporation for
                        the issuance of such Common Shares, divided by

                  (B)   the number of such Common Shares issued;

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                                     - 3 -


            (ii)  in respect of the issuance of Derivative Securities, an amount
                  equal to:

                  (A)   the total consideration  received by the Corporation for
                        the  issuance  of such  Derivative  Securities  plus the
                        minimum amount of any additional  consideration  payable
                        to the Corporation upon exercise, conversion or exchange
                        of such Derivative Securities; divided by

                  (B)   the maximum number of Common Shares that would be issued
                        if  all  such  Derivative   Securities  were  exercised,
                        converted or exchanged in accordance with their terms on
                        the effective date of the relevant calculation,

                  provided, however, that if the amount determined in accordance
                  with this clause (ii) equals zero in respect of any particular
                  issuance of Derivative Securities, then the "Consideration Per
                  Share" in respect of such issuance  shall be the amount as may
                  be determined by the agreement in writing of the  Corporation,
                  the  Series A  Majority  Holders  and the  Series  B  Majority
                  Holders.  In the  event  that the  Corporation,  the  Series A
                  Majority  Holders  and the  Series B  Majority  Holders do not
                  agree on such  amount,  the  Corporation  shall not issue such
                  Derivative Securities.

      (o)   "Control" means, with respect to any Person at any time:

            (i)   holding,  as owner or other beneficiary,  other than solely as
                  the beneficiary of an unrealized  security interest,  directly
                  or indirectly through one or more intermediaries (A) more than
                  fifty percent  (50%) of the voting  securities of that Person,
                  or (B) securities of that Person carrying votes  sufficient to
                  elect  or  appoint  the  majority  of   individuals   who  are
                  responsible  for the supervision or management of that Person;
                  or

            (ii)  the exercise of de facto control of that Person whether direct
                  or indirect and whether  through the ownership of  securities,
                  by contract or trust or otherwise,

            and the term "Controlled" has a corresponding meaning.

      (p)   "Conversion  Date" means the date on which the documentation set out
            in Section 5.8(a) is received by the Corporation.

      (q)   "Conversion  Value" means the number  determined in accordance  with
            Article 6.

      (r)   "Corporation" means Mitel Networks Corporation.

      (s)   "day"  or  "days"  means  calendar  day  or  calendar  days,  unless
            otherwise noted.

      (t)   "Derivative Securities" means:

            (i)   all shares and other  securities that are convertible  into or
                  exchangeable for Common Shares  (including the Series A Shares
                  and Series B Shares); and

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                                     - 4 -


            (ii)  all  options,  warrants  and other  rights to  acquire  Common
                  Shares or securities  directly or indirectly  convertible into
                  or exchangeable for Common Shares.

      (u)   "Excluded Issuances" has the meaning set out in Section 6.4.

      (v)   "Fair Market Value" means:

            (i)   in respect of assets  other than  securities,  the fair market
                  value  thereof  as  determined  in good  faith by the Board of
                  Directors,  provided,  however,  that if the Series A Majority
                  Holders and/or the Series B Majority Holders object in writing
                  to any such  determination  within 10 days of receiving notice
                  of  such   determination,   the  fair  market  value  will  be
                  determined by an  independent  investment  banking or business
                  valuation  firm  mutually  agreeable to the Board of Directors
                  and the Series A Majority Holders and/or the Series B Majority
                  Holders,  as the  case may be,  whose  decision  is final  and
                  binding on all  Persons  (the costs of which shall be borne by
                  the Corporation);

            (ii)  in respect of Common Shares, the fair market value thereof, as
                  determined  in  accordance  with Exhibit "1" attached to these
                  Series A Share provisions; and

            (iii) in respect of securities other than Common Shares:

                  (A)   if such securities are not subject to any statutory hold
                        periods or contractual restrictions on transfer:

                        (1)   if traded on one or more  securities  exchanges or
                              markets,  the  weighted  average  of  the  closing
                              prices  of  such  securities  on the  exchange  or
                              market  on  which  the  securities  are  primarily
                              traded over the 30-day  period  ending  three days
                              prior to the relevant date;

                        (2)   if actively traded over-the-counter,  the weighted
                              average  of  the   closing   bid  or  sale  prices
                              (whichever are applicable)  over the 30-day period
                              ending three days prior to the relevant date; or

                        (3)   if  there is no  active  public  market,  the fair
                              market value of such  securities  as determined in
                              good  faith  by the  Board  of  Directors,  but no
                              discount  or  premium  is to be  applied  to their
                              valuation   on  the   basis   of  the   securities
                              constituting  a minority block or a majority block
                              of securities, or

                  (B)   if such securities are subject to statutory hold periods
                        or contractual  restrictions  on transfer,  or both, the
                        fair market value of such  securities  as  determined by
                        applying an appropriate  discount,

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                                     - 5 -


                        as  determined  in good faith by the Board of Directors,
                        to the value as calculated in accordance with clause (A)
                        above,

                  provided,  however,  that if the  Series  A  Majority  Holders
                  and/or the Series B Majority  Holders object in writing to any
                  determination  of the Board of Directors made under clause (A)
                  or (B)  above  within  10 days  of  receiving  notice  of such
                  determination,   the  applicable   fair  market  value  and/or
                  discount,  as the  case  may  be,  will  be  determined  by an
                  independent  investment  banking or  business  valuation  firm
                  mutually  agreeable to the Board of Directors and the Series A
                  Majority Holders and/or the Series B Majority Holders,  as the
                  case may be,  whose  decision  is  final  and  binding  on all
                  Persons   (the   costs  of   which   shall  be  borne  by  the
                  Corporation).

      (w)   "Issue Price" means $1.00,  subject to appropriate  adjustments  for
            stock  dividends,   stock  splits,  stock  consolidations,   capital
            reorganizations  and the like occurring after the Original  Issuance
            Date and affecting the Series A Shares.

      (x)   "Junior Shares" has the meaning set out in Section 4.1(a)(i).

      (y)   "Liquidation  Event" means a liquidation,  dissolution or winding-up
            of the Corporation,  whether voluntary or involuntary,  or any other
            distribution of the assets of the Corporation among its shareholders
            for the purpose of winding up its affairs.

      (z)   "Matthews Group" means:

            (i)   Dr.  Terence H.  Matthews,  his spouse or former  spouse,  any
                  lineal  descendant of Dr. Terence H.  Matthews,  any spouse or
                  former  spouse  of  any  such  lineal  descendant,  and  their
                  respective legal personal representatives;

            (ii)  the  trustee  or  trustees  of any  trust  (including  without
                  limitation a testamentary  trust) for the exclusive benefit of
                  any one or more members of the Matthews Group;

            (iii) any corporation  all of the issued and  outstanding  shares of
                  which are beneficially owned by any one or more members of the
                  Matthews Group;

            (iv)  any partnership all of the partnership  interests in which are
                  beneficially  owned by any one or more members of the Matthews
                  Group; and

            (v)   any  charitable  foundation  Controlled  by any  one  or  more
                  members of the Matthews Group,

            and, for this purpose,  a trustee or trustees  referred to in clause
            (ii)  above  shall be  deemed  to  beneficially  own any  shares  or
            partnership interests held by them.

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                                     - 6 -


      (aa)  "Non-Qualified  IPO" means any public offering of the Common Shares,
            other than a Qualified IPO (provided, that, any previous filing of a
            registration  statement or similar instrument with the United States
            Securities   and  Exchange   Commission   in   fulfillment   of  the
            Corporation's existing obligations as a foreign private issuer shall
            be deemed not to  constitute  a public  offering for the purposes of
            these Series A Share provisions).

      (bb)  "Original  Issuance Date" means, in respect of Series A Shares,  the
            date on which the first Series A Shares are issued.

      (cc)  "Partial Sale Event" means:

            (i)   (A)  an   amalgamation   of  the   Corporation   with  another
                  corporation (other than with a Subsidiary of the Corporation),
                  (B) a statutory arrangement involving the Corporation, (C) the
                  sale,  exchange or other disposition of outstanding  shares of
                  the Corporation,  or (D) any other  transaction  involving the
                  Corporation (other than a public offering of securities of the
                  Corporation),  whether  by a single  transaction  or series of
                  transactions,  pursuant to which, in the case of (A), (B), (C)
                  or (D) above, any Person,  together with his or its Affiliates
                  (other than members of the Matthews Group), hereafter acquires
                  the direct or indirect  "beneficial  ownership" (as defined in
                  the Act) of securities of the  Corporation  representing  more
                  than  50% but  less  than all of the  issued  and  outstanding
                  shares in the capital of the Corporation; or

            (ii)  any  event,  whether  by a single  transaction  or a series of
                  transactions,  that results in Dr. Terence H. Matthews  and/or
                  Persons  Controlled by Dr. Terence H. Matthews  holding in the
                  aggregate less than  100,000,000 of the issued and outstanding
                  shares  in  the  capital  of  the   Corporation   (subject  to
                  appropriate  adjustments  for stock  dividends,  stock splits,
                  stock  consolidations,  capital  reorganizations  and the like
                  occurring after the Original Issuance Date),  calculated on an
                  as-if-converted to Common Shares basis.

            provided, however, that the Series A Majority Holders shall have the
            right, on behalf of all Series A Holders,  to waive the treatment of
            any of such event as a "Partial Sale Event"  (provided that any such
            waiver  must be in writing  signed by the Series A Majority  Holders
            and shall only be effective as to the particular event in respect of
            which the waiver is executed).

      (dd)  "Person" includes any individual, sole proprietorship,  partnership,
            unincorporated association, unincorporated syndicate, unincorporated
            organization,  trust,  body  corporate,  and a natural person in his
            capacity  as  trustee,  executor,   administrator,  or  other  legal
            representative.

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      (ee)  "Qualified IPO" means a public offering of Common Shares in which:

            (i)   the price per share is at least two times:

                  (A)   the aggregate Issue Price for all Series A Shares issued
                        by the Corporation,

                        divided by

                  (B)   the sum of

                        (1)   the number of Common Shares (other than Additional
                              Common Shares) into which any Series A Shares have
                              been converted (subject to appropriate adjustments
                              for   stock   dividends,   stock   splits,   stock
                              consolidations,  capital  reorganizations  and the
                              like  occurring  after the Original  Issuance Date
                              and affecting the Common Shares); and

                        (2)   the number of Common Shares (other than Additional
                              Common Shares) into which any outstanding Series A
                              Shares are then convertible;

            (ii)  the aggregate  cash proceeds to the  Corporation  are not less
                  than  $100,000,000  (before deducting  expenses,  underwriting
                  discounts and commissions); and

            (iii) immediately following the closing of the public offering,  the
                  Common  Shares are listed  and posted for  trading,  traded or
                  quoted on one or more of the Toronto Stock  Exchange,  the New
                  York Stock Exchange,  the NASDAQ National Market System or the
                  AMEX Exchange.

      (ff)  "Redemption  Notice  Period"  has the  meaning  set  out in  Section
            7.3(a)(i).

      (gg)  "Redemption  Trigger  Date"  means:  (i) if no  Series A Shares  are
            issued after the  Original  Issuance  Date,  that date which is five
            years plus one day after the Original  Issuance Date; or (ii) if any
            Series A Shares are issued after the  Original  Issuance  Date,  the
            earlier  of (A) that date which is five years plus one day after the
            last date of  issuance  of any  Series A  Shares,  and (B) that date
            which is five years and four months plus one day after the  Original
            Issuance Date, or such later date as the  Corporation and the Series
            A Majority Holders may agree in writing.

      (hh)  "Series A Holders"  means the holders of Series A Shares and "Series
            A Holder" means any one of them.

      (ii)  "Series  A  Majority  Holders"  means,  as of the  relevant  time of
            reference,  one  or  more  Series  A  Holders  of  record  who  hold
            collectively more than 50% of the outstanding Series A Shares.

      (jj)  "Series A Participation  Redemption  Amount" has the meaning set out
            in Section 7.1(a)(ii)(B).

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                                     - 8 -


      (kk)  "Series A Preference  Redemption  Amount" has the meaning set out in
            Section 7.1(a)(ii)(A).

      (ll)  "Series A  Redemption  Amount"  has the  meaning  set out in Section
            7.1(a)(ii).

      (mm)  "Series A Redemption  Amount Per Share" is the amount  determined by
            dividing  the  Series A  Redemption  Amount by the  total  number of
            Series A Shares outstanding.

      (nn)  "Series A  Redemption  Request"  has the  meaning set out in Section
            7.3(a).

      (oo)  "Series A Shares"  means the Class A Convertible  Preferred  Shares,
            Series 1 in the capital of the Corporation.

      (pp)  "Series B Holders"  means the holders of Series B Shares and "Series
            B Holder" means any one of them.

      (qq)  "Series  B  Majority  Holders"  means,  as of the  relevant  time of
            reference,  one  or  more  Series  B  Holders  of  record  who  hold
            collectively more than 50% of the outstanding Series B Shares.

      (rr)  "Series B Participation  Redemption Amount" has the meaning ascribed
            thereto in the Series B Share Terms.

      (ss)  "Series B  Preference  Redemption  Amount" has the meaning  ascribed
            thereto in the Series B Share Terms.

      (tt)  "Series B Redemption Amount" has the meaning ascribed thereto in the
            Series B Share Terms.

      (uu)  "Series B  Redemption  Amount Per Share"  has the  meaning  ascribed
            thereto in the Series B Share Terms.

      (vv)  "Series B Redemption  Request" has the meaning  ascribed  thereto in
            the Series B Share Terms.

      (ww)  "Series B Share  Terms" means the rights,  privileges,  restrictions
            and  conditions  attached  to the  Series B Shares as set out in the
            articles of the  Corporation as same exist on the Original  Issuance
            Date.

      (xx)  "Series B Shares"  means the Class B Convertible  Preferred  Shares,
            Series 1 in the capital of the Corporation.

      (yy)  "Stock Split" means:

            (i)   the  issuance  of  Common   Shares  as  a  dividend  or  other
                  distribution on outstanding Common Shares;

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

<PAGE>
                                     - 9 -


            (iii) the  combination of  outstanding  Common Shares into a smaller
                  number of Common Shares.

      (zz)  "Subsidiary"  has the  meaning  ascribed  thereto  in the Act on the
            Original Issuance Date.

      (aaa) "TPC" means Her Majesty the Queen in Right of Canada, as represented
            by the Minister of Industry.

1.2 "As-if-converted to Common Shares Basis"

For purposes of these Series A Share provisions, where a calculation is required
to be made on an "as-if-converted to Common Shares basis", such calculation will
be  made  by  determining  (in  each  case  as of the  applicable  date  for the
determination):

      (a)   in respect of the Series A Shares, the number of whole Common Shares
            into which such  Series A Shares are then  convertible  pursuant  to
            these Series A Share provisions;

      (b)   in respect of the Series B Shares, the number of whole Common Shares
            into which such Series B Shares are then convertible pursuant to the
            Series B Share Terms; and

      (c)   in respect of any other Derivative  Securities,  the number of whole
            Common  Shares  into  which  such  securities  are then  convertible
            pursuant to the articles of the Corporation.

                                   ARTICLE 2
                                  VOTING RIGHTS

2.1 Entitlement to Vote and Receive Materials

      (a)   Except  as  otherwise  expressly  provided  in these  Series A Share
            provisions,  or as provided by applicable  law, each Series A Holder
            is entitled to vote on all matters submitted to a vote or consent of
            shareholders of the Corporation.

      (b)   Each Series A Holder is  entitled  to receive  copies of all notices
            and other  materials  sent by the  Corporation  to its  shareholders
            relating to written actions to be taken by shareholders in lieu of a
            meeting.  All such notices and other  materials shall be sent to the
            Series  A  Holders   concurrently   with   delivery   to  the  other
            shareholders.

2.2 Number of Votes

      (a)   Within the first two years after the Original  Issuance  Date,  each
            Series A Share  entitles  the Series A Holder to the number of votes
            per share equal to the quotient obtained by dividing the Issue Price
            by the Conversion Value.

      (b)   After two years from the Original Issuance Date, each Series A Share
            entitles  the Series A Holder to the number of votes per share equal
            to the sum of (i) the

<PAGE>
                                     - 10 -


            quotient  obtained  by dividing  the Issue  Price by the  Conversion
            Value, and (ii) the quotient obtained by dividing the Issue Price by
            the fair market value of a Common Share (and for such purposes,  the
            fair market value of a Common Share shall be as  determined  in good
            faith  by the  Board  of  Directors  at  the  time  of the  relevant
            calculation).

      (c)   For  purposes of  determining  the number of votes for each Series A
            Share  calculated in accordance  with Section 2.2(a) or 2.2(b),  the
            determination   shall  be  made  as  of  the  record  date  for  the
            determination of shareholders entitled to vote on such matter, or if
            no record  date is  established,  the date such vote is taken or any
            written  consent  of   shareholders  is  solicited,   and  shall  be
            calculated based on the Conversion Value in effect on that date.

2.3 Single Class

Except as otherwise  provided  herein,  or except as provided by applicable law,
the Series A Holders will vote  together with the holders of Series B Shares and
Common  Shares and any other series or class of shares  entitled to vote on such
matters as a single class on all matters  submitted to a vote of shareholders of
the Corporation.

2.4 Exception to Single Class

In addition to any other approvals  required by applicable law, any addition to,
change to or removal of any right, privilege, restriction or condition attaching
to the  Series A Shares as a series or the Class A  Preferred  Shares as a class
requires  the  affirmative  vote or  written  approval  of the Series A Majority
Holders.

