Document:

EXHIBIT 4.3

                                    CAE INC.

                                       AND

                        MONTREAL TRUST COMPANY OF CANADA

                                 AS RIGHTS AGENT

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

                              AMENDED AND RESTATED
                  SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT

                                  JUNE 14, 2000

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

                                STIKEMAN ELLIOTT

<PAGE>

                                TABLE OF CONTENTS

                                    ARTICLE 1
                                 INTERPRETATION
<TABLE>
<S>         <C>                                                                       <C>
Section 1.1 Certain Definitions .....................................................  1
Section 1.2 Currency ................................................................ 12
Section 1.3 Headings ................................................................ 12
Section 1.4 Number and Gender ....................................................... 12
Section 1.5 Acting Jointly or in Concert ............................................ 12
Section 1.6 Statutory References .................................................... 13

                                   ARTICLE 2
                                   THE RIGHTS

Section 2.1 Legend on Common Share Certificates ..................................... 13
Section 2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights ........ 13
Section 2.3 Adjustments to Exercise Price; Number of Rights ......................... 16
Section 2.4 Date on Which Exercise is Effective ..................................... 21
Section 2.5 Execution, Authentication, Delivery and Dating of Rights Certificates ... 21
Section 2.6 Registration, Registration of Transfer and Exchange ..................... 22
Section 2.7 Mutilated, Destroyed, Lost and Stolen Right Certificates ................ 22
Section 2.8 Persons Deemed Owners ................................................... 23
Section 2.9 Delivery and Cancellation of Rights Certificates ........................ 23
Section 2.10 Agreement of Rights Holders ............................................ 23
Section 2.11 Rights Certificate Holder not Deemed a Shareholder ..................... 24

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

Section 3.1 Flip-in Event ........................................................... 25

                                   ARTICLE 4
                                THE RIGHTS AGENT

Section 4.1 General ................................................................. 25
Section 4.2 Merger or Amalgamation or Change of Name of Rights Agent ................ 26
Section 4.3 Duties of Rights Agent .................................................. 27
Section 4.4 Change of Rights Agent .................................................. 29

                                   ARTICLE 5
                                 MISCELLANEOUS

Section 5.1 Redemption and Waiver ................................................... 29
Section 5.2 Expiration .............................................................. 31
Section 5.3 Issuance of New Rights Certificates ..................................... 31

                                      (i)
<PAGE>

Section 5.4 Supplements and Amendments .............................................. 31
Section 5.5 Fractional Rights and Fractional Shares ................................. 33
Section 5.6 Rights of Action ........................................................ 33
Section 5.7 Notice of Proposed Actions .............................................. 33
Section 5.8 Notices ................................................................. 34
Section 5.9 Successors .............................................................. 34
Section 5.10 Benefits of this Agreement ............................................. 34
Section 5.11 Governing Law .......................................................... 35
Section 5.12 Severability ........................................................... 35
Section 5.13 Effective Date ......................................................... 35
Section 5.14 Determinations and Actions by the Board of Directors ................... 35
Section 5.15 Rights of Board, Corporation and Offeror ............................... 35
Section 5.16 Regulatory Approvals ................................................... 35
Section 5.17 Declaration as to Non-Canadian Holders.................................. 35
Section 5.18 Time of the Essence .................................................... 36
Section 5.19 Execution in Counterparts .............................................. 36
</Table>

                                    SCHEDULE

SCHEDULE 2.2(3)

                                      (ii)

<PAGE>

                  SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT

     THIS AMENDED AND RESTATED AGREEMENT dated June 14, 2000 between CAE Inc.
(the "CORPORATION"), a corporation incorporated under the laws of Canada, and
Montreal Trust Company of Canada, a trust company incorporated under the laws of
Canada, as Rights Agent (the "RIGHTS AGENT", which term shall include any
successor Rights Agent hereunder).

     WITNESSES THAT:

     WHEREAS the Corporation and the Rights Agent entered into a shareholder
protection rights plan agreement dated as of March 7, 1990, as amended; and

     WHEREAS the shareholders of the Corporation have determined to amend and
restate the shareholder protection rights plan agreement dated as of March 7,
1990, as amended, as set out herein (the amended and restated shareholder
protection rights plan agreement being referred to herein as the "RIGHTS PLAN");

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

                                   ARTICLE 1
                                 INTERPRETATION

SECTION 1.1  CERTAIN  DEFINITIONS.

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

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

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

          (ii) any Person who becomes the Beneficial Owner of twenty percent
               (20%) or more of the outstanding Voting Shares of the Corporation
               as a result of (A) Corporate Acquisitions, (B) Permitted Bid
               Acquisitions, (C) Corporate Distributions, (D) Exempt
               Acquisitions, or (E) Convertible Security Acquisitions; provided,
               however, that if a Person shall become the Beneficial Owner of
               twenty percent (20%) or more of the Voting Shares of the
               Corporation then outstanding by reason of one or more or any
               combination of the operation of a Corporate Acquisition,
               Permitted Bid Acquisition, Corporate Distribution, Exempt
               Acquisition or Convertible Security Acquisition and, after such
               Corporate Acquisition, Permitted Bid Acquisition, Corporate
               Distribution, Exempt Acquisition or Convertible Security
               Acquisition, becomes the Beneficial Owner of an additional one
               percent (1%) or more of the outstanding Voting Shares of the
               Corporation other than pursuant to Corporate Acquisitions,
               Permitted Bid Acquisitions, Corporate Distributions, Exempt
               Acquisitions or Convertible Security Acquisitions, then as of the
               date of such acquisition, such Person shall become an Acquiring
               Person;

<PAGE>
                                      -2-

          (iii)for a period of ten (10) days after the Disqualification Date
               (as hereinafter defined), any Person who becomes the Beneficial
               Owner of twenty percent (20%) or more of the outstanding Voting
               Shares of the Corporation as a result of such Person becoming
               disqualified from relying on Clause 1.1(e)(3) hereof solely
               because such Person makes or proposes to make a Take-over Bid in
               respect of securities of the Corporation alone or by acting
               jointly or in concert with any other Person (the first date of
               public announcement (which, for the purposes of this definition,
               shall include, without limitation, a report filed pursuant to
               section 101 of the SECURITIES ACT (Ontario)) by such Person or
               the Corporation of a current intent to commence such a Take-over
               Bid being herein referred to as the "DISQUALIFICATION DATE"); and

          (iv) an underwriter or member of a banking or selling group that
               acquires Voting Shares of the Corporation from the Corporation in
               connection with a distribution of securities.

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

     (c)  "AGREEMENT" means this agreement as amended, modified or supplemented
          from time to time.

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

     (e)  A Person shall be deemed the "BENEFICIAL OWNER", and to have
          "BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN":

          (i)  any securities of which such Person or any Affiliate or Associate
               of such Person is the owner in law or equity;

          (ii) any securities as to which such Person or any of such Person's
               Affiliates or Associates has the right to acquire (A) upon the
               exercise of any Convertible Securities, or (B) pursuant to any
               agreement, arrangement or understanding, if such right is
               exercisable immediately or within a period of 60 days thereafter
               whether or not on condition or the happening of any contingency
               (other than customary agreements with and between underwriters
               and banking group or selling group members with respect to a
               distribution of securities or pursuant to a pledge of securities
               in the ordinary course of business); and

          (iii) any securities that are Beneficially Owned within the meaning of
               Sections 1.1(e)(i) or (ii) hereof by any other Person with whom
               such Person is acting jointly or in concert;
<PAGE>

                                      -3-

          provided, however, that a Person shall not be deemed the "BENEFICIAL
          OWNER", or to have "BENEFICIAL OWNERSHIP" of, or to "BENEFICIALLY
          OWN", any security as a result of the existence of any one or more of
          the following circumstances:

          (1)  such security has been deposited or tendered, pursuant to a
               Take-over Bid made by such Person or made by any Affiliate or
               Associate of such Person or made by any other Person acting
               jointly or in concert with such Person, unless such deposited or
               tendered security has been taken up or paid for, whichever shall
               first occur;

          (2)  by reason of the holder of such security having agreed to deposit
               or tender such security to a Take-over Bid made by such Person or
               any of such Person's Affiliates or Associates or any other Person
               referred to in Clause (iii) of this definition pursuant to a
               Permitted Lock-Up Agreement;

          (3)  such Person or any Affiliate or Associate of such Person or any
               other Person acting jointly or in concert with such Person, holds
               such security; provided that (i) the ordinary business of any
               such Person (the "FUND MANAGER") includes the management of
               investment funds for others (which others may include or be
               limited to one or more employee benefit plans or pension plans)
               or includes the acquisition or holding of securities for a
               non-discretionary account of of a Client (as defined below) by a
               dealer or broker registered under applicable securities laws to
               the extent required, and such security is held by the Fund
               Manager in the ordinary course of such business in the
               performance of such Fund Manager's duties for the account of any
               other Person (a "CLIENT"), (ii) such Person (the "TRUST COMPANY")
               is licensed to carry on the business of a trust company under
               applicable law and, as such, acts as trustee or administrator or
               in a similar capacity in relation to the estates of deceased or
               incompetent Persons or in relation to other accounts and holds
               such security in the ordinary course of such duties for the
               estate of any such deceased or incompetent Person (each an
               "ESTATE ACCOUNT") or for such other accounts (each an "OTHER
               ACCOUNT"), (iii) the Person (the "STATUTORY BODY") is an
               independent Person established by statute for purposes that
               include, and the ordinary business or activity of such person
               includes, the management of investment funds for employee benefit
               plans, pension plans, insurance plans of various public bodies
               and the Statutory Body holds such security for the purposes of
               its activities as such, (iv) the ordinary business of any such
               Person includes acting as an agent of the Crown in the management
               of public assets (the "CROWN AGENT"), or (v) the Person, any of
               such Person's Affiliates or Associates or any other Person acting
               jointly or in concert with such Person holds such security,
               provided that the Person is the administrator or the trustee of
               one or more pension funds or plans (each a "PENSION FUND")
               registered under the laws of Canada or any province thereof or
               the United States or any state thereof (the "INDEPENDENT
               PERSON"), or is a Pension Fund and holds such securities for the
               purposes of its activities as an Independent Person or as a
               Pension Fund, and further provided that such Person does not

<PAGE>

                                      -4-

               hold more than thirty percent (30%) of the Voting Shares of the
               Corporation;

               provided, however, that in any of the foregoing cases no one of
               the Fund Manager, the Trust Company, the Statutory Body, the
               Crown Agent, the Independent Person or the Pension Fund makes or
               announces a current intention to make a Take-over Bid in respect
               of securities of the Corporation alone or by acting jointly or in
               concert with any other Person (other than pursuant to a
               distribution by the Corporation or by means of ordinary market
               transactions (including prearranged trades entered into the
               ordinary course of business of such Person) executed through the
               facilities of a stock exchange or organized over-the-counter
               market);

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

          (5)  such Person is a Client of a Fund Manager and such security is
               owned at law or in equity by the Fund Manager, or such Person is
               an Estate Account or an Other Account of a Trust Company and such
               security is owned at law or in equity by the Trust Company, or
               such Person is a Pension Fund and such security is owned at law
               or in equity by the Independent Person; or

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

          For purposes of this Agreement, the percentage of Voting Shares
          Beneficially Owned by any Person, shall be and be deemed to be the
          product of one hundred (100) and the number of which the numerator is
          the number of votes for the election of all directors generally
          attaching to the Voting Shares Beneficially Owned by such Person and
          the denominator of which is the number of votes for the election of
          all directors generally attaching to all outstanding Voting Shares.
          Where any Person is deemed to Beneficially Own unissued Voting Shares,
          such Voting Shares shall be deemed to be issued and outstanding for
          the purpose of calculating the percentage of Voting Shares
          Beneficially Owned by such Person.

     (f)  "BOARD OF DIRECTORS" means, at any time, the duly constituted board of
          directors of the Corporation.

     (g)  "BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
          which banking institutions in Toronto are authorized or obligated by
          law to close.

     (h)  "CBCA" means the CANADA BUSINESS CORPORATIONS ACT R.S.C. 1985, c.
          C-44, and the regulations thereunder, and any comparable or successor
          laws or regulations thereto.

<PAGE>

                                      -5-

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

     (j)  "COMMON SHARES", when used with reference to the Corporation, means
          the common shares in the capital of the Corporation.

     (k)  "COMPETING BID" means a Take-over Bid that: (i) is made while another
          Permitted Bid is in existence, and (ii) satisfies all the components
          of the definition of a Permitted Bid, except that the requirements set
          out in Clause (ii) of the definition of a Permitted Bid shall be
          satisfied if the Take-over Bid shall contain, and the take up and
          payment for securities tendered or deposited thereunder shall be
          subject to, an irrevocable and unqualified condition that no Voting
          Shares shall be taken up or paid for pursuant to the Competing Bid
          prior to the close of business on the date that is no earlier than the
          date which is the later of twenty-one (21) days (or such longer
          minimum period of days that a take-over bid must remain open for
          acceptance under the Securities Act (Ontario)) after the date the
          Competing Bid is made or 60 days after the earliest date on which a
          Permitted Bid or Competing Bid then in existence was made and only if
          at that date, more than fifty percent (50%) of the then outstanding
          Voting Shares held by Independent Shareholders have been deposited to
          the Competing Bid and not withdrawn.

     (l)  "CONTROLLED": a corporation is "CONTROLLED" by another Person if:

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

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

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

     (m)  "CONVERTIBLE SECURITY" means at any time:

          (i)  any right (regardless of whether such right constitutes a
               security) to acquire Voting Shares from the Corporation; and

          (ii) any securities issued by the Corporation from time to time (other
               than the Rights) carrying any exercise, conversion or exchange
               right;

          which is then exercisable or exercisable within a period of 60 days
          from that time pursuant to which the holder thereof may acquire Voting
          Shares or other securities which are convertible into or exercisable
          or exchangeable for Voting Shares (in each case, whether such right is
          then exercisable or exercisable within

<PAGE>

                                      -6-

          a period of 60 days from that time and whether or not on condition or
          the happening of any contingency).

     (n)  "CONVERTIBLE SECURITY ACQUISITION" means the acquisition of Voting
          Shares upon the exercise of Convertible Securities received by a
          Person pursuant to a Permitted Bid Acquisition, Exempt Acquisition or
          a Corporate Distribution.

     (o)  "CORPORATE ACQUISITION" means an acquisition by the Corporation or the
          redemption by the Corporation of Voting Shares of the Corporation
          which by reducing the number of Voting Shares of the Corporation
          outstanding increases the proportionate number of Voting Shares
          Beneficially Owned by any Person.

