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                                                                    EXHIBIT 4.12

                               DATED 31 JULY, 2003

                            (1) SAND TECHNOLOGY INC.

                                       AND

                        (2) CLARITYBLUE HOLDINGS LIMITED

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                                    AGREEMENT
                            FOR THE SALE AND PURCHASE
                      OF THE ENTIRE ISSUED SHARE CAPITAL OF
                               CLARITYBLUE LIMITED

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                                  DAVIES LAVERY
                                 Victoria Court
                               17-21 Ashford Road
                                    Maidstone
                                      Kent
                                    ME14 5FA

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THIS AGREEMENT is made on               31 July                             2003

BETWEEN

(1)  SAND TECHNOLOGY INC. (registered number 141012-1) a corporation
     incorporated under the Canada Business Corporations Act having its
     principal place of business at 215 Redfern, Suite 410, Westmount, Quebec
     Canada H3Z 3L5 (the "SELLER"); and

(2)  CLARITYBLUE HOLDINGS LIMITED (registered number 4842878) whose registered
     office is at Fourth Floor, City Gateway, 4 Victoria Square, St Albans,
     Hertfordshire, England AL1 3TF (the "PURCHASER").

WHEREAS:

(A)  ClarityBlue Limited (the "COMPANY") is a private company limited by shares
     incorporated pursuant to the Companies Act short particulars of which are
     set out in Schedule 1 having an authorised share capital of L1,000 divided
     into 1,000 ordinary shares of L1 each, of which 500 ordinary shares of L1
     each (the "SHARES") have been issued fully paid or credited as fully paid

(B)  The Seller is legally and beneficially entitled to all the issued share
     capital of the Company

(C)  The Seller wishes to sell and, in reliance upon (INTER ALIA) the warranties
     and undertakings set out in this agreement, the Purchaser wishes to
     purchase all the issued share capital of the Company on the terms and
     subject to the conditions set out in this agreement

IT IS AGREED as follows:

1.   INTERPRETATION

1.1  DEFINITIONS: In this agreement:

     "ACCOUNTING REQUIREMENTS" means the accounting requirements of the
     Companies Act, SSAPs, FRSs, abstracts of the Urgent Issues Task Force, any
     other requirement of a United Kingdom accounting body having mandatory
     effect and other generally accepted accounting principles and practices in
     the United Kingdom;

     "ACCOUNTS" means the audited balance sheet as at the Accounts Date and
     audited profit and loss account for the year ended on that date of the
     Company and the audited consolidated profit and loss account for that
     period and the notes and directors' report relating thereto;

     "ACCOUNTS DATE" means 31 July 2002;

     "AGREED FORM" means, in relation to any document, the form of that document
     which has been initialled for the purpose of identification by or on behalf
     of the Seller and the Purchaser;

     the "BUSINESS" means the business as principally carried on by the Company
     in the period of twelve months immediately prior to the date of Completion
     including, without limitation, the business of consultancy and business
     systems integration, with respect to customer intelligence applications for
     the financial services industry, telecommunication companies and internet
     service providers but shall specifically exclude, the services provided by
     the Company to the Sand Clients (but only to the extent of the future
     fulfilment of the Sand Client Contracts) and any consultancy or business
     systems integration to (i) clients involved in healthcare, supply chain
     management or to the government and/or public sector and (ii) clients
     requiring an operational transaction processing system based on the Sand
     Software;

     "BUSINESS DAY" means any day other than a Saturday, Sunday or any day,
     which is a public holiday in England;

     "BUSINESS NAMES" means those business and product names listed in Part 1 of
     Schedule 7;

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     "CLAIM" means any claim made by the Purchaser in accordance with this
     agreement seeking damages for breach of a Warranty or indemnification under
     an Indemnity;

     "CLAIM DATE" means the date on which the Purchaser shall notify the Seller
     in writing in respect of any Claim pursuant to Clause 5;

     "COMPANIES ACT" means the Companies Act 1985 (as amended);

     "COMPANY DEBT" means the sum of L3,253,964 owed to the Seller by the
     Company in respect of inter-company loans made by the Seller to the
     Company;

     "COMPANY SOFTWARE" means the Software owned by the Company as set out in
     Part 5 of Schedule 7;

     "COMPLETION" means completion of the sale and purchase of the Shares in
     accordance with Clause 6;

     "COMPLETION ACCOUNTS" means the audited balance sheet of the Company as at
     the close of business on the date of Completion and the audited profit and
     loss account for the period from 31 July 2002 to the date of Completion, to
     be prepared in accordance with Clause 4;

     "COMPLETION ACCOUNTS RETENTION" means the sum of L500,000 to be retained
     from the Consideration and placed in the Retention Account pursuant to
     Clause 3.2.2 and Schedule 9;

     "COMPUTER SYSTEMS" means the computer systems used by or for the benefit of
     the Business at the date of this Agreement, and all computer processors,
     associated and peripheral equipment, computer program, technical and other
     documentation and data entered into or created by the foregoing from time
     to time;

     "CONFIDENTIAL INFORMATION" means any and all information or data relating
     to the Company or the Business, prospective business, technical processes,
     know how, computer software, intellectual property or finances of the
     Company whether disclosed orally, in written, magnetic or digital
     (including disk or tape) or other form before or after the date of this
     agreement (in whatever medium stored whether or not such information is
     reduced to a tangible form or marked in writing as "confidential" and any
     and all information which has been or may be derived or obtained from any
     such information) which is of a confidential nature or which is not in the
     public domain or has not otherwise been made generally available to the
     public, including but without limitation, all business, financial,
     commercial, technical, operational, organisational, legal, management and
     marketing information, data and trade secrets in relation to the Business
     (including but not restricted to any information regrarding the products,
     assets, networks and data networks, customers, suppliers and employees of
     the Business) and any information in respect of which the Company is bound
     by an obligation of confidence to a third party and the Know-How;

     "CONSIDERATION" means the consideration payable to the Seller as specified
     in Clause 3;

     "CONSULTANCY AGREEMENT" means the consultancy agreement to be entered into
     at Completion between the Seller and the Company in the Agreed Form;

     "DEED OF ADDENDUM" means the deed of addendum to the STSI Software Licence
     Agreement to be entered into by (1) STSI, (2) the Company and (3) Sand
     Ireland at Completion in the Agreed Form;

     "DEED OF NON-INDEBTEDNESS" means the deed in the Agreed Form between the
     Seller and the Company in respect of the release of any and all claims
     which the Seller or any and all members of the Seller's Group may have
     against the Company as at Completion and releasing the Company from any and
     all liabilities which may be owing by the Company to the Seller or any
     member of the Seller's Group, save in respect of licence and maintenance
     fees which may become due and payable in respect of the sale of Sand
     Software in the financial quarter ending 31 July 2003;

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     "DEED OF TERMINATION" means the deed of termination in the Agreed Form
     between the Seller and the Company relating to the termination of the
     licence by the Company to the Seller of Segmentor;

     "DEFAULT RATE" means the rate of two per cent (2%) per annum above the base
     rate of Barclays Bank plc from time to time;

     "DISCLOSURE LETTER" means the letter of the same date as this agreement
     from the Seller to the Purchaser;

     "DOMAIN NAMES" means all internet addresses listed in Part 2 of Schedule 7;

     "ENCUMBRANCE" means in respect of any property, asset or right, any
     interest or equity of any person (including but without limitation any
     right to acquire, option or right of pre-emption) or any mortgage, charge,
     pledge, lien, assignment, security interest, title retention or other
     security or third party agreement or arrangement of whatsover nature over
     or in that property, asset or right;

     "FRSs" means the financial reporting standards established by the
     Accounting Standards Board Limited;

     "GERMAN DEBT" means the sum of L1,386,809 owed to the Company by Sand GmbH
     in respect of inter-company loans made by the Company to Sand GmbH;

     "IDEMNITIES" means the specific indemnities set out in Clause 5.15 and
     each shall be an "INDEMNITY";

     "INTELLECTUAL PROPERTY RIGHTS" means all patents, registered designs, Know
     How (whether or not it is in writing or otherwise recorded), rights in
     trade secrets and Confidential Information; registered or unregistered
     trademarks, service marks and applications therefore and all other business
     names, brand names, devices, logos, get up and signs (and whether or not
     registered or applied for) with all the goodwill associated with or
     symbolised by any of the foregoing; all other inventions (whether or not
     capable of protection by patent or other form of registration); all
     copyright, rights in the nature of copyright, sui generis rights, design
     rights, semi-conductor topography rights, moral rights and all other like
     rights in all parts of the world whether present or vested future or
     contingent in any software, object code, source code, database (including
     extraction rights), interface, text, drawing, design, artwork, sound
     recording, film, video, photograph, mould, three dimensional artistic work
     or any other material, all registrations and pending registrations relating
     to any such rights and the benefit of any pending applications for any
     such registrations in each case which are successful; all reversions,
     extensions and renewals of such rights; and all accrued rights of action in
     relation to such rights (including the right to sue for and recover damages
     for past infringements);

     "IPR ASSIGNMENT" means the means the deed of assignment of certain
     Intellectual Property Rights from the Seller or members of the Seller's
     Group to the Company in the Agreed Form;

     "KNOW-HOW" means all unpatented technical and other information including
     inventions, discoveries, designs, models, techniques, processes and
     procedures, ideas, methods, concepts, formulae, specifications, flowcharts,
     procedures for experiments and tests and results of experimentation and
     testing; together with all common law or statutory rights protecting the
     same including by any action for breach of confidence and any similar or
     analogous rights to any of the foregoing whether arising or granted under
     the laws of England and Wales or any other jurisdiction;

     "LICENCE FEES" means the licence and maintenance fees of L1,191,694 due on
     Completion from the Company to the Seller's Group in relation to the Sand
     Software;

     "MANAGEMENT ACCOUNTS" means the unaudited management accounts of the
     Company comprising the balance sheet as at the Management Accounts Date and
     the profit and loss account for the 9-month period commencing on the day
     immediately following the Accounts Date and ending on the Management
     Accounts Date;

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     "MANAGEMENT ACCOUNTS DATE" means 30 April 2003;

     "MARKETING INFORMATION" means all information relating to the marketing of
     any products or services, including customer names and lists, sales
     targets, sales statistics, market share statistics, marketing surveys and
     reports, marketing research and any advertising or other promotional
     materials;

     "NET ASSETS" means the aggregate value of all fixed and current assets of
     the Company less the aggregate value of all liabilities and provisions
     (including provisions relating to contingent liabilities required to be
     provided for pursuant to the relevant Accounting Requirements) and
     excluding any re-valuation of assets subsequent to the Accounts Date in
     respect of the Company as shown in the Completion Accounts as determined in
     accordance with Clause 4;

     "NOVATION AGREEMENTS" means the agreements in the Agreed Form between the
     Sand Clients, the Company and Sand UK relating to the novation of the
     Company's rights in respect of the contracts with the Sand Clients to Sand
     UK with such amendments as the Seller and the Purchaser shall agree to meet
     the requirements of the relevant Sand Client, such agreement not to be
     unreasonably withheld or delayed;

     "PROPERTIES" means the properties more particularly described in Schedule 2
     to this agreement;

     "PURCHASER'S ACCOUNTANTS" means Ernst & Young of 7 Rolls Buildings, Fetter
     Lane, London EC4A 1NH;

     "PURCHASER'S SOLICITORS" means Davies Lavery of Victoria Court, 17-21
     Ashford Road, Maidstone, Kent ME14 5FA;

     "PURCHASER WARRANTIES" means the warranties on the part of the Purchaser
     contained in Clause 5.2; and Schedule 6;

     "REGISTERED INTELLECTUAL PROPERTY" means all Intellectual Property Rights
     registered or applied for in the name of the Company and listed in Part 3
     of Schedule 7;

     the "RETENTION ACCOUNT" means the interest bearing joint escrow account
     opened in the name of the Purchaser's Solicitors and the Seller's
     Solicitors with National Westminster Bank plc, 3 High Street, Maidstone,
     Kent ME14 1XU;

     "SAND CLIENTS" means DunnHumby Limited, First National Bank, First Data
     Europe Limited, Invesco Plc, Lynx Express Limited, SchlumbergerSema Group
     Plc and Surridge Dawson Limited, Zurich Financial Services, Lansing Linde,
     British Standards Institute and Woolworths;

     "SAND CLIENT CONTRACTS" means the contracts for the provision of
     maintenance and support services in connection with the Sand Software
     between the Company and the Sand Clients;

     "SAND STOCK OPTION PLANS" means the Seller's 1996 Stock Incentive Plan and
     1996 Stock Option Plan;

     "SAND SOFTWARE" means the ODBC compliant database structure and software
     licensed to the Company by the Seller, which is used by the Company as the
     database for its CRM and customer intelligence software solutions;

     "SAND GmbH" means Sand Deutschland Technology GmbH registered in Germany
     whose principal place of business is at Chilehaus A, Fischertwiete 2,
     D-20095 Hamberg;

     "SAND IRELAND" means Sand Technology Ireland Limited Company Number: 314731
     whose registered office is at 6 Fitzwilliam Square, Dublin DX11, Ireland;

     "SAND UK" means Sand Technology Limited, Company Number 04513443 whose
     registered office is at 7th Floor, Hillgate House, 26 Old Bailey, London
     EC4M 7HW;

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     "SEGMENTOR" means the software owned by the Company used for the purposes
     of database analysis and predictive modelling of database data;

     "SELLER" includes the successor and assigns of the Seller;

     "SELLER'S ACCOUNTANTS" means Deloitte & Touche of London North, Verlulam
     Point, Station Way, St Albans, Hertfordshire AL1 5HE;

     "SELLER'S GROUP" means the Seller, its subsidiary undertakings and
     associated companies from time to time, all of them and each of them as the
     context admits but excluding the Company;

     "SELLER'S SOLICITORS" means Osborne Clarke of Hillgate House, 26 Old
     Bailey, London EC4M 7HW;

     "SOFTWARE" means any and all computer programs in both source and object
     code form, including all modules, routines and sub-routines thereof and all
     source and other preparatory materials relating thereto, including use
     requirements, functional specifications and programming specifications,
     ideas, principles, programming languages, algorithms, flow charts, logic,
     logic diagrams, orthographic representations, file structures, coding
     sheets, coding and including any manuals or other documentation relating
     thereto and computer generated works identified;

     "SSAPs" means the statements of standard accounting practice adopted by
     the Accounting Standards Board Limited;

     "STSI" means STSI Licensing LLC a limited liability company established
     under the laws of the State of New Jersey, USA, having its principal place
     of business of 555 Woodbridge Towers, Route 1 South, Iselin, New Jersey
     08830 USA;

     "STSI SOFTWARE LICENCE AGREEMENT" means the licence and distribution
     agreement relating to the Sand Analytic Server software "Nucleus" entered
     into between STSI and the Company dated 10th March 1999 which was assigned
     to Sand Ireland on 21 February 2001;

     "TCGA 1992" means taxation of Chargeable Gains Act 1992;

     "TAXATION" or "TAX" shall have the meanings prescribed in the Tax Deed;

     "TAX DEED" means the Tax Deed in the Agreed Form;

     "TAXES ACT 1988" means Income and Corporation Taxes Act 1988;

     "UNREGISTERED INTELLECTUAL PROPERTY" means all intellectual property rights
     used by the Company but not registered in the name of the Company
     including, without limitation, those listed in Part 4 of Schedule 7;

     "VATA 1994" means the Value Added Tax Act 1994;

     "WARRANTIES" means the warranties on the part of the Seller contained in
     Clause 5.1 and Schedules 3, 4 and 5;

1.2  REFERENCES: Any reference, express or implied, to an enactment includes
     references to:

     1.2.1  that enactment as amended, extended or applied by or under any other
            enactment before or after this agreement;

     1.2.2  any enactment which that enactment re-enacts (with or without
            modification); and

     1.2.3  any subordinate legislation made (before or after this agreement)
            under any enactment, including one within (a) or (b) above.