                                   ARTICLE 3
                                    Dividends

3.1 Entitlement to Dividends

The Series A Holders  shall be entitled  to receive,  in respect of the Series A
Shares,  non-cumulative  dividends  if,  as and when  declared  by the  Board of
Directors  out of the  monies  of the  Corporation  properly  applicable  to the
payment of  dividends,  the  amount of which the  directors,  in their  absolute
discretion,  may from time to time or at any time  determine.  Any  declared but
unpaid  dividend  shall be paid  immediately  upon the  conversion of a Series A
Share, if not previously paid.

3.2 Priority of Dividends

      (a)   Except as provided in Section 4.1, no dividend or other distribution
            (other  than a stock  dividend  giving rise to an  adjustment  under
            Section 6.5) will be paid or set apart for payment in respect of any
            share of any other class or series unless a dividend is concurrently
            paid or set apart for payment in respect of each outstanding  Series
            A Share in an amount at least equal to the product of:

<PAGE>
                                     - 11 -


            (i)   the  amount of the  dividend  per share paid in respect of the
                  shares  of  such  other  class  or  series  (calculated  on an
                  as-if-converted to Common Shares basis); and

            (ii)  the number of Common  Shares into which each Series A Share is
                  then convertible.

      (b)   When any  declared  non-cumulative  dividend or amount  payable on a
            return of capital in respect of Series A Shares is not paid in full,
            the Series A Holders shall  participate  rateably in respect of such
            dividends in accordance  with the sums which would be payable on the
            Class A Preferred  Shares if all such  dividends  were  declared and
            paid in full,  and on any return of capital in  accordance  with the
            sums which would be payable on such return of capital if all sums so
            payable were paid in full.

                                   ARTICLE 4
                             LIQUIDATION PREFERENCE

4.1 Payment of Liquidation Preference

      (a)   Subject to the limitation in Section 4.1(b),  upon the occurrence of
            a Liquidation  Event or Change of Control Event the Series A Holders
            are entitled to receive the following amounts:

            (i)   Preference on a Liquidation  Event.  Upon the  occurrence of a
                  Liquidation  Event,  the Series A Holders  are  entitled to be
                  paid  out  of the  assets  of the  Corporation  available  for
                  distribution to its shareholders  (pari passu with the holders
                  of any other series of Class A Preferred  Shares),  before any
                  payment  shall be made to the holders of any series of Class B
                  Preferred  Shares,  Common Shares or any other class or series
                  of shares ranking on liquidation, dissolution or winding-up of
                  the Corporation  junior to the Series A Shares  (collectively,
                  the  "Junior  Shares"),  an amount per Series A Share equal to
                  the Issue Price plus any declared but unpaid dividends payable
                  to Series A Holders.  If, upon such a Liquidation  Event,  the
                  assets of the  Corporation  available for  distribution to the
                  Corporation's  shareholders  shall be  insufficient to pay the
                  Series A Holders the full amount to which they are entitled as
                  set out  above,  the  holders of Series A Shares and any other
                  series of Class A Preferred Shares shall share rateably in any
                  amount  remaining  available for distribution in proportion to
                  the respective amounts which would otherwise have been payable
                  on or in  respect of the  shares  held by them if all  amounts
                  payable on or in respect of such shares were paid in full.

            (ii)  Preference on a Change of Control  Event.  Upon the occurrence
                  of a  Change  of  Control  Event,  the  Series A  Holders  are
                  entitled  to  receive an amount of cash,  securities  or other
                  property per Series A Share,  before any payment shall be made
                  to the holders of Junior Shares, equal to the Issue Price plus
                  any declared but unpaid dividends payable to Series A Holders.
                  If upon the occurrence of a Change of Control Event, the cash,
                  securities

<PAGE>
                                     - 12 -


                  or other property  available for payment to the  Corporation's
                  shareholders shall be insufficient to pay the Series A Holders
                  the full  amount to which they are  entitled as set out above,
                  the  holders  of  Series A Shares  and any  class or series of
                  shares  ranking on parity with the Series A Shares shall share
                  rateably in any such payment in proportion  to the  respective
                  amounts  which  would  otherwise  have been  payable  on or in
                  respect of the shares held by them if all  amounts  payable on
                  or in respect of such shares were paid in full.

            (iii) Participation  Amount. After the distribution to or payment of
                  all preferential amounts required to be paid to the holders of
                  Series B Shares, Series A Shares and any other series of Class
                  A  Preferred  Shares  or  Class  B  Preferred  Shares  upon  a
                  Liquidation  Event or upon a Change of Control Event (or funds
                  necessary for such payments have been set aside in trust so as
                  to be available for such  payments),  the remaining  assets of
                  the   Corporation   available  for   distribution,   or  cash,
                  securities  or other  property  available  for  payment to its
                  shareholders,  shall be  distributed  or paid, as the case may
                  be, rateably  (subject to the limitation in Section 4.1(b) and
                  to the rights, if any, of holders of any other class or series
                  of shares of the  Corporation  to  participate  in payments or
                  distributions  upon a  Liquidation  Event or Change of Control
                  Event)  among the holders of all issued and  outstanding:  (A)
                  Class A Preferred Shares;  (B) Class B Preferred  Shares;  and
                  (C) Common  Shares  (with the holders of any series of Class A
                  Preferred  Shares and Class B Preferred  Shares deemed to hold
                  that  number of shares  equal to the  number of Common  Shares
                  into which such series of Class A Preferred  Shares or Class B
                  Preferred Shares, as the case may be, are then convertible).

      (b)   In the  event  that the  applicable  Liquidation  Event or Change of
            Control  Event occurs  within the first two years after the Original
            Issuance Date, and the Series A Holders would  otherwise be entitled
            to receive a preferential  payment pursuant to Section  4.1(a)(i) or
            4.1(a)(ii),  if the  amount per Series A Share that would be payable
            upon the  occurrence of the  Liquidation  Event or Change of Control
            Event  pursuant to Section  4.1(a)(iii) to the holders of all issued
            and outstanding  Common Shares (assuming the conversion of all Class
            A Preferred  Shares and Class B Preferred  Shares in accordance with
            their terms  immediately  prior to the occurrence of the Liquidation
            Event or Change of Control Event, as the case may be) is:

            (i)   equal to or  greater  than the sum of (A) two  times the Issue
                  Price,  and (B) any declared but unpaid dividends per Series A
                  Share,  then the  Series A Holders  shall not be  entitled  to
                  receive  payment  of  any  preferential  amounts  pursuant  to
                  Section 4.1(a)(i) or 4.1(a)(ii), as the case may be, and shall
                  only be  entitled to receive  the amount  payable  pursuant to
                  Section 4.1(a)(iii); or

            (ii)  less than the sum (A) two times the Issue  Price,  and (B) any
                  declared  but unpaid  dividends  per Series A Share,  then the
                  maximum amount per Series A Share that the Series A Holders as
                  such are entitled to receive

<PAGE>
                                     - 13 -


                  pursuant to Section  4.1(a)  shall be the sum of (A) two times
                  the Issue Price, and (B) any declared but unpaid dividends per
                  Series A Share.

      (c)   In the event of any Liquidation Event or Change of Control Event:

            (i)   the  Corporation  will not permit  such  Liquidation  Event or
                  Change of Control  Event to occur unless the  transaction  (or
                  series of transactions) provides for a payment (by dividend or
                  other  distribution  by the  Corporation  or otherwise) to the
                  Series  A  Holders  in  connection  therewith  of  their  full
                  entitlements  pursuant  to  Section  4.1(a)  (subject  to  the
                  limitation in Section 4.1(b)); or

            (ii)  if the Corporation  cannot prevent such  Liquidation  Event or
                  Change of Control Event from occurring, the Corporation shall,
                  subject to  applicable  laws,  pay to the Series A Holders (by
                  dividend  or  other  distribution)  the full  amount  of their
                  entitlements  pursuant  to  Section  4.1(a)  (subject  to  the
                  limitation in Section  4.1(b)) or, if the  Corporation  cannot
                  legally pay such amount in full, the amount it is legally able
                  to pay shall be paid and the  balance  shall  increase  at the
                  rate of 15% per annum,  compounded  annually until such amount
                  is paid, and the Corporation shall not pay any amounts or make
                  any  other   distributions   (other   than  any   payment   or
                  distribution   made  pro  rata  according  to  the  respective
                  entitlements  of the  Series B  Holders  pursuant  to  section
                  4.1(c)(ii)  of the  Series B Share  Terms and of the  Series A
                  Holders  pursuant to this clause (ii)) in respect of any other
                  class or series of its  shares  until  such  entitlements  are
                  fully paid.

      (d)   The  Corporation  will not  permit  any  transaction  (or  series of
            transactions) that would constitute,  but for Section 1.1(i)(ii)(2),
            a "Change of Control  Event",  to occur unless the  transaction  (or
            series of transactions) provides for a payment (by dividend or other
            distribution  by the  Corporation  or  otherwise)  to the  Series  A
            Holders  in  connection  therewith  of the their  full  entitlements
            pursuant  to Sections  4.1(a)(ii)  and  4.1(a)(iii)  (subject to the
            limitation in Section 4.1(b)).

4.2 Distribution Other than Cash

In the case of a Liquidation  Event, the Series A Holders may in any event elect
to receive any  distribution  or payment to which they are entitled in cash,  if
any. The value of the  securities or other assets for this purpose is their Fair
Market Value.

4.3 Notice

The  Corporation  shall  provide  notice in  accordance  with the  provisions of
Section 8.2 to each Series A Holder,  at the earliest  practicable  time, of the
date on which a proposed or reasonably  anticipated  Liquidation Event or Change
of Control Event shall take place.  Such notice shall also specify the estimated
payment date, the amount to which the Series A Holders would be entitled and the
place where such payments are to be made.

<PAGE>
                                     - 14 -


                                   ARTICLE 5
                                   CONVERSION

5.1 Optional Conversion Rights

Each  Series A Share is  convertible,  at any time and from  time to time at the
option of the Series A Holder and without  payment of additional  consideration,
into Common Shares.

5.2 Automatic Conversion

The Series A Shares automatically convert into Common Shares:

      (a)   immediately  prior  to,  and  conditional  upon,  the  closing  of a
            Qualified IPO; or

      (b)   with  the  affirmative  vote or  written  consent  of the  Series  A
            Majority Holders.

5.3 Conversion Rate

The number of Common  Shares  into which each Series A Share is  convertible  is
equal to the  quotient  obtained by dividing  the Issue Price (plus any declared
but unpaid  dividends) by the Conversion Value, as adjusted from time to time in
accordance with Article 6.

5.4 Additional Common Shares on Conversion

In the event of any conversion after two years from the Original  Issuance Date,
in  addition  to the number of Common  Shares  otherwise  issuable to a Series A
Holder upon a conversion of Series A Shares,  each Series A Holder shall also be
entitled,  in  respect  of each  Series  A Share so  converted,  to  receive  an
additional number of Common Shares as is equal to the Issue Price divided by the
Fair Market Value of a Common Share as of the date that the conversion is deemed
to be effected in accordance with Section 5.6.

5.5 Additional Common Shares on Conversion in a Non-Qualified IPO

In the event of:

      (a)   an optional  conversion pursuant to Section 5.1 in connection with a
            Non-Qualified IPO; or

      (b)   an automatic  conversion  pursuant to Section  5.2(b) in  connection
            with a Non-Qualified IPO,

that occurs  within the first two years after the  Original  Issuance  Date,  in
addition to the number of Common Shares otherwise  issuable to a Series A Holder
upon a  conversion  of  Series A  Shares,  each  Series A Holder  shall  also be
entitled in respect of each Series A Share so converted,  to receive that number
of additional  Common  Shares,  if any, as is determined in accordance  with the
following formula:

                           X - Y
                           -----
                              Z

<PAGE>
                                     - 15 -


      Where:

      X = two times the Issue Price

      Y = the greater of: (i) the Issue Price; and (ii) the Offering Price

      Z = the Offering Price

For the purposes of this Section 5.5, "Offering Price" means the per share issue
price of the Common Shares issued in connection with the Non-Qualified IPO.

For the purposes of this Section 5.5 and Section 5.6(d),  a conversion of Series
A Shares into Common Shares shall be deemed to be effected "in connection with a
Non-Qualified  IPO" if (i) in the case of an  optional  conversion  pursuant  to
Section  5.1,  such  conversion  was  completed  at the  written  request of the
Corporation in order to facilitate the Non-Qualified IPO, or (ii) in the case of
an  automatic  conversion  pursuant  to  Section  5.2(b),  the Series A Majority
Holders  voting to approve or consenting to the automatic  conversion  agreed to
convert their Series A Shares at the written request of the Corporation in order
to facilitate the  Non-Qualified  IPO;  provided that, the Corporation shall not
make such a written  request  to the  Series A Holders  unless  the  Corporation
concurrently  makes a written  request to the Series B Holders  pursuant  to the
Series B Share Terms.

5.6 Effective Date and Time of Conversion

Conversion is deemed to be effected:

      (a)   subject to Section  5.6(d),  in the case of an  optional  conversion
            pursuant to Section 5.1,  immediately prior to the close of business
            on the Conversion Date;

      (b)   in the case of  automatic  conversion  pursuant  to Section  5.2(a),
            immediately prior to the closing of the Qualified IPO;

      (c)   subject  to  Section  5.6(d),  in the case of  automatic  conversion
            pursuant to Section 5.2(b), at the time and on the date specified by
            the Series A Majority Holders;

      (d)   in the case of an optional conversion or an automatic conversion "in
            connection  with a  Non-Qualified  IPO", as  contemplated in Section
            5.5, immediately prior to the closing of the Non-Qualified IPO; and

      (e)   notwithstanding   any  delay  in  the   delivery   of   certificates
            representing  the Common  Shares into which the Series A Shares have
            been converted.

5.7 Effect of Conversion

Upon the conversion of the Series A Shares:

      (a)   the rights of a Series A Holder as a holder of the converted  Series
            A Shares cease; and

<PAGE>
                                     - 16 -


      (b)   each  person in whose  name any  certificate  for  Common  Shares is
            issuable upon such conversion is deemed to have become the holder of
            record of such Common Shares.

5.8 Mechanics of Optional Conversion

      (a)   To exercise optional conversion rights under Section 5.1, a Series A
            Holder must:

            (i)   give written notice to the Corporation at its principal office
                  or the office of any transfer agent for the Common Shares:

                  (A)   stating that the Series A Holder  elects to convert such
                        shares; and

                  (B)   providing  the name or names (with address or addresses)
                        in which the  certificate  or  certificates  for  Common
                        Shares issuable upon such conversion are to be issued;

            (ii)  surrender the  certificate or  certificates  representing  the
                  shares being  converted to the  Corporation  at its  principal
                  office or the  office  of any  transfer  agent for the  Common
                  Shares; and

            (iii) where the Common  Shares are to be registered in the name of a
                  person other than the Series A Holder, provide evidence to the
                  Corporation   of  proper   assignment   and  transfer  of  the
                  surrendered   certificates  to  the   Corporation,   including
                  evidence of  compliance  with  applicable  Canadian and United
                  States   securities  laws  and  any  applicable   shareholders
                  agreement.

      (b)   As soon as reasonably  practicable,  but in any event within 10 days
            after the Conversion Date, the Corporation will issue and deliver to
            the  Series  A  Holder  a  certificate  or   certificates   in  such
            denominations  as such  Series A Holder  requests  for the number of
            full Common  Shares  issuable  upon the  conversion of such Series A
            Shares,  together  with cash in  respect  of any  fractional  Common
            Shares issuable upon such conversion.

5.9 Mechanics of Automatic Conversion

      (a)   Upon the  automatic  conversion  of any Series A Shares  into Common
            Shares,  each  Series A Holder must  surrender  the  certificate  or
            certificates  formerly  representing that Series A Holder's Series A
            Shares at the principal  office of the  Corporation or the office of
            any transfer agent for the Common Shares.

      (b)   Upon receipt by the Corporation of the certificate or  certificates,
            the  Corporation  will issue and  deliver  to such  Series A Holder,
            promptly  at the  office  and in the name  shown on the  surrendered
            certificate or  certificates,  a certificate or certificates for the
            number  of  Common  Shares  into  which  such  Series A  Shares  are
            converted,  together with cash in respect of any  fractional  Common
            Shares issuable upon such conversion.

<PAGE>
                                     - 17 -


      (c)   The Corporation is not required to issue certificates evidencing the
            Common Shares issuable upon conversion until  certificates  formerly
            evidencing the converted Series A Shares are either delivered to the
            Corporation or its transfer  agent,  or the Series A Holder notifies
            the Corporation or such transfer agent that such  certificates  have
            been  lost,  stolen or  destroyed,  and  executes  and  delivers  an
            agreement to indemnify the Corporation from any loss incurred by the
            Corporation in connection with the loss, theft or destruction.

      (d)   If the  Board of  Directors  expects,  acting  reasonably,  that the
            Series A Shares will automatically convert, the Corporation will, at
            least 20 days  before the date it  reasonably  believes  will be the
            date of the automatic conversion, send by prepaid priority overnight
            courier  or  deliver  to each  person  who at the date of mailing or
            delivery is a registered Series A Holder, a notice in writing of the
            intention of the Corporation to  automatically  convert such shares.
            That notice  shall be sent or  delivered  to each Series A Holder at
            the  last  address  of that  Series A Holder  as it  appears  on the
            securities register of the Corporation,  or in the event the address
            of any such  Series A Holder  does not so  appear,  then to the last
            address of that Series A Holder known to the Corporation. Accidental
            failure  or  omission  to give that  notice to one or more  Series A
            Holder(s)  will not affect the validity of such  conversion,  but if
            that  failure  or  omission  is  discovered,  notice  shall be given
            promptly  to any  Series A Holder  that was not given  notice.  That
            notice  will have the same force and effect as if given in due time.
            The  notice  will  set out the  basis  under  Section  5.2 for  such
            automatic  conversion,  the  number of  Series A Shares  held by the
            person to whom it is addressed which are to be converted (if known),
            the number of Common Shares into which those Series A Shares will be
            converted  (including any Additional  Common  Shares),  the expected
            date of closing of the Qualified IPO, if  applicable,  and the place
            or  places  in Canada at which  Series A  Holders  may  present  and
            surrender the certificate or certificates  representing its Series A
            Shares for conversion.