     (p)  "CORPORATE DISTRIBUTION" means an acquisition as a result of:

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

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

     (q)  "DISQUALIFICATION DATE" has the meaning ascribed thereto in Section
          1.1(a)(iii) hereof.

     (r)  "EFFECTIVE DATE" has the meaning ascribed thereto in Section 5.13
          hereof.

     (s)  "ELECTION TO EXERCISE" has the meaning ascribed thereto in Section
          2.2(4) hereof.

     (t)  "EXEMPT ACQUISITION" means an acquisition:

          (i)  in respect of which the Board of Directors has waived the
               application of Section 3.1 hereof pursuant to the provisions of
               Section 5.1(2), 5.1(3) or 5.1(4) hereof;

          (ii) which was made on or prior to the Record Time;

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

          (iv) pursuant to a distribution to the public by the Corporation of
               Voting Shares or Convertible Securities made pursuant to a
               prospectus provided that the Person in question does not thereby
               acquire a greater class percentage of Voting Shares, or
               Convertible Securities representing the right to acquire Voting
               Shares of such class, than the percentage of Voting
<PAGE>

                                      -7-

               Shares of the class Beneficially Owned immediately prior to such
               acquisition; or

          (v)  pursuant to a distribution by the Corporation of Voting Shares or
               Convertible Securities by way of a private placement by the
               Corporation, provided that (x) all necessary stock exchange
               approvals for such private placement have been obtained and such
               private placement complies with the terms and conditions of such
               approvals, and (y) the purchaser does not become the Beneficial
               Owner of more than 25% of the Voting Shares outstanding
               immediately prior to the private placement (and in making this
               determination, the securities to be issued to such purchaser on
               the private placement shall be deemed to be held by such
               purchaser but shall not be included in the aggregate number of
               outstanding Voting Shares immediately prior to the private
               placement).

     (u)  "EXERCISE PRICE" means, as of any date, the price at which a holder
          may purchase the securities issuable upon exercise of one whole Right.
          Until adjustment thereof in accordance with the terms hereof, the
          Exercise Price shall be $100.

     (v)  "EXPIRATION TIME" means the earlier of: (i) the Termination Time, and
          (ii) the close of business on the date immediately following the date
          of the Corporation's annual meeting of shareholders to be held in
          2003.

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

     (x)  "INDEPENDENT SHAREHOLDERS" means holders of Voting Shares of the
          Corporation, but shall not include any Acquiring Person or any Offeror
          (other than any Person who pursuant to Clause 1.1(e)(3) is not deemed
          to Beneficially Own the Voting Shares held by such Person), or any
          Affiliate or Associate of such Acquiring Person or such Offeror, or
          any Person acting jointly or in concert with such Acquiring Person or
          such Offeror, or any employee benefit plan, stock purchase plan,
          deferred profit sharing plan or any similar plan or trust for the
          benefit of employees of the Corporation or a Subsidiary of the
          Corporation, unless the beneficiaries of any such plan or trust direct
          the manner in which the Voting Shares are to be voted or direct
          whether the Voting Shares are to be tendered to a Take-over Bid.

     (y)  "MARKET PRICE" per share of any securities on any date of
          determination means the average of the daily closing prices per share
          of such securities (determined as described below) on each of the
          twenty (20) consecutive Trading Days through and including the Trading
          Day immediately preceding such date; provided, however, that if an
          event of a type analogous to any of the events described in Section
          2.3 hereof shall have caused the closing prices used to determine the
          Market Price on any Trading Days not to be fully comparable with the
          closing price on such date of determination or, if the date of
          determination is not a Trading Day, on the immediately preceding
          Trading Day, each such closing price so used shall be appropriately
          adjusted in a manner analogous to the applicable adjustment provided
          for in Section 2.3 hereof in order to make it fully

<PAGE>

                                      -8-

          comparable with the closing price on such date of determination or, if
          the date of determination is not a Trading Day, on the immediately
          preceding Trading Day. The closing price per share of any securities
          on any date shall be (i) the closing board lot sale price or, if such
          price is not available, the average of the closing bid and asked
          prices, for each share as reported by The Toronto Stock Exchange, or
          (ii) if for any reason none of such prices is available on such day or
          the securities are not listed or admitted to trading on The Toronto
          Stock Exchange, the closing board lot sale price or, if such price is
          not available, the average of the closing bid and asked prices, for
          each share as reported in the principal consolidated transaction
          reporting system with respect to securities listed or admitted to
          trading on the securities exchange on which the securities are
          primarily traded, or (iii) if not so listed, the last quoted price, or
          if not so quoted, the average of the high bid and low asked prices for
          each share of such securities in the over-the-counter market, or (iv)
          if on any such date the securities are not quoted by any such
          organization, the average of the closing bid and asked prices as
          furnished by a professional market maker making a market in the
          securities selected in good faith by the Board of Directors; provided,
          however, that if on any such date the securities are not traded in the
          over-the-counter market, the closing price per share of such
          securities on such date shall mean the fair value per share of such
          securities on such date as determined in good faith by a nationally or
          internationally recognized investment dealer or investment banker.

     (z)  "OFFER TO ACQUIRE" shall include:

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

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

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

     (aa) "OFFEROR" means a Person who has announced a current intention to
          make, or who makes and has outstanding, a Take-over Bid.

     (bb) "OFFEROR'S SECURITIES" means Voting Shares of the Corporation
          Beneficially Owned by an Offeror, any Affiliate or Associate of such
          Offeror or any Person acting jointly or in concert with the Offeror.

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

          (i)  the Take-over Bid shall be made to all registered holders of
               Voting Shares (other than the Voting Shares held by the Offeror);

          (ii) the Take-over Bid shall contain, and the take up and payment for
               securities tendered or deposited thereunder shall be subject to,
               an

<PAGE>

                                      -9-

               irrevocable and unqualified condition that no Voting Shares shall
               be taken up or paid for pursuant to the Take-over Bid prior to
               the close of business on the date which is not less than sixty
               (60) days following the date of the Take-over Bid and that no
               Voting Shares shall be taken up or paid for pursuant to the
               Take-over Bid unless, at such date, more than fifty percent (50%)
               of the then outstanding Voting Shares held by Independent
               Shareholders have been deposited to the Take-over Bid and not
               withdrawn;

          (iii) the Take-over Bid shall contain an irrevocable and unqualified
               provision that, unless the Take-over Bid is withdrawn, Voting
               Shares of the Corporation may be deposited pursuant to such
               Take-over Bid at any time during the period of time described in
               Clause (ii) of this Section 1.1(cc) and that any Voting Shares
               deposited pursuant to the Take-over Bid may be withdrawn at any
               time until taken up and paid for; and

          (iv) the Take-over Bid shall contain an irrevocable and unqualified
               provision that should the condition referred to in Clause (ii) of
               this Section 1.1(cc) be met: (A) the Offeror will make a public
               announcement of that fact on the date the Take-over Bid would
               otherwise expire; and (B) the Take-over Bid will be extended for
               a period of not less than ten (10) Business Days from the date it
               would otherwise expire.

     (dd) "PERMITTED BID ACQUISITIONS" means share acquisitions made pursuant to
          a Permitted Bid or a Competing Bid.

     (ee) "PERMITTED LOCK-UP AGREEMENT" means an agreement between a Person and
          one or more holders (each a "LOCKED-UP PERSON") of Voting Shares or
          Convertible Securities (the terms of which are publicly disclosed and
          a copy of which is made available to the public (including the
          Corporation) not later than the date the Lock-up Bid (as defined
          below) is publicly announced or, if the agreement was entered into
          after the date of the Lock-up Bid, not later than the date the
          agreement was entered into), pursuant to which such Locked-up Persons
          agree to deposit or tender Voting Shares or Convertible Securities to
          a Take-over Bid (the "LOCK-UP BID") made by the Person or any of such
          Person's Affiliates or Associates or any other Person referred to in
          Clause (iii) of the definition of Beneficial Owner and where the
          agreement:

          (i)  (A) permits the Locked-up Person to withdraw Voting Shares or
               Convertible Securities in order to tender or deposit Voting
               Shares or Convertible Securities to another Take-over Bid or to
               support another transaction that contains an offering price for
               each Voting Share or Convertible Security that exceeds, or
               provides a value for each Voting Share or Convertible Security
               that is greater than, the offering price or value contained or
               proposed to be contained in the Lock-up Bid, provided that the
               other Take-over Bid is made for at least the same number of
               Voting Shares or Convertible Securities as the Lock-up Bid; or
<PAGE>

                                      -10-

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

          (ii) provides that no "BREAK-UP" fees, "TOP-UP" fees, penalties,
               expenses or other amounts that exceed in the aggregate the
               greater of: (A) the cash equivalent of 2.5% of the price or value
               payable under the Lock-up Bid to the Locked-up Person, and (B)
               50% of the amount by which the price or value payable under
               another Take-over Bid to a Locked-up Person exceeds the price or
               value of the consideration that such Locked-up Person would have
               received under the Lock-up Bid, shall be payable by such
               Locked-up Person pursuant to the agreement in the event that the
               Lock-up Bid is not successfully concluded or if any Locked-up
               Person fails to tender Voting Shares or Convertible Securities
               pursuant thereto;

          and, for greater certainty, the agreement may contain a right of first
          refusal or require a period of delay to give the Offeror an
          opportunity to at least match a higher consideration in another
          Take-over Bid or transaction or contain other similar limitation on a
          Locked-up Person's right to withdraw Voting Shares or Convertible
          Securities from the agreement, so long as any such limitation does not
          preclude the exercise by the Locked-up Person of the right to withdraw
          Voting Shares or Convertible Securities in sufficient time to tender
          to the other Take-over Bid or transaction.

     (ff) "PERSON" means any individual, firm, partnership, association, trust,
          trustee, executor, administrator, legal or personal representative,
          government, governmental body, entity or authority, group, body
          corporate, corporation, unincorporated organization or association,
          syndicate, joint venture or any other entity, whether or not having
          legal personality, and any of the foregoing in any derivative,
          representative or fiduciary capacity and pronouns have a similar
          extended meaning.

     (gg) "RECORD TIME" means the close of business on March 7, 1990.

     (hh) "REDEMPTION PRICE" has the meaning ascribed thereto in Section 5.1(1)
          hereof.

     (ii) "REGULAR PERIODIC CASH DIVIDENDS" means cash dividends paid at regular
          intervals in any fiscal year of the Corporation to the extent that
          such cash dividends do not exceed, in the aggregate, the greatest of:

<PAGE>

                                      -11-

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

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

     (jj) "RIGHT" means a right issued pursuant to this Agreement.

     (kk) "RIGHTS CERTIFICATE" has the meaning ascribed thereto in Section
          2.2(3) hereof.

     (ll) "RIGHTS REGISTER" has the meaning ascribed thereto in Section 2.6(1)
          hereof.

     (mm) "SECURITIES ACT (ONTARIO)" means the SECURITIES ACT, R.S.O. 1990, c.
          S.5, and the regulations, rules, policies, and notices thereunder, and
          any comparable or successor laws, regulations, rules, policies or
          notices thereto.

     (nn) "SEPARATION TIME" means the close of business on the tenth (10th)
          Trading Day after the earlier of (i) the Stock Acquisition Date, (ii)
          the date of the commencement of, or first public announcement of the
          intent of any person (other than the Corporation or any Subsidiary of
          the Corporation) to commence, a Take-over Bid (other than a Permitted
          Bid or Competing Bid) or such later date as may be determined by the
          Board of Directors and (iii) the date on which a Permitted Bid or
          Competing Bid ceases to qualify as such or such later date as may be
          determined by the Board of Directors provided that, if any Take-over
          Bid referred to in Clause (ii) of this Section 1.1(nn) or any
          Permitted Bid or Competing Bid referred to in Clause (iii) of this
          Section 1.1(nn) expires, is cancelled, terminated or otherwise
          withdrawn prior to the Separation Time, such Take-over Bid, Permitted
          Bid or Competing Bid, as the case may be, shall be deemed, for the
          purposes of this Section 1.1(nn), never to have been made and provided
          further that if the Board of Directors determines pursuant to Sections
          5.1(2), (3) or (4) hereof to waive the application of Section 3.1
          hereof to a Flip-in Event, the Separation Time in respect of such
          Flip-in Event shall be deemed never to have occurred.

     (oo) "STOCK ACQUISITION DATE" means the first date of public announcement
          (which, for purposes of this definition, shall include, without
          limitation, a report filed pursuant to section 101 of the SECURITIES
          ACT (Ontario)) by the Corporation or an Offeror or Acquiring Person of
          facts indicating that a Person has become an Acquiring Person.

     (pp) "SUBSIDIARY": a corporation shall be deemed to be a Subsidiary of
          another corporation if:

          (i)  it is controlled by:

               (A)  that other;

<PAGE>

                                      -12-

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

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

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

     (qq) "TAKE-OVER BID" means an Offer to Acquire Voting Shares of the
          Corporation or securities convertible into or exchangeable for or
          carrying a right to purchase Voting Shares of the Corporation where
          the Voting Shares of the Corporation subject to the Offer to Acquire,
          together with the Voting Shares of the Corporation into which the
          securities subject to the Offer to Acquire are convertible,
          exchangeable or exercisable, and the Offeror's Securities, constitute
          in the aggregate twenty percent (20%) or more of the outstanding
          Voting Shares of the Corporation at the date of the Offer to Acquire.

     (rr) "TERMINATION TIME" means the time at which the right to exercise
          Rights shall terminate pursuant to Sections 5.1(1) or (5) hereof.

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

     (tt) "VOTING SHARES" means the Common Shares and any other shares of
          capital stock or voting interests of the Corporation entitled to vote
          generally in the election of all directors.

SECTION 1.2  CURRENCY.

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

SECTION 1.3  HEADINGS.

     The division of this Agreement into Articles, Sections and Clauses and the
insertion of headings, subheadings and a table of contents are for convenience
of reference only and shall not affect the construction or interpretation of
this Agreement.

SECTION 1.4  NUMBER AND GENDER.

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

SECTION 1.5  ACTING JOINTLY OR IN CONCERT.

     For the purposes of this Agreement, a Person is acting jointly or in
concert with every Person who is a party to an agreement, commitment or
understanding, whether formal or informal, with the first Person or any
Associate or Affiliate of the second Person to acquire or to make an Offer to
Acquire Voting Shares of the Corporation (other than customary agreements

<PAGE>

                                      -13-

with and between underwriters or banking group members or selling
group members with respect to a distribution of securities or to a pledge of
securities in the ordinary course of business).

SECTION 1.6  STATUTORY REFERENCES.

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

                                   ARTICLE 2
                                   THE RIGHTS

SECTION 2.1  LEGEND ON COMMON SHARE CERTIFICATES.