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     provided that any such enactment or subordinate legislation does not
     increase the liability of the Seller under this agreement.

1.3  SELLER'S KNOWLEDGE: Where any statement is qualified by the expression "so
     far as the Seller is aware" or "to the best of the Seller's knowledge,
     information and belief" or any similar expression that the statement shall
     be deemed to be given after having made all reasonable enquiry of Duncan
     Painter and John Gulliver.

1.4  CONNECTED PERSONS: A person shall be deemed to be connected with another if
     that person is connected with another within the meaning of section 839 of
     the Taxes Act 1988.

1.5  PERSONS: Words denoting persons shall include bodies corporate and
     unincorporated associations of persons.

1.6  HEADINGS: The headings in this agreement do not affect its interpretation.

1.7  INDIVIDUALS: reference to an individual includes a reference to that
     individual's legal personal representatives, successors and permitted
     assigns.

1.8  OTHER REFERENCES: In this agreement a reference to:-

     (a)  "WRITING" or "WRITTEN" includes faxes and any non-transitory form of
          visible reproduction or words but excludes electronic mail;

     (b)  a "SUBSIDIARY" means a subsidiary within the meaning ascribed to such
          expression by sections 736 and 736A, of the Companies Act;

     (c)  a "SUBSIDIARY UNDERTAKING" means a subsidiary undertaking within the
          meaning ascribed to such expression by section 258, of the Companies
          Act;

     (d)  a "HOLDING COMPANY" means a holding company within the meaning
          ascribed to such expression by sections 736 and 736A of the Companies
          Act;

     (e)  "GROUP COMPANY" means, in relation to any body corporate, any holding
          company of such a body or any subsidiary of a holding company of a
          body; and

     (f)  a time of the day is to London time and references to a day are to a
          period of 24 hours running from midnight.

2.   SALE AND PURCHASE OF THE SHARES

2.1  SALE AND PURCHASE: On and with effect from the Completion Date, the Seller
     as legal and beneficial owner and with full title guarantee shall sell and
     the Purchaser shall purchase the Shares together with all rights of any
     nature attaching to them.

2.2  COVENANTS: The Seller and the Purchaser covenant with one another as
     follows:

     2.2.1 the Seller covenants that it has the right to sell and transfer the
           full legal and beneficial interest in the Shares to the Purchaser on
           the terms set out in this agreement;

     2.2.2 the Purchaser covenants that it has the right to purchase and acquire
           the Shares from the Seller according to the terms of this agreement;
           and

     2.2.3 that on or after Completion each will, at its cost and expense,
           execute and do (or procure to be executed and done by any other
           necessary party) all such deeds, documents, acts and things as the
           other party may from time to time require in order to give full
           effect to this agreement.

2.3  NO ENCUMBRANCES: The Shares shall be sold free from all liens, charges,
     equities and encumbrances and other rights whatsoever exercisable by third
     parties.

2.4  SIMULTANEOUS PURCHASE: The Purchaser shall not be obliged to complete the
     purchase of any of the Shares unless the purchase of all the Shares is
     completed simultaneously in accordance with this agreement.

2.5  PRE-EMPTION RIGHTS: The Seller waives any right of pre-emption or other
     restrictions in respect of the Shares whether conferred on it under the
     articles of association of the Company, by statute or otherwise and agrees
     to procure before Completion the irrevocable waiver of any

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     such right or restriction conferred on any other person.

3.   CONSIDERATION

3.1  CONSIDERATION: The consideration for the sale of the Shares shall (subject
     to adjustment pursuant to Clause 4.7) be the sum of L6,021,151 (the
     "CONSIDERATION"), which shall be satisfied in accordance with the
     provisions of this Clause 3 and Clause 4.

3.2  INITIAL CONSIDERATION: On Completion, the Purchaser shall pay:

     3.2.1 the sum of L5,521,151 (the "INITIAL CASH CONSIDERATION") to the
           Seller in cash in sterling to the client account of the Seller's
           Solicitors (Osborne Clarke Client Account at National Westminster
           Bank plc, at Bristol City Branch, 32 Corn Street, Bristol, BS99 7UG,
           account number 00708542, sort code 56 - 00 - 05) (the "SELLER'S
           SOLICITORS ACCOUNT"); and

     3.2.2 the Completion Accounts Retention (L500,000) to the Retention Account
           to be held on the terms of Schedule 9 of this agreement.

3.3  SELLER'S SOLICITORS RECEIPT: The Seller agrees that any sums due to the
     Seller pursuant to this agreement may be paid by the Purchaser to the
     Seller's Solicitors, whose receipt shall constitute a full discharge of the
     Purchaser's obligations to may any such payment.

4.   COMPLETION ACCOUNTS

4.1  PREPARATION OF COMPLETION ACCOUNTS: Without delay following Completion, the
     Purchaser shall procure the preparation of the Completion Accounts by the
     Company as at the close of business on the date of Completion. The
     Completion Accounts shall be submitted to the Seller's Accountants for
     audit within 45 days after Completion. The Seller shall procure the
     completion of the audit of the Completion Accounts by the Seller's
     Accountants within 31 days of the receipt of the same from the Company and
     shall thereupon deliver the audited Completion Accounts to the Purchaser
     and the Purchaser's Accountants for review within a further 14 days. The
     Purchaser shall pay the charges of the Purchaser's Accountants and the
     Seller shall pay the charges of the Seller's Accountants in respect of the
     preparation and/or audit of the Completion Accounts.

4.2  BASIS OF PREPARATION: The Completion Accounts shall be prepared using the
     accounting principles and practices used in the preparation of the
     Accounts.

4.3  DEEMED ACCEPTANCE: Unless within 14 days after receipt of the audited
     Completion Accounts pursuant to Clause 4.1 the Purchaser or the Purchaser's
     Accountants notify the Seller's Accountants in writing of any disagreement
     or difference of opinion relating to the Completion Accounts, the parties
     shall be deemed to have accepted such accounts as accurate.

4.4  NOTICE OF DISAGREEMENT: If within the period of 14 days referred to in
     Clause 4.3 the Purchaser or the Purchaser's Accountants notify the Seller's
     Accountants of any disagreement or difference of opinion relating to the
     calculation of the value of the Net Assets pursuant to the Completion
     Accounts ("NOTICE OF DISAGREEMENT") and if they are able to resolve such
     disagreement or difference of opinion within 14 days of the Notice of
     Disagreement, the parties shall be deemed to have accepted such accounts as
     accurate.

4.5  INDEPENDENT ACCOUNTANT: If the Seller's Accountants and the Purchaser's
     Accountants are unable to reach agreement within 14 days of the Notice of
     Disagreement, the matter in dispute shall be referred to the decision of an
     independent chartered accountant (the "Independent Accountant") to be
     appointed (in default of nomination by agreement between the Seller and the
     Purchaser) by the President for the time being of the Institute of
     Chartered Accountants in England and Wales.

4.6  EXPERT: The Independent Accountant shall act as an expert and not as an
     arbitrator, the Arbitration Act 1996 shall not apply and his decision shall
     (in the absence of manifest error) be final and binding on the Seller and
     the Purchaser for all the purposes of this agreement. The costs of the
     Independent Accountant shall be apportioned between the Seller and the
     Purchaser as the Independent Accountant shall decide but each party shall
     be responsible for its own costs of presenting its case to the Independent
     Accountant.

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4.7  VARIATION OF CONSIDERATION: If and to the extent that the value of Net
     Assets (which for the avoidance of doubt shall include any negative number
     or deficit) as agreed or determined in accordance with this Clause 4 is:

     4.7.1 a sum LESS than L3,150,000 the amount of the Consideration shall be
           reduced by an amount equal to the amount of such shortfall (the
           "SHORTFALL") and the Purchaser shall be permitted to recover the
           Shortfall by the set-off of such amount, from the Completion Accounts
           Retention (together with interest accrued thereon) and the Seller
           shall, forthwith upon agreement or determination (pursuant to this
           Clause 4) that a Shortfall exists, instruct the Seller's Solicitors
           to release the Completion Accounts Retention (or the appropriate
           proportion thereof) (together with interest accrued thereon) to the
           Purchaser. If after setting-off against the Shortfall the Completion
           Accounts Retention (together with all interest accrued thereon), the
           Shortfall has not been paid in full, the Seller undertakes to pay any
           balance of any Shortfall that remains outstanding to the Purchaser in
           cash within 5 Business Days of agreement or determination of such Net
           Asset value; or

     4.7.2 a sum EQUAL TO OR GREATER THAN L3,150,000, the Purchaser shall within
           5 Business Days of agreement or determination (pursuant to this
           Clause 4) of such Net Asset value instruct the Purchaser's Solicitors
           to release from the Retention Account the amount of the Completion
           Accounts Retention (together with interest accrued on such amount) to
           the Seller's Solicitors.

     The Seller's Solicitors are hereby irrevocably authorised to receive the
     above payments and their receipt therefor shall be a sufficient discharge
     to the Purchaser who shall not be concerned with the distribution thereof
     to the Seller or be answerable for the loss or misapplication thereof.

4.8  DEFAULT INTEREST: If any party fails to pay any sum under or in relation to
     this agreement on its due date then such defaulting party will pay interest
     on it until it is paid at the Default Rate. Any default interest payable
     must be paid monthly in arrears and if not paid will itself bear interest
     at the Default Rate.

5.   WARRANTIES AND SPECIFIC INDEMNITIES

5.1  WARRANTIES: The Seller warrants to the Purchaser at the date of this
     agreement that except as fairly disclosed to the Purchaser in the
     Disclosure Letter, each of the statements set out in Schedules 3, 4 and 5
     is true and accurate and a matter shall be deemed to be fairly disclosed
     if disclosed with sufficient particulars to enable the Purchaser to
     reasonably assess the impact of the matter on the business of the Company.

5.2  PURCHASER WARRANTIES: The Purchaser warrants to the Seller that each of the
     statements set out in Schedule 6 is true and accurate in all material
     respects. The Purchaser is not actually aware of any matter which it
     actually knows constitutes a beach of Warranty or which would with the
     effluxion of time be likely to constitute a breach of Warranty (and for
     such purposes, the Purchaser's actual knowledge shall be the actual
     knowledge of Duncan Painter and/or John Gulliver or the actual knowledge of
     the Purchaser derived specifically from the contents of the legal,
     accounting and other due diligence reports prepared for it in connection
     with this transaction and on the basis that the Purchaser has actually read
     the said reports) and to the extent that it is proven that the Purchaser
     had such actual knowledge, it shall be prevented from bringing any such
     claim under the Warranties in respect of the matter to which such prior
     knowledge relates.

5.3  SEPARATE WARRANTIES: Each of the Warranties and Purchaser Warranties set
     out in the several paragraphs of each of Schedule 3, 4, 5 and 6 is separate
     and independent and except as expressly provided to the contrary in this
     agreement is not limited:

     5.3.1 by reference to any other paragraph of Schedules 3, 4, 5 and 6; or

     5.3.2 by anything in this agreement or, in the case of the Warranties, the
           Tax Deed.

     and without prejudice to the qualification of the Warranties by matters
     fairly disclosed in the

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     Disclosure Letter or clause 5.2, none of the Warranties shall be treated as
     qualified by any actual or constructive knowledge on the part of the
     Purchaser or any of its agents.

5.4  WAIVER BY SELLER: The Seller agrees with the Purchaser (as trustee for the
     Company) that, save in the case of fraud, dishonesty or wilful
     non-disclosure on the part of Duncan Painter and/or John Gulliver as the
     case may be (whereupon it is agreed that the Seller retains any rights or
     claims which it may have against Duncan Painter and/or John Gulliver in
     respect of any misrepresentation, inaccuracy or omission in or from any
     information or advice supplied or given by them in connection with the
     giving of the Warranties and the preparation of the Disclosure Letter), to
     waive any rights or claims which it may have in respect of any
     misrepresentation, inaccuracy or omission in or from any information or
     advice supplied or given by the Company, its officers, employees or
     advisers in connection with the giving of the Warranties and the
     preparation of the Disclosure Letter.

5.5  LIMITATIONS ON LIABILITY: In the absence of fraud or dishonesty on the part
     of the Seller or its agents or advisers, the liability of the Seller in
     respect of the Warranties (except in relation to a Warranty relating to
     Tax);

     5.5.1 shall not arise except to the extent that the amount agreed or
           finally determined in respect of all claims under the Warranties
           exceeds L275,000 (two hundred and seventy five thousand pounds) in
           which event the Seller shall be liable in respect of the full amount
           of such claims and not merely for the excess PROVIDED THAT such
           limitation shall not apply to any claim under those of the Warranties
           contained in Schedules 3 (Title Warranties) and Schedule 5 (Tax
           Warranties);

     5.5.2 shall not arise in respect of any single claim under the Warranties
           which does not exceed L5,000;

     5.5.3 shall not exceed L9,080,000; and

     5.5.4 shall terminate:

           5.5.4.1 on the date six years and six months from Completion in
                   respect of those matters set out in Schedule 5 (Tax
                   Warranties); and

           5.5.4.2 on the date 18 months following Completion in respect of all
                   Warranties contained in Schedule 4 (Commercial Warranties);

           except in respect of any claim under the Warranties of which valid
           notice in writing is given to the Seller in accordance with this
           agreement before that date giving reasonable details of any such
           claim and the Purchaser's reasonable estimate of the amount of such
           claim and proceedings in respect of the same shall have been
           commenced by being issued and served on the Seller within 6 months
           after such date of notification,

           but in relation to those Warranties set out in Schedule 3 (Title
           Warranties):

           (i)  the limitations set out in Clauses 5.5.1 to 5.5.4 above shall
                not apply; and

           (ii) nothing in the Disclosure Letter shall qualify or limit their
                scope.

5.6  OTHER LIMITATIONS: The Seller shall not be liable for any Claim to the
     extent that such liability arises or is increased:

     5.6.1 as a result of a change in the law or in the generally accepted
           understanding or interpretation of any law after the date of
           execution of this agreement; or

     5.6.2 as a result of any change in the accounting bases, policies or
           practices or in the accounting reference date of the Company (other
           than in order to comply with generally accepted accounting principles
           in the United Kingdom); or

     5.6.3 to the extent that the claim would not have risen but for anything
           voluntarily done or omitted to be done after Completion (other than
           in the ordinary course of business of the Company) by the Purchaser
           or the Company or any of their respective agents,

                                  Page 11 of 48

<PAGE>

           assignees or other successors in title; or

     5.6.4 it would not have arisen or would have been reduced or eliminated but
           for any claim, election, surrender or disclaimer made or notice or
           consent given or any other thing done after Completion by the Company
           or the Purchaser or any person connected with them other than any
           claim, election, surrender or disclaimer which has been assumed to
           have been made for the purposes of the Completion Accounts;

     5.6.5 it arises or is increased by a failure of the Purchaser or the
           Company to comply with their respecive obligations under this
           agreement;

     5.6.6 it has been or is made good or is otherwise compensated for without
           cost to the Purchaser or the Company;

     5.6.7 the same is expressly provided for, contained in or noted in the
           Completion Accounts;

     5.6.8 it is based on a claim which is contingent only unless and until such
           contingent liability becomes an actual liability and is due and
           payable provided that this clause will not operate to avoid a claim
           for a contingent liability where written notice is given within the
           applicable time limit expressed in Clause 5.5; or

     5.6.9 the loss in respect of which the Claim is made is recovered under an
           insurance policy of the Company in force on the date of such loss.