5.10 Fractional Shares

No fractional  Common Shares will be issued upon  conversion of Series A Shares.
Instead of any  fractional  Common Shares that would  otherwise be issuable upon
conversion of Series A Shares, the Corporation will pay to the Series A Holder a
cash  adjustment  in respect  of such  fraction  in an amount  equal to the same
fraction of the value per Common Share (as determined in good faith by the Board
of Directors) on the effective date of the  conversion.  For greater  certainty,
all of a Series A Holder's  Series A Shares will be  aggregated  for purposes of
calculating any fractional Common Share resulting from a conversion.

5.11 Partial Conversion

If some but not all of the  Series  A Shares  represented  by a  certificate  or
certificates  surrendered  by a Series A Holder are converted,  the  Corporation
will  execute  and  deliver  to or on the order of the  Series A Holder,  at the
expense of the Corporation,  a new certificate representing the number of Series
A Shares that were not converted.

<PAGE>
                                     - 18 -


                                   ARTICLE 6
                                CONVERSION VALUE

6.1 Initial Conversion Value

The initial  Conversion  Value is equal to the Issue Price and remains in effect
until the Conversion Value is adjusted in accordance with the provisions of this
Article 6.

6.2 Adjustments for Dilution

If, following the Original Issuance Date, the Corporation  issues any additional
Common Shares or  Derivative  Securities  (other than  Excluded  Issuances or in
connection  with  an  event  to  which  Section  6.5,  6.6 or 6.7  applies)  for
Consideration  Per  Share  that is less  than the  Conversion  Value  in  effect
immediately  prior  to such  issuance,  then  the  Conversion  Value  in  effect
immediately  prior  to such  issuance  shall be  adjusted  so  that,  upon  such
issuance,  the  Conversion  Value  shall be  reduced  to an amount  equal to the
Consideration   Per  Share  of  such  additional  Common  Shares  or  Derivative
Securities.

6.3 Additional Provisions Regarding Dilution

For purposes of Section 6.2:

      (a)   if a part or all of the consideration received by the Corporation in
            connection  with  the  issuance  of  additional   Common  Shares  or
            Derivative  Securities  consists of property  other than cash,  such
            consideration  is  deemed to have a value  equal to its Fair  Market
            Value;

      (b)   no  adjustment  of the  Conversion  Value  is to be  made  upon  the
            issuance of any  Derivative  Securities or additional  Common Shares
            that are issued  upon the  exercise,  conversion  or exchange of any
            Derivative Securities;

      (c)   any adjustment of the Conversion  Value is to be disregarded if, and
            to the extent that, all of the Derivative  Securities that gave rise
            to such  adjustment  expire or are  cancelled  without  having  been
            exercised  or  converted,  so that the  Conversion  Value  effective
            immediately  upon such  cancellation  or  expiration is equal to the
            Conversion   Value  that   otherwise   would  have  been  in  effect
            immediately  prior to the time of the  issuance  of the  expired  or
            cancelled Derivative Securities,  with any additional adjustments as
            subsequently  would have been made to that Conversion  Value had the
            expired or cancelled Derivative Securities not been issued;

      (d)   if the terms of any Derivative  Securities  previously issued by the
            Corporation  are  changed  (whether  by their terms or for any other
            reason) so as to raise or lower the  Consideration Per Share payable
            with  respect  to such  Derivative  Securities  (whether  or not the
            issuance of such  Derivative  Securities  originally gave rise to an
            adjustment  of  the  Conversion  Value),  the  Conversion  Value  is
            adjusted as of the date of such change;

      (e)   the  Consideration  Per Share received by the Corporation in respect
            of Derivative Securities is determined in each instance as follows:

<PAGE>
                                     - 19 -


            (i)   the  Consideration  Per Share is  determined as of the date of
                  issuance of Derivative Securities without giving effect to any
                  possible  future price  adjustments or rate  adjustments  that
                  might be applicable with respect to such Derivative Securities
                  and that are contingent upon future events; and

            (ii)  in the case of an  adjustment  to the  Conversion  Value to be
                  made as a  result  of a  change  in  terms  of any  Derivative
                  Securities,  the  Consideration  Per  Share  for  purposes  of
                  calculating   the  adjustment  to  the  Conversion   Value  is
                  determined  as of the date of such  change  and,  for  greater
                  certainty,  not  as  of  the  date  of  the  issuance  of  the
                  Derivative Securities; and

      (f)   notwithstanding  any other  provisions  contained  in these Series A
            Share provisions,  but except as provided in Sections 6.3(d) or 6.5,
            no  adjustment to the  Conversion  Value is to be made in respect of
            the issuance of additional Common Shares or Derivative Securities in
            any case in which  such  adjustment  would  otherwise  result in the
            Conversion  Value being greater than the Conversion  Value in effect
            immediately  prior to the issuance of such additional  Common Shares
            or Derivative Securities.

6.4 Excluded Transactions

Notwithstanding Section 6.2, no adjustment to the Conversion Value is to be made
in connection with the following issuances ("Excluded Issuances"):

      (a)   any Series B Shares issued on the Original Issuance Date;

      (b)   any Common Shares issued or issuable upon conversion of the Series A
            Shares or Series B Shares;  provided  that,  any such  conversion is
            effected  in  accordance  with the terms of such  shares  (including
            provisions  for  adjustment)  as such  terms  exist on the  Original
            Issuance Date;

      (c)   any Additional Common Shares;

      (d)   any Common Shares issued to the Series B Holders in accordance  with
            the Series B Share Terms;

      (e)   any Common  Shares  issued or issuable upon exercise of any warrants
            granted  to the Series A Holders in  connection  with such  Series A
            Holders' subscription for Series A Shares;

      (f)   any Common Shares issued pursuant to the Common Share Offering;

      (g)   any option to purchase Common Shares or other Derivative  Securities
            granted  under any stock option plan,  stock  purchase plan or other
            stock compensation  program of the Corporation approved by the Board
            of Directors  and/or  Common Shares or other  Derivative  Securities
            allotted for issuance,  issued or issuable pursuant to any such plan
            or  arrangement,  or the  issuance  of any  Common  Shares  upon the
            exercise of any such options or other Derivative Securities;

<PAGE>
                                     - 20 -


      (h)   any  equity  securities  issued  pursuant  to a  Qualified  IPO or a
            Non-Qualified IPO;

      (i)   any warrants to acquire Common Shares issued to TPC or any permitted
            assignee of TPC pursuant to obligations of the  Corporation to issue
            such warrants (as such  obligations  exist on or before the Original
            Issuance  Date  or as  such  obligations  may be  amended  with  the
            approval  of the  Board of  Directors  after the  Original  Issuance
            Date), and any issuance of Common Shares pursuant to the exercise of
            such warrants;

      (j)   any Common Shares or Derivative Securities issued as compensation to
            any agent,  broker,  sub-agent  or  sub-broker  with  respect to the
            transactions  entered into by the Corporation  with Series A Holders
            and certain other  shareholders of the  Corporation,  and any Common
            Shares or Derivative Securities issuable upon exercise thereof;

      (k)   except as contemplated in Section 6.5, any equity  securities issued
            in   respect   of   subdivisions,   stock   dividends   or   capital
            reorganizations affecting the share capital of the Corporation;

      (l)   any  equity   securities   issued  to  bona  fide   consultants   or
            professional   advisors   of  the   Corporation   as   part  of  the
            consideration  for services  received by the  Corporation  from such
            consultants or professional advisors;

      (m)   any Common Shares or Derivative Securities issued in connection with
            an acquisition  of assets or a business;  provided that (i) the cost
            of  such  acquisition  is  less  than  $10,000,000,  (ii)  any  such
            transaction  is  approved by the Board of  Directors,  and (iii) the
            maximum  aggregate number of Common Shares  (including Common Shares
            issuable on the  conversion  or exercise of  Derivative  Securities)
            that may be issued pursuant to all transactions contemplated by this
            clause  (m) shall not  exceed 5% of the  aggregate  number of Common
            Shares issued and outstanding on the Original Issuance Date (subject
            to appropriate adjustments for stock dividends,  stock splits, stock
            consolidations, capital reorganizations and the like occurring after
            the Original Issuance Date), all calculated on an as-if-converted to
            Common Shares basis; and

      (n)   any  Common  Shares  or  Derivative   Securities  issued  to  or  in
            connection  with any of the following (i) licensors of technology to
            the Corporation,  (ii) lending or leasing institutions in connection
            with  obtaining  debt  financing,  or  (iii)  any  other  technology
            licensing,  equipment leasing or other non-equity  interim financing
            transaction; provided that: (A) any such transaction or transactions
            are  approved  by the  Board  of  Directors;  and  (B)  the  maximum
            aggregate number of Common Shares  (including Common Shares issuable
            on the conversion or exercise of Derivative  Securities) that may be
            issued pursuant to all transactions  contemplated by this clause (n)
            shall not exceed 5% of the aggregate  number of Common Shares issued
            and   outstanding   on  the  Original   Issuance  Date  (subject  to
            appropriate  adjustments for stock  dividends,  stock splits,  stock
            consolidations, capital reorganizations and the like occurring after
            the Original Issuance Date), all calculated on an as-if-converted to
            Common Shares basis.

<PAGE>
                                     - 21 -


6.5 Adjustments for Stock Splits

After the Original  Issuance Date, the Conversion Value shall be adjusted on the
record date in respect of each Stock Split,  such that the  Conversion  Value is
equal to the product  obtained by multiplying the Conversion  Value  immediately
before the Stock Split by a fraction:

      (a)   the  numerator  of which is the number of Common  Shares  issued and
            outstanding immediately before the Stock Split; and

      (b)   the  denominator  of which is the number of Common Shares issued and
            outstanding immediately after the Stock Split.

6.6 Adjustments for Capital Reorganizations

If, following the Original Issuance Date, the Common Shares are changed into the
same or a different  number of shares of any other  class or series,  whether by
capital  reorganization,  reclassification  or otherwise,  the Corporation  will
provide  each Series A Holder with the right to convert each Series A Share into
the kind and amount of shares,  other  securities and property  receivable  upon
such  change that a holder of a number of Common  Shares  equal to the number of
Common Shares into which such Series A Share was convertible  immediately  prior
to the change  would be  entitled to receive  upon such  change  (subject to any
necessary further adjustments after the date of such change).

6.7 Other Distributions

In the event the  Corporation  declares a  distribution  payable  in  securities
(other than securities of the Corporation),  evidences of indebtedness issued by
the Corporation or other persons or assets (excluding cash dividends paid in the
ordinary  course of  business)  then,  in each such case for the purpose of this
Section 6.7,  Series A Holders shall be entitled upon conversion of their Series
A Shares to a proportionate  share of any such  distribution as though they were
the holders of the number of Common Shares into which their Series A Shares were
convertible as of the record date fixed for the  determination of the holders of
Common Shares of the Corporation entitled to receive such distribution.

6.8 No Impairment

The  Corporation  will  not,  by  amendment  of  its  articles  or  through  any
reorganization,  recapitalization,  transfer of assets,  consolidation,  merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the  observance or  performance of any of the terms to be observed
or performed under this Article 6, but will at all times in good faith assist in
the carrying out of all the  provisions  of Article 5 and 6 and in the taking of
any action necessary or appropriate in order to protect the conversion rights of
the Series A Holders against impairment.

6.9 Reservation of Common Shares

The  Corporation  shall  at all  times  reserve  and keep  available  out of its
authorized but unissued  Common Shares,  solely for the purpose of effecting the
conversion of Series A Shares, such number of Common Shares as from time to time
is sufficient to effect the conversion of all

<PAGE>
                                     - 22 -


outstanding  Series A Shares,  and if at any time the number of  authorized  but
unissued  Common Shares is not sufficient to effect the conversion of all of the
then outstanding Series A Shares,  then the Corporation will take such corporate
action as may, in the opinion of its legal counsel, be necessary to increase its
authorized but unissued  Common Shares to such number of shares as is sufficient
for such purpose.

6.10 Disputes

If a  dispute  shall  at any time  arise  with  respect  to  adjustments  in the
Conversion  Value,  such  dispute  shall  be  conclusively   determined  by  the
Corporation's auditors, or if they are unable or unwilling to act, by such other
firm of  independent  chartered  accountants  as may be selected by the Board of
Directors and any such determination shall be binding upon the Corporation,  the
Series A Holders and all other shareholders of the Corporation. Such auditors or
accountants   shall  be  provided  access  to  all  necessary   records  of  the
Corporation.  If any such determination is made, the Corporation shall deliver a
certificate  to the  Series A  Holders  and  Series B  Holders  describing  such
determination.

6.11 Certificate as to Adjustments

In each case of an adjustment  or  readjustment  of the  Conversion  Value,  the
Corporation  will promptly furnish each Series A Holder and Series B Holder with
a  certificate,   prepared  by  the  Corporation's  accountants,   showing  such
adjustment  or  readjustment,  and stating in  reasonable  detail the facts upon
which such adjustment or readjustment is based.

6.12 Further Adjustment Provisions

If, at any time as a result of an  adjustment  made  pursuant to Section  6.6, a
Series A Holder  becomes  entitled to receive any shares or other  securities of
the Corporation other than Common Shares upon  surrendering  Series A Shares for
conversion,  the Conversion  Value in respect of such other shares or securities
(if such other shares or securities are by their terms  convertible  securities)
will be adjusted after that time, and will be subject to further adjustment from
time to time, in a manner and on terms as nearly  equivalent as  practicable  to
the provisions with respect to Series A Shares  contained in this Article 6, and
the remaining  provisions of these Series A Share  provisions will apply mutatis
mutandis to any such other shares or securities.

6.13 Waiver of Adjustments

Notwithstanding any other provisions of this Article 6, with the written consent
of the Corporation,  the Series A Majority Holders shall be entitled,  on behalf
of all  Series A  Holders,  to waive any  entitlement  to an  adjustment  to the
Conversion  Value under this Article 6. Any such waiver by the Series A Majority
Holders  must be in writing  and shall only be  effective  as to the  particular
adjustment being waived.  In such event,  notice of such waiver shall be sent to
all Series A Holders and Series B Holders in accordance with Section 8.2.

<PAGE>
                                     - 23 -


                                   ARTICLE 7
                                   REDEMPTION

7.1 Redemption Following the Redemption Trigger Date

      (a)   On or after the  Redemption  Trigger  Date,  the  Series A  Majority
            Holders  shall have the right to request the  Corporation  to redeem
            all of the  Series A Shares.  Upon  receipt  of such a  request,  in
            writing, the Corporation will:

            (i)   deliver to each Series A Holder and Series B Holder  within 30
                  days following the date the written request is received by the
                  Corporation  a  notice  specifying  the  total  funds  legally
                  available  to the  Corporation  for  redemption  of all of the
                  Series A Shares and Series B Shares  outstanding  at that time
                  (the "Available Funds"); and

            (ii)  within  90  days,  but  not  before  the  expiry  of 30  days,
                  following  the date the  written  request is  received  by the
                  Corporation  redeem  from the  Series A  Holders,  subject  to
                  Section  7.2,  all  the  Series  A  Shares  (and  concurrently
                  therewith  redeem  from the Series B Holders  all the Series B
                  Shares in the event that the redemption rights of the Series B
                  Shares have been  exercised  in  accordance  with the Series B
                  Share  Terms) to the  extent  the  Corporation  has  Available
                  Funds,  by paying to the Series A Holders,  in accordance with
                  Section 7.1(b),  an amount (the "Series A Redemption  Amount")
                  equal to the sum of:

                  (A)   the number of Series A Shares outstanding  multiplied by
                        the sum of (x) the  Issue  Price  and (y) the per  share
                        amount  of any  declared  but  unpaid  dividends  on the
                        Series  A  Shares  (such  amount  being  the  "Series  A
                        Preference Redemption Amount"); and

                  (B)   the then-current  Fair Market Value of the Common Shares
                        (other than  Additional  Common  Shares)  into which the
                        Series A Shares are then convertible  (such amount being
                        the "Series A Participation Redemption Amount").

      (b)   Subject  to Section  7.2,  each  Series A Holder  shall be paid that
            portion  of the  Series A  Redemption  Amount  equal to the Series A
            Redemption  Amount  Per Share  multiplied  by the number of Series A
            Shares held by the holder.

7.2 Insufficient Funds and Priorities

      (a)   If the  Available  Funds  are  insufficient  to pay in full  (i) the
            Series A  Redemption  Amount  with  respect  to the total  number of
            Series  A  Shares  outstanding,  and  (ii)  in the  event  that  the
            redemption  rights of the  Series B Shares  have been  exercised  in
            accordance  with the Series B Share  Terms,  the Series B Redemption
            Amount  with  respect  to  the  total  number  of  Series  B  Shares
            outstanding,  then those  funds that are legally  available  for the
            redemption of the Series A Shares in accordance with Section 7.1 and
            the Series B Shares in accordance with the Series B Share

<PAGE>
                                     - 24 -


            Terms will be used to redeem the  maximum  possible  number of whole
            shares in accordance with the following priorities:

            (i)   If the  Available  Funds are  insufficient  to pay in full the
                  Series A  Preference  Redemption  Amount,  those funds will be
                  used to redeem the  maximum  possible  number of whole  shares
                  rateably  among the  Series A Holders,  and in such case,  the
                  number of Series A Shares to be  redeemed  shall be the number
                  obtained  by  dividing  (x) the  Available  Funds,  by (y) the
                  Series A Redemption Amount Per Share.