(1)  Certificates issued for Common Shares after the Record Time but prior to
     the close of business on the earlier of the Separation Time and the
     Expiration Time shall evidence one Right for each Common Share represented
     thereby and, commencing as soon as reasonably practicable after the
     effective date of this Agreement, shall have impressed on, printed on,
     written on or otherwise affixed to them, a legend in substantially the
     following form:

          Until the Separation Time (defined in the Rights Agreement referred to
          below), this certificate also evidences rights of the holder described
          in a Shareholder Protection Rights Plan Agreement, dated March 7,
          1990, as amended (the "RIGHTS AGREEMENT"), between the Corporation and
          Montreal Trust Company of Canada, a copy of which is on file at the
          principal executive offices of the Corporation. Under certain
          circumstances set out in the Rights Agreement, the rights may be
          redeemed, may expire, may become null and void or may be evidenced by
          separate certificates and no longer evidenced by this certificate.

(2)  Until the earlier of the Separation Time and the Expiration Time,
     certificates representing Common Shares that are issued and outstanding at
     the Record Time shall evidence one Right for each Common Share evidenced
     thereby notwithstanding the absence of the foregoing legend. Following the
     Separation Time, Rights will be evidenced by Rights certificates issued
     pursuant to Section 2.2 hereof.

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

(1)  RIGHT TO ENTITLE HOLDER TO PURCHASE ONE COMMON SHARE PRIOR TO ADJUSTMENT.
     Subject to adjustment as herein set forth and subject to Section 3.1(1)
     hereof, each Right will entitle the holder thereof, from and after the
     Separation Time and prior to the Expiration Time, to purchase, for the
     Exercise Price as at the Business Day immediately preceding the date of
     exercise of the Right, one Common Share (which price and number of Common
     Shares are subject to adjustment as set forth below and are subject to
     Section 3.1(1) hereof). Notwithstanding any other provision of this
     Agreement, any Rights held by the Corporation and any of its Subsidiaries
     shall be void.

<PAGE>

                                      -14-

(2)  RIGHTS NOT EXERCISABLE UNTIL SEPARATION TIME. Until the Separation Time,
     (i) the Rights shall not be exercisable and no Right may be exercised, and
     (ii) for administrative purposes each Right will be evidenced by the
     certificates for the associated Common Shares registered in the names of
     the holders thereof (which certificates shall also be deemed to be Rights
     Certificates) and will be transferable only together with, and will be
     transferred by a transfer of, such associated Common Shares.

(3)  DELIVERY OF RIGHTS CERTIFICATE AND DISCLOSURE STATEMENT. From and after the
     Separation Time and prior to the Expiration Time, (i) the Rights shall be
     exercisable, and (ii) the registration and transfer of the Rights shall be
     separate from, and independent of, Common Shares. Promptly following the
     Separation Time, the Corporation will prepare and the Rights Agent will
     mail to each holder of record of Rights as of the Separation Time (other
     than an Acquiring Person and, in respect of any Rights Beneficially Owned
     by such Acquiring Person which are not held of record by such Acquiring
     Person, the holder of record of such Rights (a "NOMINEE")) at such holder's
     address as shown by the records of the Corporation (the Corporation hereby
     agreeing to furnish copies of such records to the Rights Agent for this
     purpose), (A) a certificate (a "RIGHTS CERTIFICATE") in substantially the
     form of Schedule 2.2(3) hereto appropriately completed, representing the
     number of Rights held by such holder at the Separation Time, and having
     such marks of identification or designation and such legends, summaries or
     endorsements printed thereon as the Corporation may deem appropriate and as
     are not inconsistent with the provisions of this Agreement, or as may be
     required to comply with any law, rule, regulation or judicial or
     administrative order or with any rule or regulation made pursuant thereto
     or with any rule or regulation of any self-regulatory organization, stock
     exchange or quotation system on which the Rights may from time to time be
     listed or traded, or to conform to usage, and (B) a disclosure statement
     describing the Rights, provided that a Nominee shall be sent the materials
     provided for in (A) and (B) in respect of all Common Shares held of record
     by it which are not Beneficially Owned by an Acquiring Person. In order for
     the Corporation to determine whether any Person is holding Common Shares
     which are Beneficially Owned by another Person, the Corporation may require
     such first mentioned Person to furnish it with such information and
     documentation as the Corporation considers advisable.

(4)  EXERCISE OF RIGHTS. Rights may be exercised in whole or in part on any
     Business Day after the Separation Time and prior to the Expiration Time by
     submitting to the Rights Agent (at the office of the Rights Agent in the
     City of Toronto or any other office of the Rights Agent in the cities
     designated from time to time for that purpose by the Corporation) the
     Rights Certificate evidencing such Rights together with an election to
     exercise such Rights (an "ELECTION TO EXERCISE") substantially in the form
     attached to the Rights Certificate duly completed, accompanied by payment
     by certified cheque, banker's draft or money order payable to the order of
     the Corporation, of a sum equal to the Exercise Price multiplied by the
     number of Rights being exercised and a sum sufficient to cover any transfer
     tax or charge which may be payable in respect of any transfer involved in
     the transfer or delivery of Rights Certificates or the issuance or delivery
     of certificates for Common Shares in a name other than that of the holder
     of the Rights being exercised, all of the above to be received before the
     Expiration Time by the Rights Agent at its principal office in any of the
     cities listed on the Rights Certificate.

<PAGE>

                                      -15-

(5)  DUTIES OF RIGHTS AGENT UPON RECEIPT OF ELECTION TO EXERCISE. Upon receipt
     of a Rights Certificate, which is accompanied by (i) a completed and duly
     executed Election to Exercise, and (ii) payment as set forth in Section
     2.2(4) above, the Rights Agent (unless otherwise instructed by the
     Corporation) will thereupon promptly:

     (A)  requisition from the transfer agent for the Common Shares certificates
          representing the number of Common Shares to be purchased (the
          Corporation hereby irrevocably authorizing its transfer agent to
          comply with all such requisitions);

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

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

     (D)  when appropriate, after receipt, deliver such cash (less any amounts
          required to be withheld) to or to the order of the registered holder
          of the Rights Certificate; and

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

(6)  PARTIAL EXERCISE OF RIGHTS. In case the holder of any Rights shall exercise
     less than all of the Rights evidenced by such holder's Rights Certificate,
     a new Rights Certificate evidencing the Rights remaining unexercised will
     be issued by the Rights Agent to such holder or to such holder's duly
     authorized assigns.

(7)  DUTIES OF THE CORPORATION. The Corporation covenants and agrees that it
     will:

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

     (b)  take all such action as may be necessary and within its power to
          ensure compliance with the provisions of Section 3.1 hereof including,
          without limitation, all such action to comply with any applicable
          requirements of the CBCA, the SECURITIES ACT (Ontario) and any
          applicable comparable securities legislation of each of the provinces
          of Canada and any other applicable law, rule or regulation, in
          connection with the issuance and delivery of the Rights Certificates
          and the issuance of any Common Shares or other securities upon
          exercise of Rights;

     (c)  use reasonable efforts to cause, from and after such time as the
          Rights become exercisable, all Common Shares issued upon exercise of
          Rights to be listed upon issuance on the principal stock exchange on
          which the Common Shares were traded prior to the Stock Acquisition
          Date;

<PAGE>

                                      -16-

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

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

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

SECTION 2.3  ADJUSTMENTS TO EXERCISE PRICE, NUMBER OF RIGHTS.

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

     (a)  ADJUSTMENT TO EXERCISE PRICE UPON CHANGES TO SHARE CAPITAL. In the
          event the Corporation shall at any time after the Record Time:

          (i)  declare or pay a dividend on the Common Shares payable in Common
               Shares (or other securities exchangeable for or convertible into
               or giving a right to acquire Common Shares or other securities)
               other than the issue of Common Shares or such exchangeable or
               convertible securities to holders of Common Shares in lieu of but
               not in an amount which exceeds the value of regular periodic cash
               dividends;

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

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

          (iv) issue any Common Shares (or other securities exchangeable for or
               convertible into or giving a right to acquire Common Shares or
               other securities) in respect of, in lieu of or in exchange for
               existing Common Shares, except as otherwise provided in this
               Section 2.3;

          the Exercise Price in effect at the time of the record date for such
          dividend or of the effective date of such subdivision, combination or
          reclassification, and the number and kind of Common Shares, or other
          securities, as the case may be, issuable on such date, shall be
          proportionately adjusted so that the holder of any

<PAGE>

                                      -17-

          Right exercised after such time shall be entitled to receive, upon
          payment of the Exercise Price then in effect, the aggregate number and
          kind of Common Shares or other securities, as the case may be, which,
          if such Right had been exercised immediately prior to such date and at
          a time when the Common Share transfer books of the Corporation were
          open, such holder would have owned upon such exercise and been
          entitled to receive by virtue of such dividend, subdivision,
          combination or reclassification. If an event occurs which would
          require an adjustment under both this Section 2.3 and Section 3.1
          hereof, the adjustment provided for in this Section 2.3 shall be in
          addition to and, shall be made prior to, any adjustment required
          pursuant to Section 3.1 hereof.

     (b)  ADJUSTMENT TO EXERCISE PRICE UPON ISSUE OF RIGHTS, OPTIONS AND
          WARRANTS. In case the Corporation shall at any time after the Record
          Time fix a record date for the issuance of rights, options or warrants
          to all holders of Common Shares entitling them (for a period expiring
          within forty-five (45) calendar days after such record date) to
          subscribe for or purchase Common Shares (or shares having the same
          rights, privileges and preferences as Common Shares ("EQUIVALENT
          COMMON SHARES")) or securities convertible into or exchangeable for or
          carrying a right to purchase Common Shares or equivalent common shares
          at a price per Common Share or per equivalent common share (or having
          a conversion price or exchange price or exercise price per share, if a
          security convertible into or exchangeable for or carrying a right to
          purchase Common Shares or equivalent common shares) less than ninety
          percent (90%) of the Market Price per Common Share on such record
          date, the Exercise Price to be in effect after such record date shall
          be determined by multiplying the Exercise Price in effect immediately
          prior to such record date by a fraction, the numerator of which shall
          be the number of Common Shares outstanding on Such record date, plus
          the number of Common Shares that the aggregate offering price of the
          total number of Common Shares and/or equivalent common shares so to be
          offered (and/or the aggregate initial conversion, exchange or exercise
          price of the convertible or exchangeable securities or rights so to be
          offered, including the price required to be paid to purchase such
          convertible or exchangeable securities or rights so to be offered)
          would purchase at such Market Price per Common Share, and the
          denominator of which shall be the number of Common Shares outstanding
          on such record date, plus the number of additional Common Shares
          and/or equivalent common shares to be offered for subscription or
          purchase (or into which the convertible or exchangeable securities are
          initially convertible, exchangeable or exercisable). In case such
          subscription price may be paid by delivery of consideration, part or
          all of which may be in a form other than cash, the value of such
          consideration shall be as determined in good faith by the Board of
          Directors, whose determination shall be described in a certificate
          filed with the Rights Agent and shall be binding on the Rights Agent
          and the holders of the Rights. Such adjustment shall be made
          successively whenever such a record date is fixed and, in the event
          that such rights or warrants are not so issued, the Exercise Price
          shall be adjusted to be the Exercise Price which would then be in
          effect if such record date had not been fixed.

          For purposes of this Agreement, the granting of the right to purchase
          Common Shares (or equivalent common shares) (whether from treasury
          shares or

<PAGE>

                                      -18-

          otherwise) pursuant to any dividend or interest reinvestment plan
          and/or any Common Share purchase plan providing for the reinvestment
          of dividends or interest payable on securities of the Corporation
          and/or the investment of periodic optional payments and/or employee
          benefit, stock option or similar plans (so long as such right to
          purchase is in no case evidenced by the delivery of rights or
          warrants) shall not be deemed to constitute an issue of rights,
          options or warrants by the Corporation; provided, however, that, in
          the case of any dividend or interest reinvestment plan, the right to
          purchase Common Shares (or equivalent common shares) is at a price per
          share of not less than ninety percent (90%) of the current market
          price per share (determined as provided in such plans) of the Common
          Shares.

     (c)  ADJUSTMENT TO EXERCISE PRICE UPON CORPORATE DISTRIBUTIONS. In case the
          Corporation shall at anytime after the Record Time fix a record date
          for a distribution to all holders of Common Shares (including any such
          distribution made in connection with a merger, amalgamation,
          arrangement, plan, compromise or reorganization in which the
          Corporation is the continuing or successor corporation) of evidences
          of indebtedness, cash (other than a regular periodic cash dividend or
          a regular periodic cash dividend paid in Common Shares, but including
          any dividend payable in securities other than Common Shares), assets
          or subscription rights, options or warrants (excluding those referred
          to in Section 2.3(b) above), the Exercise Price to be in effect after
          such record date shall be determined by multiplying the Exercise Price
          in effect immediately prior to such record date by a fraction, the
          numerator of which shall be the Market Price per Common Share on such
          record date, less the fair market value (as determined in good faith
          by the Board of Directors, whose determination shall be described in a
          statement filed with the Rights Agent) of the portion of the cash,
          assets or evidences of indebtedness so to be distributed or of such
          subscription rights, options or warrants applicable to a Common Share
          and the denominator of which shall be such Market Price per Common
          Share. Such adjustments shall be made successively whenever such a
          record date is fixed, and in the event that such distribution is not
          so made, the Exercise Price shall be adjusted to be the Exercise Price
          which would have been in effect if such record date had not been
          fixed.

     (d)  DE MINIMIS THRESHOLD FOR ADJUSTMENT TO EXERCISE PRICE. Notwithstanding
          anything herein to the contrary, no adjustment in the Exercise Price
          shall be required unless such adjustment would require an increase or
          decrease of at least one percent (1%) in the Exercise Price; provided,
          however, that any adjustments which by reason of this Section 2.3(d)
          are not required to be made shall be carried forward and taken into
          account in any subsequent adjustment. All calculations under this
          Section 2.3 shall be made to the nearest cent or to the nearest
          one-hundredth of a Common Share or other share, as the case may be.
          Notwithstanding the first sentence of this Section 2.3(d), any
          adjustment required by this Section 2.3 shall be made no later than
          the earlier of (i) three (3) years from the date of the transaction
          which mandates such adjustment or (ii) the Expiration Time.