5.7  NOTIFICATION: the Purchaser shall notify the Seller in writing of:

     5.7.1 any claim made against it by a third party which may give rise to a
           Claim; and

     5.7.2 any claim the Company is entitled to bring against a third party
           which claim is based on circumstances which may give rise to a Claim.

5.8  CONDUCT OF CLAIMS: Where the Purchaser or the Company has any claim against
     any third party in relation to any matter in respect of which there shall
     have been a Claim or where the Purchaser or the company received any claim
     from a third party which may result in the Purchaser having a Claim, the
     Seller shall be entitled to take any action and require the Purchaser and
     the Company to take any action they may reasonably request to prosecute or
     resist such claim as the case may be in the name of the Purchaser or the
     Company (as appropriate) and the Purchaser shall and shall procure that the
     Company shall give the Seller all co-operation access and assistance for
     the purpose of considering, prosecuting or resisting as the case may be
     such claim as they may reasonably require (save for legally privileged
     information or which relates to the merits of any Claim against the Seller)
     PROVIDED THAT:

     5.8.1 the Seller shall indemnify and secure the Purchaser and the Company
           to their reasonable satisfaction against all and any liability,
           losses and expenses arising from any action taken by the Seller or
           any action or omission which the Seller requires the Purchaser or the
           Company to take or not to take (as the case may be) pursuant to this
           Clause 5.8; and

     5.8.2 in no circumstances shall the Purchaser or the Company be required to
           take any action or omit to take any action which in their reasonable
           opinion will or may have a material adverse effect on the business
           and/or reputation of the Company.

5.9  ACCESS: the Purchaser shall provide and shall procure that the Company
     provides to the Seller and the Seller's professional advisers reasonable
     access to premises and personnel during normal business hours and to any
     relevant assets, documents and records within their power, possession or
     control for the purpose of investigating any Claim and enabling the Seller
     to take the action referred to in Clause 5.8 (Conduct of claims) and shall
     allow the Seller and their advisers to take copies of any relevant
     documents or records at their expense.

5.10 NO DOUBLE RECOVERY: the liability of the Seller under the Warranties shall
     be reduced if and to the extent that the loss shall have been recovered
     under the Tax Deed or the Indemnities (and vice versa).

5.11 RECOVERY FROM THIRD PARTIES: If the Seller make any payment to the
     Purchaser or the Company in relation to any Claim and the Purchaser or the
     Company subsequently receives or is entitled to recover from a third party
     (incuding any tax authority) any amount referable to or any benefit which
     would not have been received but for the circumstances giving rise to the

                                 Page 12 of 48

<PAGE>

     subject matter of such claim then the purchaser or the Company shall take
     all appropriate steps to enforce that recovery (to the extent only
     supported by a legal opinion of a reputable law firm or Counsel of at least
     10 years post qualification), and once it has received such amount or
     benefit, immediately repay or procure the repayment to the Seller of either
     the amount of such receipt or if lesser the amount paid by the Seller, less
     all costs reasonable incurred by the Purchaser or the Company in recovering
     the same.

5.12 REMEDIAL ACTION: Where the subject matter of the Claim is capable of
     remedy, the Seller shall not be liable for such Claim if the breach or
     default is remedied by the Seller and at their cost within 30 days or
     receipt by them of the notification of such Claim.

5.13 DUTY OF MITIGATION: Nothing in this agreement shall affect any duty, which
     the Purchaser has under common law to mitigate its loss.

5.14 REDUCTION IN CONSIDERATION: Any payment made by the Seller in respect of a
     breach of the Warranties or a liability under the Tax Deed shall be deemed
     to be a reduction in the Consideration.

5.15 SPECIFIC INDEMNITIES: The Seller hereby agrees on demand to:

     5.15.1 indemnify the Purchaser and the Company in respect of any
            indebtedness of the Company to any member of the Seller's Group in
            the form of borrowed monies existing as at the date of Completion,
            save in respect of licence and maintenance fees which may become due
            and payable in respect of the sale of Sand Software in the financial
            quarter ending 31 July 2003; or

     5.15.2 meet any claim by any past or present client of the Company against
            the Company which arises at any time as a direct result of any
            warranty or representation made prior to Completion by the Seller,
            its subsidiaries, officers or employees to any client of the
            Company relating to, the functionality of the Sand Software; or

     5.15.3 meet any claim against the Company that arises in respect of the
            Sand Clients Contracts, including without limitation, any claim
            arising from the Sands Client Contract entered into with First
            National Bank.

5.16 NO LIMITATIONS: For the avoidance of doubt, the limitations of liability of
     the Seller set out in clauses 5.5.1, 5.5.2, 5.5.4, 5.6.1 and 5.6.2 above
     shall not apply to any liability arising pursuant to clause 5.15.

6.   COMPLETION AND POST COMPLETION OBLIGATIONS

6.1  COMPLETION: Completion shall take place at the offices of the Purchaser's
     Solicitors immediately after the signature of this agreement.

6.2  SELLER'S OBLIGATIONS: At Completion the Seller shall procure:

     6.2.1 the delivery to the Purchaser of:

           i.   a duly executed transfer in favour of the Purchaser or its
                nominee(s) of all the Shares;

           ii.  the share certificate(s) representing the Shares (or an express
                indemnity in a form satisfactory to the Purchaser in the case of
                any found to be missing);

           iii. the certificate of incorporation, common seal, minute books,
                statutory registers and share certificate books of the Company
                (to the extent not held by the Company);

           iv.  the Tax Deed duly executed by the Seller and the Company;

           v.   a duly executed copy of the Consultancy Agreement;

           vi.  the resignations of Georges Dube and Arthur Ritchie as directors
                and of Hillgate Secretarial Limited as the secretary of the
                Company, in each case acknowledging under seal that he has no
                claim against the Company whether for loss of office or

                                 Page 13 of 48
<PAGE>

               otherwise (to the extent already not resigned at Completion);

          vii. all leases and other documents relating to the Properties (to the
               extent not held by the Company);

         viii. to the extent not in the possession of the Company, all
               licences, consents, permits and authorisations obtained by or
               issued to the Company or any other person in connection with the
               Business;

          ix.  copies of all bank mandates of the Company together with
               appropriate forms to amend the mandate in respect of each bank
               account maintained by the Company;

          x.   a duly executed copy of the Deed of Non-Indebtedness;

          xi.  a duly executed copy of the Deed of Addendum;

          xii. a duly executed copy of the IPR Assignment, and

          xiii. a duly executed copy of the Deed of Termination.

     6.2.2 that a board meeting of the Company is held at which it is resolved
           that:

           (i) such persons as the Purchaser nominates are appointed as
               additional directors and as the secretary of the Company;

          (ii) its registered office is changed to 4th City Gateway, Victoria
               Square, St Albans, Hertfordshire AL1 3TF;

         (iii) the transfers referred to in Clause 6.2.1(i) above (subject only
               to their being duly stamped) are approved for registration; and

           (v) its bank mandates are revised in such manner as the Purchaser
               requires.

6.3  PURCHASER'S OBLIGATIONS: Upon completion of all the matter referred to in
     Clause 8.2 above the Purchaser shall:

     6.3.1 pay the Initial Cash Consideration to the Seller;

     6.3.2 pay the Completion Accounts Retention into the Retention Account;

     6.3.3 deliver or procure delivery of duly executed counterparts of the Tax
           Deed, Deed of Addendum, the Consultancy Agreement, the Deed of
           Termination and the IPR Assignment;

     6.3.4 procure that the Company repays the Company Debt to the Seller by
           transferring an amount in pounds sterling equal to such debt to the
           Seller's Solicitors Account;

     6.3.5 procure that the Company make the Royalty Payment to Sand Ireland by
           paying an amount in pounds sterling equal to the Royalty Payment to
           the Seller's Solicitors Account;

6.4  SAND GmbH: Upon completion of the matters referred to in Clause 6.3 above
     the Seller will procure repayment of the Sand GmbH Debt to the Company.

6.5  RESCISSION: If for any reason the provisions of Clause 6.2 or 6.3 above
     are not fully complied with the Purchaser in the case where the Seller has
     not complied with the provisions of clause 6.2 and the Seller in the case
     where the Purchaser has not complied with the provisions of clause 6.3 may
     elect (in addition and without prejudice to all other rights or remedies
     available to it) to rescind this agreement or the fix a new date for
     Completion (which shall be no later than 28 days from the date set
     originally for completion).

                                  Page 14 of 48

<PAGE>

6.6  NOVATION AGREEMENTS: The parties undertakes with effect from Completion to
     use all reasonable endeavors to procure the novation of all the Sand
     Client Contracts from the Company to Sand UK and to procure execution of
     the Novation Agreements in respect thereof and subject always to Clause
     6.7, the parties agree that the following provisions shall apply in respect
     of the Sand Client Contracts:

     6.6.1 unless and until any such Sand Client Contract shall be novated in
           accordance with the Novation Agreements the Purchaser shall procure
           that the Company shall hold such Sand Client Contract on trust for
           the Seller or Sand UK (as appropriate) and Sand UK shall become
           entitled to the benefits of the Company under the Sand Client
           Contracts and the Seller shall procure that Sand UK shall perform
           all the obligations of the Company under such Sand Client Contract
           as the Company's sub-contractor;

     6.6.2 unless and until any such Sand Client Contract shall be novated the
           Purchaser shall procure that the Company will (so far as it lawfully
           may) give all such assistance to the Seller or Sand UK, at the
           Seller's cost, as the Seller or Sand UK may reasonably require to
           enable the Seller or Sand UK to enforce its rights its rights under
           such Sand Client Contract and will provide access to all relevant
           books, documents and other information in relation to such Sand
           Client Contract as the Seller/Sand UK may reasonably require from
           time to time.

     6.6.3 to the extent that any payment is made to the Purchaser or the
           Company in respect of the Sand Client Contracts on or after
           Completion the Purchaser and/or Company shall receive the same as
           trustee, shall record such payment separately in its books and shall
           account to the Seller or Sand UK for the same within 10 Business Days
           of receipt.

6.7  SAND CLIENT CONTRACT WITH SCHLUMBERGERSEMA GROUP PLC: The parties agree
     that notwithstanding the provisions of Clause 6.6 (in particular sub-clause
     6.6.3), until such time as the Sand Client Contract with SchlumbergerSema
     Group plc ("SEMA") (the "SEMA CONTRACT") is novated to the Seller pursuant
     to a Novation Agreeement, any and all licence fees payable by Sema
     thereunder shall accrue for the benefit of the Company and any and all
     maintenance fees payable by Sema thereunder shall accrue for the benefit of
     the Seller and it is further agreed that on the actual date of novation of
     the Sema Contract, the Seller shall pay forthwith to the Company a sum
     equal to the balance of the licence fees due under the Sema Contract to the
     Company but after deduction of any sum representing deferred revenue in
     respect of future maintenance obligations to be assumed by the Seller under
     the Sema Contract by reason of such novation. In the event of dispute as to
     any sums owed pursuant to this Clause, the decison of the auditors for the
     time being of the Company (acting as an expert and not an arbitrator) shall
     be binding on the parties save in the event of manifest error.

6.8  ADJUSTING PAYMENTS: Forthwith upon the novation of any Sand Client Contract
     (other than the Sema Contract) pursuant to Clause 6.6, the parties agree
     that:

     6.8.1 where any prepayment has been made by the relevant Sand Client to the
           Company in respect of services to be provided under the relevant Sand
           Contract after the date of novation, an amount equal to such
           prepayment shall be paid by the Company to the Seller; and

     6.8.2 where any licence revenue due to the Company under the relevant Sand
           Contract is outstanding at the date of novation of the relevant Sand
           Contract, and amount equal to such licence revenue shall be paid by
           the Seller to the Company.

6.9  PARENT GUARANTEES: The Purchaser shall use all reasonable endeavors (short
     of actual payment) to procure the release of any company in the Seller's
     Group from any guarantee, suretyship, indemnity, bonding liability or
     similar contingent liability forthwith of being notified of the same or
     otherwise becoming aware of it (and for such purposes the fair disclosure
     of any guarantee in the Disclosure Letter shall constitute notification of
     the same on Completion) and shall indemnify each member of the Seller's
     Group against all liability arising after Completion (except in relation
     to facts or circumstances existing prior to Completion) in respect
     thereof.

                                  Page 15 of 48

<PAGE>

7.   PROTECTIVE COVENANTS

7.1  COVENANTS: As further consideration for the Purchaser agreeing to purchase
     the Shares and with the intent of securing to the Purchaser the full
     benefit and value of the goodwill and connections of the Company and as an
     essential part of the agreement for the purchase and sale of the Shares,
     the Seller covenants and undertakes for itself and on behalf of each of
     the companies in the Seller's Group (other than the Company) to and with
     the Purchaser (for itself and as trustee for the Company), that it and
     each of the companies in the Seller's Group (other than the Company),
     shall not, whether by itself, through its employees or agents or otherwise
     and whether on its own behalf or on behalf of any person, directly or
     indirectly:

     7.1.1 for a period of 3 years from Completion, so as to compete with the
           Business, be concerned in any business carrying on business with the
           United Kingdom which is competitive or likely to be competitive with
           the Business except for business carried on through those
           distributors, agents, re-sellers and indirect channels specified in
           Schedule 8 SAVE THAT if after the third anniversary of the date of
           Completion, licence fees payable under the STSI Software Licence
           Agreement (as amended by the Deed of Addendum) shall have increased
           in value at the average rate of ten (10) per cent per annum for each
           of the first three years following Completion, the period of this
           covenant shall be increased by a further two (2) years; or

     7.1.2 for a period of 3 years from Completion, appoint any distributor,
           agent or re-seller of Sand Software for the uses licensed to the
           Company pursuant to the STSI Software Licence Agreement (as amended
           by the Deed of Addendum) for the United Kingdom, other than those
           distributors, agents or re-sellers and indirect channels listed in
           Schedule 8; or

     7.1.3 for a period of 3 years from Completion, induce or attempt to induce
           any supplier of the Company who has supplied services to the Company
           during the period of up to 12 months prior to the date of Completion,
           to cease to supply, or to restrict or vary the terms of supply, to
           the Company; or

     7.1.4 for a period of 3 years from Completion shall not solicit or entice
           away or endeavour to solicit or entice away any employee of the
           Company occupying a senior or managerial or software development
           position and likely to be in possession of confidential information
           relating to the Company or able to influence customer relationships
           or connections of the Company.

     7.1.5 at any time after Completion, make use of or (except as required by
           law or any competent regulatory body) disclose or divulge to any
           third party any information of a secret or confidential nature
           relating to the business or affairs of the Company or its customers
           or suppliers, unless ordered to do so by a court of competent
           jursidiction; or

     7.1.6 at any time after Completion, use or (insofar as it can reasonably do
           so) allow to be used (except by the Company) any Business Name,
           Domain Name, e-mail address or product name used by the Company at
           Completion or any other name intended or likely to be confused with
           such name(s) or address.

7.2  DEFINITIONS: For the purpose of Clause 7.1 above:

     7.2.1 a Seller is concerned in a business if it carries it on as principal
           or agent, directly or indirectly (including, without limitation,
           through a director or officer or employee of the Seller or of any
           member of the Seller's Group (excluding the Company)) or if:

          (i)  it is a partner, director, consultant or agent in, of or to any
               person who carries on the business; or

          (ii) it has any direct or indirect financial interest (as shareholder
               or otherwise) in any person who carries on the business; or

                                  Page 16 of 48

<PAGE>

          (iii)     it is partner, director, consultant or agent in, of or to
                    any person who has a direct or indirect financial
                    interest (as shareholder or otherwise) in any person who
                    carried on the business

      disregarding any financial interest of a person in securities which are
      listed on the London Stock Exchange or traded on a recognised
      investment exchange or overseas investment exchange (as such term is
      defined in the Financial Services and Markets Act 2000) if that person,
      the Seller and any  person connected with him or them are interested in
      securities which amount to less than 5 per cent. of the voting rights
      (if any) attaching to the issued securities of that class; and

7.2.2 references to a Company include its successors in business.