            (ii)  If the  Available  Funds  are  sufficient  to pay in full  the
                  Series A Preference Redemption Amount, but are insufficient to
                  pay in full the Aggregate Preference  Redemption Amount, those
                  funds will be used to redeem:

                  (A)   that  proportion  of the total number of Series A Shares
                        determined  by  dividing  (x) the  Series  A  Preference
                        Redemption Amount, by (y) the Series A Redemption Amount
                        Per Share; and

                  (B)   the maximum  possible  number of whole  shares  rateably
                        among the Series B Holders, and in such case, the number
                        of Series B Shares to be  redeemed  shall be the  number
                        obtained by dividing (x) the  Available  Funds minus the
                        Series A Preference Redemption Amount, by (y) the Series
                        B Redemption Amount Per Share.

            (iii) If the  Available  Funds  are  sufficient  to pay in full  the
                  Aggregate  Preference  Redemption Amount, but are insufficient
                  to pay in full the Aggregate Preference Redemption Amount plus
                  the  Series A  Participation  Redemption  Amount  and Series B
                  Participation  Redemption Amount,  those funds will be used to
                  redeem:

                  (A)   that  proportion  of the total number of Series A Shares
                        determined  by  dividing  (x) the  Series  A  Preference
                        Redemption Amount, by (y) the Series A Redemption Amount
                        Per Share;

                  (B)   that  proportion  of the total number of Series B Shares
                        determined  by  dividing  (x) the  Series  B  Preference
                        Redemption Amount, by (y) the Series B Redemption Amount
                        Per Share; and

                  (C)   the maximum  possible  number of whole  shares  rateably
                        among the Series A Holders and Series B Holders,  and in
                        such case,

                        (1)   the number of Series A Shares to be redeemed shall
                              be  determined  in  accordance  with the following
                              formula:

                                            A x B
                                            -----
                                               C

<PAGE>
                                     - 25 -


                        (2)   the number of Series B Shares to be redeemed shall
                              be  determined  in  accordance  with the following
                              formula:

                                            A x D
                                            -----
                                               E

                        Where:

                        A  = the   Available   Funds  minus  the   Aggregate
                             Preference Redemption Amount

                        B  = the  Series A  Participation  Redemption  Amount
                             divided by the Aggregate Participation  Redemption
                             Amount

                        C  = the Series A Redemption Amount Per Share

                        D  = the  Series B  Participation  Redemption  Amount
                             divided by the Aggregate Participation  Redemption
                             Amount

                        E  = the Series B Redemption Amount Per Share

      (b)   Any Series A Shares not redeemed in accordance  with Section  7.2(a)
            remain outstanding and remain entitled to all rights and preferences
            otherwise provided in these Series A Share provisions.  Any Series B
            Shares not redeemed  remain  outstanding  and remain entitled to all
            rights  and  preferences  otherwise  provided  in the Series B Share
            Terms. As and when funds legally  available for redemption of Series
            A Shares and Series B Shares  subsequently  become available,  those
            funds will be used to redeem the  maximum  possible  number of whole
            shares  rateably  among the Series A Holders and Series B Holders in
            accordance  with clause (i), (ii) and (iii) of Section  7.2(a) above
            and the  Series B Share  Terms.  The  Corporation  shall not pay any
            amounts  or make any other  distributions  in  respect  of any other
            class or series of its shares until all Series A Shares and Series B
            Shares are redeemed as provided above,  and all redemption  payments
            required to be made in  accordance  with this  Section 7.2 are fully
            paid to the Series A Holders and Series B Holders respectively.

7.3 Redemption Upon a Partial Sale Event

      (a)   In  connection  with a proposed  transaction  that would result in a
            Partial  Sale Event,  the Series A Majority  Holders  shall have the
            right,  prior to the  completion  of the  proposed  transaction,  to
            request,  in writing,  the Corporation to redeem all of the Series A
            Shares.  Upon  receipt  of such a request  (a  "Series A  Redemption
            Request") the Corporation will:

            (i)   deliver  to each  Series  A Holder  and  each  Series B Holder
                  within  20 days (or  such  shorter  or  longer  period  as the
                  Corporation,  the Series A Majority  Holders  and the Series B
                  Majority Holders may agree in writing) (the "Redemption Notice
                  Period") following the date the Series A Redemption Request is
                  received by the Corporation a copy of such Series

<PAGE>
                                     - 26 -


                  A  Redemption  Request  and a notice  specifying  whether  the
                  Corporation  has  sufficient  funds  legally  available to the
                  Corporation  for the  redemption of all of the Series A Shares
                  and (in the event that the Corporation  also receives a Series
                  B Redemption  Request prior to the expiry of 30 days following
                  the  Redemption  Notice  Period)  all of the  Series  B Shares
                  outstanding; and

            (ii)  redeem,   conditional  upon  and  contemporaneously  with  the
                  completion  of the  transaction  resulting in the Partial Sale
                  Event,  from the Series A Holders all the Series A Shares (and
                  concurrently  therewith  redeem  from the Series B Holders all
                  the  Series B Shares in the event  that the  Corporation  also
                  received  a Series B  Redemption  Request  within  the  period
                  specified in clause (i) above)  provided the  Corporation  has
                  funds legally available for such redemption,  by paying to the
                  Series A Holders,  in  accordance  with  Section  7.3(b),  the
                  Series A Redemption Amount.

      (b)   Subject  to Section  7.4,  each  Series A Holder  shall be paid that
            portion  of the  Series A  Redemption  Amount  equal to the Series A
            Redemption  Amount  Per Share  multiplied  by the number of Series A
            Shares held by the holder.

7.4 Insufficient Funds

If in connection with the exercise of the redemption rights pursuant to a Series
A Redemption  Request the total funds legally  available to the  Corporation are
insufficient  to pay in full (i) the Series A Redemption  Amount with respect to
the total number of Series A Shares outstanding,  and (ii) in the event that the
Corporation also received a Series B Redemption Request pursuant to the Series B
Share Terms, the Series B Redemption  Amount with respect to the total number of
Series B Shares outstanding, then:

      (a)   the Corporation shall not redeem any of the Series A Shares pursuant
            to the  Series A  Redemption  Request  or any of the Series B Shares
            pursuant to the Series B Redemption Request; and

      (b)   the Corporation will not permit the proposed  transaction that would
            otherwise  result in a Partial Sale Event to occur  unless  Series A
            Majority Holders and Series B Majority  Holders direct,  in writing,
            the Corporation to permit such a transaction.

7.5 Surrender of Certificates

If a redemption of Series A Shares  pursuant to this Article 7 will occur,  each
Series A Holder shall surrender to the Corporation the certificates representing
the Series A Shares to be redeemed by the  Corporation  in accordance  with this
Article 7, in the manner and at the place  designated  by the  Corporation,  and
thereupon all redemption  amounts to be paid for such shares shall be payable to
the order of the Person  whose name  appears on such  certificates  as the owner
thereof, and each surrendered certificate shall be cancelled and retired. If, in
the case of the exercise of redemption  rights in  accordance  with Sections 7.1
and 7.2, less than all of the Series A Shares  represented by such  certificates
are  redeemed,  then the  Corporation  shall  promptly  issue  new  certificates
representing the shares not redeemed.

<PAGE>
                                     - 27 -


                                   ARTICLE 8
                                  MISCELLANEOUS

8.1 Notices of Record Dates

If:

      (a)   the Corporation  establishes a record date to determine the Series A
            Holders  who  are   entitled  to  receive  any   dividend  or  other
            distribution; or

      (b)   there occurs any Stock Split or other capital  reorganization of the
            Corporation, any reclassification of the capital of the Corporation,
            any Change of Control Event, or any Liquidation Event,

      the  Corporation  will  deliver to each Series A Holder,  at least 20 days
      prior to such record date or the proposed  effective  date of the relevant
      transaction, a notice specifying:

            (i)   the date of such record date for the purpose of such  dividend
                  or  distribution   and  a  description  of  such  dividend  or
                  distribution;

            (ii)  the date on which any such  reorganization,  reclassification,
                  Change of Control  Event or  Liquidation  Event is expected to
                  become effective; and

            (iii) the time,  if any,  that is to be fixed as to when the holders
                  of record of Common Shares (or other  securities) are entitled
                  to exchange  their  Common  Shares (or other  securities)  for
                  cash,  securities  or other  property  deliverable  upon  such
                  reorganization,  reclassification,  Change of Control Event or
                  Liquidation Event.

8.2 Notices

All notices,  requests,  payments,  instructions  or other documents to be given
hereunder must be in writing or given by written telecommunication,  and will be
deemed to have been duly given if:

      (a)   delivered personally (effective upon delivery);

      (b)   mailed by certified mail, return receipt requested,  postage prepaid
            (effective  five Business  Days after  dispatch) if the recipient is
            located in the United States or Canada;

      (c)   sent by a reputable,  established  courier  service that  guarantees
            next Business Day delivery  (effective the next Business Day) if the
            recipient is located in the United States or Canada;

      (d)   sent by air mail or by commercial express overseas air courier, with
            receipt acknowledged in writing by the recipient (effective upon the
            date of such  acknowledgement)  if the recipient is located  outside
            the United States or Canada;

      (e)   sent by fax  confirmed  within 24 hours through one of the foregoing
            methods  (effective  upon  receipt of the fax in  complete  readable
            form); and

<PAGE>
                                     - 28 -


addressed as follows (or to such other address as the recipient  party furnishes
by notice to the sending party for these purposes: (i) if to any Series A Holder
or  Series B Holder,  to the last  address  of that  Series A Holder or Series B
Holder as it appears on the securities  register of the  Corporation,  or in the
event the  address  of any such  Series A Holder or Series B Holder  does not so
appear,  then to the last  address  of that  Series A Holder  or Series B Holder
known to the Corporation;  and (ii) if to the Corporation, to the address of its
principal office.

8.3 Negative Covenants

So long as any  Series A Shares  are  outstanding,  the  Corporation  will  not,
without the prior written approval of the Series A Majority Holders:

      (a)   designate any further series of Class A Preferred  Shares or Class B
            Preferred Shares;

      (b)   issue more than  30,000,000  Series A Shares (other than  additional
            Series A Shares issuable in respect of any stock dividends  declared
            by the Corporation);

      (c)   issue more than  68,000,000  Series B Shares (other than  additional
            Series B Shares issuable in respect of any stock dividends  declared
            by the Corporation); or

      (d)   amend the articles of the  Corporation to add,  change or remove any
            rights,  privileges,  restrictions  or  conditions  attached  to the
            Series A Shares  or the  Series B Shares  or  otherwise  change  the
            Series A Shares or Series B Shares.

8.4 Currency

All references to dollar  amounts in these Series A Share  provisions are to the
lawful currency of Canada.

8.5 Transfer Agents

The  Corporation  may appoint,  and from time to time  discharge  and change,  a
transfer  agent  for the  Series A Shares  or any  other  class of shares of the
Corporation. Upon any such appointment, discharge or change of a transfer agent,
the  Corporation  will send a written notice of such  appointment,  discharge or
change to each Series A Holder.

8.6 Transfer Taxes

The Corporation will pay all share transfer taxes,  documentary  stamp taxes and
the like that may be  properly  payable  by the  Corporation  in  respect of any
issuance  or delivery  of Series A Shares or Common  Shares or other  securities
issued in respect  of Series A Shares in  accordance  with these  Series A Share
provisions  or  certificates   representing  such  shares  or  securities.   The
Corporation  is not  required to pay any such tax that may be payable in respect
of any  transfer  involved  in the  issuance  or  delivery of Series A Shares or
Common Shares or other securities in a name other than that in which such shares
were  registered,  or in  respect of any  payment  to any person  other than the
registered Series A Holder of the shares with respect to any such shares, and is
not required to make any such issuance, delivery or payment unless and until the
person otherwise entitled to such issuance,  delivery or payment has paid to the
Corporation the amount

<PAGE>
                                     - 29 -


of any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid or is not payable.

<PAGE>
                                     - 30 -


                                 EXHIBIT "1" to
                                  SCHEDULE "A"

                       DETERMINATION OF FAIR MARKET VALUE

The "Fair Market Value" of Common  Shares will be determined in accordance  with
the following procedures:

      (a)   The Board of Directors, the Series A Majority Holders and the Series
            B Majority Holders will in good faith attempt to agree upon the Fair
            Market  Value  of the  Common  Shares  that are the  subject  of the
            proposed determination under this Exhibit "1".

      (b)   Fair  Market  Value of such  Common  Shares will in all cases (i) be
            calculated on the  assumption of an arm's length sale at open market
            value on a "going concern basis" with no minority  discount applied,
            and (ii)  take  into  account  any  conversion  rights,  liquidation
            preferences  and  any  other  entitlements  attached  to  any  other
            securities of the Corporation.

      (c)   If the Fair  Market  Value  has not been  agreed  upon  between  the
            Corporation, the Series A Majority Holders and the Series B Majority
            Holders  within 10 Business Days after  commencing  their good faith
            attempt to agree upon the Fair Market  Value under clause (a) above,
            then within five Business Days after the end of such 10 Business Day
            period,  the  Corporation,  the  Series A Majority  Holders  and the
            Series B Majority  Holders shall jointly  appoint a U.S. or Canadian
            nationally  recognized  independent  investment  banking or business
            valuation  firm (the  "Valuator") to determine the Fair Market Value
            of such shares which are subject of the proposed determination under
            this Exhibit "1". If the Corporation,  the Series A Majority Holders
            and the Series B Majority  Holders cannot agree on a Valuator within
            such five Business Day period, any of the Corporation,  the Series A
            Majority  Holders or the Series B Majority  Holders  may  thereafter
            apply to a court of competent jurisdiction to have the court appoint
            such Valuator  meeting the foregoing  criteria to determine the Fair
            Market  Value  of  the  subject  shares.  The  determination  by the
            Valuator shall be final and binding on the Corporation, the Series A
            Holders and the Series B Holders, absent manifest error.

      (d)   The  Corporation  shall be  responsible  for all costs  incurred  in
            connection with the independent  valuation performed by the Valuator
            (including  the  costs  of  any  court  proceeding  to  appoint  the
            Valuator, if applicable).

      (e)   The Valuator  shall be  instructed to deliver its  determination  of
            Fair Market Value as at the  applicable  valuation  date, as soon as
            practicable  following  its  appointment  and in any event within 30
            Business Days thereafter.

      (f)   In the  event  that the  Valuator  provides  a range of fair  market
            values,  the middle of such range shall be utilized  for purposes of
            determining the Fair Market Value of the subject shares.

<PAGE>
                                     - 31 -


      (g)   The  Corporation  shall  immediately  provide to the  Valuator  such
            information, including confidential information, and allow such firm
            to  conduct  "due  diligence"  and  make  such   investigations  and
            inquiries  with  respect to the affairs of the  Corporation  and its
            subsidiaries as may be required by such Valuator in order to fulfill
            its  mandate,  provided  that such firm  executes a  confidentiality
            agreement in favour of the Corporation containing standard terms and
            conditions.

<PAGE>



                                  SCHEDULE "B"
                                       TO
                              ARTICLES OF AMENDMENT

                           MITEL NETWORKS CORPORATION
                               (the "Corporation")

The first  series of Class B  Convertible  Preferred  Shares of the  Corporation
shall consist of an unlimited  number of shares which shall be designated as the
Class B  Convertible  Preferred  Shares,  Series 1 (the  "Series B Shares")  and
which,  in  addition  and subject to the rights,  privileges,  restrictions  and
conditions  attached  to the Class B  Convertible  Preferred  Shares as a class,
shall have attached thereto the rights, privileges,  restrictions and conditions
set forth herein.

                                   ARTICLE 1
                                 INTERPRETATION

1.1 Definitions

For purposes of these Series B Share provisions:

      (a)   "Act" means the Canada Business Corporations Act.

      (b)   "Additional  Common Shares" means the Common Shares,  if any, issued
            or issuable pursuant to Section 5.4 or Section 5.5.

      (c)   "Affiliate" of a Person means any Person that would be considered to
            be an  "affiliated  entity"  of such  first-mentioned  Person  under
            Ontario Securities Commission Rule 45-501 - Exempt Distributions, as
            in effect on the Original Issuance Date.

      (d)   "Aggregate   Preference   Redemption  Amount"  means  the  Series  A
            Preference Redemption Amount plus the Series B Preference Redemption
            Amount.

      (e)   "Aggregate  Participation  Redemption  Amount"  means  the  Series A
            Participation  Redemption  Amount  plus the  Series B  Participation
            Redemption Amount.

      (f)   "Available Funds" has the meaning set out in Section 7.1(a)(i).

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

      (h)   "Business  Day" means any day,  other than a Saturday or Sunday,  on
            which  chartered  banks in Ottawa,  Ontario are open for  commercial
            banking business during normal banking hours.

<PAGE>
                                     - 2 -


      (i)   "Change of Control Event" means:

            (i)   the  sale,   lease,   exclusive   and   irrevocable   licence,
                  abandonment,   transfer  or  other   disposition   of  all  or
                  substantially all of the assets of the Corporation to a Person
                  other than a Person that is an Affiliate  of the  Corporation;
                  or

            (ii)  (A)  an   amalgamation   of  the   Corporation   with  another
                  corporation (other than with a Subsidiary of the Corporation),
                  (B) a statutory  arrangement  involving the Corporation or (C)
                  any other transaction involving the Corporation,  whether by a
                  single  transaction  or series of  transactions,  pursuant  to
                  which, in the case of (A), (B) or (C) above,

                  (1)   any  Person,   together  with  his  or  its   Affiliates
                        hereafter  acquires  the direct or indirect  "beneficial
                        ownership"  (as defined in the Act) of all of the issued
                        and   outstanding   shares   in  the   capital   of  the
                        Corporation; and

                  (2)   the   nature   of  the   transaction   (or   series   of
                        transactions) is such that the consideration (whether in
                        the  form of cash,  securities  or  other  property)  in
                        connection   with  such   transaction   (or   series  of
                        transactions)  would not be received by the shareholders
                        of the Corporation,

                  provided,  however,  that the Series B Majority  Holders shall
                  have the right, on behalf of all Series B Holders to waive the
                  treatment of any of such event as a "Change of Control  Event"
                  (provided  that any such waiver  must be in writing  signed by
                  the Series B Majority  Holders and shall only be  effective as
                  to the  particular  event in  respect  of which the  waiver is
                  executed).