<PAGE>

                                      -19-

     (e)  CORPORATION MAY PROVIDE FOR ALTERNATE MEANS OF ADJUSTMENT. Subject to
          the prior consent of the holders of Voting Shares or Rights obtained
          as set forth in Section 5.4(2) or (3) hereof, as applicable, in the
          event the Corporation shall at any time after the Record Time issue
          any shares of capital stock (other than Common Shares), or rights or
          warrants to subscribe for or purchase any such capital stock, or
          securities convertible into or exchangeable for any such capital
          stock, in a transaction referred to in Sections 2.3(a)(i) or (iv) or
          2.3(b) or (c) above, if the Board of Directors acting in good faith
          determines that the adjustments contemplated by Sections 2.3(a), (b)
          and (c) above in connection with such transaction will not
          appropriately protect the interests of the holders of Rights, the
          Corporation shall be entitled to determine what other adjustments to
          the Exercise Price, number of Rights and/or securities purchasable
          upon exercise of Rights would be appropriate and, notwithstanding
          Sections 2.3(a), (b) and (c) above, such adjustments, rather than the
          adjustments contemplated by Sections 2.3(a), (b) and (c) above, shall
          be made. The Corporation and the Rights Agent shall amend this
          Agreement as appropriate to provide for such adjustments.

     (f)  ADJUSTMENT TO RIGHTS EXERCISABLE INTO SHARES OTHER THAN COMMON SHARES.
          If as a result of an adjustment made pursuant to Section 3.1 hereof,
          the holder of any Right thereafter exercised shall become entitled to
          receive any shares other than Common Shares, thereafter the number of
          such other shares so receivable upon exercise of any Right and the
          Exercise Price thereof shall be subject to adjustment from time to
          time in a manner and on terms as nearly equivalent as practicable to
          the provisions with respect to the Common Shares contained in Sections
          2.3(a), (b), (c), (d), (e), (g), (h), (i), (j), (k) and (l) above and
          below, as the case may be, and the provisions of this Agreement with
          respect to the Common Shares shall apply on like terms to any such
          other shares.

     (g)  RIGHTS TO EVIDENCE RIGHT TO PURCHASE COMMON SHARES AT ADJUSTED
          EXERCISE PRICE. Each Right originally issued by the Corporation
          subsequent to any adjustment made to the Exercise Price hereunder
          shall evidence the right to purchase, at the adjusted Exercise Price,
          the number of Common Shares purchasable from time to time hereunder
          upon exercise of such Right, all subject to further adjustment as
          provided herein.

     (h)  ADJUSTMENT TO NUMBER OF COMMON SHARES PURCHASABLE UPON ADJUSTMENT TO
          EXERCISE PRICE. Unless the Corporation shall have exercised its
          election as provided in Section 2.3(i) below, upon each adjustment of
          the Exercise Price as a result of the calculations made in Sections
          2.3(b) and (c) above, each Right outstanding immediately prior to the
          making of such adjustment shall thereafter evidence the right to
          purchase, at the adjusted Exercise Price, that number of Common Shares
          (calculated to the nearest one ten-thousandth) obtained by (A)
          multiplying (x) the number of shares purchasable upon exercise of a
          Right immediately prior to this adjustment by (y) the Exercise Price
          in effect immediately prior to such adjustment of the Exercise Price,
          and (B) dividing the product so obtained by the Exercise Price in
          effect immediately after such adjustment of the Exercise Price.

<PAGE>

                                      -20-

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

     (j)  RIGHTS CERTIFICATES MAY CONTAIN EXERCISE PRICE BEFORE ADJUSTMENT.
          Irrespective of any adjustment or change in the Exercise Price or the
          number of Common Shares issuable upon the exercise of the Rights, the
          Rights Certificates theretofore and thereafter issued may continue to
          express the Exercise Price per share and the number of shares which
          were expressed in the initial Rights Certificates issued hereunder.

     (k)  CORPORATION MAY IN CERTAIN CASES DEFER ISSUES OF SECURITIES. In any
          case in which this Section 2.3 shall require that an adjustment in the
          Exercise Price be made effective as of a record date for a specified
          event, the Corporation may elect to defer until the the occurrence of
          such event the issuance to the holder of any Right exercised after
          such record date the number of Common Shares and other securities of
          the Corporation, if any, issuable upon such exercise over and above
          the number of Common Shares and other securities of the Corporation,
          if any, issuable upon such exercise on the basis of the Exercise Price
          in effect prior to such adjustment; provided, however, that the
          Corporation shall deliver to such holder an appropriate instrument
          evidencing such holder's right to receive such

<PAGE>

                                      -21-

          additional shares (fractional or otherwise) or securities upon the
          occurrence of the event requiring such adjustment.

     (l)  CORPORATION HAS DISCRETION TO REDUCE EXERCISE PRICE FOR TAX REASONS.
          Notwithstanding anything in this Section 2.3 to the contrary, the
          Corporation shall be entitled to make such reductions in the Exercise
          Price, in addition to those adjustments expressly required by this
          Section 2.3, as and to the extent that in their good faith judgment,
          the Board of Directors shall determine to be advisable in order that
          any (A) consolidation or subdivision of the Common Shares, (B)
          issuance of any Common Shares at less than the Market Price, (C)
          issuance of securities convertible into or exchangeable for Common
          Shares, (D) stock dividends or (E) issuance of rights, options or
          warrants, referred to in this Section 2.3 hereafter made by the
          Corporation to holders of its Common Shares, shall not be taxable to
          such shareholders.

SECTION 2.4  DATE ON WHICH EXERCISE IS EFFECTIVE.

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

SECTION 2.5  EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS
CERTIFICATES.

(1)  The Rights Certificates shall be executed on behalf of the Corporation by
     its Chairman, President or any of its Vice-Presidents under its corporate
     seal reproduced thereon attested by its Secretary or one of its Assistant
     Secretaries. The signature of any of these officers on the Rights
     Certificates may be manual or facsimile. Rights Certificates bearing the
     manual or facsimile signatures of individuals who were at any time the
     proper officers of the Corporation shall bind the Corporation,
     notwithstanding that such individuals or any of them have ceased to hold
     such offices prior to the countersignature and delivery of such Rights
     Certificates.

(2)  Promptly after the Corporation learns of the Separation Time, the
     Corporation will notify the Rights Agent of such Separation Time and will
     deliver Rights Certificates executed by the Corporation to the Rights Agent
     for countersignature and a disclosure statement as described in Section
     2.2(3), and the Rights Agent shall manually or by facsimile signature
     countersign and mail such Rights Certificates and disclosure statement to
     the holders of the Rights pursuant to Section 2.2(3) hereof. No Rights
     Certificate shall be valid for any purpose until countersigned by the
     Rights Agent as aforesaid.

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

<PAGE>

                                      -22-

SECTION 2.6  REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

(1)  The Corporation will cause to be kept a register (the "RIGHTS REGISTER") in
     which, subject to such reasonable regulations as it may prescribe, the
     Corporation will provide for the registration and transfer of Rights. The
     Rights Agent is hereby appointed "RIGHTS REGISTRAR" for the purpose of
     maintaining the Rights Register for the Corporation and registering Rights
     and transfers of Rights as herein provided, in the event that the Rights
     Agent shall cease to be the Rights Registrar, the Rights Agent will have
     the right to examine the Rights Register at all reasonable times.

     After the Separation Time and prior to the Expiration Time, upon surrender
     for registration of transfer or exchange of any Rights Certificate and
     subject to the provisions of Section 2.6(3) below and the other provisions
     of this Agreement, the Corporation will execute and the Rights Agent will
     countersign, register and deliver, in the name of the holder or the
     designated transferee or transferees as required pursuant to the holder's
     instructions, one or more new Rights Certificates evidencing the same
     aggregate number of Rights as did the Rights Certificates so surrendered.

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

(3)  Every Rights Certificate surrendered for registration of transfer or
     exchange shall be duly endorsed, or be accompanied by a written instrument
     of transfer in form satisfactory to the Corporation or the Rights Agent, as
     the case may be, duly executed by the registered holder thereof or such
     holder's attorney duly authorized in writing. As a condition to the
     issuance of any new Rights Certificate under this Section 2.6, the
     Corporation or the Rights Agent may require the payment of a sum sufficient
     to cover any tax or other governmental charge that may be imposed in
     relation thereto and the Corporation may require payment of a sum
     sufficient to cover any other expenses (including the fees and expenses of
     the Rights Agent) in connection therewith.

SECTION 2.7  MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES.

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

(2)  If there shall be delivered to the Corporation and the Rights Agent prior
     to the Expiration Time (i) evidence to their reasonable satisfaction of the
     destruction, loss or theft of any Rights Certificate, and (ii) such
     indemnity or other security as may be required by them to save each of them
     and any of their agents harmless then, in the absence of notice to the
     Corporation or the Rights Agent that such Rights Certificate has been
     acquired by a bona fide purchaser, the Corporation shall execute and upon
     its request the Rights Agent shall countersign and deliver, in lieu of any
     such destroyed, lost or stolen Rights Certificate, a new Rights Certificate
     evidencing the same number of Rights as did the Rights Certificate so
     destroyed, lost or stolen.

<PAGE>

                                      -23-

(3)  As a condition to the issuance of any new Rights Certificate under this
     Section 2.7, the Corporation or the Rights Agent may require the payment of
     a sum sufficient to cover any tax or other governmental charge that may be
     imposed in relation thereto and the Corporation may require payment of a
     sum sufficient to cover any other expenses (including the fees and expenses
     of the Rights Agent) in connection therewith.

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

SECTION 2.8  PERSONS DEEMED OWNERS.

     Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Share certificate) for registration of
transfer, the Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent shall be entitled to deem and treat the person in whose name a
Rights Certificate (or, prior to the Separation Time, the associated Common
Share certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever. As used in this Agreement, unless
the context otherwise requires, the term "HOLDER" of any Rights shall mean the
registered holder of such Rights (or, prior to the Separation Time, the
associated Common Shares).

SECTION 2.9  DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES.

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

SECTION 2.10  AGREEMENT OF RIGHTS HOLDERS.

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

     (a)  to be bound by and subject to the provisions of this Agreement, as
          amended or supplemented from time to time in accordance with the terms
          hereof, in respect of all Rights held;

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

<PAGE>

                                      -24-

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

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

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

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

     (g)  that notwithstanding anything in this Agreement to the contrary,
          neither the Corporation nor the Rights Agent shall have any liability
          to any holder of a Right or any other Person as a result of its
          inability to perform any of its obligations under this Agreement by
          reason of any preliminary or permanent injunction or other order,
          decree or ruling issued by a court of competent jurisdiction or by a
          governmental, regulatory or administrative agency or commission, or
          any statute, rule, regulation, or executive order promulgated or
          enacted by any governmental authority, prohibiting or otherwise
          restraining performance of such obligation.

SECTION 2.11  RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.

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

<PAGE>

                                      -25-

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

SECTION 3.1  FLIP-IN EVENT.

(1)  Subject to Section 3.1(2) below, and Sections 5.1(2), (3) and (4) hereof,
     in the event that prior to the Expiration Time a Flip-in Event shall occur,
     the Corporation shall take such action as may be necessary to ensure and
     provide within eight (8) Business Days of such occurrence, or such longer
     period as may be required to satisfy all applicable requirements of the
     SECURITIES ACT (Ontario), and the securities legislation of each other
     province of Canada that, except as provided below, each Right shall
     thereafter constitute the right to purchase from the Corporation upon
     exercise thereof in accordance with the terms hereof that number of Common
     Shares of the Corporation having an aggregate Market Price on the date of
     the occurrence of such Flip-in Event equal to twice the Exercise Price for
     an amount in cash equal to the Exercise Price (such Right to be
     appropriately adjusted in a manner analogous to the applicable adjustment
     provided for in Section 2.3 hereof in the event that after such date of
     occurrence an event of a type analogous to any of the events described in
     Section 2.3 hereof shall have occurred with respect to such Common Shares).

(2)  Notwithstanding anything in this Agreement to the contrary, upon the
     occurrence of any Flip-in Event, any Rights that are Beneficially Owned by
     (i) an Acquiring Person, or any Affiliate or Associate of an Acquiring
     Person, or any Person acting jointly or in concert with an Acquiring Person
     or any Affiliate or Associate of such Acquiring Person, or any Affiliate or
     Associate of such Person so acting jointly or in concert, or (ii) a
     transferee or other successor in title of Rights, directly or indirectly,
     of an Acquiring Person (or of any Affiliate or Associate of an Acquiring
     Person) or of any Person acting jointly or in concert with an Acquiring
     Person or any Associate or Affiliate of an Acquiring Person (or of any
     Affiliate or Associate of such Person so acting jointly or in concert) who
     becomes a transferee or successor in title concurrently with or subsequent
     to the Acquiring Person becoming such, shall become null and void without
     any further action, and any holder of such Rights (including transferees or
     successors in title) shall not have any rights whatsoever to exercise such
     Rights under any provision of this Agreement and shall not have thereafter
     any other rights whatsoever with respect to such Rights, whether under any
     provision of this Agreement or otherwise.

                                   ARTICLE 4
                                THE RIGHTS AGENT

SECTION 4.1  GENERAL.

(1)  The Corporation hereby appoints the Rights Agent to act as agent for the
     Corporation in accordance with the terms and conditions hereof, and the
     Rights Agent hereby accepts such appointment. The Corporation may from time
     to time appoint such co-Rights Agents as it may deem necessary or
     desirable, subject to the prior approval of the Rights Agent. In the event
     the Corporation appoints one or more co-Rights Agents, the respective
     duties of the Rights Agents and co-Rights Agents shall be as the
     Corporation may determine, with the approval of the Rights Agent. The
     Corporation agrees to pay to the Rights Agent reasonable compensation for
     all services rendered by it hereunder and, from time to time, on demand of
     the Rights Agent, its reasonable expenses and

<PAGE>

                                      -26-

     other disbursements incurred in the administration and execution of this
     Agreement (including the reasonable fees and disbursements of counsel for
     the Rights Agent) and the exercise and performance of its duties hereunder.
     The Corporation also agrees to indemnify the Rights Agent, its officers,
     directors and employees for, and to hold such persons harmless against, any
     loss, liability, cost, claim, action, suit, damage, or expense incurred
     (that is not the result of negligence, bad faith or wilful misconduct on
     the part of any one or all of the Rights Agent, its officers, directors or
     employees) for anything done or omitted by the Rights Agent in connection
     with the acceptance and administration of this Agreement, including the
     costs and expenses of defending against any claim of liability, which right
     to indemnification will survive the termination of this Agreement or the
     resignation or removal of the Rights Agent.

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

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

SECTION 4.2  MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT.

