Document:

Passport Potash Inc.: Exhibit 4.2 - Filed by newsfilecorp.com

SHAREHOLDER RIGHTS PLAN AGREEMENT 

August 25, 2011 

between 

PASSPORT POTASH INC. 

and 

COMPUTERSHARE TRUST COMPANY OF CANADA 

as Rights Agent

TABLE OF CONTENTS 

	ARTICLE
      1 INTERPRETATION 	1
      
	 	1.1
      	Certain
      Definitions 	1
      
	 	1.2
      	Currency
      	13
      
	 	1.3
      	Headings
      	13
      
	 	1.4
      	References
      to Agreement 	13
      
		1.5
      	Calculation
      of Number and Percentage of Beneficial Ownership of Outstanding Voting
      Shares 	13
      
	 	1.6
      	Acting
      Jointly or in Concert 	13
      
	 	1.7
      	Generally
      Accepted Accounting Principles 	14
      
	ARTICLE
      2 THE RIGHTS 	14
      
	 	2.1
      	Legend
      on Common Share Certificates 	14
      
	 	2.2
      	Initial
      Exercise Price; Exercise of Rights; Detachment of Rights 	14
      
	 	2.3
      	Adjustments
      to Exercise Price; Number of Rights 	17
      
	 	2.4
      	Date
      on Which Exercise is Effective 	21
      
	 	2.5
      	Execution,
      Authentication, Delivery and Dating of Rights Certificates 	21
      
	 	2.6
      	Registration,
      Registration of Transfer and Exchange 	22
      
	 	2.7
      	Mutilated,
      Destroyed, Lost and Stolen Rights Certificates 	22
      
	 	2.8
      	Persons
      Deemed Owners 	23
      
	 	2.9
      	Delivery
      and Cancellation of Certificates 	23
      
	 	2.10
      	Agreement
      of Rights Holders 	23
      
	 	2.11
      	Rights
      Certificate Holder not Deemed a Shareholder 	24
      
	ARTICLE
      3 ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS . 	24
      
	 	3.1
      	Flip-in
      Event 	24
      
	 	3.2
      	Fiduciary
      Duties of the Board of Directors of the Company 	26
      
	ARTICLE
      4 THE RIGHTS AGENT 	26
      
	 	4.1
      	General
      	26
      
	 	4.2
      	Merger
      or Amalgamation or Change of Name of Rights Agent 	27
      
	 	4.3
      	Duties
      of Rights Agent 	27
      
	 	4.4
      	Change
      of Rights Agent 	29
      
	 	4.5
      	Compliance
      with Money Laundering Legislation 	29
      
	 	4.6
      	Privacy
      Provision 	30
      
	ARTICLE
      5 MISCELLANEOUS 	30
      
	 	5.1
      	Redemption
      and Waiver 	30
      
	 	5.2
      	Expiration
      	31
      
	 	5.3
      	Issuance
      of New Rights Certificates 	31
      
	 	5.4
      	Supplements
      and Amendments 	31
      
	 	5.5
      	Fractional
      Rights and Fractional Shares 	33
      
	 	5.6
      	Rights
      of Action 	33
      
	 	5.7
      	Regulatory
      Approvals 	34
      
	 	5.8
      	Unlawful
      Distributions 	34
      
	 	5.9
      	Notices
      	34
      
	 	5.10
      	Costs
      of Enforcement 	35
      
	 	5.11
      	Successors
      	35
      
	 	5.12
      	Benefits
      of this Agreement 	35
      
	 	5.13
      	Governing
      Law 	35
      
	 	5.14
      	Severability
      	36
      
	 	5.15
      	Effective
      Date 	36
      

- ii - 

	 	5.16
      	Determinations
      and Actions by the Board of Directors 	36
      
	 	5.17
      	Time
      of the Essence 	36
      
	 	5.18
      	Execution
      in Counterparts 	36
      
	 	5.19
      	Language
      	37
      

EXHIBIT A 

Form of Rights Certificate 

THIS SHAREHOLDER RIGHTS AGREEMENT as of August 25, 2011. 