7.3  PURCHASER COVENANTS: in consideration of the Seller agreeing to sell the
     Shares to the Purchaser the Purchaser covenants with the Seller (for
     itself and on behalf of Sand UK) that it will not and will procure that
     its subsidiaries will not for a period of 3 years from Completion
     solicit or entice away or endeavour to solicit or entice away any
     employee of the Seller or Sand UK occupying a senior managerial or
     software development position and likely to be in possession of
     confidential information relating to the Seller or Sand UK or able to
     influence customer relationships or connections of the Seller or Sand UK.

7.4  INDEPENDENCE OF UNDERTAKINGS: Each of the restrictions contained in
     Clause 7.1 above shall be enforceable by the Purchaser independently of
     each of the others as an entirely separable and severable undertaking.

7.5  SEVERABILITY: The parties acknowledge and agree that the above provisions
     of this Clause 7 are considered by the parties to be fair and
     reasonable, having regard in particular to the necessity to protect the
     goodwill, secrets and customer connections of their businesses and the
     amount of the consideration payable by the Purchaser pursuant to this
     agreement, if it should be found by any competent court that any of such
     restrictions is void or unenforceable for any reason and if by altering
     or deleting part of the wording or substituting shorter periods of time
     or a different geographical limit or more restricted ranges of
     activities it would not be void or unenforceable, then there shall be
     made such alteration or deletion or be submitted such next less
     extensive periods and/or limits and/or activities as shall render the
     relevant restriction valid and enforceable.

7.5  THIRD PARTY RIGHTS: The undertakings in Clause 7.1 shall be given to the
     Purchaser for itself and as trustee of the Company and the undertaking
     in clause 7.3 shall be given to the Seller for itself and as trustee of
     Sand UK. The Company may enforce the terms of Clause 7.1 against the
     Seller under the Contracts (Rights of Third Parties) Act 1999 and Sand
     UK may enforce the terms of clause 7.3 against the Purchaser under the
     Contracts (Rights of Third Parties) Act 1999.

8    ANNOUNCEMENTS

     No party shall make or permit any person connected with him to make any
     announcement concerning this sale and purchase or any ancillary matter
     before, on or after Completion except as required by law or any
     competent regulatory body or with the written approval of the other
     parties, such approval not to be unreasonably withheld or delayed. The
     restrictions in this Clause 8 shall apply without limit of time.

9    NOTICES

9.1  NOTICES: Any notice or other communication to be served or given under
     this agreement shall be in writing and signed on behalf of the party
     giving it and shall be delivered or sent by first class pre-paid
     recorded delivery or registered post or by fax to the party to be served
     at his address appearing in this agreement or at such other address as
     it may have notified to the other parties in accordance with this clause.

     SELLER

     FAO Gilles Therrien, CA
     Vice-President and Chief Executive Officer

                                   Page 17 of 48

<PAGE>

     Sand Technology inc.
     215, Redfern, Suite 410
     Westmount, Quebec
     H3Z 3L5
     Tel.: (514) 906-4179
     Fax:  (514) 906-4171

     WITH COPIES

     FAO Simon Fielder

     Osborne Clarke, Hillgate House, 26 Old Bailey, London EC4M 7HW

     FAX NUMBER 0207 809 1021

     AND

     FAO Georges Dube

     Lavery, de Billy
     1 Place Ville Marie
     Suite 4000
     Montreal, Quebec
     Canada H3B 4M4
     Tel.: (514) 877-2989
     Fax:  (514) 871-8977

     PURCHASER

     FAO Duncan Painter

     ADDRESS FOR SERVICE 4th Floor, City Gateway, St Albans, Hertfordshire
                         AL1 3TF

     FAX NUMBER 01727 890501

9.2  DEEMED SERVICE: Any notice or document shall be deemed to have been served:

     9.2.1. if delivered by messenger, at the time of delivery as indicated
            in the record of the messenger service; or

     9.2.2  if posted, at 10.00am on the second business day after it was put
            into the post; or

     9.2.3  if sent by fax on a Business Day, at the time of transaction or if
            not sent on a Business Day on the Business Day following the day of
            transmission.

9.3  PROOF OF SERVICE: In proving service of a notice or document it shall be
     sufficient to prove that delivery was made or that the envelope containing
     the notice or document was properly addressed and posted as a prepaid first
     class recorded delivery letter or that the fax message was properly
     addressed and despatched as the case may be.

9.4  NO ELECTRONIC SERVICE: Any notice or communication given under this
     agreement shall not be validly service if sent by e-mail.

10   GENERAL

10.1 SURVIVAL OF OBLIGATIONS: Each of the obligations, Warranties, Purchaser
     Warranties, Indemnities and undertakings set out in this agreement which
     is not fully performed at Completion will continue in full force and
     effect after Completion.

10.2 NO ASSIGNMENT: None of the rights or obligations of the Seller under this
     agreement may be assigned or transferred. None of the rights or
     obligations of the Purchaser under this agreement may be assigned or
     transferred without the prior written consent of the Seller, such consent
     shall be deemed to be given in respect of a transfer or assignment to
     (i) a company which is a member of the Purchaser's Group and for these
     purposes the Purchaser's Group

                                Page 18 of 48

<PAGE>

     means the Purchaser, any holding company of the Purchaser, and any
     subsidiary of the Purchaser or such holding company or (ii) any funder
     (debt or equity) which has provided funds to the Purchaser in connection
     with the acquisition contemplated hereby. Provided in the case of (i)
     above, if the assignee or the transferee ceases to be a member of the
     Purchaser's Group they shall re-assign or transfer the rights under this
     agreement to the Purchaser.

10.3 RELEASES: Either party may release or compromise in whole or in part the
     liability of the other under this agreement or grant any time or other
     indulgence without affecting any other liability of the other under this
     agreement.

10.4 COSTS: Each party shall pay the costs and expenses incurred by him in
     connection with the entering into and completion of this agreement. The
     Purchaser shall be liable in for any stamp duty payable in respect of the
     transfer of the Shares to it pursuant to this agreement.

10.5 COUNTERPARTS: This agreement may be executed in any number of counterparts,
     all of which taken together shall constitute one and the same agreement
     and any party may enter into this agreement by executing a counterpart.

10.6 THIRD PARTY RIGHTS: Except as provided in Clause 7.5 and for the indemnity
     under clause 6.6, the terms of this agreement may be enforced only by a
     party to it and the operation of the Contracts (Rights of Third Parties)
     Act 1999 is excluded.

10.7 AMENDMENT: No amendment or variation to this agreement or any of the
     documents referred to in it shall be effective unless in writing and
     signed by or on behalf of each of the parties.

10.8 TIME OF THE ESSENCE: Time is of the essence as regard every obligation of
     any party under this agreement.

10.9 SAND STOCK OPTION: The Seller undertakes to the Purchaser to take all
     actions necessary to enable all those employees of the Company as at the
     date of Completion who are entitled to exercise options for Class A Common
     Shares in the share capital of the Seller to continue to be so entitled to
     exercise such options under the terms of the Sand Stock Option Plans
     notwithstanding their ceasing to be employed by the Seller's Group
     provided that such options shall lapse on such individuals ceasing to be
     employees of the Purchaser or the Company (as the case may be).

10.10 ACCESS TO INFORMATION: The Seller undertakes to provide all reasonable
     assistance, reasonably requested by the Purchaser for the provision of
     and/or access to information (at the cost of the Purchaser) that may be
     retained by the Seller and which information relates to the Company.

11   WHOLE AGREEMENT

     This agreement and the documents referred to in it contain the whole
     agreement between the parties relating to the transactions contemplated by
     this agreement and supersede all previous agreements between the parties
     relating to these transactions and the only remedies available to the
     parties shall be those under this agreement. The Purchaser acknowledges
     that it has entered into this agreement in reliance only upon the terms
     specifically contained or incorporated in this agreement and save as
     expressly set out in this agreement the Seller shall have no liability in
     respect of any other representation, warranty or promise made prior to the
     date of this agreement unless it was made fraudulently.

12   GOVERNING LAW

12.1 GOVERNING LAW: This agreement is governed by and shall be construed in
     accordance with English law.

12.2 JURISDICTION: The Seller submits to the exclusive jurisdiction of the
     English courts for all purposes relating to this agreement and irrevocably
     appoints Sand UK as its agent for service of process and acknowledges and
     agrees that Sand UK is duly authorised to receive the same on the Seller's
     behalf.

AS WITNESS the duly authorised officer of each of the Seller and the Purchaser
on the date which appears first on page 1.

                                  Page 19 of 48

<PAGE>

                                   SCHEDULE 1

                           PARTICULARS OF THE COMPANY

<TABLE>

<S>                           <C>

Registered number:            3644914

Registered office:            7th Floor, Hillgate House, 26 Old Bailey, London EC4M 7HW

Date and place of
incorporation:                6th October 1998, England and Wales

Directors:                    Georges Dube, Duncan Painter, John Keith Gulliver and Arthur Ritchie

Secretary:                    Hillgate Secretarial Limited

VAT number:                   731919819

Accounting reference date:    31 July

Auditors:                     Deloitte & Touche
</TABLE>

                                 Page 20 of 48

<PAGE>

                                   SCHEDULE 2

                                 THE PROPERTIES

<TABLE>
<CAPTION>

Description           Landlord          Tenant          Term                 Rent                Rent Review            Present use
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>               <C>             <C>                  <C>                <C>                    <C>
Underlease of         Computer          the Company     6 years from 28th    L57,840.50 p.a.     17 March 2003,         Offices
4th Floor,            Associates UK     (Undertenant)   August 2001                             (not yet taken
The Platinum Centre,  Limited                           Expiry 11                                place)
City Gateway,                                           December 2007
St. Albans,           (Ultimate
Hertfordshire         Landlord under
                      head lease:
                      Allied Dunbar
                      Assurance plc)
------------------------------------------------------------------------------------------------------------------------------------
Underlease of Part    Computer          the Company     4 3/4 years, from    L152,329 p.a.        17 March 2003,         Offices
2nd Floor,            Associates UK     (Undertenant)   14th March 2003                           (not yet taken
The Platinum Centre   Limited                           Expiry 11                                 place)
City Gateway,                                           December 2007
St. Albans,           (Ultimate
Hertfordshire         Landlord under
                      head lease:
                      Allied Dunbar
                      Assurance plc)
------------------------------------------------------------------------------------------------------------------------------------
17th Floor of the     Cheltenham        the Company     6 months from 1      L1057 per            None                   Offices
Animation Block,      Film Studios                      June 2003            month plus VAT
Cheltenham Film       Limited                           Expiry 1
Studios, Arie Court                                     December 2003
Hatherley Lane,
Cheltenham,
GL51 6PN
------------------------------------------------------------------------------------------------------------------------------------
Office 102,           Regus (UK)        the Company     1 August 2002 to     Until 31 July        None during initial    Offices
Thorpe Business Park, Limited                           31 July 2003         2003 the rent is     term but if
1200 Century Way,                                       Either party can     L1260 plus VAT       agreement
Colton, Leeds                                           terminate at 31      per month and        continues then an
LS15 8ZA                                                July 2004            additionally L30     increase to market
                                                                             each per month       price
                                                                             (for 2 car-
                                                                             parking space)
                                                                             From 1 August 2003
                                                                             the rent will be
                                                                             L1350 plus VAT per
                                                                             month and additionally
                                                                             L30 each per month
                                                                             (for 2 parking spaces)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 Page 21 of 48

<PAGE>

                                   SCHEDULE 3

                                TITLE WARRANTIES

1    The Seller has full power and authority to enter into and perform this
     agreement and the Tax Deed and this agreement and the Tax Deed when
     executed will constitute binding obligations on the Seller in accordance
     with their respective terms.

2    The Seller is the registered holder of and is entitled to sell and transfer
     to the Purchaser the full legal and beneficial ownership of the Shares free
     from all encumbrances on the terms of this agreement, without the consent
     of any person.

3    The Seller is entitled to sell and transfer the Shares to the Purchaser
     with full title guarantee.

4    The Shares constitute the whole of the issued and allotted share capital of
     the Company and are fully paid or credited as fully paid.

5    There is not, nor is there any agreement or arrangement to create, any
     encumbrance on, over or affecting any of the Shares and no claim has been
     made by any person to be entitled to any of the foregoing.

                                 Page 22 of 48

<PAGE>

                                   SCHEDULE 4

                             COMMERCIAL WARRANTIES

1     FURTHER DEFINITIONS

      In this Agreement unless the context requires otherwise:

      "HARDWARE" means any and all computer, telecommunications and network
      equipment;

      "INTELLECTUAL PROPERTY AGREEMENTS" means all agreements or arrangements
      entered into by the Seller or any member of the Seller's Group (other than
      the Company) relating to the Intellectual Property Rights of the Company,
      all of which (if any) are listed in the Disclosure Letter;

      "IT CONTRACTS" means any agreements or arrangements with third parties
      relating to IT Systems or IT Services, including all hire purchase or
      procurement contracts or leases of Hardware owned or used by the Company
      and all licences of Software owned or used by the Company;

      "IT SERVICES" means any services relating to the IT Systems or to any
      other aspect of the Company's data processing or data transfer
      requirements, including facilities management, bureau services, hardware
      maintenance, software development or support, consultancy, source code
      deposit, recovery and network services;

      "IT SYSTEMS" means Hardware and/or Software owned or used by the Company
      and any plant, machinery, equipment or control system in which any
      computer program is embedded or used by the Company in or in connection
      with the Business;

      REFERENCES IN THIS SCHEDULE 4 TO THE "SELLER" SHALL BE DEEMED TO
      INCLUDE REFERENCES TO ANY AND ALL MEMBERS OF THE SELLER'S GROUP OTHER
      THAN THE COMPANY.

2     THE SELLER

2.1   OTHER INTERESTS

2.1.1 The Seller is not individually, collectively or with any other person or
      persons interested in any way in any Intellectual Property Rights owned or
      used by the Company, including, without limitation, the Company Software.

2.1.2 The Seller has no ownership in or right or licence to use the Company
      Software.

2.2   LOANS AND DEBTS

      There will not immediately following Completion be:

      (a)   any indebtedness or other liability (actual or contingent) owing by
            the Seller to the Company;

      (b)   any indebtedness or other liability (actual or contingent) owing by
            the Company to the Seller; and

      (c)   any guarantee or security for any such indebtedness or liability as
            aforesaid.

2.3   FEES AND COMMISSIONS

      Neither the Company nor the Seller has entered into any contract or
      arrangement whereby any person is entitled to receive from the Company any
      finder's fee, brokerage or other commission in connection with the sale
      and purchase of the Shares under this agreement.

2.4   ARM'S LENGTH ARRANGEMENTS

      There is not outstanding, and there has not at any time since the
      Company's incorporation been outstanding, any agreement, arrangement or
      understanding (whether legally enforceable or not) to which the Company is
      a party and in which the Seller or former

                                 Page 23 of 48
<PAGE>

     director of the Company (who is or was also a director of the Seller) is or
     has been interested whether directly or indirectly.

3.   CORPORATE

3.1  There are no agreements or arrangement in force, other than this
     agreement, which grant to any person the right to call for the issue,
     allotment or transfer of any share or loan capital of the Company

3.2  The register of members and other statutory books of the Company have been
     properly kept and contain an accurate complete record of the matters with
     which they should deal; and no notice or allegation, that any of them is
     incorrect or should be rectified, has been received by the Seller or the
     Company secretary.

3.3  All returns, particulars, resolutions and documents required to be filed
     with the Registrar of Companies in respect of the Company have been duly
     filed and were correct.