(1)  Any corporation into which the Rights Agent or any successor Rights Agent
     may be merged or amalgamated or with which it may be consolidated, or any
     corporation resulting from any merger, amalgamation, statutory arrangement
     or consolidation to which the Rights Agent or any successor Rights Agent is
     a party, or any corporation succeeding to the shareholder or stockholder
     services business of the Rights Agent or any successor Rights Agent, will
     be the successor to the Rights Agent under this Agreement without the
     execution or filing of any paper or any further act on the part of any of
     the parties hereto, provided that such corporation would be eligible for
     appointment as a successor Rights Agent under the provisions of Section 4.4
     hereof. In case at the time such successor Rights Agent succeeds to the
     agency created by this Agreement any of the Rights Certificates have been
     countersigned but not delivered, any such successor Rights Agent may adopt
     the countersignature of the predecessor Rights Agent and deliver such
     Rights Certificates so countersigned; and in case at that time any of the
     Rights Certificates have not been countersigned, any successor Rights Agent
     may countersign such Rights Certificates either in the name of the
     predecessor Rights Agent or in the name of the successor Rights Agent; and
     in all such cases such Rights Certificates will have the full force
     provided in the Rights Certificates and in this Agreement.

(2)  In case at any time the name of the Rights Agent is changed and at such
     time any of the Rights Certificates shall have been countersigned but not
     delivered, the Rights Agent may adopt the countersignature under its prior
     name and deliver Rights Certificates so

<PAGE>

                                      -27-

     countersigned; and in case at that time any of the Rights Certificates
     shall not have been countersigned, the Rights Agent may countersign such
     Rights Certificates either in its prior name or in its changed name; and in
     all such cases such Rights Certificates shall have the full force provided
     in the Rights Certificates and in this Agreement.

SECTION 4.3  DUTIES OF RIGHTS AGENT.

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

(a)  The Rights Agent may retain and consult with legal counsel (who may be
     legal counsel for the Corporation) and the opinion of such counsel will be
     full and complete authorization and protection to the Rights Agent as to
     any action taken or omitted to be taken by it in good faith and in
     accordance with such opinion. Subject to the prior written consent of the
     Corporation, which consent shall not be unreasonably withheld, the Rights
     Agent may also consult with such other experts as the Rights Agent shall
     consider necessary or appropriate to properly carry out the duties and
     obligations imposed under this Agreement (at the expense of the
     Corporation) and the Rights Agent shall be entitled to act and rely in good
     faith on the advice of any such expert.

(b)  Whenever in the performance of its duties under this Agreement the Rights
     Agent deems it necessary or desirable that any fact or matter be proved or
     established by the Corporation prior to taking or suffering any action
     hereunder, such fact or matter (unless other evidence in respect thereof be
     herein specifically prescribed) may be deemed to be conclusively proven and
     established by a certificate signed by a person believed by the Rights
     Agent to be the Chairman of the Board, the President or any Vice-President,
     Treasurer or the Controller of the Corporation and delivered to the Rights
     Agent; and such certificate will be full authorization to the Rights Agent
     for any action taken or suffered in good faith by it under the provisions
     of this Agreement in reliance upon such certificate.

(c)  The Rights Agent will be liable hereunder only for events which are the
     result of its own negligence, bad faith or wilful misconduct and that of
     its officers, directors and employees.

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

(e)  The Rights Agent will not be under any responsibility in respect of the
     validity of this Agreement or the execution and delivery hereof (except the
     due authorization, execution and delivery hereof by the Rights Agent) or in
     respect of the validity or execution of any Common Share certificate or
     Rights Certificate (except its countersignature thereof); nor will it be
     responsible for any breach by the Corporation of any covenant or condition
     contained in this Agreement or in any Rights Certificate; nor will it be
     responsible for any change in the

<PAGE>

                                      -28-

     exercisability of the Rights (including the Rights becoming void pursuant
     to Section 3.1(2) hereof) or any adjustment required under the provisions
     of Section 2.3 hereof or responsible for the manner, method or amount of
     any such adjustment or the ascertaining of the existence of facts that
     would require any such adjustment (except with respect to the exercise of
     Rights after receipt of the certificate contemplated by Section 2.3 hereof
     describing any such adjustment); nor will it by any act hereunder be deemed
     to make any representation or warranty as to the authorization of any
     Common Shares to be issued pursuant to this Agreement or any Rights or as
     to whether any Common Shares will, when issued, be duly and validly
     authorized, executed, issued and delivered or fully paid and
     non-assessable.

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

(g)  The Rights Agent is hereby authorized and directed to accept instructions
     with respect to the performance of its duties hereunder from any person
     believed by the Rights Agent to be the Chairman of the Board, President,
     any Vice-President or the Treasurer or Controller of the Corporation and to
     apply to such persons for advice or instructions in connection with its
     duties, and it shall not be liable for any action taken or suffered by it
     in good faith in accordance with instructions of any such person. It is
     understood that instructions to the Rights Agent shall, except where
     circumstances make it impracticable or the Rights Agent otherwise agrees,
     be given in writing and, where not in writing, such instructions shall be
     confirmed in writing as soon as reasonably possible after the giving of
     such instructions.

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

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

<PAGE>

                                      -29-

SECTION 4.4  CHANGE OF RIGHTS AGENT.

     The Rights Agent may resign and be discharged from its duties under this
Agreement upon sixty (60) days' notice (or such lesser notice as is acceptable
to the Corporation) in writing mailed to the Corporation and to each transfer
agent of Voting Shares of the Corporation by registered or certified mail, and
to the holders of the Rights in accordance with Section 5.8 hereof (all of which
shall be at the expense of the Corporation). The Corporation may remove the
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent and to each transfer agent of the Voting Shares of the Corporation by
registered or certified mail and to the holders of the Rights in accordance with
Section 5.8 hereof. If the Rights Agent should resign or be removed or otherwise
become incapable of acting, the Corporation will appoint a successor to the
Rights Agent. If the Corporation fails to make such appointment within a period
of sixty (60) days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of any Rights (which holder shall, with such notice, submit
such holder's Rights Certificate for inspection by the Corporation), then the
Rights Agent or the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent at the Corporation's
expense. Any successor Rights Agent, whether appointed by the Corporation or by
such a court, shall be a corporation incorporated under the laws of Canada or a
province thereof authorized to carry on the business of a trust company in
Canada. After appointment, the successor Rights Agent will be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent, upon receiving from the Corporation payment in full of all amounts
outstanding under this Agreement, shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the
Corporation will file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Voting Shares of the Corporation, and mail
a notice thereof in writing to the holders of the Rights. The cost of giving any
notice required under this Section 4.4 shall be borne solely by the Corporation.
Failure to give any notice provided for in this Section 4.4 however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

                                   ARTICLE 5
                                 MISCELLANEOUS

SECTION 5.1  REDEMPTION AND WAIVER.

(1)  Subject to the prior consent of the holders of Voting Shares or Rights
     obtained as set forth in Section 5.4(2) or Section 5.4(3) hereof, as
     applicable, the Board of Directors acting in good faith may, at any time
     prior to the occurrence of a Flip-in Event, elect to redeem all but not
     less than all of the then outstanding Rights at a redemption price of
     $0.00001 per Right appropriately adjusted in a manner analogous to the
     applicable adjustment provided for in Section 2.3 hereof in the event that
     an event of the type described in Section 2.3 hereof shall have occurred
     (such redemption price being herein referred to as the "REDEMPTION PRICE").

(2)  Subject to the prior consent of the holders of Voting Shares obtained as
     set forth in Section 5.4(2) hereof, the Board of Directors may, at any time
     prior to the occurrence of a

<PAGE>

                                      -30-

     Flip-in Event as to which the application of Section 3.1 hereof has not
     been waived pursuant to this Section 5.1, if such Flip-in Event would occur
     by reason of an acquisition of Voting Shares otherwise than pursuant to a
     Take-over Bid made by means of a Take-over Bid circular to all registered
     holders of Voting Shares and otherwise than in the circumstances set forth
     in Section 5.1(4) hereof, waive the application of Section 3.1 hereof to
     such Flip-in Event. In such event, the Board of Directors shall extend the
     Separation Time to a date at least ten (10) Business Days subsequent to the
     meeting of shareholders called to approve such waiver.

(3)  The Board of Directors acting in good faith, may, prior to the occurrence
     of a Flip-in Event, and upon prior written notice delivered to the Rights
     Agent, determine to waive the application of Section 3.1 hereof to a
     Flip-in Event that may occur by reason of a Take-over Bid made by means of
     a Take-over Bid circular to all registered holders of Voting Shares;
     provided that if the Board of Directors waives the application of Section
     3.1 hereof to a particular Flip-in Event pursuant to this Section 5.1(3),
     the Board of Directors shall be deemed to have waived the application of
     Section 3.1 hereof to any other Flip-in Event occurring by reason of any
     Take-over Bid made by means of a Take-over Bid circular to all registered
     holders of Voting Shares prior to the expiry of any Take-over Bid in
     respect of which a waiver is, or is deemed to have been granted, pursuant
     to this Section 5.1(3).

(4)  The Board of Directors may, prior to the close of business on the tenth
     (10th) day following the Stock Acquisition Date, determine, upon prior
     written notice delivered to the Rights Agent, to waive or to agree to waive
     the application of Section 3.1 hereof to a Flip-in Event, provided that
     both of the following conditions are satisfied:

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

     (b)  such Acquiring Person has reduced its Beneficial Ownership of Voting
          Shares (or has entered into a contractual arrangement with the
          Corporation, acceptable to the Board of Directors, to do so within
          thirty (30) days of the date on which such contractual arrangement is
          entered into) such that at the time the waiver becomes effective
          pursuant to this Section 5.1(4) it is no longer an Acquiring Person;

     and in the event of such a waiver, for the purposes of this Agreement, the
     Flip-in Event shall be deemed never to have occurred.

(5)  Where a Person acquires pursuant to a Permitted Bid, a Competing Bid or an
     Exempt Acquisition under Section 5.1(3) above, outstanding Voting Shares,
     then the Corporation shall immediately upon the consummation of such
     acquisition redeem the Rights at the Redemption Price.

(6)  If the Corporation is obligated under Section 5.1(5) above to redeem the
     Rights, or if the Board of Directors elects under Section 5.1(1) above or
     Section 5.1(8) below to redeem the Rights, the right to exercise the Rights
     will thereupon, without further action and without notice, terminate and
     each Right will after redemption be null and void and the only right
     thereafter of the holders of Rights shall be to receive the Redemption
     Price.

<PAGE>

                                      -31-

(7)  Within ten (10) days after the Corporation is obligated under Section
     5.1(5) above to redeem the Rights, or the Board of Directors elects under
     Section 5.1(1) above or Section 5.1(8) below to redeem the Rights, the
     Corporation shall give notice of redemption to the holders of the then
     outstanding Rights by mailing such notice to all such holders at their last
     address as they appear upon the Rights Register or, prior to the Separation
     Time, on the registry books of the Transfer Agent for the Common Shares.
     Any notice which is mailed in the manner herein provided shall be deemed
     given, whether or not the holder receives the notice. Each such notice of
     redemption will state the method by which the payment of the Redemption
     Price will be made. The Corporation may not redeem, acquire or purchase for
     value any Rights at any time in any manner other than that specifically set
     forth in this Section 5.1 and other than in connection with the purchase of
     Common Shares prior to the Separation Time.

(8)  Where a Take-over Bid that is not a Permitted Bid Acquisition is withdrawn
     or otherwise terminated after the Separation Time has occurred and prior to
     the occurrence of a Flip-in Event, the Board of Directors may elect to
     redeem all the outstanding Rights at the Redemption Price.

(9)  Upon the Rights being redeemed pursuant to Section 5.1(8) above, all the
     provisions of this Agreement shall continue to apply as if the Separation
     Time had not occurred and Rights Certificates representing the number of
     Rights held by each holder of record of Common Shares as of the Separation
     Time had not been mailed to each such holder and for all purposes of this
     Agreement the Separation Time shall be deemed not to have occurred.

SECTION 5.2  EXPIRATION.

     No person shall have any rights whatsoever pursuant to or arising out of
this Agreement or in respect of any Right after the Expiration Time, except the
Rights Agent as specified in Section 4.1(1) hereof.

SECTION 5.3  ISSUANCE OF NEW RIGHTS CERTIFICATES.

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

SECTION 5.4  SUPPLEMENTS AND AMENDMENTS.

(1)  The Corporation may, prior to any shareholders' meeting called to approve
     this Agreement, supplement or amend this Agreement without the approval of
     any holder of Rights or Voting Shares. Thereafter, the Corporation may from
     time to time supplement or amend this Agreement without the approval of any
     holders of Rights or Voting Shares to correct any clerical or typographical
     error or to maintain the validity of the Agreement as a result of a change
     in any applicable legislation or regulations or rules thereunder.

     Notwithstanding anything in this Section 5.4 to the contrary, no supplement
     or amendment shall be made to the provisions of Article 4 hereof except
     with the written concurrence of the Rights Agent to such supplement or
     amendment.

<PAGE>

                                      -32-

(2)  Subject to Section 5.4(1) above, the Corporation may, with the prior
     consent of the holders of the Voting Shares obtained as set forth below, at
     any time prior to the Separation Time amend, vary or rescind any of the
     provisions of this Agreement and the Rights (whether or not such action
     would materially adversely affect the interests of the holders of Rights
     generally). Such consent shall be deemed to have been given if provided by
     the holders of Voting Shares at a meeting of the holders of Voting Shares,
     which meeting shall be called and held in compliance with applicable laws
     and regulatory requirements and the requirements in the articles and
     by-laws of the Corporation. Subject to compliance with any requirements
     imposed by the foregoing, consent shall be deemed to have been given if the
     proposed amendment, variation or revision is approved by the affirmative
     vote of a majority of the votes cast by all holders of Voting Shares (other
     than any holder of Voting Shares who is an Offeror pursuant to a Take-over
     Bid that is not a Permitted Bid or Competing Bid with respect to all Voting
     Shares Beneficially Owned by such Person), represented in person or by
     proxy at the meeting.

(3)  The Corporation may, with the prior consent of the holders of Rights, at
     any time after the Separation Time and before the Expiration Time, amend,
     vary or rescind any of the provisions of this Agreement and the Rights
     (whether or not such action would materially adversely affect the interests
     of the holders of Rights generally).

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

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

(6)  Any supplements or amendments made by the Corporation to this Agreement
     pursuant to Section 5.4(1) above which are required to maintain the
     validity of this Agreement as a result of any change in any applicable
     legislation or regulations or rules thereunder shall:

     (a)  if made before the Separation Time, be submitted to the shareholders
          of the Corporation at the next meeting of shareholders and the
          shareholders may, by the majority referred to in Section 5.4(2) above
          confirm or reject such amendment; and

     (b)  if made after the Separation Time, be submitted to the holders of
          Rights at a meeting to be called for on a date not later than
          immediately following the next meeting of shareholders of the
          Corporation and the holders of Right may, by

<PAGE>

                                      -33-

          resolution passed by the majority referred to in Section 5.4(4) above,
          confirm or reject such amendment.