      (j)   "Class A Preferred  Shares" means the Class A Convertible  Preferred
            Shares in the capital of the Corporation,  the first series of which
            are the Series A Shares.

      (k)   "Class B Preferred  Shares" means the Class B Convertible  Preferred
            Shares in the capital of the Corporation,  the first series of which
            are the Series B Shares.

      (l)   "Common Share Offering" means the offering, issuance and sale by the
            Corporation  of Common  Shares  within nine  months of the  Original
            Issuance  Date for an  aggregate  purchase  price  of not more  than
            $10,000,000.

      (m)   "Common  Shares"  means  the  common  shares in the  capital  of the
            Corporation.

      (n)   "Consideration Per Share" means:

            (i)   in respect of the issuance of Common  Shares,  an amount equal
                  to:

                  (A)   the total consideration  received by the Corporation for
                        the issuance of such Common Shares, divided by

                  (B)   the number of such Common Shares issued;

<PAGE>
                                     - 3 -


            (ii)  in respect of the issuance of Derivative Securities, an amount
                  equal to:

                  (A)   the total consideration  received by the Corporation for
                        the  issuance  of such  Derivative  Securities  plus the
                        minimum amount of any additional  consideration  payable
                        to the Corporation upon exercise, conversion or exchange
                        of such Derivative Securities; divided by

                  (B)   the maximum number of Common Shares that would be issued
                        if  all  such  Derivative   Securities  were  exercised,
                        converted or exchanged in accordance with their terms on
                        the effective date of the relevant calculation,

                  provided, however, that if the amount determined in accordance
                  with this clause (ii) equals zero in respect of any particular
                  issuance of Derivative Securities, then the "Consideration Per
                  Share" in respect of such issuance  shall be the amount as may
                  be determined by the agreement in writing of the  Corporation,
                  the  Series B  Majority  Holders  and the  Series  A  Majority
                  Holders.  In the  event  that the  Corporation,  the  Series B
                  Majority  Holders  and the  Series A  Majority  Holders do not
                  agree on such  amount,  the  Corporation  shall not issue such
                  Derivative Securities.

      (o)   "Control" means, with respect to any Person at any time:

            (i)   holding,  as owner or other beneficiary,  other than solely as
                  the beneficiary of an unrealized  security interest,  directly
                  or indirectly through one or more intermediaries (A) more than
                  fifty percent  (50%) of the voting  securities of that Person,
                  or (B) securities of that Person carrying votes  sufficient to
                  elect  or  appoint  the  majority  of   individuals   who  are
                  responsible  for the supervision or management of that Person;
                  or

            (ii)  the exercise of de facto control of that Person whether direct
                  or indirect and whether  through the ownership of  securities,
                  by contract or trust or otherwise,

            and the term "Controlled" has a corresponding meaning.

      (p)   "Conversion  Date" means the date on which the documentation set out
            in Section 5.8(a) is received by the Corporation.

      (q)   "Conversion  Value" means the number  determined in accordance  with
            Article 6.

      (r)   "Corporation" means Mitel Networks Corporation.

      (s)   "day"  or  "days"  means  calendar  day  or  calendar  days,  unless
            otherwise noted.

      (t)   "Derivative Securities" means:

            (i)   all shares and other  securities that are convertible  into or
                  exchangeable for Common Shares  (including the Series A Shares
                  and Series B Shares); and

<PAGE>
                                     - 4 -


            (ii)  all  options,  warrants  and other  rights to  acquire  Common
                  Shares or securities  directly or indirectly  convertible into
                  or exchangeable for Common Shares.

      (u)   "Excluded Issuances" has the meaning set out in Section 6.4.

      (v)   "Fair Market Value" means:

            (i)   in respect of assets  other than  securities,  the fair market
                  value  thereof  as  determined  in good  faith by the Board of
                  Directors,  provided,  however,  that if the Series B Majority
                  Holders and/or the Series A Majority Holders object in writing
                  to any such  determination  within 10 days of receiving notice
                  of  such   determination,   the  fair  market  value  will  be
                  determined by an  independent  investment  banking or business
                  valuation  firm  mutually  agreeable to the Board of Directors
                  and the Series B Majority Holders and/or the Series A Majority
                  Holders,  as the  case may be,  whose  decision  is final  and
                  binding on all  Persons  (the costs of which shall be borne by
                  the Corporation);

            (ii)  in respect of Common Shares, the fair market value thereof, as
                  determined  in  accordance  with Exhibit "1" attached to these
                  Series B Share provisions; and

            (iii) in respect of securities other than Common Shares:

                  (A)   if such securities are not subject to any statutory hold
                        periods or contractual restrictions on transfer:

                        (1)   if traded on one or more  securities  exchanges or
                              markets,  the  weighted  average  of  the  closing
                              prices  of  such  securities  on the  exchange  or
                              market  on  which  the  securities  are  primarily
                              traded over the 30-day  period  ending  three days
                              prior to the relevant date;

                        (2)   if actively traded over-the-counter,  the weighted
                              average  of  the   closing   bid  or  sale  prices
                              (whichever are applicable)  over the 30-day period
                              ending three days prior to the relevant date; or

                        (3)   if  there is no  active  public  market,  the fair
                              market value of such  securities  as determined in
                              good  faith  by the  Board  of  Directors,  but no
                              discount  or  premium  is to be  applied  to their
                              valuation   on  the   basis   of  the   securities
                              constituting  a minority block or a majority block
                              of securities, or

                  (B)   if such securities are subject to statutory hold periods
                        or contractual  restrictions  on transfer,  or both, the
                        fair market value of such  securities  as  determined by
                        applying an appropriate discount,

<PAGE>
                                     - 5 -


                        as  determined  in good faith by the Board of Directors,
                        to the value as calculated in accordance with clause (A)
                        above,

                  provided,  however,  that if the  Series  B  Majority  Holders
                  and/or the Series A Majority  Holders object in writing to any
                  determination  of the Board of Directors made under clause (A)
                  or (B)  above  within  10 days  of  receiving  notice  of such
                  determination,   the  applicable   fair  market  value  and/or
                  discount,  as the  case  may  be,  will  be  determined  by an
                  independent  investment  banking or  business  valuation  firm
                  mutually  agreeable to the Board of Directors and the Series B
                  Majority Holders and/or the Series A Majority Holders,  as the
                  case may be,  whose  decision  is  final  and  binding  on all
                  Persons   (the   costs  of   which   shall  be  borne  by  the
                  Corporation).

      (w)   "Issue Price" means $1.00,  subject to appropriate  adjustments  for
            stock  dividends,   stock  splits,  stock  consolidations,   capital
            reorganizations  and the like occurring after the Original  Issuance
            Date and affecting the Series B Shares.

      (x)   "Junior Shares" has the meaning set out in Section 4.1(a)(i).

      (y)   "Liquidation  Event" means a liquidation,  dissolution or winding-up
            of the Corporation,  whether voluntary or involuntary,  or any other
            distribution of the assets of the Corporation among its shareholders
            for the purpose of winding up its affairs.

      (z)   "Matthews Group" means:

            (i)   Dr.  Terence H.  Matthews,  his spouse or former  spouse,  any
                  lineal  descendant of Dr. Terence H.  Matthews,  any spouse or
                  former  spouse  of  any  such  lineal  descendant,  and  their
                  respective legal personal representatives;

            (ii)  the  trustee  or  trustees  of any  trust  (including  without
                  limitation a testamentary  trust) for the exclusive benefit of
                  any one or more members of the Matthews Group;

            (iii) any corporation  all of the issued and  outstanding  shares of
                  which are beneficially owned by any one or more members of the
                  Matthews Group;

            (iv)  any partnership all of the partnership  interests in which are
                  beneficially  owned by any one or more members of the Matthews
                  Group; and

            (v)   any  charitable  foundation  Controlled  by any  one  or  more
                  members of the Matthews Group,

            and, for this purpose,  a trustee or trustees  referred to in clause
            (ii)  above  shall be  deemed  to  beneficially  own any  shares  or
            partnership interests held by them.

<PAGE>
                                     - 6 -


      (aa)  "Non-Qualified  IPO" means any public offering of the Common Shares,
            other than a Qualified IPO (provided, that, any previous filing of a
            registration  statement or similar instrument with the United States
            Securities   and  Exchange   Commission   in   fulfillment   of  the
            Corporation's existing obligations as a foreign private issuer shall
            be deemed not to  constitute  a public  offering for the purposes of
            these Series B Share provisions).

      (bb)  "Original  Issuance Date" means, in respect of Series B Shares,  the
            date on which the first Series B Shares are issued.

      (cc)  "Partial Sale Event" means:

            (i)   (A)  an   amalgamation   of  the   Corporation   with  another
                  corporation (other than with a Subsidiary of the Corporation),
                  (B) a statutory arrangement involving the Corporation, (C) the
                  sale,  exchange or other disposition of outstanding  shares of
                  the Corporation,  or (D) any other  transaction  involving the
                  Corporation (other than a public offering of securities of the
                  Corporation),  whether  by a single  transaction  or series of
                  transactions,  pursuant to which, in the case of (A), (B), (C)
                  or (D) above, any Person,  together with his or its Affiliates
                  (other than members of the Matthews Group), hereafter acquires
                  the direct or indirect  "beneficial  ownership" (as defined in
                  the Act) of securities of the  Corporation  representing  more
                  than  50% but  less  than all of the  issued  and  outstanding
                  shares in the capital of the Corporation; or

            (ii)  any  event,  whether  by a single  transaction  or a series of
                  transactions,  that results in Dr. Terence H. Matthews  and/or
                  Persons  Controlled by Dr. Terence H. Matthews  holding in the
                  aggregate less than  100,000,000 of the issued and outstanding
                  shares  in  the  capital  of  the   Corporation   (subject  to
                  appropriate  adjustments  for stock  dividends,  stock splits,
                  stock  consolidations,  capital  reorganizations  and the like
                  occurring after the Original Issuance Date),  calculated on an
                  as-if-converted to Common Shares basis.

            provided, however, that the Series B Majority Holders shall have the
            right, on behalf of all Series B Holders,  to waive the treatment of
            any of such event as a "Partial Sale Event"  (provided that any such
            waiver  must be in writing  signed by the Series B Majority  Holders
            and shall only be effective as to the particular event in respect of
            which the waiver is executed).

      (dd)  "Person" includes any individual, sole proprietorship,  partnership,
            unincorporated association, unincorporated syndicate, unincorporated
            organization,  trust,  body  corporate,  and a natural person in his
            capacity  as  trustee,  executor,   administrator,  or  other  legal
            representative.

<PAGE>
                                     - 7 -


      (ee)  "Qualified IPO" means a public offering of Common Shares in which:

            (i)   the price per share is at least two times:

                  (A)   the aggregate Issue Price for all Series A Shares issued
                        by the Corporation,

                        divided by

                  (B)   the sum of

                        (1)   the number of Common Shares (other than Additional
                              Common Shares) into which any Series A Shares have
                              been converted (subject to appropriate adjustments
                              for   stock   dividends,   stock   splits,   stock
                              consolidations,  capital  reorganizations  and the
                              like  occurring  after the Original  Issuance Date
                              and affecting the Common Shares); and

                        (2)   the number of Common Shares (other than Additional
                              Common Shares) into which any outstanding Series A
                              Shares are then convertible;

            (ii)  the aggregate  cash proceeds to the  Corporation  are not less
                  than  $100,000,000  (before deducting  expenses,  underwriting
                  discounts and commissions); and

            (iii) immediately following the closing of the public offering,  the
                  Common  Shares are listed  and posted for  trading,  traded or
                  quoted on one or more of the Toronto Stock  Exchange,  the New
                  York Stock Exchange,  the NASDAQ National Market System or the
                  AMEX Exchange.

      (ff)  "Redemption  Notice  Period"  has the  meaning  set  out in  Section
            7.3(a)(i).

      (gg)  "Redemption  Trigger Date" has the meaning  ascribed  thereto in the
            Series A Share Terms.

      (hh)  "Series A Holders"  means the holders of Series A Shares and "Series
            A Holder" means any one of them.

      (ii)  "Series  A  Majority  Holders"  means,  as of the  relevant  time of
            reference,  one  or  more  Series  A  Holders  of  record  who  hold
            collectively more than 50% of the outstanding Series A Shares.

      (jj)  "Series A Participation  Redemption Amount" has the meaning ascribed
            thereto in the Series A Share Terms.

      (kk)  "Series A  Preference  Redemption  Amount" has the meaning  ascribed
            thereto in the Series A Share Terms.

<PAGE>
                                     - 8 -


      (ll)  "Series A Redemption Amount" has the meaning ascribed thereto in the
            Series A Share Terms.

      (mm)  "Series A  Redemption  Amount Per Share"  has the  meaning  ascribed
            thereto in the Series A Share Terms.

      (nn)  "Series A Redemption  Request" has the meaning  ascribed  thereto in
            the Series A Share Terms.

      (oo)  "Series A Shares"  means the Class A Convertible  Preferred  Shares,
            Series 1 in the capital of the Corporation.

      (pp)  "Series A Share  Terms" means the rights,  privileges,  restrictions
            and  conditions  attached  to the  Series A Shares as set out in the
            articles of the  Corporation as same exist on the Original  Issuance
            Date.

      (qq)  "Series B Holders"  means the holders of Series B Shares and "Series
            B Holder" means any one of them.

      (rr)  "Series  B  Majority  Holders"  means,  as of the  relevant  time of
            reference,  one  or  more  Series  B  Holders  of  record  who  hold
            collectively more than 50% of the outstanding Series B Shares.

      (ss)  "Series B Participation  Redemption  Amount" has the meaning set out
            in Section 7.1(a)(ii)(B).

      (tt)  "Series B Preference  Redemption  Amount" has the meaning set out in
            Section 7.1(a)(ii)(A).

      (uu)  "Series B  Redemption  Amount"  has the  meaning  set out in Section
            7.1(a)(ii).

      (vv)  "Series B Redemption  Amount Per Share" is the amount  determined by
            dividing  the  Series B  Redemption  Amount by the  total  number of
            Series B Shares outstanding.

      (ww)  "Series B  Redemption  Request"  has the  meaning set out in Section
            7.3(a).

      (xx)  "Series B Shares"  means the Class B Convertible  Preferred  Shares,
            Series 1 in the capital of the Corporation.

      (yy)  "Stock Split" means:

            (i)   the  issuance  of  Common   Shares  as  a  dividend  or  other
                  distribution on outstanding Common Shares;

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

            (iii) the  combination of  outstanding  Common Shares into a smaller
                  number of Common Shares.

<PAGE>
                                     - 9 -


      (zz)  "Subsidiary"  has the  meaning  ascribed  thereto  in the Act on the
            Original Issuance Date.

      (aaa) "TPC" means Her Majesty the Queen in Right of Canada, as represented
            by the Minister of Industry.

1.2 "As-if-converted to Common Shares Basis"

For purposes of these Series B Share provisions, where a calculation is required
to be made on an "as-if-converted to Common Shares basis", such calculation will
be  made  by  determining  (in  each  case  as of the  applicable  date  for the
determination):

      (a)   in respect of the Series B Shares, the number of whole Common Shares
            into which such  Series B Shares are then  convertible  pursuant  to
            these Series B Share provisions;

      (b)   in respect of the Series A Shares, the number of whole Common Shares
            into which such Series A Shares are then convertible pursuant to the
            Series A Share Terms; and

      (c)   in respect of any other Derivative  Securities,  the number of whole
            Common  Shares  into  which  such  securities  are then  convertible
            pursuant to the articles of the Corporation.

                                   ARTICLE 2
                                  VOTING RIGHTS

2.1 Entitlement to Vote and Receive Materials

      (a)   Except  as  otherwise  expressly  provided  in these  Series B Share
            provisions,  or as provided by applicable  law, each Series B Holder
            is entitled to vote on all matters submitted to a vote or consent of
            shareholders of the Corporation.

      (b)   Each Series B Holder is  entitled  to receive  copies of all notices
            and other  materials  sent by the  Corporation  to its  shareholders
            relating to written actions to be taken by shareholders in lieu of a
            meeting.  All such notices and other  materials shall be sent to the
            Series  B  Holders   concurrently   with   delivery   to  the  other
            shareholders.

2.2 Number of Votes

      (a)   Within the first two years after the Original  Issuance  Date,  each
            Series B Share  entitles  the Series B Holder to the number of votes
            per share equal to the quotient obtained by dividing the Issue Price
            by the Conversion Value.

      (b)   After two years from the Original Issuance Date, each Series B Share
            entitles  the Series B Holder to the number of votes per share equal
            to the sum of (i) the quotient  obtained by dividing the Issue Price
            by the Conversion  Value, and (ii) the quotient obtained by dividing
            the Issue Price by the fair market  value of a Common Share (and for
            such purposes, the fair market value of a Common Share

<PAGE>
                                     - 10 -


            shall be as  determined  in good faith by the Board of  Directors at
            the time of the relevant calculation).