3.4  Full compliance has been made with all provisions of the Companies Act and
     all other legal requirements in connection with the formation of the
     Company, any allotment, issue, increase or redemption of shares or other
     securities in the Company, any reduction of the authorised or issued share
     capital of the Company, any amendment to the memorandum or articles of
     association of the Company, the passing of any resolutions by the Company
     and the payment of all dividends by the Company.

3.5  The Company does not own (and to the best of the Seller's knowledge has
     never agreed to own) any shares or debentures on the capital of, nor does
     it have (nor has it ever agreed to have) any beneficial interest or control
     over, any other company or business.

4    ACCOUNTS

4.1  THE ACCOUNTS

     4.1.1 The Accounts have been prepared in accordance with the historical
           cost convention.

     4.1.2 The bases and policies of accounting, adopted for the purpose of
           preparing the Accounts, are the same as those adopted in preparing
           the audited accounts of the Company in respect of the three last
           preceding financial years.

     4.1.3 The Accounts:

          (a)  give a true and fair view of the assets and liabilities and state
               of affairs of the Company at the Accounts Date and of its
               profits for the financial year ended on such date;

          (b)  were prepared in accordance with and comply with the requirements
               of the Companies Act at the date of publication;

          (c)  were prepared in accordance with and comply with all Accounting
               Requirements relevant at the time of their preparation;

4.2  THE MANAGEMENT ACCOUNTS

     The Management Accounts have been carefully prepared on a basis consistent
     with the Accounts and fairly reflect the trading position of the Company as
     at their date and for the period to which they relate.

4.3  BOOKS AND RECORDS

     To the best of the Seller's knowledge all the accounts, books, ledgers and
     financial records of whatsoever kind of the Company (including all invoices
     and other records required for VAT purposes):

     (a)  are in the possession of the Company;

     (b)  have been properly and accurately kept and completed;

     (c)  do not contain any material inaccuracies or discrepancies of any kind;

                                  Page 24 of 48

<PAGE>

     and no notice or allegation that any of the same is incorrect or should be
     revised has been received by the Seller.

4.4  CAPITAL COMMITMENTS AND ASSETS

     Since the Accounts Date, the Seller has not required the Company to commit
     to any capital commitments individually in excess of L5,000 and in
     aggregate of L25,000 nor required the Company to agree to make any capital
     expenditure individually in excess of L5,000 and in aggregate in excess of
     L25,000, nor required the Company to incur or agree to incur any capital
     commitments in such proportions.

4.5  DIVIDENDS AND DISTRIBUTIONS

     4.5.1 Since the Accounts Date no dividend or other distribution (as defined
           in Taxes Act 1988 Part III and section 418) has been, or is treated
           as having been declared, paid or made by the Company.

     4.5.2 All dividends or distributions declared, made or paid by the Company
           have been declared, made or paid in accordance with the Articles of
           Association of the Company and the applicable provisions of the
           Companies Act.

5    TRADING

5.1  SINCE THE ACCOUNTS DATE

     5.1.1 Since the Accounts Date:

     (a)  the Company has not declared, made or paid any dividend, bonus or
          other distribution of capital or income (whether a qualifying
          distribution or otherwise);

     (b)  the Company (including any class of its members) has not passed any
          resolution whether in general meeting or otherwise;

     (c)  neither the Seller nor to the best of the Seller's knowledge the
          Company has prejudiced the Company's goodwill by doing or omitting to
          do anything;

     (d)  the Company has to the best of the Seller's knowledge paid its
          creditors in accordance with their respective credit terms and there
          are no amounts owing by the Company which have been due for more than
          six weeks;

     (e)  the Company has carried on its business in the ordinary course;

     (f)  the Company has not acquired or agreed to acquire or dispose of or
          agreed to dispose of any asset other than (i) in the ordinary course
          of trading or (ii) for a consideration which in the case of a disposal
          is less than open market value or in the case of an acquisition is
          more than open market value;

     (g)  the Company has not assumed or incurred or agreed to assume or incur
          any liability, obligation or commitment otherwise than in the
          ordinary course of trading;

     (h)  to the best of the Seller's knowledge there has been no material
          increase in the levels of debtors or creditors or in the average
          collection or payment periods for debtors and creditors of the Company
          as derived from the Accounts.

5.2   CONDUCT OF BUSINESS

5.2.1 The Company has at all times carried on business and conducted its
      affairs in all material respects in accordance with its Memorandum and
      Articles of Association.

5.2.2 To the best of the Seller's knowledge the Company is empowered and
      duly qualified to carry on business in all jursidictions in which it
      now carries on business.

5.2.3 The Company is conducting its business in all material respects in
      accordance with all applicable laws and regulations, whether of the
      United Kingdom or such other jurisdictions in which it carries out its
      business at the date of Completion.

                                  Page 25 of 48

<PAGE>

5.3  REPORTS BY FINANCIAL OR MANAGEMENT CONSULTANTS

     Neither the Seller nor the Company has commissioned any reports concerning
     the Company by financial or management consultants within the period of
     three years prior to the date of execution of this agreement.

5.4  MANAGEMENT AGREEMENTS

     There are no arrangements or understandings (whether legally enforceable or
     not) between the Company and the Seller relating to the management of the
     Company's business, or the appointment or removal of directors of the
     Company, or the ownership or transfer of ownership or the letting of any of
     the assets of the Company, or the provision, supply or purchase of finance,
     goods, services or other facilities to, by or from the Company.

5.5   LITIGATION AND DISPUTES

5.5.1 The Company is not engaged in any litigation, arbitration or criminal
      proceedings, as plaintiff or defendant, and to the best of the Seller's
      knowledge there are no such proceedings pending or threatened, either
      by or against the Company or any person for whose acts or defaults the
      Company may be vicariously liable.

5.5.2 To the best of the Seller's knowledge there is no matter or fact in
      existence which might reasonably give rise to any legal proceedings or
      arbitration involving the Company including any which might in the
      opinion of the Seller form the basis of any criminal prosecution
      against the Company.

5.5.3 There is not outstanding any injunction or order for specific performance
      having been granted against the Company.

5.5.4 No order or judgement has been given by any court or governmental
      agency relating to the Company which is still in force and the Company
      has not given any undertaking to any court or to any third party
      arising out of any legal proceedings.

5.5.5 No judgement has been executed against the Company which remains
      undischarged nor is there any unfulfilled or unsatisfied decree or
      other court order outstanding against the Company.

5.6   SOLVENCY AND STATUS

5.6.1 The Company has not stopped payment and is not insolvent nor unable
      to pay its debts within the meaning of section 123 of the Insolvency
      Act 1986.

5.6.2 No order has been made or petition presented or resolution passed for
      the winding-up of the Company.

5.6.3 No distress, execution or other process has been levied on any of the
      Company's assets.

5.6.4 No order has been made, or applied for, and no petition has been for
      the appointment of an administrator to the Company.

5.6.5 No receiver or administrative receiver has been appointed by any person
      over the business or assets of the Company or any part thereof.

5.6.6 No person has taken any steps to enforce any charge or security interest
      against the Company nor is the Company in default under any charge or
      security interest.

5.7   POWERS OF ATTORNEY AND AUTHORITIES

5.7.1 To the best of the Seller's knowledge, no power of attorney given on
      behalf of or relating to, the Company is in force.

5.7.2 To the best of the Seller's knowledge there are not outstanding any
      authorities (express or implied) by which any person may enter into any
      contract or commitment to do anything on behalf of the Company.

                                  Page 26 of 48

<PAGE>

5.8   LICENSES AND CONSENTS

5.8.1 The Company has obtained all necessary licences (including statutory
      licences), permits, authorities (public and private) and consents from
      any person, authority or body for the proper conduct of its business.

5.8.2 The Company is not in breach of any of the terms or conditions of any
      of its licences, permits, authorities or consents; and so far as the
      Seller is aware, there are no factors that might in its opinion materially
      prejudice the continuation or renewal of any of such licences or consents.

5.9  UNDERTAKINGS

     The Company is not a party to any undertaking or assurance given to any
     court or governmental agency or regulatory authority which is still in
     force.

5.10 CONTRACTS

5.10.1 The Seller has not committed the Company to any contract that is
       subsisting and which is, or may be, material in relation to its
       business.

5.10.2 The Company is not party to any contract, transaction, arrangement or
       liability which:

       (a)  is outside the ordinary course of business;

       (b)  is for a fixed term of more than 12 months;

       (c)  is of a long-term nature (that is, unlikely to have been fully
            performed, in accordance with its terms, more than 12 months
            after the date on which it was entered into or undertaken);

       (d)  is incapable of termination in accordance with its terms, by the
            Company, on 60 days' notice or less;

       (e)  involves payment by the Company by reference to fluctuations in
            the index of retail prices, or any other index, or in the rate of
            exchange for any currency;

       (f)  involves quantifiable aggregate outstanding expenditure by the
            Company of more than L50,000;

       (g)  involves, or is likely to involve, the supply of goods or
            services the aggregate sales value of which will represent in
            excess of 5 per cent of the turnover for the financial year of
            the Company immediately preceding Completion;

       (h)  is a contract for hire or rent, hire purchase or purchase by way
            of credit sale or periodical payment.

5.10.3 So far as the Seller is aware, the Company is not a party to any
       agreement for the supply of services or for agency.

5.10.4 The Company is not, nor has agreed to become, a member of any joint
       venture, consortium, partnership or other unincorporated association
       and the Company is not, nor has agreed to become, a party to any
       agreement or arrangement for sharing commissions or other income.

5.10.5 To the best of the Seller's knowledge, the Company has not entered
       into any transaction with any director of the Company or any connected
       person of such director within the meaning of Section 346 of the
       Companies Act.

5.10.6 To the best of the Seller's knowledge the Company provides maintenance
       services on all sales of Company Software.

                                  Page 27 of 48
<PAGE>

5.11 PERFORMANCE OF CONTRACTS

5.11.1 To the best of the Seller's knowledge the terms of all contracts
       of the Company have been complied with by the other parties to the
       contracts in all material respects.

5.11.2 To the best of the Seller's knowledge there are no outstanding
       claims, separately or in the aggregate, of material amounts, against
       the Company on the part of customers or other parties in respect of
       defects in quality or delays in delivery or completion of contracts or
       deficiencies of design or performance or otherwise relating to
       liability for goods or services sold or supplied by the Company and no
       such claims are threatened or anticipated and so far as the Seller is
       aware, there is no matter or fact in existence in relation to goods or
       services currently sold or supplied by the Company which might rise to
       the same.

5.11.3 The Seller has no knowledge of the invalidity of or grounds for
       rescission, avoidance or repudiation of any agreement or other
       transaction to which the Company is a party and no notice of any
       intention to terminate, repudiate or disclaim any such agreement or
       other transaction has been received either by the Seller or the
       Company.

5.11.4 To the best of the Seller's knowledge the Company is not currently
       a party to any contract under which it had failed or is failing to
       comply with any deadlines or milestones.

5.12   DEFAULTS UNDER CONTRACTS

5.12.1 No threat or claim of default, under any agreement, instrument or
       arrangement to which the Company is a party has been received by the
       Seller or any member of the Seller's Group and to the best of the
       Seller's knowledge is outstanding, against the Company.

5.12.2 To the best of the Seller's knowledge no party to any agreement
       with, or under an obligation to, the Company is in default there
       under, being a default which would be material in the context of the
       financial or trading position of the Company; and so far as the Seller
       is aware there are no circumstances likely to give rise to such a
       default.

5.13   CONSUMER PROTECTION

       The Company has not manufactured, sold or supplied products which are or
       were or have become in any respect faulty or defective, or to the best of
       the Seller's knowledge which do not comply in any respect with any
       warranties or representations, expressly or impliedly made by the
       Company, or with all applicable regulations, standards and requirements
       in respect thereof.

5.14   DATA PROTECTION

5.14.1 To the best of the Seller's knowledge, all personal data held by
       the Seller on behalf of or relating to the Company or its employees
       has been held in accordance with the data protection principles and
       there has been no unauthorised processing or disclosure of such
       personal data by the Seller or so far as the Seller is aware by any
       third party.

5.14.2 The Company and to the best of the Seller's knowledge its employees
       have complied with the requirements of the Data Protection Act 1998.

5.14.3 The Company has notified itself under the Data Protection Act 1998
       and any notification regulations enacted under the Act in respect of
       all personal data held or processed by it, and all due and requisite
       fees in respect of such registrations have been paid and to the best
       of the Seller's knowledge the Company has at all times complied with
       all prior data protection legislation including the Data Protection
       Act 1984.

5.14.4 To the best of the Seller's knowledge the details contained in
       such notifications and in any entry in the register of persons who
       have given notification kept by the Information Commissioner (the
       "REGISTER") are correct, proper and suitable for the purpose(s) for
       which the Company holds or uses the personal data which are the
       subject of them, any changes in the registrable particulars have been
       notified to the Information Commissioner.

5.14.5 To the best of the Seller's knowledge there are no outstanding
       enforcement, information or special information notices or any other
       nature or notice under the Data Protection Act 1998 or any other
       relevant legislation including the Data Protection Act 1984 currently
       outstanding against the Company, nor is there any outstanding appeal
       against such notices. The Seller

                                  Page 28 of 48
<PAGE>

       is not aware of any circumstances which may in its opinion give rise
       to the giving of any such notices to the Company.

5.14.6 To the best of the Seller's knowledge there are no unsatisfied
       requests to the Company made by data subjects in respect of personal
       data held by the Company, nor any outstanding applications for
       rectification, blocking, erasure or destruction of personal data.

5.14.7 To the best of the Seller's knowledge there are no outstanding
       notices to the Company made by data subjects in respect of their right
       to prevent processing likely to cause damage or distress or for the
       purposes or direct marketing or in relation to automated decision
       taking.

5.14.8 There are no outstanding claims for compensation for inaccuracy, loss
       or unauthorised disclosure of personal data or contravention by the
       Company of any of the requirements of the Data Protection Act 1998 nor
       to the best of the Seller's knowledge is any personal data held by the
       Company inaccurate in any material respect, nor has the Company to the
       best of the Seller's knowledge lost or made any unauthorised
       disclosure of any such data.

5.15   GUARANTEES

       The Company is not responsible for the indebtedness of the Seller nor, to
       the best of the Seller's knowledge of any other person, nor to the best
       of the Seller's knowledge is the Company party to any option or
       pre-emption right or any guarantee, suretyship or any other obligation
       (whatever called) to pay, purchase or provide funds (whether by the
       advance of money, the purchase of or subscription for shares or other
       securities or the purchase of assets or services or otherwise) for the
       payment of, or as an indemnity against the consequence of default in the
       payment of, any indebtedness of any other person.

5.16   ASSETS

       All the assets necessary for the conduct of the Business are legally and
       beneficially owned by the Company.

6.     INTELLECTUAL PROPERTY

6.1    TITLE

6.1.1  The Company is and has been at all times since the date of its creation
       the sole legal and beneficial owner of the Intellectual Property
       Rights specified in Schedule 7 an otherwise used in the Business free
       from any Encumbrance.

6.1.2  The Intellectual Property Rights specified in Schedule 7 and otherwise
       used in the Business, and the Company's right, title and interest
       therein is valid and subsisting, is not the subject of any current,
       pending or threatened challenge, claim or proceeding, including for
       opposition, cancellation, revocation or rectification, and to the best
       of the Seller's knowledge has not since the date of incorporation of
       the Company been subject of any such challenge, claim or proceeding,
       and there are no facts or matters which might reasonably give rise to
       any such challenge, claim or proceeding.

6.1.3  To the best of the Seller's knowledge none of the Intellectual Property
       Rights specified in Schedule 7 or otherwise used in the Business has
       been at any time wrongfully or unlawfully acquired or used by the
       Company.