BETWEEN: 

PASSPORT POTASH INC., a company
existing under the laws of the 
Province of British Columbia (hereinafter
referred to as the "Company") 

OF THE FIRST PART 

AND 

COMPUTERSHARE TRUST COMPANY OF
CANADA, a company 
existing under the laws of Canada (hereinafter
referred to as the "Rights 
Agent") 

OF THE SECOND PART 

     WHEREAS the Board of Directors
has determined that it is in the best interests of the Company and all of its
shareholders to adopt a shareholder rights plan; 

     AND WHEREAS in order to implement
the adoption of a shareholder rights plan the Board of Directors has: 

	(a) 	
      authorized the issuance and distribution of one Right in
      respect of each Common Share outstanding at the Record Time; and

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

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

     AND WHEREAS the Company desires
to appoint the Rights Agent to act on behalf of the Company and the 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 herein; 

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

ARTICLE 1 
INTERPRETATION 

	1.1 	
      Certain Definitions

In this agreement, as amended or supplemented from time to time
(the "Agreement"): 

	(a) 	
      "Acquiring Person" means, subject to Section
      5.1(e), any Person who is the Beneficial Owner of 20% or more of the
      outstanding Voting Shares; provided, however, that the term "Acquiring
      Person" shall not include:

- 2 - 

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

	 	 	 
		(ii) 	
      any Person who becomes the Beneficial Owner of 20% or
      more of the outstanding Voting Shares as a result of any one or any
      combination of: (A) Voting Share Reductions; (B) Permitted Bid
      Acquisitions; (C) Exempt Acquisitions; (D) a Convertible Security
      Acquisition, or (E) Pro Rata Acquisitions; provided that if a Person shall
      become the Beneficial Owner of 20% or more of the outstanding Voting
      Shares by reason of any one or any combination of Voting Share Reductions,
      Permitted Bid Acquisitions, Exempt Acquisitions, Convertible Security
      Acquisitions or Pro Rata Acquisitions, if thereafter, such Person, while
      such Person is the Beneficial Owner of 20% or more of the outstanding
      Voting Shares, becomes the Beneficial Owner of additional Voting Shares
      which result in an increase of such Person's Beneficial Ownership of
      Voting Shares by more than 1% of the number of such Voting Shares
      outstanding as at the time of acquisition (other than pursuant to one or
      any combination of Voting Share Reduction, Permitted Bid Acquisitions,
      Exempt Acquisitions, Convertible Security Acquisitions or Pro Rata
      Acquisitions), then, as of the date such Person becomes the Beneficial
      Owner of such additional outstanding Voting Shares, such Person shall be
      an "Acquiring Person";

	 	 	 
		(iii) 	
      an underwriter or members of a banking or selling group
      that becomes the Beneficial Owner of 20% or more of the outstanding Voting
      Shares in connection with a distribution of securities pursuant to a
      prospectus or by way of private placement;

	 	 	 
		(iv) 	
      for a period of 10 days after the Disqualification Date
      (as hereinafter defined), any Person who becomes the Beneficial Owner of
      20% or more of the outstanding Voting Shares as a result of such Person
      becoming disqualified from relying on clause 1.1(a)(v) hereof because such
      Person makes or announces an intention to make a Takeover Bid in respect
      of the Voting Shares alone or by acting jointly or in concert with any
      other Person and, for this purpose, “Disqualification Date” means
      the first date of public announcement of facts indicating that such Person
      is making or intends to make a Take-over Bid;

	 	 	 
		(v) 	
      a Person (a “Grandfathered Person”) who is the
      Beneficial Owner of more than 20% of the outstanding Voting Shares
      determined as of the Record Time; provided, however, that this exemption
      shall not be, and shall cease to be, applicable to a Grandfathered Person
      in the event that such Grandfathered Person shall, after the Record Time,
      become the Beneficial Owner of additional Voting Shares that increases its
      Beneficial Ownership by more than 1% of the number of Voting Shares
      outstanding (other than through one or any combination of a Voting Share
      Reduction, a Permitted Bid Acquisition, an Exempt Acquisition, a
      Convertible Security Acquisition or a Pro Rata Acquisition);

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

	 	 	 
	(c) 	
      "Associate", when used to indicate a relationship
      with a specified Person, means:

	 	 	 
		(i) 	
      a spouse of such specified Person or any Person of the
      same or opposite sex with whom such specified Person is living in a
      conjugal relationship outside marriage or a child of such specified
      Person; and

	 	 	 
		(ii) 	
      any relative of such specified Person or of a spouse or
      other Person mentioned in paragraph 1.1(c)(i), if that relative has the
      same residence as such specified Person;

- 3 - 

	(d) 	
      A Person shall 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 direct or indirect 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 become the owner at law
      or equity (within 60 days of the date of determination of Beneficial
      Ownership and whether or not on condition or the occurrence of any
      contingency) (a) upon the exercise of any Convertible Securities or (b)
      pursuant to any agreement, arrangement, pledge or understanding (whether
      or not in writing) (other than customary agreements with and between
      underwriters and banking group or selling group members with respect to a
      distribution of securities pursuant to a prospectus or by way of private
      placement and other than pledges of securities in the ordinary course of
      business); and