      (c)   For  purposes of  determining  the number of votes for each Series B
            Share  calculated in accordance  with Section 2.2(a) or 2.2(b),  the
            determination   shall  be  made  as  of  the  record  date  for  the
            determination of shareholders entitled to vote on such matter, or if
            no record  date is  established,  the date such vote is taken or any
            written  consent  of   shareholders  is  solicited,   and  shall  be
            calculated based on the Conversion Value in effect on that date.

2.3 Single Class

Except as otherwise  provided  herein,  or except as provided by applicable law,
the Series B Holders will vote  together with the holders of Series A Shares and
Common  Shares and any other series or class of shares  entitled to vote on such
matters as a single class on all matters  submitted to a vote of shareholders of
the Corporation.

2.4 Exception to Single Class

In addition to any other approvals  required by applicable law, any addition to,
change to or removal of any right, privilege, restriction or condition attaching
to the  Series B Shares as a series or the Class B  Preferred  Shares as a class
requires  the  affirmative  vote or  written  approval  of the Series B Majority
Holders.

                                    ARTICLE 3
                                    DIVIDENDS

3.1 Entitlement to Dividends

The Series B Holders  shall be entitled  to receive,  in respect of the Series B
Shares,  non-cumulative  dividends  if,  as and when  declared  by the  Board of
Directors  out of the  monies  of the  Corporation  properly  applicable  to the
payment of  dividends,  the  amount of which the  directors,  in their  absolute
discretion,  may from time to time or at any time  determine.  Any  declared but
unpaid  dividend  shall be paid  immediately  upon the  conversion of a Series B
Share, if not previously paid.

3.2 Priority of Dividends

      (a)   Except as provided in Section 4.1, no dividend or other distribution
            (other  than a stock  dividend  giving rise to an  adjustment  under
            Section 6.5) will be paid or set apart for payment in respect of any
            share of any other class or series unless a dividend is concurrently
            paid or set apart for payment in respect of each outstanding  Series
            B Share in an amount at least equal to the product of:

            (i)   the  amount of the  dividend  per share paid in respect of the
                  shares  of  such  other  class  or  series  (calculated  on an
                  as-if-converted to Common Shares basis); and

            (ii)  the number of Common  Shares into which each Series B Share is
                  then convertible.

<PAGE>
                                     - 11 -


      (b)   When any  declared  non-cumulative  dividend or amount  payable on a
            return of capital in respect of Series B Shares is not paid in full,
            the Series B Holders shall  participate  rateably in respect of such
            dividends in accordance  with the sums which would be payable on the
            Class B Preferred  Shares if all such  dividends  were  declared and
            paid in full,  and on any return of capital in  accordance  with the
            sums which would be payable on such return of capital if all sums so
            payable were paid in full.

                                    ARTICLE 4
                             LIQUIDATION PREFERENCE

4.1 Payment of Liquidation Preference

      (a)   Subject to the limitation in Section 4.1(b),  upon the occurrence of
            a Liquidation  Event or Change of Control Event the Series B Holders
            are entitled to receive the following amounts:

            (i)   Preference on a Liquidation  Event.  Upon the  occurrence of a
                  Liquidation Event, after the distribution to or payment of all
                  preferential  amounts  required  to be paid to the  holders of
                  Series A Shares  and any  other  series  of Class A  Preferred
                  Shares (or funds  necessary  for such  payments  have been set
                  aside in trust so as to be available for such  payments),  the
                  Series B Holders are  entitled to be paid out of the assets of
                  the Corporation available for distribution to its shareholders
                  (pari  passu with the  holders of any other  series of Class B
                  Preferred  Shares),  before any  payment  shall be made to the
                  holders  of  Common  Shares  or any  other  class or series of
                  shares  ranking on  liquidation,  dissolution or winding-up of
                  the Corporation  junior to the Series B Shares  (collectively,
                  the  "Junior  Shares"),  an amount per Series B Share equal to
                  the Issue Price plus any declared but unpaid dividends payable
                  to Series B Holders.  If, upon such a  Liquidation  Event (and
                  after  the  distribution  to or  payment  of all  preferential
                  amounts  required to be paid to the holders of Series A Shares
                  and any  other  series  of  Class A  Preferred  Shares  upon a
                  Liquidation  Event (or funds  necessary for such payments have
                  been  set  aside  in  trust  so as to be  available  for  such
                  payments)),  the  assets  of  the  Corporation  available  for
                  distribution  to  the  Corporation's   shareholders  shall  be
                  insufficient  to pay the Series B Holders  the full  amount to
                  which  they are  entitled  as set out  above,  the  holders of
                  Series B Shares  and any  other  series  of Class B  Preferred
                  Shares shall share rateably in any amount remaining  available
                  for distribution in proportion to the respective amounts which
                  would  otherwise  have been  payable  on or in  respect of the
                  shares held by them if all amounts payable on or in respect of
                  such shares were paid in full.

            (ii)  Preference on a Change of Control  Event.  Upon the occurrence
                  of a Change of Control  Event,  after the  distribution  to or
                  payment of all preferential amounts required to be paid to the
                  holders  of Series A Shares  and any  other  series of Class A
                  Preferred  Shares  upon a Change  of  Control  Event (or funds
                  necessary for such payments have been set aside in trust so as
                  to be available for such  payments),  the Series B Holders are
                  entitled

<PAGE>
                                     - 12 -


                  to receive an amount of cash, securities or other property per
                  Series  B  Share,  before  any  payment  shall  be made to the
                  holders of Junior  Shares,  equal to the Issue  Price plus any
                  declared but unpaid dividends payable to Series B Holders.  If
                  upon the  occurrence  of a Change of Control  Event (and after
                  the  distribution  to or payment of all  preferential  amounts
                  required  to be paid to the holders of Series A Shares and any
                  other  series  of Class A  Preferred  Shares  upon a Change of
                  Control Event (or funds  necessary for such payments have been
                  set aside in trust so as to be available for such  payments)),
                  the cash,  securities or other property  available for payment
                  to the Corporation's shareholders shall be insufficient to pay
                  the  Series B  Holders  the  full  amount  to  which  they are
                  entitled as set out above,  the holders of Series B Shares and
                  any  class or  series of  shares  ranking  on parity  with the
                  Series B Shares  shall share  rateably in any such  payment in
                  proportion to the  respective  amounts  which would  otherwise
                  have been  payable on or in respect of the shares held by them
                  if all  amounts  payable on or in respect of such  shares were
                  paid in full.

            (iii) Participation  Amount. After the distribution to or payment of
                  all preferential amounts required to be paid to the holders of
                  Series A Shares, Series B Shares and any other series of Class
                  A  Preferred  Shares  or  Class  B  Preferred  Shares  upon  a
                  Liquidation  Event or upon a Change of Control Event (or funds
                  necessary for such payments have been set aside in trust so as
                  to be available for such  payments),  the remaining  assets of
                  the   Corporation   available  for   distribution,   or  cash,
                  securities  or other  property  available  for  payment to its
                  shareholders,  shall be  distributed  or paid, as the case may
                  be, rateably  (subject to the limitation in Section 4.1(b) and
                  to the rights, if any, of holders of any other class or series
                  of shares of the  Corporation  to  participate  in payments or
                  distributions  upon a  Liquidation  Event or Change of Control
                  Event)  among the holders of all issued and  outstanding:  (A)
                  Class A Preferred Shares;  (B) Class B Preferred  Shares;  and
                  (C) Common  Shares  (with the holders of any series of Class A
                  Preferred  Shares and Class B Preferred  Shares deemed to hold
                  that  number of shares  equal to the  number of Common  Shares
                  into which such series of Class A Preferred  Shares or Class B
                  Preferred Shares, as the case may be, are then convertible).

      (b)   In the  event  that the  applicable  Liquidation  Event or Change of
            Control  Event occurs  within the first two years after the Original
            Issuance Date, and the Series B Holders would  otherwise be entitled
            to receive a preferential  payment pursuant to Section  4.1(a)(i) or
            4.1(a)(ii),  if the  amount per Series B Share that would be payable
            upon the  occurrence of the  Liquidation  Event or Change of Control
            Event  pursuant to Section  4.1(a)(iii) to the holders of all issued
            and outstanding  Common Shares (assuming the conversion of all Class
            A Preferred  Shares and Class B Preferred  Shares in accordance with
            their terms  immediately  prior to the occurrence of the Liquidation
            Event or Change of Control Event, as the case may be) is:

<PAGE>
                                     - 13 -


            (i)   equal to or  greater  than the sum of (A) two  times the Issue
                  Price,  and (B) any declared but unpaid dividends per Series B
                  Share,  then the  Series B Holders  shall not be  entitled  to
                  receive  payment  of  any  preferential  amounts  pursuant  to
                  Section 4.1(a)(i) or 4.1(a)(ii), as the case may be, and shall
                  only be  entitled to receive  the amount  payable  pursuant to
                  Section 4.1(a)(iii); or

            (ii)  less than the sum (A) two times the Issue  Price,  and (B) any
                  declared  but unpaid  dividends  per Series B Share,  then the
                  maximum amount per Series B Share that the Series B Holders as
                  such are entitled to receive  pursuant to Section 4.1(a) shall
                  be the sum of (A)  two  times  the  Issue  Price,  and (B) any
                  declared but unpaid dividends per Series B Share.

      (c)   In the event of any Liquidation Event or Change of Control Event:

            (i)   the  Corporation  will not permit  such  Liquidation  Event or
                  Change of Control  Event to occur unless the  transaction  (or
                  series of transactions) provides for a payment (by dividend or
                  other  distribution  by the  Corporation  or otherwise) to the
                  Series  B  Holders  in  connection  therewith  of  their  full
                  entitlements  pursuant  to  Section  4.1(a)  (subject  to  the
                  limitation in Section 4.1(b)); or

            (ii)  if the Corporation  cannot prevent such  Liquidation  Event or
                  Change of Control Event from occurring, the Corporation shall,
                  subject to  applicable  laws,  pay to the Series B Holders (by
                  dividend  or  other  distribution)  the full  amount  of their
                  entitlements  pursuant  to  Section  4.1(a)  (subject  to  the
                  limitation in Section  4.1(b)) or, if the  Corporation  cannot
                  legally pay such amount in full, the amount it is legally able
                  to pay shall be paid and the  balance  shall  increase  at the
                  rate of 15% per annum,  compounded  annually until such amount
                  is paid, and the Corporation shall not pay any amounts or make
                  any  other   distributions   (other   than  any   payment   or
                  distribution   made  pro  rata  according  to  the  respective
                  entitlements  of the  Series A  Holders  pursuant  to  section
                  4.1(c)(ii)  of the  Series A Share  Terms and of the  Series B
                  Holders  pursuant to this clause (ii)) in respect of any other
                  class or series of its  shares  until  such  entitlements  are
                  fully paid.

      (d)   The  Corporation  will not  permit  any  transaction  (or  series of
            transactions) that would constitute,  but for Section 1.1(i)(ii)(2),
            a "Change of Control  Event",  to occur unless the  transaction  (or
            series of transactions) provides for a payment (by dividend or other
            distribution  by the  Corporation  or  otherwise)  to the  Series  B
            Holders  in  connection  therewith  of the their  full  entitlements
            pursuant  to Sections  4.1(a)(ii)  and  4.1(a)(iii)  (subject to the
            limitation in Section 4.1(b)).

4.2 Distribution Other than Cash

In the case of a Liquidation  Event, the Series B Holders may in any event elect
to receive any  distribution  or payment to which they are entitled in cash,  if
any. The value of the  securities or other assets for this purpose is their Fair
Market Value.

<PAGE>
                                     - 14 -


4.3 Notice

The  Corporation  shall  provide  notice in  accordance  with the  provisions of
Section 8.2 to each Series B Holder,  at the earliest  practicable  time, of the
date on which a proposed or reasonably  anticipated  Liquidation Event or Change
of Control Event shall take place.  Such notice shall also specify the estimated
payment date, the amount to which the Series B Holders would be entitled and the
place where such payments are to be made.

                                    ARTICLE 5
                                   CONVERSION

5.1 Optional Conversion Rights

Each  Series B Share is  convertible,  at any time and from  time to time at the
option of the Series B Holder and without  payment of additional  consideration,
into Common Shares.

5.2 Automatic Conversion

The Series B Shares automatically convert into Common Shares:

      (a)   immediately  prior  to,  and  conditional  upon,  the  closing  of a
            Qualified IPO; or

      (b)   with  the  affirmative  vote or  written  consent  of the  Series  B
            Majority Holders.

5.3 Conversion Rate

The number of Common  Shares  into which each Series B Share is  convertible  is
equal to the  quotient  obtained by dividing  the Issue Price (plus any declared
but unpaid  dividends) by the Conversion Value, as adjusted from time to time in
accordance with Article 6.

5.4 Additional Common Shares on Conversion

In the event of any conversion after two years from the Original  Issuance Date,
in  addition  to the number of Common  Shares  otherwise  issuable to a Series B
Holder upon a conversion of Series B Shares,  each Series B Holder shall also be
entitled,  in  respect  of each  Series  B Share so  converted,  to  receive  an
additional number of Common Shares as is equal to the Issue Price divided by the
Fair Market Value of a Common Share as of the date that the conversion is deemed
to be effected in accordance with Section 5.6.

5.5 Additional Common Shares on Conversion in a Non-Qualified IPO

In the event of:

      (a)   an optional  conversion pursuant to Section 5.1 in connection with a
            Non-Qualified IPO; or

      (b)   an automatic  conversion  pursuant to Section  5.2(b) in  connection
            with a Non-Qualified IPO,

<PAGE>
                                     - 15 -


that occurs  within the first two years after the  Original  Issuance  Date,  in
addition to the number of Common Shares otherwise  issuable to a Series B Holder
upon a  conversion  of  Series B  Shares,  each  Series B Holder  shall  also be
entitled in respect of each Series B Share so converted,  to receive that number
of additional  Common  Shares,  if any, as is determined in accordance  with the
following formula:

                        X - Y
                        -----
                          Z

                        Where:

                        X  = two times the Issue Price

                        Y  = the  greater of: (i) the Issue  Price;  and (ii)
                             the Offering Price

                        Z  = the Offering Price

For the purposes of this Section 5.5, "Offering Price" means the per share issue
price of the Common Shares issued in connection with the Non-Qualified IPO.

For the purposes of this Section 5.5 and Section 5.6(d),  a conversion of Series
B Shares into Common Shares shall be deemed to be effected "in connection with a
Non-Qualified  IPO" if (i) in the case of an  optional  conversion  pursuant  to
Section  5.1,  such  conversion  was  completed  at the  written  request of the
Corporation in order to facilitate the Non-Qualified IPO, or (ii) in the case of
an  automatic  conversion  pursuant  to  Section  5.2(b),  the Series B Majority
Holders  voting to approve or consenting to the automatic  conversion  agreed to
convert their Series B Shares at the written request of the Corporation in order
to facilitate the  Non-Qualified  IPO;  provided that, the Corporation shall not
make such a written  request  to the  Series B Holders  unless  the  Corporation
concurrently  makes a written  request to the Series A Holders  pursuant  to the
Series A Share Terms.

5.6 Effective Date and Time of Conversion

Conversion is deemed to be effected:

      (a)   subject to Section  5.6(d),  in the case of an  optional  conversion
            pursuant to Section 5.1,  immediately prior to the close of business
            on the Conversion Date;

      (b)   in the case of  automatic  conversion  pursuant  to Section  5.2(a),
            immediately prior to the closing of the Qualified IPO;

      (c)   subject  to  Section  5.6(d),  in the case of  automatic  conversion
            pursuant to Section 5.2(b), at the time and on the date specified by
            the Series B Majority Holders;

      (d)   in the case of an optional conversion or an automatic conversion "in
            connection  with a  Non-Qualified  IPO", as  contemplated in Section
            5.5, immediately prior to the closing of the Non-Qualified IPO; and

      (e)   notwithstanding   any  delay  in  the   delivery   of   certificates
            representing  the Common  Shares into which the Series B Shares have
            been converted.

<PAGE>
                                     - 16 -


5.7 Effect of Conversion

Upon the conversion of the Series B Shares:

      (a)   the rights of a Series B Holder as a holder of the converted  Series
            B Shares cease; and

      (b)   each  person in whose  name any  certificate  for  Common  Shares is
            issuable upon such conversion is deemed to have become the holder of
            record of such Common Shares.

5.8 Mechanics of Optional Conversion

      (a)   To exercise optional conversion rights under Section 5.1, a Series B
            Holder must:

            (i)   give written notice to the Corporation at its principal office
                  or the office of any transfer agent for the Common Shares:

                  (A)   stating that the Series B Holder  elects to convert such
                        shares; and

                  (B)   providing  the name or names (with address or addresses)
                        in which the  certificate  or  certificates  for  Common
                        Shares issuable upon such conversion are to be issued;

            (ii)  surrender the  certificate or  certificates  representing  the
                  shares being  converted to the  Corporation  at its  principal
                  office or the  office  of any  transfer  agent for the  Common
                  Shares; and

            (iii) where the Common  Shares are to be registered in the name of a
                  person other than the Series B Holder, provide evidence to the
                  Corporation   of  proper   assignment   and  transfer  of  the
                  surrendered   certificates  to  the   Corporation,   including
                  evidence of  compliance  with  applicable  Canadian and United
                  States   securities  laws  and  any  applicable   shareholders
                  agreement.

      (b)   As soon as reasonably  practicable,  but in any event within 10 days
            after the Conversion Date, the Corporation will issue and deliver to
            the  Series  B  Holder  a  certificate  or   certificates   in  such
            denominations  as such  Series B Holder  requests  for the number of
            full Common  Shares  issuable  upon the  conversion of such Series B
            Shares,  together  with cash in  respect  of any  fractional  Common
            Shares issuable upon such conversion.