6.1.4  All Know-How owned, used or exploited by the Company has been kept secret
       and confidential and has not been disclosed to third parties.

6.1.5  The Seller has not received notice that any third party has asserted any
       rights in or used any Intellectual Property Rights of the Company.

6.1.6  No Intellectual Property Rights specified in Schedule 7 or otherwise
       used in the Business have been charged, mortgaged, licensed or otherwise
       encumbered.

6.2    INTELLECTUAL PROPERTY AGREEMENTS

6.2.1  Save as disclosed in the Intellectual Property Agreements to the best of
       the Seller's knowledge the Company has not entered into any agreement,
       arrangement or understanding (whether legally enforceable or not) for
       the licensing, or otherwise permitting the use or exploitation, of the
       Intellectual Property Rights specified in Schedule 7 or

                                  Page 29 of 48

<PAGE>

       otherwise used in the Business or which prevents, restricts or
       otherwise inhibits the Company's freedom to use and exploit
       such Intellectual Property Rights.

6.2.2  To the best of the Seller's knowledge the Company is not in breach
       of any Intellectual Property Agreement and the Seller is not aware
       of the existence of any circumstances under which the Company's
       right to use any Intellectual Property Rights specified in Schedule 7
       or otherwise used in the Business may be terminated.

6.3    INFRINGEMENT AND MISUSE

6.3.1  To the best of the Seller's knowledge none of the Intellectual
       Property Rights specified in Schedule 7 or otherwise used in the
       Business is currently being infringed, misused or used without
       authorisation by any third party or has been so infringed, misused
       or used without authorisation since the date of incorporation of the
       Company and neither the Company nor the Seller nor to the best of the
       Seller's knowledge, the Company, has received notice that any third
       party has threatened any such infringement, misuse or unauthorised
       use and the Seller is not aware of any allegations of the same.

6.3.2  To the best of the Seller's knowledge the Company is not engaged
       in any activities which infringe or otherwise involve in the
       misuse or unauthorised  use of any patents, know-how, other
       confidential information, registered design, copyright, database
       rights, design rights, trade marks, domain names, semiconductor
       topography rights, business names, moral rights, rights in the
       nature of any of the aforesaid or rights in the nature of unfair
       competition rights belonging to any third party or which give any
       third party the right to instigate an action against the Company
       for passing off.

6.4    PROTECTION

       The Company has taken all reasonable steps to protect and preserve the
       Intellectual Property Rights of the Company including,
       but not limited to:

       (a)     taking all reasonable steps to preserve the confidentiality
               of all Confidential Information used by the Company
               including, but not limited to the Company Software;

       (b)     opposing any application to register any trade mark or the
               use of any trade name likely to be confused with any of
               the Business Names used by the Company in relation to
               the goods or services in respect of which the trade names
               are used by the Company; and

       (c)     ensuring that all Intellectual Property Rights which are
               capable of being or required to be registered or recorded are
               so registered or recorded.

6.5    MORAL RIGHTS

       To the best of the Seller's knowledge, no moral rights as defined
       in Chapter IV of the Copyright, Designs and Patents Act 1988
       (as amended) have been asserted or are capable of being asserted which
       could materially affect the use or value of any of the Intellectual
       Property Rights of the Company and the best of the Seller's knowledge
       the Company is not engaged in any activities which infringe any moral
       rights belonging any third party.

6.6    IT IDENTIFICATION AND OWNERSHIP

6.6.1  Save in respect of IT Systems leased or licensed to the Company
       under any contract all IT Systems and data are legally and
       beneficially owned by the company, free from encumbrances, and are
       not wholly or partly dependent on any facilities or services not
       under the exclusive ownership and control of the Company.

6.6.2  All the IT Contracts are valid and binding and in full force and
       effect. The Seller has not received notice to terminate any of the
       IT Contracts nor notice that the IT Contracts (or any of them) has
       been the subject of any breach or default, or of any event which
       (with notice or lapse of time or both) would constitute a default,
       or is liable to be terminated or otherwise adversely affected by
       the Transaction contemplated by this agreement.

                                  Page 30 of 48

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6.7    COMPUTER OPERATION AND MAINTENANCE

6.7.1  To the best of the Seller's knowledge all IT Systems are in good
       working order and are being properly maintained and replaced. To the
       best of the Seller's knowledge no part of the It Systems has
       materially failed to function at any time during the five years prior
       to the date hereof. To the best of the Seller's knowledge maintenance
       providers have fulfilled their obligations in all material respects
       under relevant maintenance agreements in accordance with the terms
       of those agreements (and those terms provide for the Software
       concerned to be updated free of charge, for errors to be
       corrected and for the Software to be amended to reflect changes in
       the law which impact on the Software).

6.7.2  To the best of the Seller's knowledge, all IT Services are being and
       have been provided in accordance with all applicable specifications.

6.7.3  The Company has full and unrestricted access to and use of the IT
       systems, and no third party agreements or consents are required to
       enable the Company to continue such access and use following
       completion of the transaction contemplated by this agreement.

6.7.4  To the best of the Seller's knowledge the Company does not share
       access to any element of the IT Systems with any third party
       (including the Seller or any member of the Seller's Group)
       and the Company is not obliged to enter any agreement to share
       access to any element of of the IT Systems.

6.7.5  A summary of the steps the Company has taken to ensure that its
       business as carried on immediately prior to Completion can continue
       in the event of a failure of the IT Systems (whether due to natural
       disaster, power failure or otherwise) is contained in the Disclosure
       Letter.

6.7.6  To the best of the Seller's knowledge the Company is not dependent
       upon access to any IT Systems belonging to third parties (other than
       connection to the internet or such access which is required as a
       result of maintenance and support services provided to the Company)
       in order to run and maintain the IT Systems.

6.8    SOFTWARE

6.8.1  The Company has absolute title and right to and copyright in each
       item of the Company Software, including source code and object code,
       user and other manuals, tapes, indices, descriptive
       memoranda, original listings, development working
       papers, calculations and all other relevant documents,
       media and confidential information free of all encumbrances and
       adverse claims and to the best of the Seller's knowledge no
       property rights of the Company in such Company Software have been
       sold, assigned, licensed or disposed of to any party other than
       by the granting of non-exclusive licences to customers of the
       Business in the ordinary course of the Business.

6.8.2  All source codes, tapes, indices, descriptive memoranda, original
       listings, development working papers, calculation and know-how
       relating to Company Software and any other documents or media
       necessary conclusively to prove ownership of the Company
       Software are recorded in human readable form and are in the possession,
       custody or control of the Company. The Company is not a party to any
       contract requiring the Company to place in escrow, or otherwise permit
       any third party to use or have access to, the source code to any of
       the Company Software.

6.8.3  To the best of the Seller's knowledge, where Intellectual Property
       Rights in Software are not owned by the Company, the Company is
       entitled to use and, where indicated, to grant sublicences to
       third parties to use the Software pursuant to licences and/or
       consents granted to the Company by the owner or licensee of such
       Intellectual Property Rights. To the best of the Seller's knowledge
       all royalties and other payments have been paid when due and there
       has been no act or default by the Company or, where appropriate,
       its sub-licensees or any other person which may in the Seller's
       opinion result in such licences being terminated or the Company
       being unable to obtain any benefit under such licences.

6.8.4  To the best of the Seller's knowledge, the Company has not at any
       time had any dispute with any person relating to proprietary or
       other rights in or the Company Software. To the best of the Seller's
       knowledge, all licences relating to the Company Software granted by the
       Company are in full force and effect and the Seller is not aware
       of any breach of any terms

                                  Page 31 of 48

<PAGE>

       of any such licences. To the best of the Seller's knowledge the
       Company has on the termination of any licence granted by it
       either recovered or secured the destruction of all copies of the
       Company Software in the possession, custody or control of the
       licensee or other contracting party at the date of such
       termination.

6.8.5  To the best of the Seller's knowledge the Company has not at any
       time had any material dispute with any person relating to
       the functionality, quality or fitness for purpose of the Company
       Software or relating to its compliance with its specifications
       or with any warranties given by the Company or any other person
       relating to it.

6.9    DATA COMPLIANCE

       To the best of the Seller's knowledge all of the IT
       Systems are Data Compliant. "Data Compliant" means that use and
       functionality, and the ability to express data and calculate in
       accordance with dates and times, are unaffected by changes in
       dates, including year changes and leap years.

6.10   EURO COMPLIANCE

       To the best of the Seller's knowledge all IT Systems

       (a)     in the case of Software, have the ability accurately to
               recognise, manage, accommodate and manipulate
               monetary figures expressed in the denomination known as the
               "Euro" (the currency adopted by the European Union for the
               purposes of European monetary union"), and accurately to
               convert data for this purpose (including by way
               of triangulation);

       (b)     will comply with all legal requirements applicable to the
               Euro at the date of this Agreement, such as the rules on
               conversion and rounding set out in Article 235 of the
               European Treaty of Maastricht (7 February 1992) and European
               Union Council Regulation(EC) number 1103/97; and

       (c)     in the case of Hardware and the Software, are capable of
               displaying and printing (and incorporating in all relevant
               screen layouts) all symbols, acronyms and codes adopted by
               the European Union at the date of this agreement in relation
               to the Euro

7      EMPLOYMENT

7.1    SHARE SCHEMES

       Details of any share options in the share capital of the Seller
       held by each employee of the Company including details of the share
       option  scheme under which they are granted are set out in the
       Disclosure Letter.

8      EFFECT OF TRANSACTION

8.1    CHANGE OF OWNERSHIP

       So far as the Seller is aware, after Completion (whether by the
       reason of an existing agreement or arrangement or otherwise) or as
       a result of the  proposed acquistion of the Shares by the Purchaser:

       (a)     no supplier of the Company will be entitled to cease,
               supplying the Company or the substantially reduce its
               supplies to the Company: and

       (b)     no customer of the Company will be entitled to cease, to
               deal with the Company or to substantially reduce its existing
               level of business with the Company.

8.2    COMPLIANCE WITH THIS AGREEMENT

      So far as the Seller is aware, the acquisition of the Shares by
      the Purchaser or compliance with the terms of this Agreement does not
      and will not:

       conflict with, or result in the breach of, or constitute a default
       under, any of the terms, conditions or provisions of any
       agreement or instrument to which the Company is a party, or any
       provision of the Memorandum of Association or Articles of Association
       of the Company or any encumbrance, lease, contract,

                                 Page 32 of 48

<PAGE>

       order, decree, award, interdict, regulation or other
       restriction or obligation of any kind or character by which or to
       which any asset of the Company is bound or subject;

        (b)    relieve any person from any obligation to the Company or
               any person to determine any such obligation, or any right or
               benefit enjoyed by the Company;

        (c)    directly result in the creation, imposition, crystallisation
               or enforcement of any encumbrance whatsoever on any of the
               assets of the Company;

        (d)     directly result in any indebtedness of the Company becoming
               due, or capable of being declared due, and payable prior to
               its stated maturity;

        (e)    conflict with, violate or result in a breach of any law,
               regulatory order, decree or with applicable to the Company.

9       INFORMATION

        All factual information given by the Seller to the Purchaser,
        the Purchaser's Solicitors or the Purchaser's Accountants relating
        to the business, activities, affairs, or assets or liabilities
        of the Company was when given and is (unless subsequently
        updated) now accurate in all material respects and not in any
        way misleading in any material respects.

                                 Page 33 of 48

<PAGE>
                                           SCHEDULE 5

                                         TAX WARRANTIES

1    FURTHER DEFINITIONS

     In this Agreement unless the context requires otherwise:

     "ACT" means advance corporation tax;

     "CAA 2001" means the Capital Allowances Act 2001;

     "FINANCE ACT" and "FA" followed by a year shall mean the Finance Act of
     the year in question;

     "IHTA" means the Inheritance Tax Act 1984;

     "LIABILITY TO TAXATION" has the meaning ascribed in the Tax Deed;

     "RELIEF" has the meaning ascribed in the Tax Deed;

     "VATA" means Value Added Tax Act 1994; and

     "VAT" means Value Added Tax.

2    GENERAL

2.1  The Company has not within the last six years:

     (a)  been the subject of an investigation by the Inland Revenue or any
          other relevant tax authority; or

     (b)  been the subject of any discovery by the Inland Revenue or any
          other relevant tax authority.

     and the Sellers are not aware of any facts or matters which are likely to
     or may lead to any such investigation or discovery.

2.2  To the extent required by generally accepted accounting principles, the
     Accounts make provision or reserve for all Taxation for which the
     Company was at the Accounts Date or at any time thereafter may have
     become or may hereafter become liable to pay:

     (a)  on or in respect of or by reference to any profits, gains or income
          of the Company for any period ended on or before the Accounts Date;
          and

     (b)  on or in respect of any distribution paid or made by the Company on
          or before the Accounts Date; and

     (c)  in respect of any act event, omission, transaction or other matter
          which occurred or took place or was entered into on or before the
          Accounts Date.

2.3  To the extent required by generally accepted accounting principles, the
     Accounts make provision for deferred Tax.

2.4  The Disclosure Letter contains full details of all applications made
     relating to the Company and all clearances received from the Inland
     Revenue under the provisions of any of:

     (a)  TCGA Section 139(5) (company reconstruction or amalgamation);

     (b)  Taxes Act Section 215 (demergers);

     (c)  Taxes Act Section 225 (purchase of own shares);

     (d)  Taxes Act Section 707 (transactions in securities);

     (e)  Taxes Act Section 765 (migration of companies);

     (f)  Taxes Act Section 776(11) (transactions in land); and/or

                                  Page 34 of 48

<PAGE>

       (g)  TCGA Section 138 (reconstructions or amalgamations),

       and any such transaction or event was carried out strictly in
       accordance with the terms described in any application for the said
       clearance.

3      COMPLIANCE

3.1    The Company has at all times (and will before the date of this
       Agreement have) submitted to all relevant tax authorities (whether of
       the United Kingdom or elsewhere) by the requisite dates all returns
       which it is required by law to make together with all appropriate
       claims for Reliefs and allowances, applications and computations.

3.2    All such returns, claims, applications and computations are complete,
       true and accurate in all material respects, give full disclosure of
       all material facts and circumstances and are not the subject of any
       question or dispute and so far as the Seller is aware, are not likely
       to become the subject of any question or dispute with any such tax
       authority.

3.3    All payments by the Company to any person which ought to have been
       made under deduction of tax have been so made and the Company has (if
       required by law to do so) accounted to the relevant tax authority for
       the tax so deducted.

3.4    The Company is not liable as agent or lessee for any tax liability of
       another person.

3.5    No tax authority has agreed to operate any special arrangement (being
       an arrangement which is not based on a strict and detailed application
       of the relevant legislation or on generally published statements of
       practice or generally published extra-statutory concessions) in
       relation to the Company's affairs.

3.6    There are set out in the Disclosure Letter with express reference to
       this paragraph full details of all matters relating to tax in respect
       of which the Company (whether alone or jointly with any other person)
       has an outstanding entitlement or obligation:

       (a)  to make any claim (including a supplementary claim) for relief
            from tax;

       (b)  to make any appeal (including a further appeal) against an
            assessment to tax;

       (c)  to make any application for the postponement of payment of tax; or

       (d)  to submit any return or provide particulars or information to any
            tax authority.

3.6.2  The Company has complied with all notices served on it by any tax
       authority and no such notice remains outstanding.

3.6.3  The Company has duly and punctually paid all tax which it has become
       liable to pay and it has never paid or become liable to pay any
       penalty, fine or surcharge in connection with tax.