     A supplement or amendment of the nature referred to in this Section 5.4(6)
     shall be effective from the date of the resolution of the Board of
     Directors adopting such supplement or amendment until it is confirmed or
     rejected or until it ceases to be effective (as described in the next
     sentence) and, where such supplement or amendment is confirmed, it
     continues in effect in the form so confirmed. If such supplement or
     amendment is rejected by the shareholders or the holders of Rights or is
     not submitted to the shareholders or holders of Rights as required, then
     such supplement or amendment shall cease to be effective from and after the
     termination of the meeting at which it was rejected or to which it should
     have been but was not submitted or from and after the date of the meeting
     of holders of Rights that should have been but was not held, and no
     subsequent resolution of the Board of Directors to amend, vary or delete
     any provision of this Agreement to substantially the same effect shall be
     effective until confirmed by the shareholders or holders of Rights, as the
     case may be.

SECTION 5.5  FRACTIONAL RIGHTS AND FRACTIONAL SHARES.

(1)  The Corporation shall not be required to issue fractions of Rights or to
     distribute Rights Certificates which evidence fractional Rights. Any such
     fractional Right shall be null and void and the Corporation will not have
     any obligation or liability in respect thereof.

(2)  The Corporation shall not be required to issue fractions of Common Shares
     or other securities upon exercise of the Rights or to distribute
     certificates which evidence fractional Common Shares or other securities.
     In lieu of issuing fractional Common Shares or other securities, the
     Corporation shall pay to the registered holders of Rights Certificates at
     the time such Rights are exercised as herein provided, an amount in cash
     equal to the same fraction of the Market Price of one Common Share. The
     Rights Agent shall have no obligation to make any payments in lieu of
     fractional Common Shares unless the Corporation shall have provided the
     Rights Agent with the necessary funds to pay in full all amounts payable in
     accordance with Section 2.2(5).

SECTION 5.6  RIGHTS OF ACTION.

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

SECTION 5.7  NOTICE OF PROPOSED ACTIONS.

     In case the Corporation shall propose after the Separation Time and prior
to the Expiration Time to effect the liquidation, dissolution or winding-up of
the Corporation or the

<PAGE>

                                      -34-

sale of all or substantially all of the Corporation's assets, then, in each such
case, the Corporation shall give to each holder of a Right, in accordance with
Section 5.8 hereof, a notice of such proposed action, which shall specify the
date on which such liquidation, dissolution, winding up, or sale is to take
place, and such notice shall be so given at least twenty (20) Business Days
prior to the date of taking of such proposed action.

SECTION 5.8  NOTICES.

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

                    CAE Inc.
                    P.O. Box 30, Suite 3060
                    Royal Bank Plaza
                    Toronto, Ontario
                    M5J 2J1

                    Attention: President and Chief Executive Officer
                    Facsimile No.: (416) 865-0337

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

                    Montreal Trust Company of Canada
                    151 Front Street West, 8th Floor
                    Toronto, Ontario, M5J 2N1

                    Attention: Senior Manager, Client Services
                    Facsimile No.: (416) 981-9800

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

SECTION 5.9  SUCCESSORS.

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

SECTION 5.10  BENEFITS OF THIS AGREEMENT.

     Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy

<PAGE>

                                      -35-

or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Corporation, the Rights Agent and the holders of the
Rights.

SECTION 5.11  GOVERNING LAW.

     This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
shall be governed by and construed in accordance with the laws of such province.

SECTION 5.12  SEVERABILITY.

     If any Section, Clause, term or provision hereof or the application thereof
to any circumstances or any right hereunder shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such Section, Clause, term or provision
or such right shall be ineffective only in such jurisdiction and to the extent
of such invalidity or unenforceability in such jurisdiction without invalidating
or rendering unenforceable or ineffective the remaining Sections, Clauses, terms
and provisions hereof or rights hereunder in such jurisdiction or the
application of such Section, Clause, term or provision or rights hereunder in
any other jurisdiction or to circumstances other than those as to which it is
specifically held invalid or unenforceable.

SECTION 5.13  EFFECTIVE DATE.

     This Agreement is effective and in full force and effect in accordance with
its terms and conditions as of and from March 7, 1990 (the "EFFECTIVE DATE").

SECTION 5.14  DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.

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

SECTION 5.15  RIGHTS OF BOARD, CORPORATION AND OFFEROR.

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

SECTION 5.16  REGULATORY APPROVALS.

     Any obligation of the Corporation or action or event contemplated by this
Agreement shall be subject in any jurisdiction to the prior receipt of any
required approval or consent from any governmental or regulatory authority in
such jurisdiction including, without limiting the generality of the foregoing,
any necessary approval of any securities regulatory authority or stock exchange.

SECTION 5.17  DECLARATION AS TO NON-CANADIAN HOLDERS.

     If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would require
compliance with the securities laws or comparable legislation of a jurisdiction
outside Canada, the Board of Directors

<PAGE>

                                      -36-

acting in good faith may take such actions as it may deem appropriate to ensure
such compliance. In no event shall the Corporation or the Rights Agent be
required to issue or deliver Rights or securities issuable on exercise of Rights
to Persons who are citizens, residents or nationals of any jurisdiction other
than Canada or the United States in which such issue or delivery would be
unlawful without registration of the relevant Persons or securities for such
purposes.

SECTION 5.18  TIME OF THE ESSENCE.

     Time shall be of the essence in this Agreement.

SECTION 5.19  EXECUTION IN COUNTERPARTS.

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

     IN WITNESS WHEREOF, the parties have executed this Agreement.

                                   CAE INC

                                   By: /s/ Paul G. Renaud
                                       __________________________
                                       Authorized Signing Officer

                                   MONTREAL TRUST COMPANY OF CANADA

                                   By: /s/ Pierre Tellis
                                       __________________________
                                       Authorized Signing Officer
                                       Pierre Tellis
                                       Senior Account Manager
                                       Montreal Trust Company of Canada

                                   By: /s/ J.P. Gagnon
                                       __________________________
                                       Authorized Signing Officer

<PAGE>

                                SCHEDULE 2.2(3)

                           FORM OF RIGHTS CERTIFICATE

CERTIFICATE NO. ___________                                   ___________ RIGHTS

THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED
IN SECTION 3.1(2) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON, ANY PERSON ACTING JOINTLY OR IN CONCERT WITH AN ACQUIRING
PERSON OR THEIR RESPECTIVE ASSOCIATES AND AFFILIATES (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) AND THEIR RESPECTIVE TRANSFEREES SHALL BECOME VOID
WITHOUT ANY FURTHER ACTION.

                               RIGHTS CERTIFICATE

     This certifies that ______________________ or registered assigns, is the
registered holder of the number of Rights set forth above each of which entitles
the registered holder thereof, subject to the terms, provisions and conditions
of the Amended and Restated Shareholder Protection Rights Plan Agreement dated
June 14, 2000, as amended and restated from time to time (the "RIGHTS
AGREEMENT"), between CAE Inc., a corporation incorporated under the laws of
Canada (the "CORPORATION"), and Montreal Trust Company of Canada, a trust
company incorporated under the laws of Canada, as rights agent (the "RIGHTS
AGENT", which term shall include any successor Rights Agent under the Rights
Agreement) to purchase from the Corporation at any time after the Separation
Time (as such term is defined the Rights Agreement) and prior to the Expiration
Time (as such term is defined in the Rights Agreement) (or such earlier
expiration time as is provided in the Rights Agreement) one fully paid and
non-assessable Common Share of the Corporation (a "COMMON SHARE") at the
Exercise Price referred to below, upon presentation and surrender of this Rights
Certificate together with the Form of Election to Exercise duly executed and
submitted to the Rights Agent at its principal offices in any of the City of
Toronto. The Exercise Price shall initially be $100 (Canadian) per Right and
shall be subject to adjustment in certain events as provided in the Rights
Agreement.

     In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive assets, debt securities or other equity securities of the Corporation
(or a combination thereof) all as provided in the Rights Agreement.

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

     This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such purpose,
may be exchanged for another

<PAGE>

                                      -2-

Rights Certificate or Rights Certificates of like tenor and date evidencing an
aggregate number of Rights entitling the holder to purchase a like aggregate
number of Common Shares as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered. If this Rights Certificate shall be exercised
in part, the registered holder shall be entitled to receive, upon surrender
hereof, another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.

     Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Rights Certificate may be, and under certain circumstances are required to
be, redeemed by the Corporation at a redemption price of $0.00001 per Right.

     No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby.

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

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

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

Dated --

                                   CAE INC.

                                   By:__________________________
                                   Authorized Signing Officer

                                   By:__________________________
                                   Authorized Signing Officer

<PAGE>

                                      -3-

                                   MONTREAL TRUST COMPANY OF CANADA

                                   By:__________________________
                                   Authorized Signing Officer

                                   By:__________________________
                                   Authorized Signing Officer

<PAGE>

                                     NOTICE

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

<PAGE>

                               FORM OF ASSIGNMENT

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

FOR VALUE RECEIVED ________________________________________ hereby sells,
assigns and transfers unto ________________________________
               ____________________________________________
              (Please print name and address of transferee)

the Rights represented by this Rights Certificate, together with all right,
title and interest therein and does hereby irrevocably constitute and appoint

___________________________________________________________
as attorney to transfer the within Rights on the books of the Corporation,
with full power of substitution.

Dated ___________________

Signature Guaranteed ________________________________________________________
                     Signature

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

     Signature must be guaranteed by a Canadian chartered bank, or Medallion
guaranteed by a Canadian trust company or a member of a recognized stock
exchange or a member of the Transfer Association Medallion (Stamp) Program.

                             TO BE COMPLETED IF TRUE

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

                     ________________________________________________________
                     Signature

<PAGE>

                                      -2-

                                     NOTICE

     In the event the certification set forth in the Form of Assignment is not
completed, the Corporation will deem the Beneficial Owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and accordingly such
Rights shall be null and void.

<PAGE>

                   (To be attached to each Rights Certificate)

                          FORM OF ELECTION TO EXERCISE

TO: CAE INC.

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

                          ____________________________
                                     (NAME)

                          ____________________________
                                   (ADDRESS)

                          ____________________________
                          (CITY AND STATE OR PROVINCE)

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

                          ____________________________
                                     (NAME)

                          ____________________________
                                   (ADDRESS)

                          ____________________________
                          (CITY AND STATE OR PROVINCE)

           __________________________________________________________
           SOCIAL INSURANCE, SOCIAL SECURITY OR OTHER TAXPAYER NUMBER

Dated ___________________

Signature Guaranteed ________________________________________________
                     Signature

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

     Signature must be guaranteed by a Canadian chartered bank, a Canadian trust
company or a member of a recognized stock exchange or a member of the Securities
Transfer Association Medallion Program (Stamp).

<PAGE>

                                      -2-

                            TO BE COMPLETED IF TRUE

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

                     __________________________________
                     Signature

<PAGE>

                        ASSIGNMENT OF AGENCIES AGREEMENT

THIS AGREEMENT made as of the 15th day of January, 2001

BETWEEN:                CAE INC.,
                        a company incorporated under the laws of C.B.C.A

                        (hereinafter called the "Company")

                            PARTY OF THE FIRST PART

AND:                    MONTREAL TRUST COMPANY,
                        a trust company existing under the laws of Canada

                            PARTY OF THE SECOND PART

AND:                    MONTREAL TRUST COMPANY OF CANADA,
                        a trust company existing under the laws of Canada

                        (Montreal Trust Company and Montreal Trust Company of
                        Canada being hereinafter referred to, either
                        individually or collectively as the context may require,
                        as "Montreal Trust")

                             PARTY OF THE THIRD PART

AND:                    COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company
                        existing under the laws of Canada with an office in the
                        City of Toronto, in the Province of Ontario

                        (hereinafter called "Computershare")

                            PARTY OF THE FOURTH PART

WHEREAS Montreal Trust is currently under contract to act as the Company's duly
appointed Transfer Agent and Registrar, and provides various ancillary services
to the Company in connection therewith;

<PAGE>

AND WHEREAS Montreal Trust may currently be under contract to provide certain
additional agency and administrative services to the Company, under agreements
or arrangements entered into through its former Stock Transfer operations;

AND WHEREAS the aforementioned agencies and services (hereinafter called "the
Agencies") are provided principally under the agreement(s) set forth on Schedule
"A" hereto (the "Contracts");

AND WHEREAS Computershare and Montreal Trust represent that Computershare
acquired the Stock Transfer business of Montreal Trust pursuant to an Asset
Purchase Agreement dated as of June 30, 2000;

AND WHEREAS both the Company and Montreal Trust are desirous of having the
rights, powers, duties and obligations of the Agencies transferred and assigned
to, and assumed by, Computershare, and Computershare is desirous of accepting
same, all with effect from the close of business on March 16, 2001,
(hereinafter, the "Transfer Date");

AND WHEREAS to give effect to the foregoing, Montreal Trust desires to transfer
and assign, and to formally resign from, the Agencies; and the Company is
prepared to accept such resignations and to appoint Computershare as the
successor to the Agencies under the terms of the applicable Contracts, all with
effect upon the Transfer Date;

NOW, THEREFORE, THIS AGREEMENT WITNESSES THAT IN CONSIDERATION OF THE PREMISES
AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH
ARE HEREBY ACKNOWLEDGED BY THE PARTIES HERETO, THE PARTIES COVENANT AND AGREE AS
FOLLOWS:

1. Montreal Trust hereby transfers and assigns to Computershare all of its
rights, powers, duties and obligations under the Agencies and the Contracts, and
immediately thereafter resigns therefrom, all with effect upon the Transfer
Date.

2. The Company hereby consents to such transfers and assignments from Montreal
Trust to Computershare, accepts such resignations, waiving any periods of notice
that may be set forth in the Contracts, and appoints Computershare as its
Transfer Agent and Registrar and as its agent and/or administrator under the
other Agencies, if any, all with effect upon the Transfer Date. The Company
further releases Montreal Trust from any duties and liabilities that may arise
pursuant to Computershare's administration of the Agencies, from and after the
Transfer Date.

3. Computershare hereby accepts such appointments, transfers and assignments,
effective upon the Transfer Date and upon such terms as are set forth in the
Contracts, and agrees to perform all of the obligations of Montreal Trust under
the Agencies and the Contracts which are required to be performed from and after
the Transfer Date.

4. Montreal Trust shall transfer and deliver to Computershare, and Computershare
shall accept, any and all records, documents, property, monies and other
holdings as may be held by Montreal Trust in connection with the Agencies. Such
transfers, deliveries and acceptances shall be made as soon as practicable upon,
after, or in anticipation of, the Transfer Date as may be agreed between such
parties.