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

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

	 	(iv) 	
      because either (A) the holder of such security has agreed
      pursuant to a Permitted Lock-up Agreement to deposit or tender such
      security to a Take-over Bid made by such Person, any of such Person's
      Affiliates or Associates or any other Person referred to in paragraph
      (iii) of this definition or (B) such security has been deposited or
      tendered pursuant to any Take-over Bid made by such Person or by any of
      such Person's Affiliates or Associates or any other Person referred to in
      paragraph (iii) of this definition, in either case until such deposited or
      tendered security has been unconditionally accepted for payment or
      exchange or taken up and paid for, whichever shall first occur;

	 	 	 
	 	(v) 	
      because such Person, any of such Person's Affiliates or
      Associates or any other Person referred to in paragraph (iii) of this
      definition holds such security provided that:

	 	(A) 	
      the ordinary business of such Person (the "Investment
      Manager") includes the management of mutual funds or investment funds
      for others (which others, for greater certainty, may include and be
      limited to one or more employee benefit plans or pension plans) and such
      security is held in the ordinary course of such business in the
      performance of the duties of the Investment Manager for the account of any
      other Person (the "Client");

	 	 	 
	 	(B) 	
      such Person (the "Trust Company") is licensed to
      carry on the business of a trust company under applicable law and, as
      such, acts as trustee or administrator or in a similar capacity in
      relation to the estates of deceased or incompetent Persons (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 the estate of any such deceased or incompetent Person or
      for such other accounts;

- 4 - 

	 	(C) 	
      such Person is a Crown agent or agency (in this
      definition, the "Crown Agency");

	 	 	 
	 	(D) 	
      the Person is established by statute for purposes that
      include, and the ordinary business or activity of such Person (in this
      definition, a "Statutory Body") includes, the management of
      investment funds for employee benefit plans, pension plans, insurance
      plans of various public bodies and the Statutory Body holds such security
      for the purposes of its activities as such; or

	 	 	 
	 	(E) 	
      the person (in this definition, an
      "Administrator") is the administrator or trustee of one or more
      pension funds or plans (each, in this definition, a "Plan")
      registered under the laws of Canada or any province thereof or the
      corresponding laws of the jurisdiction by which such Plan is governed or
      is such a Plan and the Administrator or Plan holds such security for the
      purposes of its activities as such;

but only if the Investment Manager,
the Trust Company, the Crown Agency, the Statutory Body, the Administrator of
the Plan, or the Plan, as the case may be, is not then making and has not
announced a current intention to make a Take-over Bid, other than an Offer to
Acquire Common Shares or other securities pursuant to a distribution by the
Company or by means of ordinary market transactions (including prearranged
trades entered into in the ordinary course of business of such Person) executed
through the facilities of a stock exchange or an organized over-the-counter
market, alone or by acting jointly or in concert with any other Person; 

	 	(vi) 	
      because such Person:

	 	 	 	 
	 		(A) 	
      is a Client of the same Investment Manager as another
      Person whose account the Investment Manager holds such security;

	 	 	 	 
	 		(B) 	
      has an Estate Account or an Other Account with the same
      Trust Company as another Person on whose account the Trust Company holds
      such security; or

	 	 	 	 
	 		(C) 	
      is a Plan with the same Administrator as another Plan on
      whose account the Administrator holds such security,

	 	 	 	 
	 	(vii) 	
      because such Person:

	 	 	 	 
	 		(A) 	
      is a Client of an Investment Manager and such security is
      owned at law or in equity by the Investment Manager;

	 	 	 	 
	 		(B) 	
      has an Estate Account or an Other Account with a Trust
      Company and such security is owned at law or in equity by the Trust
      Company; or

	 	 	 	 
	 		(C) 	
      is a Plan and such security is owned at law or in equity
      by the Administrator of the Plan,

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

- 5 - 

	(e) 	
      "Board of Directors" means the board of directors
      of the Company or any duly constituted and empowered committee
    thereof;

	 	 	 
	(f) 	
      "Business Corporations Act" means British
      Columbia Business Corporations Act as amended from time to time,
      and the regulations made thereunder, as in effect on the date of this
      Agreement or as the same may be amended, re-enacted or replaced by any
      comparable or successor laws or regulations thereto;

	 	 	 
	(g) 	
      "Business Day" means any day other than a
      Saturday, Sunday or a day on which banking institutions in Vancouver are
      authorized or obligated by law to close;

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

	 	 	 
	(i) 	
      "close of business" on any given date means the
      time on such date (or, if such date is not a Business Day, the time on the
      next succeeding Business Day) at which the Vancouver office of the
      principal transfer agent for the Common Shares (or, after the Separation
      Time, the Vancouver office of the Rights Agent) is closed to the
      public;

	 	 	 
	(j) 	
      "Common Shares" means the common shares without
      nominal or par value in the capital of the Company and any other shares in
      the capital of the Company into which such shares may be subdivided,
      consolidated, reclassified or changed; provided, however, that "common
      shares", when used with reference to any Person other than the Company,
      shall mean the class or classes of shares (or similar equity interest)
      with the greatest per share voting power entitled to vote generally in the
      election of all directors of such other Person;