5.9 Mechanics of Automatic Conversion

      (a)   Upon the  automatic  conversion  of any Series B Shares  into Common
            Shares,  each  Series B Holder must  surrender  the  certificate  or
            certificates  formerly  representing that Series B Holder's Series B
            Shares at the principal  office of the  Corporation or the office of
            any transfer agent for the Common Shares.

<PAGE>
                                     - 17 -


      (b)   Upon receipt by the Corporation of the certificate or  certificates,
            the  Corporation  will issue and  deliver  to such  Series B Holder,
            promptly  at the  office  and in the name  shown on the  surrendered
            certificate or  certificates,  a certificate or certificates for the
            number  of  Common  Shares  into  which  such  Series B  Shares  are
            converted,  together with cash in respect of any  fractional  Common
            Shares issuable upon such conversion.

      (c)   The Corporation is not required to issue certificates evidencing the
            Common Shares issuable upon conversion until  certificates  formerly
            evidencing the converted Series B Shares are either delivered to the
            Corporation or its transfer  agent,  or the Series B Holder notifies
            the Corporation or such transfer agent that such  certificates  have
            been  lost,  stolen or  destroyed,  and  executes  and  delivers  an
            agreement to indemnify the Corporation from any loss incurred by the
            Corporation in connection with the loss, theft or destruction.

      (d)   If the  Board of  Directors  expects,  acting  reasonably,  that the
            Series B Shares will automatically convert, the Corporation will, at
            least 20 days  before the date it  reasonably  believes  will be the
            date of the automatic conversion, send by prepaid priority overnight
            courier  or  deliver  to each  person  who at the date of mailing or
            delivery is a registered Series B Holder, a notice in writing of the
            intention of the Corporation to  automatically  convert such shares.
            That notice  shall be sent or  delivered  to each Series B Holder at
            the  last  address  of that  Series B Holder  as it  appears  on the
            securities register of the Corporation,  or in the event the address
            of any such  Series B Holder  does not so  appear,  then to the last
            address of that Series B Holder known to the Corporation. Accidental
            failure  or  omission  to give that  notice to one or more  Series B
            Holder(s)  will not affect the validity of such  conversion,  but if
            that  failure  or  omission  is  discovered,  notice  shall be given
            promptly  to any  Series B Holder  that was not given  notice.  That
            notice  will have the same force and effect as if given in due time.
            The  notice  will  set out the  basis  under  Section  5.2 for  such
            automatic  conversion,  the  number of  Series B Shares  held by the
            person to whom it is addressed which are to be converted (if known),
            the number of Common Shares into which those Series B Shares will be
            converted  (including any Additional  Common  Shares),  the expected
            date of closing of the Qualified IPO, if  applicable,  and the place
            or  places  in Canada at which  Series B  Holders  may  present  and
            surrender the certificate or certificates  representing its Series B
            Shares for conversion.

5.10 Fractional Shares

No fractional  Common Shares will be issued upon  conversion of Series B Shares.
Instead of any  fractional  Common Shares that would  otherwise be issuable upon
conversion of Series B Shares, the Corporation will pay to the Series B Holder a
cash  adjustment  in respect  of such  fraction  in an amount  equal to the same
fraction of the value per Common Share (as determined in good faith by the Board
of Directors) on the effective date of the  conversion.  For greater  certainty,
all of a Series B Holder's  Series B Shares will be  aggregated  for purposes of
calculating any fractional Common Share resulting from a conversion.

<PAGE>
                                     - 18 -


5.11 Partial Conversion

If some but not all of the  Series  B Shares  represented  by a  certificate  or
certificates  surrendered  by a Series B Holder are converted,  the  Corporation
will  execute  and  deliver  to or on the order of the  Series B Holder,  at the
expense of the Corporation,  a new certificate representing the number of Series
B Shares that were not converted.

                                   ARTICLE 6
                                CONVERSION VALUE

6.1 Initial Conversion Value

The initial  Conversion  Value is equal to the Issue Price and remains in effect
until the Conversion Value is adjusted in accordance with the provisions of this
Article 6.

6.2 Adjustments for Dilution

If, following the Original Issuance Date, the Corporation  issues any additional
Common Shares or  Derivative  Securities  (other than  Excluded  Issuances or in
connection  with  an  event  to  which  Section  6.5,  6.6 or 6.7  applies)  for
Consideration  Per  Share  that is less  than the  Conversion  Value  in  effect
immediately  prior  to such  issuance,  then  the  Conversion  Value  in  effect
immediately  prior  to such  issuance  shall be  adjusted  so  that,  upon  such
issuance,  the  Conversion  Value  shall be  reduced  to an amount  equal to the
Consideration   Per  Share  of  such  additional  Common  Shares  or  Derivative
Securities.

6.3 Additional Provisions Regarding Dilution

For purposes of Section 6.2:

      (a)   if a part or all of the consideration received by the Corporation in
            connection  with  the  issuance  of  additional   Common  Shares  or
            Derivative  Securities  consists of property  other than cash,  such
            consideration  is  deemed to have a value  equal to its Fair  Market
            Value;

      (b)   no  adjustment  of the  Conversion  Value  is to be  made  upon  the
            issuance of any  Derivative  Securities or additional  Common Shares
            that are issued  upon the  exercise,  conversion  or exchange of any
            Derivative Securities;

      (c)   any adjustment of the Conversion  Value is to be disregarded if, and
            to the extent that, all of the Derivative  Securities that gave rise
            to such  adjustment  expire or are  cancelled  without  having  been
            exercised  or  converted,  so that the  Conversion  Value  effective
            immediately  upon such  cancellation  or  expiration is equal to the
            Conversion   Value  that   otherwise   would  have  been  in  effect
            immediately  prior to the time of the  issuance  of the  expired  or
            cancelled Derivative Securities,  with any additional adjustments as
            subsequently  would have been made to that Conversion  Value had the
            expired or cancelled Derivative Securities not been issued;

      (d)   if the terms of any Derivative  Securities  previously issued by the
            Corporation  are  changed  (whether  by their terms or for any other
            reason) so as to raise or lower the  Consideration Per Share payable
            with respect to such Derivative Securities

<PAGE>
                                     - 19 -


            (whether  or  not  the  issuance  of  such   Derivative   Securities
            originally gave rise to an adjustment of the Conversion  Value), the
            Conversion Value is adjusted as of the date of such change;

      (e)   the  Consideration  Per Share received by the Corporation in respect
            of Derivative Securities is determined in each instance as follows:

            (i)   the  Consideration  Per Share is  determined as of the date of
                  issuance of Derivative Securities without giving effect to any
                  possible  future price  adjustments or rate  adjustments  that
                  might be applicable with respect to such Derivative Securities
                  and that are contingent upon future events; and

            (ii)  in the case of an  adjustment  to the  Conversion  Value to be
                  made as a  result  of a  change  in  terms  of any  Derivative
                  Securities,  the  Consideration  Per  Share  for  purposes  of
                  calculating   the  adjustment  to  the  Conversion   Value  is
                  determined  as of the date of such  change  and,  for  greater
                  certainty,  not  as  of  the  date  of  the  issuance  of  the
                  Derivative Securities; and

      (f)   notwithstanding  any other  provisions  contained  in these Series B
            Share provisions,  but except as provided in Sections 6.3(d) or 6.5,
            no  adjustment to the  Conversion  Value is to be made in respect of
            the issuance of additional Common Shares or Derivative Securities in
            any case in which  such  adjustment  would  otherwise  result in the
            Conversion  Value being greater than the Conversion  Value in effect
            immediately  prior to the issuance of such additional  Common Shares
            or Derivative Securities.

      6.4 Excluded Transactions

      Notwithstanding  Section 6.2, no adjustment to the Conversion  Value is to
      be made in connection with the following issuances ("Excluded Issuances"):

      (a)   any Series A Shares issued on or after the Original Issuance Date;

      (b)   any Common Shares issued or issuable upon conversion of the Series A
            Shares or Series B Shares;  provided  that,  any such  conversion is
            effected  in  accordance  with the terms of such  shares  (including
            provisions  for  adjustment)  as such  terms  exist on the  Original
            Issuance Date;

      (c)   any Additional Common Shares;

      (d)   any Common Shares issued to the Series A Holders in accordance  with
            the Series A Share Terms;

      (e)   any Common  Shares  issued or issuable upon exercise of any warrants
            granted  to the Series A Holders in  connection  with such  Series A
            Holders' subscription for Series A Shares;

      (f)   any Common Shares issued pursuant to the Common Share Offering;

<PAGE>
                                     - 20 -


      (g)   any option to purchase Common Shares or other Derivative  Securities
            granted  under any stock option plan,  stock  purchase plan or other
            stock compensation  program of the Corporation approved by the Board
            of Directors  and/or  Common Shares or other  Derivative  Securities
            allotted for issuance,  issued or issuable pursuant to any such plan
            or  arrangement,  or the  issuance  of any  Common  Shares  upon the
            exercise of any such options or other Derivative Securities;

      (h)   any  equity  securities  issued  pursuant  to a  Qualified  IPO or a
            Non-Qualified IPO;

      (i)   any warrants to acquire Common Shares issued to TPC or any permitted
            assignee of TPC pursuant to obligations of the  Corporation to issue
            such warrants (as such  obligations  exist on or before the Original
            Issuance  Date  or as  such  obligations  may be  amended  with  the
            approval  of the  Board of  Directors  after the  Original  Issuance
            Date), and any issuance of Common Shares pursuant to the exercise of
            such warrants;

      (j)   any Common Shares or Derivative Securities issued as compensation to
            any agent,  broker,  sub-agent  or  sub-broker  with  respect to the
            transactions  entered into by the Corporation  with Series A Holders
            and certain other  shareholders of the  Corporation,  and any Common
            Shares or Derivative Securities issuable upon exercise thereof;

      (k)   except as contemplated in Section 6.5, any equity  securities issued
            in   respect   of   subdivisions,   stock   dividends   or   capital
            reorganizations affecting the share capital of the Corporation;

      (l)   any  equity   securities   issued  to  bona  fide   consultants   or
            professional   advisors   of  the   Corporation   as   part  of  the
            consideration  for services  received by the  Corporation  from such
            consultants or professional advisors;

      (m)   any Common Shares or Derivative Securities issued in connection with
            an acquisition  of assets or a business;  provided that (i) the cost
            of  such  acquisition  is  less  than  $10,000,000,  (ii)  any  such
            transaction  is  approved by the Board of  Directors,  and (iii) the
            maximum  aggregate number of Common Shares  (including Common Shares
            issuable on the  conversion  or exercise of  Derivative  Securities)
            that may be issued pursuant to all transactions contemplated by this
            clause  (m) shall not  exceed 5% of the  aggregate  number of Common
            Shares issued and outstanding on the Original Issuance Date (subject
            to appropriate adjustments for stock dividends,  stock splits, stock
            consolidations, capital reorganizations and the like occurring after
            the Original Issuance Date), all calculated on an as-if-converted to
            Common Shares basis; and

      (n)   any  Common  Shares  or  Derivative   Securities  issued  to  or  in
            connection  with any of the following (i) licensors of technology to
            the Corporation,  (ii) lending or leasing institutions in connection
            with  obtaining  debt  financing,  or  (iii)  any  other  technology
            licensing,  equipment leasing or other non-equity  interim financing
            transaction; provided that: (A) any such transaction or transactions
            are  approved  by the  Board  of  Directors;  and  (B)  the  maximum
            aggregate number of Common Shares  (including Common Shares issuable
            on the conversion or exercise of

<PAGE>
                                     - 21 -


            Derivative   Securities)   that  may  be  issued   pursuant  to  all
            transactions  contemplated by this clause (n) shall not exceed 5% of
            the aggregate  number of Common Shares issued and outstanding on the
            Original Issuance Date (subject to appropriate adjustments for stock
            dividends,    stock   splits,    stock    consolidations,    capital
            reorganizations  and the like occurring after the Original  Issuance
            Date), all calculated on an as-if-converted to Common Shares basis.

6.5 Adjustments for Stock Splits

After the Original  Issuance Date, the Conversion Value shall be adjusted on the
record date in respect of each Stock Split,  such that the  Conversion  Value is
equal to the product  obtained by multiplying the Conversion  Value  immediately
before the Stock Split by a fraction:

      (a)   the  numerator  of which is the number of Common  Shares  issued and
            outstanding immediately before the Stock Split; and

      (b)   the  denominator  of which is the number of Common Shares issued and
            outstanding immediately after the Stock Split.

6.6 Adjustments for Capital Reorganizations

If, following the Original Issuance Date, the Common Shares are changed into the
same or a different  number of shares of any other  class or series,  whether by
capital  reorganization,  reclassification  or otherwise,  the Corporation  will
provide  each Series B Holder with the right to convert each Series B Share into
the kind and amount of shares,  other  securities and property  receivable  upon
such  change that a holder of a number of Common  Shares  equal to the number of
Common Shares into which such Series B Share was convertible  immediately  prior
to the change  would be  entitled to receive  upon such  change  (subject to any
necessary further adjustments after the date of such change).

6.7 Other Distributions

In the event the  Corporation  declares a  distribution  payable  in  securities
(other than securities of the Corporation),  evidences of indebtedness issued by
the Corporation or other persons or assets (excluding cash dividends paid in the
ordinary  course of  business)  then,  in each such case for the purpose of this
Section 6.7,  Series B Holders shall be entitled upon conversion of their Series
B Shares to a proportionate  share of any such  distribution as though they were
the holders of the number of Common Shares into which their Series B Shares were
convertible as of the record date fixed for the  determination of the holders of
Common Shares of the Corporation entitled to receive such distribution.

6.8 No Impairment

The  Corporation  will  not,  by  amendment  of  its  articles  or  through  any
reorganization,  recapitalization,  transfer of assets,  consolidation,  merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the  observance or  performance of any of the terms to be observed
or performed under this Article 6, but will at all times in good faith assist in
the carrying out of all the  provisions  of Article 5 and 6 and in the taking of
any action necessary

<PAGE>
                                     - 22 -


or appropriate in order to protect the conversion rights of the Series B Holders
against impairment.

6.9 Reservation of Common Shares

The  Corporation  shall  at all  times  reserve  and keep  available  out of its
authorized but unissued  Common Shares,  solely for the purpose of effecting the
conversion of Series B Shares, such number of Common Shares as from time to time
is sufficient to effect the conversion of all outstanding  Series B Shares,  and
if at any time the  number  of  authorized  but  unissued  Common  Shares is not
sufficient  to effect the  conversion  of all of the then  outstanding  Series B
Shares,  then the  Corporation  will take such  corporate  action as may, in the
opinion of its legal  counsel,  be  necessary  to increase  its  authorized  but
unissued  Common  Shares to such  number of  shares  as is  sufficient  for such
purpose.

6.10 Disputes

If a  dispute  shall  at any time  arise  with  respect  to  adjustments  in the
Conversion  Value,  such  dispute  shall  be  conclusively   determined  by  the
Corporation's auditors, or if they are unable or unwilling to act, by such other
firm of  independent  chartered  accountants  as may be selected by the Board of
Directors and any such determination shall be binding upon the Corporation,  the
Series B Holders and all other shareholders of the Corporation. Such auditors or
accountants   shall  be  provided  access  to  all  necessary   records  of  the
Corporation.  If any such determination is made, the Corporation shall deliver a
certificate  to the  Series B  Holders  and  Series A  Holders  describing  such
determination.

6.11 Certificate as to Adjustments

In each case of an adjustment  or  readjustment  of the  Conversion  Value,  the
Corporation  will promptly furnish each Series B Holder and Series A Holder with
a  certificate,   prepared  by  the  Corporation's  accountants,   showing  such
adjustment  or  readjustment,  and stating in  reasonable  detail the facts upon
which such adjustment or readjustment is based.

6.12 Further Adjustment Provisions

If, at any time as a result of an  adjustment  made  pursuant to Section  6.6, a
Series B Holder  becomes  entitled to receive any shares or other  securities of
the Corporation other than Common Shares upon  surrendering  Series B Shares for
conversion,  the Conversion  Value in respect of such other shares or securities
(if such other shares or securities are by their terms  convertible  securities)
will be adjusted after that time, and will be subject to further adjustment from
time to time, in a manner and on terms as nearly  equivalent as  practicable  to
the provisions with respect to Series B Shares  contained in this Article 6, and
the remaining  provisions of these Series B Share  provisions will apply mutatis
mutandis to any such other shares or securities.

6.13 Waiver of Adjustments

Notwithstanding any other provisions of this Article 6, with the written consent
of the Corporation,  the Series B Majority Holders shall be entitled,  on behalf
of all  Series B  Holders,  to waive any  entitlement  to an  adjustment  to the
Conversion  Value under this Article 6. Any such waiver by the Series B Majority
Holders  must be in writing  and shall only be  effective  as to the

<PAGE>
                                     - 23 -


particular  adjustment being waived. In such event,  notice of such waiver shall
be sent to all Series B Holders and Series A Holders in accordance  with Section
8.2.