5. Each party hereto agrees to execute and deliver all such documents and
instruments and to do such other acts as may be necessary or advisable to give
effect to the assignments, transfers, and deliveries referred to herein.

<PAGE>

6. For greater certainty, the parties acknowledge and agree that any Agencies
currently performed by Montreal Trust, or in its name by Computershare, which
are ancillary to and/or related to those set forth in the Contracts but which
may not be expressly provided for in the Contracts, are intended to be
transferred to Computershare along with the Agencies expressly created by the
Contracts, and they shall transfer to Computershare upon the Transfer Date.

7. Notwithstanding any other provision hereof, to the extent that any of the
Contracts expressly require the consent of any third party or parties, the
parties hereto agree that the transfer and assignments of such Contract(s) shall
not be effective until such consent(s) are provided.

8. The parties hereto acknowledge that Computershare, having been continued as a
federal trust company on January 9, 2001, expects to obtain all registrations,
licenses and approvals required for it to carry on its business in all
jurisdictions in Canada (the "required approvals") on or before the Transfer
Date. If, however, the receipt of the required approvals has not occurred by the
Transfer Date, then notwithstanding any other provision of this Agreement,
Computershare may elect by written notice to the other parties hereto that all
resignations, releases, appointments, transfers and assignments contemplated
hereunder shall not occur on the Transfer Date but shall occur on such later
date as Computershare shall determine and communicate to the other parties,
provided that if Computershare's determination and communication of such later
date have not occurred by December 31, 2001, this Agreement shall be null and
void in its entirety. This Agreement shall ensure to the benefit of and be
binding upon the parties hereto and their successors and permitted assigns.

9. This Agreement shall be governed by the laws of the Province of Ontario and
the laws of Canada applicable therein.

IN WITNESS WHEREOF THIS AGREEMENT HAS BEEN DULY EXECUTED BY THE PARTIES HERETO
AS OF THE DATE FIRST ABOVE WRITTEN.

                                   CAE INC.

                                   Per: /s/ Robert Hedges
                                        ________________________

                                   Per: /s/ Paul G. Renaud
                                        ________________________

<PAGE>

                                   MONTREAL TRUST COMPANY

                                   Per: /s/ Shirley Yuen
                                        ________________________

                                   Per: /s/ Christine Lawton
                                        ________________________

                                   MONTREAL TRUST COMPANY OF CANADA

                                   Per: /s/ Shirley Yuen
                                        ________________________

                                   Per: /s/ Christine Lawton
                                        ________________________

                                   COMPUTERSHARE TRUST COMPANY OF CANADA

                                   Per: /s/ Sandra Palma
                                        ________________________

                                   Per: /s/ Rita De Sousa-Lopes
                                        ________________________

<PAGE>

                                  SCHEDULE "A"
             TO ASSIGNMENT OF AGENCIES AGREEMENT BETWEEN CAE INC.,
          MONTREAL TRUST COMPANY, MONTREAL TRUST COMPANY OF CANADA AND
                     COMPUTERSHARE TRUST COMPANY OF CANADA

TITLE AND DATE OF AGREEMENT            ADDITIONAL IDENTIFIERS
                                       (e.g.. Capacity. Type of Agreement etc.,
                                       as may be required to identify Agreement)

Transfer Agent, Registrar & Dividend 1996
Disbursing Agent

Shareholder Protection      14-Jun-00
Rights Plan Agreement       (Amended and Restated)

Sedar Solutions Agreement   01-Apr-97CAE INC.

                          EMPLOYEE STOCK PURCHASE PLAN

                         Effective as of April 1, 2000

<PAGE>

                                    CAE INC.
                          EMPLOYEE STOCK PURCHASE PLAN

1.   PURPOSE

     The purpose of the Plan is to provide Employees with an opportunity to
     participate in the ownership of the Company on an ongoing basis through
     purchases of Shares. The Plan is established effective April 1, 2000 and
     shall operate as an employees profit sharing plan as defined in section 144
     of the Income Tax Act (Canada) or any successor provision.

2.   DEFINITIONS

     As used in the Plan:

     "Affiliate" means an affiliated body corporate of the Company within the
     meaning of subsection 2(2) of the Canada Business Corporations Act.
     Notwithstanding any other provision of the Plan, the Committee may
     determine whether and as of what date employees of any particular Affiliate
     may participate herein.

     "Board" means the Board of Directors of the Company.

     "Business Day" means any day of the year, other than a Saturday, Sunday or
     any day on which banks are required or authorized to close in Toronto,
     Ontario.

     "Company" means CAE Inc. or a successor.

     "Committee" means the Compensation Committee of the Board or such other
     committee as may be designated by the Board.

     "Effective Date" means April 1, 2000.

     "Employee" means a permanent full-time or permanent part-time employee of
     the Company or of an Affiliate. For purposes of the Plan, a transfer from
     the Company to an Affiliate, from an Affiliate to the Company, or between
     Affiliates shall be deemed not to constitute a resignation or termination
     of employment.

     "Employer Contributions" means contributions made to the Plan by the
     Company or an Affiliate pursuant to section 6.

     "Enrollment/Modification Form" means the Enrollment/Modification Form in
     the form determined by the Committee.

     "Group RRSP" means any group registered retirement savings plan
     administered by the Trustee or an affiliate thereof for the benefit of
     Employees that is designated by the Committee for purposes of the Plan.

<PAGE>
                                      -3-

     "Initial Participant Contribution" means a one-time contribution made by a
     Participant in the amount of Cdn.$500, the election for which contribution
     must be indicated on an Enrollment/Modification Form filed within two (2)
     months after the later of the Effective Date and the first enrollment date
     after the Participant qualifies as an Employee.

     "Ordinary Participant Contributions" means periodic contributions made by a
     Participant computed as a percentage of Salary.

     "Participant" means an Employee who has enrolled in the Plan.

     "Participant Contributions" means Initial Participant Contributions and/or
     Ordinary Participant Contributions, as the context requires.

     "Pay Period" means the Participant's pay period.

     "Plan" means this Employee Stock Purchase Plan, as it may be amended from
     time to time, and which is intended to constitute an employees profit
     sharing plan as defined in section 144 of the Income Tax Act (Canada) or
     any successor provision.

     "Plan Year" means any calendar year during which the Plan is in force.

     "Profits" means current profits, retained earnings, and any other amount of
     or in respect of the Company or an Affiliate considered by the Canada
     Customs and Revenue Agency to constitute profits for purposes of subsection
     144(10) of the Income Tax Act (Canada) or any successor provision.

     "Retirement" means a cessation of employment entitling the Participant to
     receive an immediate pension benefit under a Company or Affiliate pension
     plan, except in the case of a termination for cause (other than mental or
     physical incapacity).

     "Salary" means the base salary of the Employee for the relevant period,
     excluding overtime, bonuses, and other special or one-time payments
     received in that period.

     "Shares" means common shares in the capital stock of the Company.

     "Trust Fund" means the assets of the Plan held by the Trustee, consisting
     of the Participant Contributions, the Employer Contributions, the Shares
     purchased therewith and the income derived therefrom, the whole as more
     fully set out at paragraph 7.1.

     "Trustee" means such trustee as may from time to time be appointed by the
     Company.

     "Unvested Shares" means Shares in a Participant's account purchased with
     the Employer Contributions in the current and two previous Plan Years.

     "Vested Shares" means Shares in a Participant's account which are not
     Unvested Shares.

     "Withdrawal/Termination Form" means the Withdrawal/Termination Form in the
     form determined by the Committee.

<PAGE>

                                       -4-

     Unless the context otherwise requires, references to the masculine shall be
     deemed to include references to the feminine, and vice versa, and
     references to the singular shall be deemed to include references to the
     plural, and vice versa.

3.   REGULATORY APPROVAL

     This Plan is subject to all necessary regulatory approvals.

4.   ELIGIBILITY

4.1  Eligible Employees - Each Employee shall be eligible to participate in the
     Plan.

4.2  No Effect on Employment - The terms of employment of an Employee by the
     Company or an Affiliate shall not be affected by his participation in the
     Plan. Nothing contained in the Plan or in any documentation pertaining
     thereto shall confer upon any Participant any right with respect to
     continuance of employment by the Company or any Affiliate or interfere in
     any way with the right of the Company or any Affiliate to terminate the
     employment of any Participant. Under no circumstances shall any person who
     is or has at any time been a Participant be able to claim from the Company
     or an Affiliate or any related person any sum or other benefit to
     compensate him for loss of any rights or benefits under or in connection
     with this Plan or by reason of his participation herein.

4.3  Enrollment Modification Form - Each Employee may elect to participate in
     the Plan as of the Effective Date or any subsequent July 1, October 1,
     January 1, or April 1, by completing and delivering to the Company the
     Enrollment/Modification Form. Delivery of a duly completed and executed
     Enrollment/Modification Form shall constitute acceptance by the Employee of
     all the terms and conditions of the Plan and of any regulations adopted or
     to be adopted pursuant to paragraph 13.1.

5.   PARTICIPANT CONTRIBUTIONS

5.1  Amount of Contributions - The Employee shall indicate in the
     Enrollment/Modification Form whether he wishes to make an Initial
     Participant Contribution and/or the amount of any Ordinary Participant
     Contributions he wishes to make. Such amount of Ordinary Participant
     Contributions must be equal to any whole percentage of the Participant's
     Salary from 1 percent to 10 percent. In the event that the Salary of a
     Participant varies at any time in the course of a Plan Year, the Ordinary
     Participant Contributions of such Participant shall be automatically
     adjusted accordingly in order to remain equal to the selected percentage of
     the Participant's Salary.

5.2  Manner of Payment - Each Participant shall make Participant Contributions
     to the Plan by regular scheduled payroll deductions at the end of each Pay
     Period. Each payroll deduction in respect of Ordinary Participant
     Contributions shall be in an amount equal to the percentage of such
     Participant's Salary for such Pay Period selected by the Participant on his
     Enrollment/Modification Form. Each payroll deduction in respect of the
     Initial

<PAGE>

                                      -5-

     Participant Contribution shall be in the same percentage, provided,
     however, that such Participant may instead make such Initial Participant
     Contribution by way of cheque payable to the Trustee no later than two
     months after the later of the Effective Date and the first enrollment date
     after he qualifies as an Employee. The Participant Contributions in any
     given Plan Year shall be made on the basis of the year of receipt of the
     Salary from which such Participant Contributions are deducted. Participant
     Contributions shall commence as soon as practicable but in no event later
     than the first Pay Period following the Pay Period in which the
     Enrollment/Modification form is received.

5.3  Modification of Contributions - A Participant may modify the amount of his
     Ordinary Participant Contributions to the Plan up to twice in any Plan
     Year, by completing and delivering to the Company an
     Enrollment/Modification Form. Such modification shall take effect as soon
     as practicable but in no event later than the first Pay Period following
     the Pay Period in which the Enrollment/Modification Form is received, at
     which time the Ordinary Participant Contributions shall be adjusted
     accordingly, provided such adjustment conforms with paragraph 5.1.

5.4  No Retroactive Contributions - A Participant may not make retroactive
     Participant Contributions to the Plan, unless the Committee determines
     otherwise.

5.5  No Lump Sum Contributions - Subject to paragraph 5.2, a Participant may not
     make lump sum Participant Contributions to the Plan, unless the Committee
     determines otherwise.

5.6  Paid Leave of Absence - A Participant on authorized Company-paid or
     Affiliate-paid leave of absence shall continue to make Participant
     Contributions through payroll deduction, as provided for in paragraph 5.2,
     unless such Participant has completed and delivered to the Company an
     Enrollment/Modification form stating that he wishes that his Participant
     Contributions be suspended during the period of such absence, in which
     event paragraph 5.8 shall become applicable with such modifications as the
     context requires.

5.7  Maternity Leave - A Participant on maternity leave shall continue to make
     Participant Contributions by way of post-dated cheques, unless such
     Participant has completed and delivered to the Trustee an
     Enrollment/Modification Form stating that she wishes that her Participant
     Contributions be suspended during the period of such absence, in which
     event paragraph 5.8 shall become applicable with such modifications as the
     context requires.

5.8  Lay-off, Unpaid Leave of Absence - In the case of lay-off or authorized
     unpaid leave of absence, and subject to paragraph 5.10, the Participant
     Contributions of the Participant shall be automatically suspended. Such
     suspension shall apply until the Participant returns to work, in which case
     the Participant may resume his Participant Contributions by completing and
     delivering to the Company an Enrollment/Modification Form. Participant
     Contributions shall resume as soon as practicable but in no event later
     than the first Pay Period following the Pay Period in which the
     Enrollment/Modification Form is received.

<PAGE>

                                      -6-

     During any suspension of Participant Contributions by a Participant on
     lay-off or unpaid leave of absence, the Participant shall remain eligible
     for Company Contributions earned prior to such suspension, subject to
     section 6.

5.9  Long-Term Disability - In the event that a Participant becomes disabled and
     entitled to benefits under a recognized long-term disability program, and
     subject to paragraph 5.10, the Participant Contributions of the Participant
     shall be automatically suspended. Such suspension shall apply until the
     Participant returns to work, in which case the Participant may resume his
     Participant Contributions by completing and delivering to the Company an
     Enrollment/Modification Form. Participant Contributions shall resume as
     soon as practicable but in no event later than the first Pay Period
     following the Pay Period in which the Enrollment/Modification Form is
     received.

     During any suspension of Participant Contributions by a Participant on
     long-term disability, the Participant shall remain eligible for Employer
     Contributions earned prior to such suspension, subject to section 6.

5.10 Continuing Contributions - A Participant to whom paragraph 5.8 or 5.9
     applies may continue to contribute to the Plan by way of post-dated cheques
     until the earlier of his return to work or the end of the Plan Year in
     which the event described in such applicable paragraph occurs.

5.11 Voluntary Suspension of Contributions - A Participant may at any time, by
     completing and delivering to the Company an Enrollment/Modification Form,
     request that his Ordinary Participant Contributions be suspended. The
     Participant will have the option of resuming his Ordinary Participant
     Contributions at any time by completing and delivering to the Company a new
     Enrollment/Modification Form. Ordinary Participant Contributions shall
     resume as soon as practicable but in no event later than the first Pay
     Period following the Pay Period in which the new Enrollment/Modification
     Form is received. However, in the event of a second such suspension in the
     same Plan Year, the Participant shall not be allowed to resume making
     Participant Contributions until the next enrollment date.

     During any suspension of Participant Contributions, the Participant shall
     remain eligible for Employer Contributions earned prior to such suspension,
     subject to section 6, and shall be considered a Participant in the Plan for
     all purposes other than the making of Participant Contributions.