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

	 	 	 
		(i) 	
      the Take-over Bid is made after a Permitted Bid has been
      made and prior to the expiry of the Permitted Bid or of any other
      Competing Permitted Bids (in this definition the “Prior
    Bids”);

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

	 	 	 
		(iii) 	
      the Take-over Bid contains, and the take-up and payment
      for Voting Shares tendered or deposited thereunder are subject to,
      irrevocable and unqualified conditions that no Voting Shares will be taken
      up and paid for pursuant to such Take-over Bid (x) prior to the Close of
      Business on a date that is no earlier than the later of (1) the earliest
      date on which Voting Shares may be taken up and paid for under any Prior
      Bids in existence when the Take-over Bid is made and (2) 35 days after the
      date of such Take-over Bid constituting the Competing Permitted Bid, and
      (y) unless, at the time that the Voting Shares are to be taken up, 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;

	 	 	 
	(l) 	
      "controlled": a company is "controlled" by another
      Person if:

- 6 - 

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

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

and "control", "controls" and
"controlling" shall be interpreted accordingly; 

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

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

	 	 	 
	(o) 	
      "Co-Rights Agent" has the meaning ascribed thereto
      in subsection 4.1(a);

	 	 	 
	(p) 	
      "Dividend Reinvestment Acquisition" means an
      acquisition of Voting Shares pursuant to a Dividend Reinvestment
    Plan;

	 	 	 
	(q) 	
      "Dividend Reinvestment Plan" means a regular
      dividend reinvestment or other plan of the Company made available by the
      Company to holders of its securities where such plan permits the holder to
      direct that some or all of:

	 	 	 
		(i) 	
      dividends paid in respect of shares of any class of the
      Company;

	 	 	 
		(ii) 	
      proceeds of redemption of shares of the
Company;

	 	 	 
		(iii) 	
      interest paid on evidences of indebtedness of the
      Company; or

	 	 	 
		(iv) 	
      optional cash payments;

	 	 	 
		
      be applied to the purchase from the Company of Voting
      Shares;

	 	 	 
	(r) 	
      "Election to Exercise" has the meaning ascribed
      thereto in subsection 2.2(d);

	 	 	 
	(s) 	
      “Exchange” means the TSX Venture
  Exchange;

	 	 	 
	(t) 	
      "Exempt Acquisition" means a share acquisition (i)
      in respect of which the Board of Directors has waived the application of
      Section 3.1 pursuant to the provisions of subsection 5.1(d) or 5.1(e),
      (ii) which was made on or prior to the date of this Agreement, or (iii)
      pursuant to an amalgamation, merger, treasury security issuance, plan of
      arrangement or other statutory procedure having similar effect which has
      been approved by the holders of Voting Shares by the requisite majority or
      majorities of the holders of Voting Shares at a meeting of such holders
      duly called and held for such purpose in accordance with the provisions of
      Business Corporations Act, the Articles of the Company and any
      other applicable legal requirements;

- 7 - 

	(u) 	
      "Exercise Price" means the price at which a holder
      may purchase the securities issuable upon exercise of one whole Right and,
      until adjustment thereof in accordance with the terms hereof, the Exercise
      Price shall be equal to fifty ($50.00) dollars;

	 	 	 
	(v) 	
      "Expansion Factor" has the meaning ascribed
      thereto in subsection 2.3(a);

	 	 	 
	(w) 	
      "Expiration Time" means the earlier of:

	 	 	 
		(i) 	
      the Termination Time; or

	 	 	 
		(ii) 	
      the close of business on the first Business Day following
      the annual general meeting of the shareholders of the Company held in
      2014, unless at such meeting shareholders have reconfirmed this Agreement
      for an additional period of time in which case "Expiration Time" shall
      mean the end of such additional period of time, and so on from time to
      time;

	 	 	 
	(x) 	
      "Flip-in Event" means a transaction in or pursuant
      to which any Person becomes an Acquiring Person;

	 	 	 
	(y) 	
      "Grandfathered Person" shall have the meaning
      ascribed thereto in clause 1.1(c)(v);

	 	 	 
	(z) 	
      "holder" has the meaning ascribed thereto in
      Section 2.8;

	 	 	 
	(aa) 	
      "Independent Shareholders" means holders of Voting
      Shares other than:

	 	 	 
		(i) 	
      any Acquiring Person;

	 	 	 
		(ii) 	
      any Offeror;