3.6.4  The Company has maintained and has in its possession and under its
       control all records and documentation that it is required by any tax
       statute to maintain and preserve and the Company has complete and
       accurate records and/or information to calculate its future) liability
       to or relief from tax including, without limitation, arising on the
       disposal of any asset owned by the Company at Completion or which has
       been disposed of since the Accounts Date.

4      DISTRIBUTIONS

4.1    The Company has not since the Accounts Date made or agreed to make any
       distribution for tax purposes.

4.2    The Company has not:

       (a)  been concerned in any exempt distribution within Taxes Act
            Sections 213 to 218 within the period of five years preceding
            Completion;

       (b)  issued any security now outstanding in circumstances such that
            any interest or other payment payable in respect of it
            constitutes a distribution for tax purposes;

       (c)  redeemed, repaid or repurchased or agreed to redeem, repay or
            repurchase any shares of any class of its share capital or
            otherwise reduced or agreed to reduce its share capital or any
            class thereof; or

                                  Page 35 of 48

<PAGE>

       (d)  issued any share capital or securities as paid up other than by
            receipt of new consideration within the meaning of Taxes Act
            Section 254.

5      CAPITAL ALLOWANCES

5.1    No balancing charge under the capital allowances legislation would be
       made on the Company if any asset or any pool of assets (that is to say
       all those assets expenditure relating to which would be taken into
       account in computing whether a balancing charge would arise on a
       disposal of any of those assets) was disposed of by the Company for a
       consideration equal to its book value as shown in or adopted for the
       purpose of the Accounts.

5.2    All expenditure incurred by the Company or which it may incur under
       any subsisting commitment on the provision of machinery or plant has
       qualified or will qualify (if not deductible as a trading expense of a
       trade carried on by the Company) for writing down allowances under the
       capital allowances legislation.

5.3    So far as the Seller is aware there are no circumstances which could
       give rise to, any dispute between the Company and any other person as
       to the entitlement to capital allowances on any fixtures.

5.4    The Company has not made and does not require to be taken to have made
       any election to have any asset treated as a short life asset within
       the meaning of the capital allowances legislation.

5.5    The Company does not own any asset which is or is capable of being a
       long life asset within the meaning of the capital allowances
       legislation.

6      INTANGIBLE FIXED ASSETS

6.1    The tax written down value of each of the Company's intangible fixed
       assets is not different from its value in or for the purposes of the
       Accounts.

6.2    No credit would require to be brought into account by the Company for
       tax purposes if any of its intangible fixed assets was to be realised
       for a consideration equal to its value in or for the purposes of the
       Accounts.

6.3    The Company has not made and so far as the Seller is aware is not
       entitled to make any claim to have the cost for tax purposes of any of
       its intangible fixed assets reduced by reference to the proceeds of
       realisation of any other intangible fixed asset which was owned by the
       Company or any other company.

6.4    The Company has never recognised a gain in respect of negative
       goodwill.

7      CAPITAL GAINS

7.1    No chargeable profit or gain would arise in respect of any asset of
       the Company:

7.1.1  treated as such in the Accounts if that asset were to be disposed of
       for a consideration equal to its value in or for the purposes of the
       Accounts;

7.1.2  acquired after the Accounts Date if that asset were to be disposed of
       for a consideration equal to the consideration given for its
       acquisition,

       in each case disregarding any statutory right to claim any allowance
       or relief other than amounts deductible under TCGA Section 38.

7.2    No debt owed to the Company would give rise to a chargeable gain on
       its disposal.

7.3    No benefit under any policy of assurance has been acquired by the
       Company which would give rise to a chargeable gain on its disposal.

7.4    The Company does not have an interest in any assets which are wasting
       assets for the purposes of the taxation of chargeable gains and which
       do not qualify for capital allowances.

7.5    The Company has not made nor is entitled to make any claims under any
       of TCG Sections 152 to 157, 165, 172 or 175 insofar as such claims
       affect or would effect the chargeable gain or allowable loss which
       would arise on a disposal by the Company of any of its assets

                                  Page 36 of 48

<Page>

7.6  The Company has not made nor is it entitled to make any claim or
     election under either of TCGA Section 24 (assets lost or destroyed) or
     TCGA Section 161(3) (appropriations to or from stock). The Company has
     not, since the Accounts Date, appropriated any asset forming part of its
     trading stock for any other purpose.

7.7  The Company has not since the Accounts Date been a party to any
     depreciatory transactions for the purpose of TCGA Section 176
     (transactions in a group) or which could be treated as a depreciatory
     transaction under TCGA Section 177 (dividend stripping).

7.8  The Company has not been a party to any arrangements falling within TCGA
     Sections 29, 30, 31, 32, 33 or 34 (value shifting).

7.9  The Company has not made nor is entitled to make any claim under TCGA
     Section 279 (relief in respect of delayed remittances or gains) or
     Section 280 (consideration due after time of disposal).

7.10 No election has been made under TCGA Section 35(5) (assets held on 31
     March 1982) in respect of the assets of the Company.

7.11 The Company has not disposed of or acquired any asset in circumstances
     falling within TCGA Sections 17 or 19 and is not entitled to any capital
     loss to which TCGA Section 18(3) applies.

7.12 No reorganisation of the share capital of the Company within the
     provisions of TCGA Sections 126 to 130 has taken place.

7.13 The Company does not own any asset in respect of which TCGA Schedule 7A
     (restriction on set-off of pre-entry losses) or TCGA Schedule 2 (assets
     held on 6 April 1965) has or may have effect.

8    LOAN RELATIONSHIPS

8.1  The Company is and has since the Accounts Date been taxed on an
     authorised accruals basis of accounting in relation to all loan
     relationships which are creditor relationships for tax purposes and in
     relation thereto:

     (a)  the accruals on which the Company is taxable are computed only by
          reference to interest;

     (b)  if any such debt were to be repaid at its face value the Company
          would not suffer any charge to tax in excess of tax on interest
          accrued; and

     (c)  there is no connection between the Company and the debtor as
          mentioned in FA 1996 Section 87.

8.2  The Company obtains and has since the Accounts Date obtained tax relief
     on an authorised accruals basis of accounting in relation to all loan
     relationships which are debtor relationships for taxation purposes and
     in relation to each such relationship:

     (a)  the deduction given in computing the taxable profits of the Company
          in consequence of that relationship is not less than the interest
          accruing for the period concerned; and

     (b)  the Company would suffer no adverse tax consequences were such
          debts to be repaid at face value except that the tax deduction for
          interest accrued would cease.

8.3  The Company has not since the Accounts Date held or been the debtor under
     any deep discount securities as defined in Taxes Act Schedule 4
     paragraph 1 or any deep gain securities as defined in FA 1989 Schedule
     11 paragraph 1 or any relevant discounted security as mention in FA 1996
     Schedule 13.

9    GROUPS

9.1  The Company will not cease to be a member of a Tax Group as a result of
     entering into or giving effect to this Agreement.

                                                                  Page 37 of 48
<Page>

10   LOSSES

     In the three years prior to the date of this Agreement there has not
     been a major change or series of changes which when taken together
     constitute a major change in the nature of conduct of any trade or
     business carried on by the Company (or a surrendering company) such that
     it could affect the ability of the Company to utilise after Completion
     trading losses and deficits arising in respect of loan relationships.

11   TAX AVOIDANCE

     The Company has never:

     (a)  entered into, been party to or otherwise been concerned with any
          transaction or event or arrangement as a result of which any
          provision of Taxes Act Part XVII applied, applies or may apply; or

     (b)  been party to or concerned with any scheme or arrangement of which
          the main purpose or one of the main purposes was the avoidance of a
          liability to tax.

12   VALUE ADDED TAX

12.1 The Company is not and has never been treated for the purposes of VAT as
     a member of a Tax Group.

12.2 The Company is a registered and taxable person for the purposes of the
     VATA and has complied with and observed in all respects the terms of all
     statutory provisions, directions, conditions, notices and agreements
     with HM Customs and Excise relating to VAT. The Company has maintained
     and obtained accounts, records, invoices and other documents (as the
     case may be) appropriate or requisite for the purposes of VAT which are
     complete, correct and up-to-date.

12.3 The Company:

     (a)  is not, nor in the two years prior to Completion has been, in
          arrears with any payments or returns or notifications under any
          statutory provisions, directions, conditions or notices relating to
          VAT, or liable to any forfeiture or penalty or interest or
          surcharge or to the operation of any penalty, interest or surcharge
          provision;

     (b)  has not been required by HM Customs and Excise to give security;

     (c)  is not, and has not agreed to become, an agent, manager, factor or
          tax representative for the purposes of VAT for any other person;

     (d)  has not made, and will not make prior to Completion, any supplies
          that are exempt supplies; and

     (e)  has not received a notice directing that the value of goods
          supplied by the Company is for the purposes of VAT to be taken to
          be their open market value.

12.4 The Company has not since the Accounts Date been, and will not prior to
     Completion be, treated as having made any supply of goods or services
     for the purposes of VAT where no supply has in fact been made by the
     Company.

12.5 The Company does not use any special scheme for the purposes of VAT.

12.6 The Company has never received a surcharge liability notice or a penalty
     liability notice.

12.7 The Company is not required to pay amounts on account of VAT.

13   CLOSE COMPANIES

13.1 The Company is not and has never been a close company as defined in
     Taxes Act Section 414.

13.2 The Company is not, nor has ever been, liable to tax under the
     provisions of Taxes Act Sections 418 to 422.

                                                                  Page 38 of 48
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13.3 The Company has never made any transfer of the kind described in TCGA
     Section 125 (transfer of assets at undervalue).

13.4 The Company has never made any transfer of value within the meaning of
     IHTA.

13.5 Neither the assets owned by nor the shares of the Company are subject to
     an outstanding Inland Revenue charge as defined in IHTA Section 237.

13.6 No circumstances exist, or but for IHTA Section 204(6) would exist, such
     that a power of sale could be exercised in relation to any assets or
     shares of the Company pursuant to IHTA Section 212 (contingent liability
     of transferee for unpaid capital transfer tax or inheritance tax).

14   EMPLOYEES

14.1 The Company has properly operated the income tax pay-as-you-earn
     ("PAYE") system, deducting the appropriate tax and national insurance
     contributions as required by law from all payments made to or treated as
     made to employees or ex-employees of the Company and all sums payable to
     the Inland Revenue under the PAYE system have been paid up to Completion.

14.2 The Company has received no notifications or notices under Taxes Act
     Section 166 (benefits in kind; notice of nil liability).

14.3 The Company does not operate any payroll deduction scheme in respect of
     payments to charity.

14.4 No officer or employee of the Company participates in any share option
     scheme or share acquisition or ownership plan of any kind.

14.5 Since the Accounts Date the Company has not received any payment from a
     pension scheme.

14.6 All sums payable under the existing arrangements for remunerating any
     person who is or has been an officer or employee of the Company or a
     dependant of any such person and for rewarding persons rendering
     services to the Company are deductible in computing the profits of the
     Company for tax purposes.

15   STAMP DUTY

15.1 There is no instrument which is necessary to establish the Company's
     title to any right or asset which is liable to stamp duty in the United
     Kingdom or elsewhere but which has not been duly stamped or which would
     attract stamp duty if brought within the relevant jurisdiction.

15.2 The Company has duly paid all stamp duty and stamp duty reserve tax to
     which it is, has been or to the best of the Seller's knowledge may be
     made liable and there is no liability to any penalty in respect of such
     duty or tax nor to the best of the Seller's knowledge are there any
     circumstances or transactions to which the Company is or has been a
     party which may result in the Company becoming liable to such a penalty.

15.3 No claim has been made by the Company at any time during the period of
     five years up to the date of this Agreement in respect of stamp duty
     relief under FA 1930 Section 42 or FA 1986 Section 75, 76 or 77.

16   INTERNATIONAL

16.1 The Company is and always has been exclusively resident in the United
     Kingdom for tax purposes.

16.2 The Company is and has never ceased to be resident in the United Kingdom
     for tax purposes.

16.3 The Company is not liable to tax in any jurisdiction other than the
     United Kingdom.

16.4 The Company has not without the prior consent of the Treasury entered
     into any of the transactions specified in Taxes Act Section 765
     (migration etc. of companies).

                                                                  Page 39 of 48

<PAGE>

16.5 No income has arisen in a territory outside the United Kingdom in
     respect of which any claim under Taxes Act Section 584 (unremittable
     overseas income) has been made or is available to the Company.

16.6 The Company does not control any "controlled foreign company" within
     the meaning of Taxes Act Section 747 in respect of which the Board of
     Inland Revenue has made or would be entitled to make a direction under
     that Section.

16.7 No notice under Taxes Act Section 755 has been given to the Company by
     the Board of Inland Revenue.

17   INTELLECTUAL PROPERTY

17.1 The Company has not sold or agreed to sell any patent rights for a
     capital sum (which would be chargeable to income) pursuant to Taxes Act
     Section 524.

17.2 Since the Accounts Date the Company has not acquired or disposed of or
     agreed to acquire or dispose of know-how (whether or not together with a
     trade or part of trade) in connection with which Taxes Act
     Section 531(1), (2), (4) or (8) apply or may apply.

18   TRANSACTIONS IN LAND

     The Company has not:

     (a)     made any part disposal of land within TCGA Sections 242 or 243
             in connection with which a claim has been made under
             Section 242(2) or 242(3) as appropriate; or

     (b)     entered into any transaction to which the provisions of Taxes
             Act Sections 34-37 (premiums, leases of undervalue etc) have or
             could be applied.

                                                                  Page 40 of 48

<PAGE>

                                   SCHEDULE 6

                              PURCHASER WARRANTIES

1.   The Purchaser is a company duly incorporated, validly existing and in
     good standing as a private limited company under English Law.

2.   No resolution for the winding-up of the Purchaser has been passed, and
     no order for the winding-up of the Purchaser has been made and no
     petition for the winding-up of Purchaser has been presented, no order
     for the appointment of an administrator of the Purchaser has been made
     and no administrative receiver, receiver or liquidator for the Purchaser
     has been appointed.

3.   All necessary corporate actions and shareholder authorities required to
     authorise the execution, delivery and performance by the Purchaser of
     its obligations under this agreement have been duly taken and validly
     obtained and the Purchaser has the corporate power and authority to
     execute, deliver and perform its obligations under this agreement.

4.   This agreement been duly authorised, executed and delivered by the
     Purchaser and constitutes legal, valid, binding and enforceable
     obligations of the Purchaser.

5.   Neither the execution and delivery nor this performance by the Purchaser
     of its obligations under this agreement does or will conflict with or
     result in any breach of any of the provisions of, or constitute a
     default under, the Memorandum and Articles of Association of the
     Purchaser.

6.   No consent, approval, authorisation or order of, and no notice to or
     filing with, any governmental agency or governmental body or any court
     is required to be obtained or made by the Purchaser for the transactions
     contemplated under this agreement.