                                   ARTICLE 7
                                   REDEMPTION

7.1 Redemption Following the Redemption Trigger Date

      (a)   On or after the  Redemption  Trigger  Date,  the  Series B  Majority
            Holders  shall have the right to request the  Corporation  to redeem
            all of the  Series B Shares.  Upon  receipt  of such a  request,  in
            writing, the Corporation will:

            (i)   deliver to each Series B Holder and Series A Holder  within 30
                  days following the date the written request is received by the
                  Corporation  a  notice  specifying  the  total  funds  legally
                  available  to the  Corporation  for  redemption  of all of the
                  Series B Shares and Series A Shares  outstanding  at that time
                  (the "Available Funds"); and

            (ii)  within  90  days,  but  not  before  the  expiry  of 30  days,
                  following  the date the  written  request is  received  by the
                  Corporation  redeem  from the  Series B  Holders,  subject  to
                  Section  7.2,  all  the  Series  B  Shares  (and  concurrently
                  therewith  redeem  from the Series A Holders  all the Series A
                  Shares in the event that the redemption rights of the Series A
                  Shares have been  exercised  in  accordance  with the Series A
                  Share  Terms) to the  extent  the  Corporation  has  Available
                  Funds,  by paying to the Series B Holders,  in accordance with
                  Section 7.1(b),  an amount (the "Series B Redemption  Amount")
                  equal to the sum of:

                  (A)   the number of Series B Shares outstanding  multiplied by
                        the sum of (x) the  Issue  Price  and (y) the per  share
                        amount  of any  declared  but  unpaid  dividends  on the
                        Series  B  Shares  (such  amount  being  the  "Series  B
                        Preference Redemption Amount"); and

                  (B)   the then-current  Fair Market Value of the Common Shares
                        (other than  Additional  Common  Shares)  into which the
                        Series B Shares are then convertible  (such amount being
                        the "Series B Participation Redemption Amount").

      (b)   Subject  to Section  7.2,  each  Series B Holder  shall be paid that
            portion  of the  Series B  Redemption  Amount  equal to the Series B
            Redemption  Amount  Per Share  multiplied  by the number of Series B
            Shares held by the holder.

7.2 Insufficient Funds and Priorities

      (a)   If the Available  Funds are  insufficient  to pay in full (i) in the
            event that the  redemption  rights of the Series A Shares  have been
            exercised in accordance with the Series A Share Terms,  the Series A
            Redemption  Amount  with  respect  to the  total  number of Series A
            Shares  outstanding,  and (ii) the Series B  Redemption  Amount with
            respect to the total number of Series B Shares outstanding, then

<PAGE>
                                     - 24 -


            those funds that are legally  available  for the  redemption  of the
            Series A Shares in accordance  with the Series A Share Terms and the
            Series B  Shares  in  accordance  with  Section  7.1 will be used to
            redeem the maximum  possible  number of whole  shares in  accordance
            with the following priorities:

            (i)   If the  Available  Funds are  insufficient  to pay in full the
                  Series A  Preference  Redemption  Amount,  those funds will be
                  used to redeem the  maximum  possible  number of whole  shares
                  rateably  among the  Series A Holders,  and in such case,  the
                  number of Series A Shares to be  redeemed  shall be the number
                  obtained  by  dividing  (x) the  Available  Funds,  by (y) the
                  Series A Redemption Amount Per Share.

            (ii)  If the  Available  Funds  are  sufficient  to pay in full  the
                  Series A Preference Redemption Amount, but are insufficient to
                  pay in full the Aggregate Preference  Redemption Amount, those
                  funds will be used to redeem:

                  (A)   that  proportion  of the total number of Series A Shares
                        determined  by  dividing  (x) the  Series  A  Preference
                        Redemption Amount, by (y) the Series A Redemption Amount
                        Per Share; and

                  (B)   the maximum  possible  number of whole  shares  rateably
                        among the Series B Holders, and in such case, the number
                        of Series B Shares to be  redeemed  shall be the  number
                        obtained by dividing (x) the  Available  Funds minus the
                        Series A Preference Redemption Amount, by (y) the Series
                        B Redemption Amount Per Share.

            (iii) If the  Available  Funds  are  sufficient  to pay in full  the
                  Aggregate  Preference  Redemption Amount, but are insufficient
                  to pay in full the Aggregate Preference Redemption Amount plus
                  the  Series A  Participation  Redemption  Amount  and Series B
                  Participation  Redemption Amount,  those funds will be used to
                  redeem:

                  (A)   that  proportion  of the total number of Series A Shares
                        determined  by  dividing  (x) the  Series  A  Preference
                        Redemption Amount, by (y) the Series A Redemption Amount
                        Per Share;

                  (B)   that  proportion  of the total number of Series B Shares
                        determined  by  dividing  (x) the  Series  B  Preference
                        Redemption Amount, by (y) the Series B Redemption Amount
                        Per Share; and

                  (C)   the maximum  possible  number of whole  shares  rateably
                        among the Series A Holders and Series B Holders,  and in
                        such case,

                        (1)   the number of Series A Shares to be redeemed shall
                              be  determined  in  accordance  with the following
                              formula:

                              A x B
                              -----
                                C

<PAGE>
                                     - 25 -


                        (2)   the number of Series B Shares to be redeemed shall
                              be  determined  in  accordance  with the following
                              formula:

                              A x D
                              -----
                                E

                              Where:

                              A  =  the  Available  Funds minus the  Aggregate
                                    Preference Redemption Amount

                              B  =  the  Series  A  Participation  Redemption
                                    Amount     divided    by    the    Aggregate
                                    Participation Redemption Amount

                              C  =  the Series A Redemption Amount Per Share

                              D  =  the  Series  B  Participation  Redemption
                                    Amount     divided    by    the    Aggregate
                                    Participation Redemption Amount

                              E  =  the Series B Redemption Amount Per Share.

      (b)   Any  Series A Shares  not  redeemed  remain  outstanding  and remain
            entitled  to all rights and  preferences  otherwise  provided in the
            Series A Share Terms. Any Series B Shares not redeemed in accordance
            with Section 7.2(a) remain  outstanding  and remain  entitled to all
            rights and  preferences  otherwise  provided in these Series B Share
            provisions.  As and when funds legally  available for  redemption of
            Series A Shares and Series B Shares  subsequently  become available,
            those  funds will be used to redeem the maximum  possible  number of
            whole  shares  rateably  among  the  Series A Holders  and  Series B
            Holders in  accordance  with clause  (i),  (ii) and (iii) of Section
            7.2(a) above and the Series A Share Terms. The Corporation shall not
            pay any  amounts or make any other  distributions  in respect of any
            other  class or series of its  shares  until all Series B Shares and
            Series A Shares are redeemed as provided  above,  and all redemption
            payments required to be made in accordance with this Section 7.2 are
            fully   paid  to  the   Series  B  Holders   and  Series  A  Holders
            respectively.

7.3 Redemption Upon a Partial Sale Event

      (a)   In  connection  with a proposed  transaction  that would result in a
            Partial  Sale Event,  the Series B Majority  Holders  shall have the
            right,  prior to the  completion  of the  proposed  transaction,  to
            request,  in writing,  the Corporation to redeem all of the Series B
            Shares.  Upon  receipt  of such a request  (a  "Series B  Redemption
            Request") the Corporation will:

            (i)   deliver  to each  Series  B Holder  and  each  Series A Holder
                  within  20 days (or  such  shorter  or  longer  period  as the
                  Corporation,  the Series B Majority  Holders  and the Series A
                  Majority Holders may agree in writing) (the "Redemption Notice
                  Period") following the date the Series B Redemption Request is
                  received by the Corporation a copy of such Series

<PAGE>
                                     - 26 -


                  B  Redemption  Request  and a notice  specifying  whether  the
                  Corporation  has  sufficient  funds  legally  available to the
                  Corporation  for the  redemption of all of the Series B Shares
                  and (in the event that the Corporation  also receives a Series
                  A Redemption  Request prior to the expiry of 30 days following
                  the  Redemption  Notice  Period)  all of the  Series  A Shares
                  outstanding; and

            (ii)  redeem,   conditional  upon  and  contemporaneously  with  the
                  completion  of the  transaction  resulting in the Partial Sale
                  Event,  from the Series B Holders all the Series B Shares (and
                  concurrently  therewith  redeem  from the Series A Holders all
                  the  Series A Shares in the event  that the  Corporation  also
                  received  a Series A  Redemption  Request  within  the  period
                  specified in clause (i) above)  provided the  Corporation  has
                  funds legally available for such redemption,  by paying to the
                  Series B Holders,  in  accordance  with  Section  7.3(b),  the
                  Series B Redemption Amount.

      (b)   Subject  to Section  7.4,  each  Series B Holder  shall be paid that
            portion  of the  Series B  Redemption  Amount  equal to the Series B
            Redemption  Amount  Per Share  multiplied  by the number of Series B
            Shares held by the holder.

7.4 Insufficient Funds

If in connection with the exercise of the redemption rights pursuant to a Series
B Redemption  Request the total funds legally  available to the  Corporation are
insufficient  to pay in full (i) the Series B Redemption  Amount with respect to
the total number of Series B Shares outstanding,  and (ii) in the event that the
Corporation also received a Series A Redemption Request pursuant to the Series A
Share Terms, the Series A Redemption  Amount with respect to the total number of
Series A Shares outstanding, then:

      (a)   the Corporation shall not redeem any of the Series B Shares pursuant
            to the  Series B  Redemption  Request  or any of the Series A Shares
            pursuant to the Series A Redemption Request; and

      (b)   the Corporation will not permit the proposed  transaction that would
            otherwise  result in a Partial Sale Event to occur  unless  Series B
            Majority Holders and Series A Majority  Holders direct,  in writing,
            the Corporation to permit such a transaction.

7.5 Surrender of Certificates

If a redemption of Series B Shares  pursuant to this Article 7 will occur,  each
Series B Holder shall surrender to the Corporation the certificates representing
the Series B Shares to be redeemed by the  Corporation  in accordance  with this
Article 7, in the manner and at the place  designated  by the  Corporation,  and
thereupon all redemption  amounts to be paid for such shares shall be payable to
the order of the Person  whose name  appears on such  certificates  as the owner
thereof, and each surrendered certificate shall be cancelled and retired. If, in
the case of the exercise of redemption  rights in  accordance  with Sections 7.1
and 7.2, less than all of the Series B Shares  represented by such  certificates
are  redeemed,  then the  Corporation  shall  promptly  issue  new  certificates
representing the shares not redeemed.

<PAGE>
                                     - 27 -


                                    ARTICLE 8
                                  MISCELLANEOUS

8.1 Notices of Record Dates

If:

      (a)   the Corporation  establishes a record date to determine the Series B
            Holders  who  are   entitled  to  receive  any   dividend  or  other
            distribution; or

      (b)   there occurs any Stock Split or other capital  reorganization of the
            Corporation, any reclassification of the capital of the Corporation,
            any Change of Control Event, or any Liquidation Event,

      the  Corporation  will  deliver to each Series B Holder,  at least 20 days
      prior to such record date or the proposed  effective  date of the relevant
      transaction, a notice specifying:

            (i)   the date of such record date for the purpose of such  dividend
                  or  distribution   and  a  description  of  such  dividend  or
                  distribution;

            (ii)  the date on which any such  reorganization,  reclassification,
                  Change of Control  Event or  Liquidation  Event is expected to
                  become effective; and

            (iii) the time,  if any,  that is to be fixed as to when the holders
                  of record of Common Shares (or other  securities) are entitled
                  to exchange  their  Common  Shares (or other  securities)  for
                  cash,  securities  or other  property  deliverable  upon  such
                  reorganization,  reclassification,  Change of Control Event or
                  Liquidation Event.

8.2 Notices

All notices,  requests,  payments,  instructions  or other documents to be given
hereunder must be in writing or given by written telecommunication,  and will be
deemed to have been duly given if:

      (a)   delivered personally (effective upon delivery);

      (b)   mailed by certified mail, return receipt requested,  postage prepaid
            (effective  five Business  Days after  dispatch) if the recipient is
            located in the United States or Canada;

      (c)   sent by a reputable,  established  courier  service that  guarantees
            next Business Day delivery  (effective the next Business Day) if the
            recipient is located in the United States or Canada;

      (d)   sent by air mail or by commercial express overseas air courier, with
            receipt acknowledged in writing by the recipient (effective upon the
            date of such  acknowledgement)  if the recipient is located  outside
            the United States or Canada;

      (e)   sent by fax  confirmed  within 24 hours through one of the foregoing
            methods  (effective  upon  receipt of the fax in  complete  readable
            form); and

<PAGE>
                                     - 28 -


addressed as follows (or to such other address as the recipient  party furnishes
by notice to the sending party for these purposes: (i) if to any Series B Holder
or  Series A Holder,  to the last  address  of that  Series B Holder or Series A
Holder as it appears on the securities  register of the  Corporation,  or in the
event the  address  of any such  Series B Holder or Series A Holder  does not so
appear,  then to the last  address  of that  Series B Holder  or Series A Holder
known to the Corporation;  and (ii) if to the Corporation, to the address of its
principal office.

8.3 Negative Covenants

So long as any  Series B Shares  are  outstanding,  the  Corporation  will  not,
without the prior written approval of one or more Series B Holders of record who
hold collectively more than 80% of the then outstanding Series B Shares:

      (a)   designate any further series of Class A Preferred  Shares or Class B
            Preferred Shares;

      (b)   issue more than  30,000,000  Series A Shares (other than  additional
            Series A Shares issuable in respect of any stock dividends  declared
            by the Corporation);

      (c)   issue more than  68,000,000  Series B Shares (other than  additional
            Series B Shares issuable in respect of any stock dividends  declared
            by the Corporation); or

      (d)   amend the articles of the  Corporation to add,  change or remove any
            rights,  privileges,  restrictions  or  conditions  attached  to the
            Series A Shares  or the  Series B Shares  or  otherwise  change  the
            Series A Shares or Series B Shares.

8.4 Currency

All references to dollar  amounts in these Series B Share  provisions are to the
lawful currency of Canada.

8.5 Transfer Agents

The  Corporation  may appoint,  and from time to time  discharge  and change,  a
transfer  agent  for the  Series B Shares  or any  other  class of shares of the
Corporation. Upon any such appointment, discharge or change of a transfer agent,
the  Corporation  will send a written notice of such  appointment,  discharge or
change to each Series B Holder.

8.6 Transfer Taxes

The Corporation will pay all share transfer taxes,  documentary  stamp taxes and
the like that may be  properly  payable  by the  Corporation  in  respect of any
issuance  or delivery  of Series B Shares or Common  Shares or other  securities
issued in respect  of Series B Shares in  accordance  with these  Series B Share
provisions  or  certificates   representing  such  shares  or  securities.   The
Corporation  is not  required to pay any such tax that may be payable in respect
of any  transfer  involved  in the  issuance  or  delivery of Series B Shares or
Common Shares or other securities in a name other than that in which such shares
were  registered,  or in  respect of any  payment  to any person  other than the
registered Series B Holder of the shares with respect to any such shares, and is
not required to make any such issuance, delivery or payment unless and until the
person otherwise entitled to such issuance,  delivery or payment has paid to the
Corporation the amount

<PAGE>
                                     - 29 -


of any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid or is not payable.

<PAGE>

                                     - 30 -


                                 EXHIBIT "1" to
                                  SCHEDULE "B"

                       DETERMINATION OF FAIR MARKET VALUE

The "Fair Market Value" of Common  Shares will be determined in accordance  with
the following procedures:

      (a)   The Board of Directors, the Series B Majority Holders and the Series
            A Majority Holders will in good faith attempt to agree upon the Fair
            Market  Value  of the  Common  Shares  that are the  subject  of the
            proposed determination under this Exhibit "1".

      (b)   Fair  Market  Value of such  Common  Shares will in all cases (i) be
            calculated on the  assumption of an arm's length sale at open market
            value on a "going concern basis" with no minority  discount applied,
            and (ii)  take  into  account  any  conversion  rights,  liquidation
            preferences  and  any  other  entitlements  attached  to  any  other
            securities of the Corporation.

      (c)   If the Fair  Market  Value  has not been  agreed  upon  between  the
            Corporation, the Series B Majority Holders and the Series A Majority
            Holders  within 10 Business Days after  commencing  their good faith
            attempt to agree upon the Fair Market  Value under clause (a) above,
            then within five Business Days after the end of such 10 Business Day
            period,  the  Corporation,  the  Series B Majority  Holders  and the
            Series A Majority  Holders shall jointly  appoint a U.S. or Canadian
            nationally  recognized  independent  investment  banking or business
            valuation  firm (the  "Valuator") to determine the Fair Market Value
            of such shares which are subject of the proposed determination under
            this Exhibit "1". If the Corporation,  the Series B Majority Holders
            and the Series A Majority  Holders cannot agree on a Valuator within
            such five Business Day period, any of the Corporation,  the Series B
            Majority  Holders or the Series A Majority  Holders  may  thereafter
            apply to a court of competent jurisdiction to have the court appoint
            such Valuator  meeting the foregoing  criteria to determine the Fair
            Market  Value  of  the  subject  shares.  The  determination  by the
            Valuator shall be final and binding on the Corporation, the Series B
            Holders and the Series A Holders, absent manifest error.

      (d)   The  Corporation  shall be  responsible  for all costs  incurred  in
            connection with the independent  valuation performed by the Valuator
            (including  the  costs  of  any  court  proceeding  to  appoint  the
            Valuator, if applicable).

      (e)   The Valuator  shall be  instructed to deliver its  determination  of
            Fair Market Value as at the  applicable  valuation  date, as soon as
            practicable  following  its  appointment  and in any event within 30
            Business Days thereafter.

      (f)   In the  event  that the  Valuator  provides  a range of fair  market
            values,  the middle of such range shall be utilized  for purposes of
            determining the Fair Market Value of the subject shares.

<PAGE>
                                     - 31 -


      (g)   The  Corporation  shall  immediately  provide to the  Valuator  such
            information, including confidential information, and allow such firm
            to  conduct  "due  diligence"  and  make  such   investigations  and
            inquiries  with  respect to the affairs of the  Corporation  and its
            subsidiaries as may be required by such Valuator in order to fulfill
            its  mandate,  provided  that such firm  executes a  confidentiality
            agreement in favour of the Corporation containing standard terms and
            conditions.