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

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

	 	 	 
		(v) 	
      any employee benefit plan, deferred profit sharing plan,
      stock participation plan or trust for the benefit of employees of the
      Company or any Subsidiary of the Company but excluding in any event a plan
      or trust in respect of which the employee directs the manner in which the
      Voting Shares are to be voted and directs whether the Voting Shares be
      tendered to a Take-over Bid;

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

- 8 - 

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

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

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

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

provided, however, that if for any
reason none of such prices is available on any such date, the closing price per
share of such securities on such date shall mean the fair value per share of
such securities on such date as determined by a nationally or internationally
recognized Canadian investment dealer or investment banker with respect to the
fair value per share of such securities. The Market Price shall be expressed in
Canadian dollars and, if initially determined in respect of any day forming part
of the 20 consecutive Trading Day period in United States dollars, such amount
shall be translated into Canadian dollars at the Canadian Dollar Equivalent
thereof on the relevant Trading Day; 

	(cc) 	
      "Nominee" has the meaning ascribed thereto in
      subsection 2.2(c);

	 	 	 
	(dd) 	
      "Offer to Acquire" shall include:

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

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

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

	 	 	 
	(ee) 	
      "Offeror" means a Person who has announced an
      intention to make or who has made a Take-over Bid (including a Permitted
      Bid or Competing Permitted Bid, but excluding an Offer to Acquire made by
      a Investment Manager, Trust Company, Crown Agency, Statutory Body,
      Administrator or Plan referred to clause 1.1(d)(v) of the definition of
      Beneficial Owner pursuant to a distribution by the Company or by means of
      ordinary market transactions (including pre-arranged trades entered into
      in the ordinary course of business of such Person) in the circumstances
      contemplated in clause 1.1(d)(v), but only so long as the Take-over Bid so
      announced or made has not been withdrawn or terminated or has not
      expired;

- 9 - 

	(ff) 	
      "Offeror's Securities" means the Voting Shares
      Beneficially Owned by an Offeror on the date of an Offer to
  Acquire;

	 	 	 	 	 
	(gg) 	
      "ordinary course dividends" means cash dividends
      paid in any fiscal year of the Company to the extent that such cash
      dividends, in the aggregate, do not exceed the greatest of:

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

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

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

	 	 	 	 	 
	(hh) 	
      "Permitted Bid" means a Take-over Bid made by an
      Offeror by way of a Take-over bid circular which also complies with the
      following additional provisions:

	 	 	 	 	 
		(i) 	
      the Take-over Bid is made to all holders of record of
      Voting Shares wherever resident as registered on the books of the Company,
      other than the Offeror;

	 	 	 	 	 
		(ii) 	
      the Take-over Bid contains, and the take up and payment
      for securities tendered or deposited thereunder shall be subject to, an
      irrevocable and unqualified provision that:

	 	 	 	 	 
			(A) 	
      no Voting Shares will be taken up or paid for pursuant to
      the Take-over Bid:

	 	 	 	 	 
				(I) 	
      prior to the close of business on the 60th day
      following the date of the Take-over Bid; and

	 	 	 	 	 
				(II) 	
      if less than 50% of the Voting Shares held by Independent
      Shareholders have been deposited pursuant to the Take-over Bid and not
      withdrawn;

	 	 	 	 	 
			(B) 	
      Voting Shares may be deposited pursuant to such Take-over
      Bid at any time during the period described in subparagraph (ii)(A)(I) of
      this definition and that any Voting Shares deposited pursuant to the
      Take-over Bid may be withdrawn until taken up and paid for; and

	 	 	 	 	 
			(C) 	
      if the condition set forth in subparagraph (ii)(A)(II) of
      this definition 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 not less than ten Business Days from the date
      of such public announcement;

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

	 	 	 	 	 
	(ii) 	
      "Permitted Bid Acquisition" means an acquisition
      made pursuant to a Permitted Bid or a Competing Permitted Bid;

	 	 	 	 	 
	(jj) 	
      "Permitted Lock-up Agreement" means an agreement
      between an Offeror and another Person (the "Locked-up Person") whereby the
      Locked-up Person agrees to deposit or tender the
Voting Shares held by the Locked-up Person to
  the Offeror's Take-over Bid that is a Permitted Bid (the "Lock-up Bid") and the
agreement: 

- 10 - 

	 	(i) 	
      permits the Locked-up Person to withdraw the Voting
      Shares from the agreement in order to tender or deposit the Voting Shares
      to another Take-over Bid, or to support another transaction, that provides
      for a consideration for each Voting Share that is higher than the
      consideration contained in or proposed to be contained in the Lock-up Bid;
      or