                                                                  Page 41 of 48

<PAGE>

                                   SCHEDULE 7

                             INTELLECTUAL PROPERTY

                                     PART 1
                                 BUSINESS NAMES

                                   ClarityBlue
                               ClarityBlue Limited
                                    Clarity Q

                                     PART 2
                                  DOMAIN NAMES

-------------------------------------------------------------------------------
     www.clarityblue.com                     www.clarity-blue.biz
-------------------------------------------------------------------------------
     www.clarityblue.co.uk                   www.clarity-blue.co.uk
-------------------------------------------------------------------------------
     www.clarityblue.ca                      www.clarity-blue.com
-------------------------------------------------------------------------------
     www.clarityblue.de                      www.clarity-blue.de
-------------------------------------------------------------------------------
     www.clarityblue.net                     www.clarity-blue.info
-------------------------------------------------------------------------------
     www.clarityblue.biz                     www.clarity-blue.net
-------------------------------------------------------------------------------
     www.clarityblue.info                    www.clarity-blue.org
-------------------------------------------------------------------------------
     www.clarityblue.org                     www.clarity-blue.tv
-------------------------------------------------------------------------------
     www.clarityblue.tv                      www.clarity-blue.ws
-------------------------------------------------------------------------------
     www.clarityblue.ws                      www.clarity-blue.ca
-------------------------------------------------------------------------------
     www.clarityblueonline.com               www.clarityblue-online.com
-------------------------------------------------------------------------------

                                     PART 3
                       REGISTERED INTELLECTUAL PROPERTY

                          Canada Trademark Application
                                    1174174
                               Re: "CLARITYBLUE"
                               Filed: 16/04/2003
                              STATUS: Formalised

                                     PART 4
                      UNREGISTERED INTELLECTUAL PROPERTY

                            USA Trademark Application
                                   78/238396
                               Re: "CLARITYBLUE"
                               Filed: 16/04/2003
                      STATUS: Newly filed/Not yet assigned

                             UK Trademark Application
                                     2313600
                               Re: "CLARITYBLUE"
                               Filed: 19/10/2002
                       STATUS: Examined/Objections raised.

                                                                  Page 45 of 48

<PAGE>

                    LOGO      LOGO
                    LOGO      LOGO
                    LOGO      LOGO

                                                                  Page 46 of 48

<PAGE>

                                     PART 5
                               COMPANY SOFTWARE

-     Segmentor

-     ClarityQ

-     ClarityQ Select

and

The following software components, comprising:

-     Extract, Transform and Load (ETL) scripts written in either Ab Initio
      or Informatica
-     Data Definition Language (DDL) scripts to define the necessary database
      models
-     UNIX Execution scripts to execute the above ETL scripts to load the
      data into the above database models

For each of the following clients:

-     Freeserve
-     Goldfish
-     Lloyds TSB Credit Cards
-     Lloyds TSB BlueSky
-     O2
-     Orange
-     Singlepoint
-     T-Mobile
-     Vodafone Clarify
-     Vodafone Retail
-     Wanadoo

together with any such software components which are currently in development
by the Company.

                                                                  Page 47 of 48

<page>

                                 SCHEDULE 8

               EXISTING DISTRIBUTORS, AGENTS, RE-SELLERS AND
                   INDIRECT CHANNELS OF THE SAND SOFTWARE

                         Protagona Worldwide Limited
                               C.S.C. Limited
                              Dunnhumby Limited
                              Aspective Limited
                                 Morse Group
                                  Accenture
                                     IBM
                   Any other partner with global operations

                                  Page  48 of 48

<page>

                                 SCHEDULE 9

                           RETENTION ACCOUNT TERMS

The parties have agreed that in order to assist in the administration of any
adjustment to the Consideration (pursuant to Clause 4.7) the Retention
Account will be opened into which the Purchaser shall on the Completion Date
deposit the Completion Accounts Retention. The purpose of the Completion
Accounts Retention is to assist in discharging (to such extent as is
possible) the variations in the Consideration resulting from shortfalls in
the Net Assets as provided for in Clause 4.7.

1.  DEFINITIONS AND INTERPRETATION

    In this Schedule the following words and expressions shall have the
    following meanings:

    "RELATED INTEREST": in relation to any part of the sum standing to the
    credit of the Retention Account which is or is to be withdrawn in
    accordance with the provisions of this Schedule 9, that portion of the
    interest earned in respect of the Completion Accounts Retention as is
    attributable to the sum so withdrawn or to be withdrawn accruing from
    Completion net of any taxes or bank charges referred to in paragraph 5
    below;

    the "RETENTION AGENTS": the Seller's Solicitors and the Purchaser's
    Solicitors;

    the "PAYMENT DATE": shall be the date prescribed in this agreement.

2.  BASIS UPON WHICH RETENTION HELD: The Retention shall be held in the
    Retention Account in trust for the Purchaser and the Seller to be paid to
    them in accordance with the provisions of this Schedule 9 and otherwise
    on the following terms:

    (a)  all interest earned in respect of the Completion Accounts Retention
         shall be credited to the Retention Account without any deduction;

    (b)  no other credit will be made to the Retention Account without the
         prior written consent of the Purchaser's Solicitors and the Seller's
         Solicitor; and

    (c)  no withdrawal will be made form the Retention Account save as
         provided in clause 4 of this agreement

3.  INSTRUCTIONS TO OPEN: The Purchaser and Seller shall upon execution of
    this agreement instruct the Purchaser's Solicitors and the Seller's
    Solicitors to open, operate and make payments out of the Retention
    Account upon and subject to the provisions of this agreement on the basis
    that each such firm jointly with the other firm shall receive and hold
    all monies paid to them pursuant to this agreement and all monies from
    time to time standing to the credit of the Retention Account, jointly as
    trustees for the Purchaser and the Seller to pay the same either to the
    Purchaser or to the Seller, or partly to one such party and partly to the
    other such party, upon and subject only to the provisions of this
    agreement.

4.  PAYMENT OF TAXES AND BANK CHARGES: The Purchaser's Solicitors and the
    Seller's Solicitors shall be irrevocably authorised and entitled to pay
    out of the Retention Account without further authority or instruction:

    (a)  any taxes of whatever nature which may be payable as a matter of law
         in respect of interest accrued on the amount standing from time to
         time to the credit of the Retention Account; and

    (b)  all bank charges payable in respect of the Retention Account.

                                  Page  49 of 48

<page>

5.  NOT INTEREST WITHOUT PRINCIPAL: Neither the Purchaser nor the Seller
    shall have any entitlement to interest until the due date of payment of
    the principal to which it relates.

6.  INSTRUCTIONS TO PAY OUT: The Purchaser and the Seller shall as and when
    necessary give instructions to the Purchaser's Solicitors and the
    Seller's Solicitors in the agreed form in order to procure compliance
    with the provisions of clause 4 and this Schedule 9. Unless otherwise
    specified in this Schedule 9, the Purchaser's Solicitors and the Sellers'
    Solicitors shall not be required to take any action with respect to the
    Retention Account except on the joint written instruction of the
    Purchaser and the Seller in the agreed form.

7.  ALTERNATIVE ARRANGEMENT: The Purchaser and the Seller agree that, if any
    instructions are not given to the Purchaser's Solicitors and the Seller's
    Solicitors, such firms shall be entitled to place the monies standing to
    the credit of the Retention Account for such deposit period as they agree
    in their sole and absolute discretion (and such firms shall have no
    responsibility of whatever nature for the actual interest earned thereon)
    or, if such firms cannot agree, on overnight deposit.

8.  NO PAYMENT OUT: The Purchaser and the Seller agree that, except as may
    otherwise be ordered by a court of competent jurisdiction, or as may be
    agreed otherwise by such parties no payment or transfer of any sums
    standing to the credit if the Retention Account shall be made except as
    expressly provided in this agreement.

9.  EXPENSES: The Purchaser and Seller undertake with each other to pay the
    respective fees and expenses (including VAT) of their respective
    solicitors in connection with the Retention Account.

                                  Page  50 of 48

<page>

Signed by ARTHUR RITCHIE
duly authorised under the laws of the State of Quebec, Canada
to sign this agreement for and on behalf of and acting under the
authority of SAND TECHNOLOGY INC.
in the presence of:

(signed) ARTHUR RITCHIE
-----------------------

Signed by DUNCAN PAINTER
for and on behalf of
CLARITYBLUE HOLDINGS LIMITED
in the presence of:

(signed) BUTLER GALLIE
----------------------
             SOLICITOR

                                  Page  51 of 48<PAGE>

                                                                    Exhibit 4.13

                              SAND TECHNOLOGY INC.

                                       AND

                            CIBC MELLON TRUST COMPANY
                                 AS RIGHTS AGENT

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

                        SHAREHOLDER RIGHTS PLAN AGREEMENT

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

                                November 17, 2003

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

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

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

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

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

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

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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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

</TABLE>

<PAGE>

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

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

                                 (hereinafter referred to as the "CORPORATION")

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

                                 (hereinafter referred to as the "RIGHTS AGENT")

RECITALS:

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

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

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

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

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

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

<PAGE>
                                       -2

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

                                   ARTICLE 1
                                 INTERPRETATION

1.1      CERTAIN DEFINITIONS

         For the purpose of this agreement:

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

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

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

                           (A)      a Voting Share Reduction;

                           (B)      a Permitted Bid Acquisition;

                           (C)      an Exempt Acquisition;

                           (D)      a Pro Rata Acquisition; or

                           (E)      a Convertible Security Acquisition;

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

<PAGE>
                                      -3-

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

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

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

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

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

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

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

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

<PAGE>
                                      -4-

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

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

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

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

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

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

<PAGE>
                                      -5-

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

                           (F)      such Person is a Plan;

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

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

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

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

<PAGE>
                                      -6-

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

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

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

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

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

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

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

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

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

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

<PAGE>
                                      -7-

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

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

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

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

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

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

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

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

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

<PAGE>
                                      -8-

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

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

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

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

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

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

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

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

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

<PAGE>
                                      -9-

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

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

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

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

         (u)      "EXPIRATION TIME" means earlier of:

                  (i)      the Termination Time; and

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

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

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

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

                  (i)      an Acquiring Person;

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

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

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

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

<PAGE>
                                      -10-

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

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

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

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

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

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

<PAGE>
                                      -11-

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

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

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

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

<PAGE>
                                      -12-

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

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

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

         (bb)     "OFFER TO ACQUIRE" includes:

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

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

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

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

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

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

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

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

<PAGE>
                                      -13-

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

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

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

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

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

         (hh)     "PRO RATA ACQUISITION" means:

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

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

<PAGE>
                                      -14-

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

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

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

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

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

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

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

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

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

                  (i)      the Stock Acquisition Date; and

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

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

<PAGE>
                                      -15-

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

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

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

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

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

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

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

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

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

<PAGE>
                                      -16-

1.2      CURRENCY

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

1.3      DESCRIPTIVE HEADINGS

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

1.4      REFERENCES TO AGREEMENT

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

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

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

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

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

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

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

<PAGE>
                                      -17-

1.6      ACTING JOINTLY OR IN CONCERT

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

                                   ARTICLE 2
                                   THE RIGHTS

2.1      LEGEND ON CERTIFICATES

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

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

<PAGE>
                                      -18-

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

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

2.2      EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES

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

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

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

2.3      REGISTRATION, TRANSFER AND EXCHANGE

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

<PAGE>
                                      -19-

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

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

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

2.4      MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES

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

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

<PAGE>
                                      -20-

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

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

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

2.5      PERSONS DEEMED OWNERS OF RIGHTS

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

2.6      DELIVERY AND CANCELLATION OF CERTIFICATES

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

<PAGE>
                                      -21-

2.7      AGREEMENT OF RIGHTS HOLDERS

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

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

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

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

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

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

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

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

<PAGE>
                                      -22-

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

2.8      RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER

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

                                   ARTICLE 3
                             EXERCISE OF THE RIGHTS

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

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

         (b)      Until the Separation Time:

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

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

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

<PAGE>
                                      -23-

                  (i)      the Rights will be exercisable; and

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

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

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

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

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

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

<PAGE>
                                      -24-

                  (i)      the Rights Certificate evidencing such Rights;

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

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

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

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

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

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

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

<PAGE>
                                      -25-

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

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

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

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

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

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

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

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

<PAGE>
                                      -26-

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

3.2      ADJUSTMENTS TO EXERCISE PRICE: NUMBER OF RIGHTS

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

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

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

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

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

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

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

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

<PAGE>
                                      -27-

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

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

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

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

<PAGE>
                                      -28-

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

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

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

<PAGE>
                                      -29-

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

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

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

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

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

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

<PAGE>
                                      -30-

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

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

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

<PAGE>
                                      -31-

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

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

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

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

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

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

<PAGE>
                                      -32-

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

3.3      DATE ON WHICH EXERCISE IS EFFECTIVE

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

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

4.1      FLIP-IN EVENT

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

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

<PAGE>
                                      -33-

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

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

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

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

<PAGE>
                                      -34-

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

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

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

                                   ARTICLE 5
                                THE RIGHTS AGENT

5.1      GENERAL

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

<PAGE>
                                      -35-

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

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

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

5.2      MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT

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

<PAGE>
                                      -36-

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

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

5.3      DUTIES OF RIGHTS AGENT

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

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

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

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

<PAGE>
                                      -37-

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

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

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

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

<PAGE>
                                      -38-

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

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

5.4      CHANGE OF RIGHTS AGENT

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

<PAGE>
                                      -39-

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

                                    ARTICLE 6
                                  MISCELLANEOUS

6.1      REDEMPTION AND WAIVER

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

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

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

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

<PAGE>
                                      -40-

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

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

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

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

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

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

<PAGE>
                                      -41-

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

6.2      EXPIRATION

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

6.3      ISSUANCE OF NEW RIGHTS CERTIFICATES

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

6.4      FRACTIONAL RIGHTS AND FRACTIONAL SHARES

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

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

6.5      SUPPLEMENTS AND AMENDMENTS

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

<PAGE>
                                      -42-

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

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

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

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

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

<PAGE>
                                      -43-

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

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

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

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

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

<PAGE>
                                      -44-

6.6      RIGHTS OF ACTION

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

6.7      NOTICE OF PROPOSED ACTIONS

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

6.8      NOTICES

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

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

<PAGE>
                                      -45-

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

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

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

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

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

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

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

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

<PAGE>
                                      -46-

6.9      COSTS OF ENFORCEMENT

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

6.10     SUCCESSORS

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

6.11     BENEFITS OF THIS AGREEMENT

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

6.12     GOVERNING LAW

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

6.13     COUNTERPARTS

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

6.14     SEVERABILITY

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

<PAGE>
                                      -47-

6.15     EFFECTIVE DATE

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

6.16     SHAREHOLDER APPROVAL

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

6.17     DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS

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

6.18     TIME OF THE ESSENCE

         Time will be of the essence of this agreement.

6.19     REGULATORY APPROVALS

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

<PAGE>
                                      -48-

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

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

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

6.21     FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS

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

6.22     LANGUAGE

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

<PAGE>
                                      -49-

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

        SAND TECHNOLOGY INC.                     CIBC MELLON TRUST COMPANY

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

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

                                            Date: December 9, 2003

<PAGE>

                                    EXHIBIT A

                           FORM OF RIGHTS CERTIFICATE

Certificate No.______________                                 ___________ Rights

                               RIGHTS CERTIFICATE

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

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

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

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

<PAGE>
                                      -2-

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

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

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

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

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

Date: _________________

                                                    SAND TECHNOLOGY INC.

                                            By: ________________________________

                                            By: ________________________________

Countersigned:
                                                 CIBC MELLON TRUST COMPANY

                                            By: ________________________________
                                                Authorized Signature

<PAGE>

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

TO:   Sand Technology Inc.

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

                 _______________________________________________________________
                 Name

                 _______________________________________________________________
                 Address

                 _______________________________________________________________
                 City and Province

                 _______________________________________________________________
                 Social Insurance Number or other taxpayer identification number

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

                 _______________________________________________________________
                 Name

                 _______________________________________________________________
                 Address

                 _______________________________________________________________
                 City and Province

                 _______________________________________________________________
                 Social Insurance Number or other taxpayer identification number

Dated:
       __________________________________    ___________________________________
                                                        Signature

<PAGE>
                                      -2-

Signature Guaranteed:

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

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

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

                                       ________________________________________
                                                      Signature

<PAGE>

                               FORM OF ASSIGNMENT

FOR VALUE RECEIVED _____________________________________________

hereby sells, assigns and transfers unto________________________________________

________________________________________________________________________________
(please print name and address of transferee)

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

Dated: ____________________________

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

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

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

                                       ________________________________________
                                       Signature

<PAGE>

                                     NOTICE

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

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