5.12 Remittance of Contributions - Participant Contributions withheld through
     payroll deduction by the Company and each Affiliate in each Pay Period
     shall be remitted by the Company and each Affiliate to the Trustee as soon
     as practicable but not later than the fifth Business Day following the date
     such withholding is effected. Participant Contributions described in
     paragraph 5.7 or 5.10 shall be remitted by the Participant directly to the
     Trustee by way of post-dated cheque.

<PAGE>

                                      -7-

6.   EMPLOYER CONTRIBUTIONS

     Simultaneous with the relevant Participant Contribution or as soon as
     practicable thereafter, the Company or the relevant Affiliate, as the case
     may be, shall remit to the Trustee for the benefit of each Participant an
     Employer Contribution out of Profits. Such Employer Contribution shall be
     equal to: (a) 100 percent of the amount of the Participant's Initial
     Participant Contribution, if any, and (b) 33.3 percent of the amount of the
     relevant Ordinary Participant Contributions up to (i) 6 percent of Salary
     less (ii) any amount described in (a); provided, however, that if there are
     insufficient Profits to make an Employer Contribution computed according to
     the preceding formula in a particular Plan Year, the Employer Contribution
     for that Plan Year shall be reduced to Cdn.$100 per Participant. For the
     avoidance of doubt, the Employer Contribution described in (b) for the
     benefit of any Participant in respect of a Plan Year shall not exceed 2
     percent of his Salary in that Plan Year.

7.   TRUST FUND; ALLOCATIONS TO PARTICIPANTS

7.1  Assets of the Trust Fund - The Trustee shall receive from the Company and
     the Affiliates the Participant Contributions of all the Participants made
     in accordance with section 5 and the Employer Contributions made to the
     Plan in accordance with section 6. Such contributions, the Shares acquired
     therewith and the income thereon from the date of receipt by the Trustee
     shall constitute the Trust Fund of the Plan and shall be held, invested,
     managed, administered and dealt with by the Trustee pursuant to the terms
     of the Plan. The Trustee shall, as soon as reasonably practicable, convert
     into Canadian dollars any Participant Contributions and Employer
     Contributions paid in another currency.

7.2  Allocations to Participants - The Trustee shall maintain a separate account
     for each Participant. The Trustee shall credit to the account of a
     Participant all Employer Contributions made for the benefit of the said
     Participant, all Participant Contributions made by such Participant, and
     all Shares acquired therewith. The Trustee shall allocate either absolutely
     or contingently to each Participant all income received, capital gains
     realized, and capital losses sustained by the Trust Fund on his account at
     such time or times as the Trustee may determine but in any event, at least
     annually. The Trustee shall credit to the Plan reserve all Unvested Shares
     forfeited by Participants in accordance with paragraph 8.4.

8.   SALE, WITHDRAWAL, TRANSFER, OR FORFEITURE OF SHARES

8.1  Right to Sell, Withdraw or Transfer - Upon completion and delivery to the
     Company of a Withdrawal/Termination Form, a Participant may direct the
     Trustee to sell, withdraw, or transfer some or all of the Vested Shares in
     his account. In the first case, the Trustee shall pay to the Participant an
     amount equal to the net proceeds of sale of those Shares which have been
     sold at the Participant's direction. In the second case, the Trustee shall
     transfer title and deliver to the Participant those Shares which have been

<PAGE>

                                      -8-

     withdrawn at the Participant's direction. In the third case, the Trustee
     shall proceed in accordance with paragraph 8.3.

8.2  Exception for Unvested Shares - A Participant may not direct the Trustee to
     sell or withdraw any Unvested Shares in his account. For purposes of this
     paragraph 8.2, the Trustee shall track each Participant's Unvested Shares
     separately from his Vested Shares.

8.3  Group RRSP Transfer - Beginning on such date as the Committee determines, a
     Participant may direct the Trustee to transfer some or all of the Vested
     Shares in his account into the Group RRSP. A Participant may not request
     Share transfers to the Group RRSP more than once in any Plan Year. It is
     the responsibility of the Participant to ensure that the aggregate of such
     Group RRSP contributions and any contributions he makes to other registered
     retirement savings plans does not exceed the allowable limit under the
     Income Tax Act (Canada).

8.4  Termination for Cause; Resignation - In the event that the employment of a
     Participant is terminated for cause or the Participant resigns, the
     Participant's participation in the Plan shall be terminated. The Trustee
     shall either transfer and deliver to the Participant or sell all of the
     Vested Shares in the Participant's account, at the option of the
     Participant. The transfer and delivery of the Shares or payment of the net
     proceeds of sale, as the case may be, shall be effected as soon as
     practicable but in no event later than five (5) days from the date the
     Trustee receives notification of such termination.

     The Participant shall not be entitled to acquire title to or receive
     proceeds from the sale of his Unvested Shares. Such Shares shall be
     forfeited and credited to the Plan reserve and may be utilized to satisfy
     future Employer Contribution obligations.

8.5  Termination in Other Circumstances - In the event of the death, Retirement,
     or involuntary termination without cause of a Participant, the Trustee
     shall transfer and deliver or sell all of the Vested Shares and Unvested
     Shares in the Participant's account to the Participant or the legal
     representatives of the deceased Participant's estate, as the case may be.
     The transfer and delivery or payment of the net proceeds of sale, as the
     case may be, shall be effected as soon as practicable but in no event later
     than five (5) days from the date the Trustee receives notification of such
     termination.

9.   INVESTMENTS

9.1  Contributions to Be Invested Solely in Shares - All Participant
     Contributions and all Employer Contributions, as well as all income
     thereon, shall be invested solely in the acquisition of Shares.
     Notwithstanding the foregoing, all Participant Contributions and Employer
     Contributions remitted to the Trustee shall, prior to the acquisition of
     Shares therewith pursuant to paragraph 9.2, earn interest for the account
     of the Participants.

9.2  Acquisition of Shares by Trustee - In the case of Participant
     Contributions, Shares shall be purchased by the Trustee as soon as
     reasonably practicable following receipt of the Participant Contributions
     by the Trustee, as determined by the Trustee. In the case of Employer
     Contributions, Shares shall be purchased by the Trustee as soon as
     reasonably

<PAGE>

                                      -9-

     practicable following receipt of such Contributions from the Company or any
     such longer period required by securities legislation, stock exchange
     rules, or other relevant rules.

9.3  Source of Shares - The Trustee shall use the Participant Contributions and
     the Employer Contributions to purchase Shares only on the open market,
     through the facilities of The Toronto Stock Exchange or such other stock
     exchange on which the Shares are listed as the Board shall from time to
     time prescribe.

9.4  Registration of Shares - All the Shares purchased by the Trustee on behalf
     of a Participant pursuant to the provisions hereof shall be registered in
     the name of the Trustee, on behalf of such Participant. As long as such
     Shares have not been forfeited pursuant to paragraph 8.4 and are governed
     by the provisions of the Plan, they shall be held by the Trustee on behalf
     of the Participant. However, all rights and privileges with respect to the
     Shares, including voting rights, shall be exercised by the Participant
     through the Trustee, and any dividends shall be credited to the
     Participant's account.

9.5  Dividends - All dividends paid on Shares held by the Trustee on a
     Participant's behalf shall be reinvested by the Trustee in the acquisition
     of additional Shares as soon as practicable but in no event later than ten
     (10) days following payment of the dividends, which Shares shall be
     credited to the account of the Participant.

9.6  Shareholder Information; Right to Vote - The Trustee shall forward to each
     Participant all the shareholder information, documentation and reports sent
     by the Company to its shareholders. Prior to all meetings of the Company's
     shareholders, the Trustee shall provide to the Participant a voting
     instruction card so that the Participant may indicate thereon his
     directions to the Trustee as to how he wishes the Trustee to vote on his
     behalf and the Participant shall return such voting instruction card to the
     Trustee. Should the Participant fail to provide the Trustee with the voting
     instruction card, the Trustee shall refrain from voting the Shares credited
     to the account of the Participant.

9.7  Discretion of Trustee - Notwithstanding paragraph 9.2, the Trustee, in its
     discretion, may limit the daily volume of its purchases and sales of Shares
     or make such purchases and sales over several trading days to the extent
     that such action is deemed by it to be in the best interests of the
     Participants. Should the purchase or sale of Shares by the Trustee in any
     given month pursuant hereto be at various prices, the Trustee shall
     establish an average purchase or sale price, as the case may be, applicable
     for each Share in the relevant month.

9.8  Fractions of Shares - A Participant shall not be allowed in any
     circumstances to withdraw or transfer a fraction of a Share pursuant to any
     provision of the Plan. The value of any such fraction will be paid in cash.

9.9  No Share Value Guarantee - Neither the Company nor any Affiliate makes any
     representation or warranty as to the future market value of any Shares
     acquired in accordance with the provisions of the Plan.

<PAGE>

                                      -10-

10.  STATEMENTS OF ACCOUNT

10.1 Quarterly Statements - The Trustee will provide, on a quarterly basis, a
     statement of account to each Participant setting out the activity relating
     to the Participant's account for those periods ending at the end of March,
     June, September and December of each Plan Year.

10.2 Up-to-Date Statements - Should a Participant request an up-to-date
     statement of account, such statement may be made available at such other
     time as may be agreed upon between the Company and the Trustee.

11.  THE TRUSTEE

11.1 Change of Trustee - The Company as agent for each Participant may at any
     time or times after providing ninety (90) days' written notice remove the
     Trustee and appoint a successor or successors to fill any vacancy arising
     for any reason whatever.

11.2 Delegation by Trustee - The Trustee may delegate to the Company or to any
     corporation authorized to carry on the business of a trust company in
     Canada the duty to maintain records and to furnish statements in connection
     with all aspects of the Plan.

11.3 Indemnification - The Trustee shall be indemnified and held harmless by the
     Company against and from any and all loss, cost, liability or expense
     resulting from any claim, action, suit or proceeding to which it may be a
     party or in which it may be involved by reason of any action taken or
     failure to act under the Plan and against and from any and all amounts paid
     by it in settlement thereof (with the Company's written approval) or paid
     by it in satisfaction of a judgment in any such action, suit or proceeding,
     except a judgment in favor of the Company based upon a finding of the
     Trustee's wilful misconduct, negligence, or bad faith; subject, however, to
     the condition that, upon the assertion or institution of any such claim,
     action, suit or proceeding against it, the Trustee shall in writing give
     the Company a reasonable opportunity, at the latter's expense, to handle
     and defend the same within a time frame to be specified by the Trustee,
     before the Trustee undertakes to handle and defend such claim, action, suit
     or proceeding on its own behalf. The Company and the Participants shall be
     indemnified and held harmless by the Trustee against and from any and all
     loss, cost, liability or expense resulting from the wilful misconduct,
     negligence or bad faith of the Trustee or of any person (other than the
     Company) to which the Trustee has delegated any of its duties hereunder.

11.4 Certificates, Reports, Opinions - The Trustee shall be entitled to rely on
     all certificates, reports, opinions and other documents furnished by any
     broker, accountant, auditor or counsel to the Company and shall be fully
     protected and indemnified by the Company in respect of any acts done in
     good faith and in reliance on such certificates, reports, opinions or
     documents.

11.5 Resignation of Trustee - The Trustee may resign its trust and be discharged
     from all further duties and liabilities hereunder upon ninety (90) days'
     written notice to the Company and each Participant or such shorter notice
     as may be agreed upon.

<PAGE>

                                      -11-

12.  PARTICIPANT'S RIGHTS NOT TRANSFERABLE

     Except as provided herein, the rights of a Participant pursuant to the
     provisions of the Plan are non-assignable and non-transferable, in whole or
     in part. No attempted assignment or transfer thereof, otherwise than in
     accordance with the provisions hereof, shall be effective.

13.  INTERPRETATION, REGULATIONS, AMENDMENT AND TERMINATION

13.1 Regulation and Delegation - The Committee may make, amend and repeal at any
     time and from time to time such regulations not inconsistent herewith, as
     it may deem necessary or advisable generally for the proper administration
     and operation of the Plan. In particular, the Committee may delegate to any
     person, group of persons or corporation such administrative duties and
     powers as it sees fit, and the Committee may take such actions as are
     necessary not to penalize a Participant moving to or from Canada at the
     Company's request.

13.2 Interpretation - The Committee shall have the power to interpret the
     provisions of the Plan from time to time. All decisions and interpretations
     of the Committee respecting the Plan and all rules and regulations made
     from time to time pursuant hereto shall be binding and conclusive on the
     Company, the Affiliates, and all Participants and their respective legal
     representatives and on all Employees eligible under the Plan to participate
     herein.

13.3 Amendment - The Committee may amend at any time the provisions of the Plan
     at its sole and complete discretion, except that no such amendment shall
     operate so as to deprive a Participant of any rights acquired prior to the
     date thereof or to relieve the Company of the obligation to make such
     unremitted Employer Contributions as it would have been obliged to make in
     respect of that Participant pursuant to section 6. Notwithstanding the
     foregoing, if any provision of the Plan contravenes any applicable laws or
     regulations or any rules, regulations, by-laws or policies of any
     regulatory authority or stock exchange having jurisdiction or authority
     over the Company, an Affiliate or the Plan, then the Committee may amend
     such provision to the extent required to bring such provision into
     compliance therewith.

13.4 Termination - The Company hopes and expects to maintain the Plan
     indefinitely. However, the Committee reserves the right to terminate the
     Plan at any time, in which event the Participants' rights will be governed
     by paragraph 8.5 as if the Participants' Retirements had all occurred on
     the date of the termination of the Plan.

14.  COSTS

     Except as otherwise provided for in this section 14, the Company shall pay
     all costs of administering the Plan, including without limitation all the
     fees and expenses of the Trustee. All brokerage fees relating to the
     acquisition of Shares shall be borne by the Company. All brokerage and
     other fees relating to the sale, transfer to the Group RRSP

<PAGE>

                                      -12-

     or withdrawal of Shares shall be paid by the relevant Participants, except
     that the Company shall pay the said fees in respect of one (1) such
     transaction per Participant in each Plan Year.

15.  APPLICABLE LAW

     The laws of the Province of Ontario and the laws of Canada applicable
     therein shall apply to the Plan, any amendments thereto, and the
     administration thereof, and all rights and obligations thereunder shall be
     governed, construed and determined in accordance with such laws.

16.  NON-CANADIAN EMPLOYEES

     The Plan shall apply to Employees outside Canada as of the times and to the
     extent determined by the Committee. The terms and conditions offered to
     non-Canadian Employees may vary and be more limited than those set forth
     above, depending on local regulations and restrictions. For greater
     certainty, the application to non-Canadian Employees of the foregoing Plan
     provisions shall be determined: (a) in accordance with any schedules added
     to the Plan at the Committee's discretion; and (b) as the context requires.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}]]