	 	 	 
	 	(ii) 	
      (A) permits the Locked-up Person to withdraw the Voting
      Shares from the agreement in order to tender or deposit the Voting Shares
      to another Take-over Bid, or to support another transaction, that provides
      for a consideration for each Voting Share that exceeds by as much as or
      more than a specified amount (the "Specified Amount") the consideration
      for each Voting Share contained in or proposed to be contained in the
      Lock-up Bid and (B) does not by its terms provide for a Specified Amount
      that is greater than 7% of the consideration for each Voting Share
      contained in or proposed to be contained in the Lock-up
  Bid;

and, for greater certainty, the Lock-up
Agreement may (1) contain a right of first refusal in favour of the Offeror or
(2) require a period of delay to give the Offeror an opportunity to match or
exceed the consideration offered in another Take-over Bid or transaction or (3)
contain other similar limitations on a Locked-up Person's right to withdraw
Voting Shares from the Lock-up Agreement and not tender such Voting Shares to
the Lock-up Bid, so long as the limitation does not preclude the exercise by the
Locked-up Person of the right to withdraw Voting Shares in sufficient time to
tender to the other Take-over Bid or participate in the other transaction; and

	 	(iii) 	
      does not provide for the payment by the Locked-up Person,
      in the event that the Locked- up Person fails to deposit or tender Voting
      Shares to the Lock-up Bid or withdraws the Voting Shares in order to
      tender to another Take-over Bid or participate in another transaction, of
      any "break-up" fees, "top-up" fees, penalties, expense reimbursement or
      other amounts that exceed in the aggregate the greater of:

	 	 	 	 
	 		(A) 	
      the cash equivalent of 2.5% of the consideration that the
      Locked-up Person would have received under the Lock-up Bid; and

	 	 	 	 
	 		(B) 	
      50% of the amount by which the consideration payable to
      the Locked-up Person under another Take-over Bid or transaction exceeds
      the consideration such Locked-up Person would have received under the
      Lock-up Bid; and

	 	 	 	 
	 	(iv) 	
      is disclosed to the public, including the Company, by
      making copies thereof available not later than the date on which the
      Lock-up Bid has been publicly announced (or, if the Lock-up Bid has been
      publicly announced prior to the date on which the Lock-up Agreement is
      entered into, not later than such date);

	(kk) 	
      "Person" shall include any individual, firm,
      partnership, association, trust, trustee, executor, administrator, legal
      personal representative, body corporate, company, unincorporated
      organization, syndicate or other entity;

	 	 
	(ll) 	
      "Pro Rata Acquisition" means an acquisition by a
      Person of Beneficial Ownership of Voting Shares as a result of: a Dividend
      Reinvestment Acquisition; a stock dividend, a stock split or other event
      pursuant to which a Person becomes Beneficial Owner of Voting Shares on
      the same pro rata basis as all other holders of Voting Shares; the
      acquisition or exercise by such Person of rights to purchase Voting Shares distributed to such
      Person in the course of a distribution to all holders of Voting Shares
      pursuant to a rights offering or pursuant to a prospectus; or a
      distribution of Voting Shares or Convertible Securities or securities
      convertible into or exchangeable into Voting Shares or Convertible
      Securities, made pursuant to a prospectus or a distribution by way of a
      private placement; provided that the Person does not thereby acquire a
      greater percentage of such Voting Shares, or Convertible Securities or
      securities convertible into or exchangeable into Voting Shares or
      Convertible Securities, so offered than the Person's percentage of Voting
  Shares Beneficially Owned immediately prior to such acquisition;

- 11 - 

	(mm) 	
      "Record Time" means 5:00 p.m. (Vancouver time) on
      August 25, 2011;

	 	 
	(nn) 	
      "Redemption Price" has the meaning ascribed
      thereto in subsection 5.1(a);

	 	 
	(oo) 	
      "Right" means a right to purchase a Common Share,
      upon the terms and subject to the conditions set forth in this
      Agreement;

	 	 
	(pp) 	
      "Rights Certificate" has the meaning ascribed
      thereto in subsection 2.2(c) and shall be in substantially the form of
      Exhibit A to this Agreement;

	 	 
	(qq) 	
      "Rights Register" has the meaning ascribed thereto
      in subsection 2.6(a);

	 	 
	(rr) 	
      "Securities Act” shall mean the
      Securities Act, R.S.B.C. 1996, Chapter 418, as amended, and the
      regulations and rules thereunder, unless otherwise specified, as in effect
      on the date of this Agreement or as the same may be amended, re-enacted or
      replaced by any comparable or successor laws or regulations
  thereto;

	 	 
	(ss) 	
      "Separation Time" means the close of business on
      the tenth Trading Day after the earlier of:

	 	(i) 	
      the Stock Acquisition Date; and

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

or such later time as may be determined
by the Board of Directors, provided that: 

	 	(A) 	
      if any Take-over Bid referred to in paragraph (ii) of
      this definition expires, or is cancelled, terminated or otherwise
      withdrawn prior to the Separation Time, such Take-over Bid shall be
      deemed, for the purposes of this definition, never to have been made;
      and

	 	 	 
	 	(B) 	
      if the Board of Directors determines pursuant to
      subsection 5.1(d) or 5.1(e) to waive the application of Section 3.1 to a
      Flip-in Event, the Separation Time in respect of such Flip-in Event shall
      be deemed never to have occurred;

	(tt) 	
      "Stock Acquisition Date" means the first date of
      public announcement that a Person has become an Acquiring Person (which,
      for purposes of this definition, shall include, without limitation, a
      report filed pursuant to the provisions of the Securities
    Act);

	 	 
	(uu) 	
      "Subsidiary": a company shall be deemed to be a
      Subsidiary of another company if:

- 12 - 

	 	(i) 	
      it is controlled by:

	 	 	 	 
	 		(A) 	
      that other; or

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

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

	 	 	 	 
	 	(ii) 	
      it is a Subsidiary of a company that is that other's
      Subsidiary;

	(vv) 	
      "Take-over Bid" means an Offer to Acquire Voting
      Shares or other securities if, assuming the Voting Shares or other
      securities subject to the Offer to Acquire are acquired at the date of the
      Offer to Acquire by the Person making the Offer to Acquire, such Voting
      Shares (including all Voting Shares that may be acquired upon exercise of
      all rights of conversion, exchange or purchase attaching to the other
      securities) together with the Offeror's Securities would constitute in the
      aggregate 20% or more of the outstanding Voting Shares at the date of the
      Offer to Acquire;

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

	 	 	 
	(xx) 	
      "Trading Day", when used with respect to any
      securities, means a day on which the principal Canadian stock exchange or
      U.S. 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 stock exchange or
      U.S. securities exchange, a Business Day;

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

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

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

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

	 	 	 
	(aaa) 	
      "Voting Shares" means the Common Shares and any
      other shares of capital stock or voting interests of the Company entitled
      to vote generally in the election of all directors; and

	 	 	 
	(bbb) 	
      "Voting Share Reduction" means an acquisition or
      redemption by the Company or a Subsidiary of the Company of Voting Shares
      which, by reducing the number of Voting Shares outstanding or which may be
      voted, increases the proportionate number of Voting Shares Beneficially
      Owned by any Person to 20% or more of the Voting Shares
  outstanding.

- 13 - 

	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 	
      Headings

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

	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, paragraph, subparagraph or other provision hereof and
include any and every instrument supplemental or ancillary hereto. Unless the
context otherwise requires, references in this Agreement to an Article, Section,
subsection, paragraph, subparagraph or Exhibit by number, letter or otherwise
refer to the Article, Section, subsection, paragraph, subparagraph or Exhibit,
respectively, bearing that designation in this Agreement. 

	1.5 	
      Calculation of Number and Percentage of Beneficial
      Ownership of Outstanding Voting Shares

For purposes of this Agreement: 

	(a) 	
      in determining the percentage of outstanding Voting
      Shares Beneficially Owned by any Person, all unissued Voting Shares as to
      which such Person is deemed the Beneficial Owner shall be deemed to be
      outstanding; and

	 	 
	(b) 	
      the percentage of outstanding Voting Shares Beneficially
      Owned by any Person shall be and be deemed to be the product determined by
      the formula:

	 	100 x A 	 
	 	          B 	 
	 	  	 
	 	where: 	 

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

	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 is a party to any agreement, commitment
or understanding, whether formal or informal and whether or not in writing, with
the first mentioned Person to acquire or offer to acquire Voting Shares (other
than pursuant to customary agreements with and between underwriters and/or
banking group and/or selling group members with respect to a distribution of securities pursuant
to a prospectus or by way of private placement and other than pursuant to
pledges of securities in the ordinary course of business). 

- 14 - 

	1.7 	
      Generally Accepted Accounting
  Principles

Wherever in this Agreement reference is made to generally
accepted accounting principles, such reference shall be deemed to be the
recommendations at the relevant time of the Canadian Institute of Chartered
Accountants, or any successor institute, applicable on a consolidated basis
(unless otherwise specifically provided herein to be applicable on an
unconsolidated basis) as at the date on which a calculation is made or required
to be made in accordance with generally accepted accounting principles. Where
the character or amount of any asset or liability or item of revenue or expense
is required to be determined, or any consolidation or other accounting
computation is required to be made for the purpose of this Agreement or any
document, such determination or calculation shall, to the extent applicable and
except as otherwise specified herein or as otherwise agreed in writing by the
parties, be made in accordance with generally accepted accounting principles
applied on a consistent basis. 

ARTICLE 2 
THE RIGHTS 

	2.1 	
      Legend on Common Share
  Certificates

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

	
      Until the Separation Time (as defined in the Rights
      Agreement referred to below), this certificate also evidences and entitles
      the holder hereof to certain Rights as set forth in a Shareholder Rights
      Agreement made as of August 25, 2011 (the "Rights Agreement"),
      between Passport Potash Inc. (the "Company") and Computershare
      Trust Company of Canada, as rights agent, as amended from time to time,
      the terms of which are hereby incorporated herein by reference and a copy
      of which may be inspected during normal business hours at the principal
      office of the Company. Under certain circumstances, as set out in the
      Rights Agreement, the Rights may be amended, redeemed, may expire, may
      become null and void or may be evidenced by separate certificates and no
      longer evidenced by this certificate. The Company will mail or arrange for
      the mailing of a copy of the Rights Agreement to the holder of this
      certificate without charge as soon as practicable after the receipt of a
      written request therefor. 

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

	2.2 	
      Initial Exercise Price; Exercise of Rights; Detachment
      of Rights

	(a) 	
      Subject to adjustment as herein set forth, each Right
      will entitle the holder thereof, from and after the Separation Time and
      prior to the Expiration Time, to purchase, for the Exercise Price, one
      Common Share. Notwithstanding any other provision of this Agreement, any
      Rights held by the Company or any of its Subsidiaries shall be
  void.

	 	 
	(b) 	
      Until the Separation Time:

- 15 - 

		(i) 	
      the Rights shall not be exercisable and no Right may be
      exercised; and

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

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

	 	 	 
		(i) 	
      the Rights shall be exercisable; and

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

	 	 	 
		
      Promptly following the Separation Time, the Company will
      prepare and the Rights Agent will mail or arrange to be mailed to each
      holder of record of Rights as of the Separation Time (other than an
      Acquiring Person and, in respect of any Rights Beneficially Owned by such
      Acquiring Person which are not held of record by such Acquiring Person,
      the holder of record of such Rights (a "Nominee")), at such
      holder's address as shown by the records of the Company (the Company
      hereby agreeing to furnish copies of such records to the Rights Agent for
      this purpose):

	 	(A) 	
      a rights certificate ("Rights Certificate")
      representing the number of Rights held by such holder at the Separation
      Time and having such markers of identification or designation and such
      legends, summaries or endorsements printed thereon as the Company 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 of any
      self-regulatory organization, stock exchange or quotation system on which
      the Rights may from time to time be listed or traded, or to conform to
      usage; and

	 	 	 
	 	(B) 	
      a disclosure statement describing the
  Rights;

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

	 	 	 
	(d) 	
      Rights may be exercised in whole or in part on any
      Business Day after the Separation Time and prior to the Expiration Time by
      submitting to the Rights Agent at its principal office in the city of
      Vancouver the Rights Certificate evidencing such Rights together
    with:

	 	 	 
		(i) 	
      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 executors or
      administrators or other personal representatives or his or their legal
      attorney duly appointed by an instrument in writing in form and executed
      in a manner satisfactory to the Rights Agent; and

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

- 16 - 

	(e) 	
      Upon receipt of a 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 3.1(b) and
      payment as set forth in subsection 2.2(d), the Rights Agent (unless
      otherwise instructed by the Company if the Company is of the opinion that
      the Rights cannot be exercised in accordance with this Agreement) will
      thereupon promptly:

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

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

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

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

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

	 	 	 
	(f) 	
      If the holder of any Rights shall exercise less than all
      the Rights evidenced by such holder's Rights Certificate, a new Rights
      Certificate evidencing the Rights remaining unexercised (subject to
      Section 5.5) will be issued by the Rights Agent to such holder or to such
      holder's duly authorized assigns.

	 	 	 
	(g) 	
      The Company covenants and agrees that it will:

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

	 	 	 
		(ii) 	
      take all such action as may be necessary and within its
      power to comply with any applicable requirements of Business
      Corporations Act, the Securities Act and any other applicable
      laws in connection with the issuance and delivery of the Rights, the
      Rights Certificates and the issuance of any securities upon exercise of
      Rights;

	 	 	 
		(iii) 	
      use reasonable efforts to cause all securities issued
      upon exercise of Rights to be listed on the stock exchanges on which the
      Common Shares were traded immediately prior to the Stock Acquisition
      Date;

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

- 17 - 

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

	 	 	 
	 	(vi) 	
      after the Separation Time not take (or permit any
      Subsidiary to take) any action if at the time such action is taken it is
      reasonably foreseeable that such action will diminish substantially or
      otherwise eliminate the benefits intended to be afforded by the
    Rights.

	2.3 	
      Adjustments to Exercise Price; Number of
    Rights

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

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

	 	 	 
		(i) 	
      declare or pay a dividend on its 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
      optional stock dividend program;

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

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

	 	 	 
		(iv) 	
      issue any new 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;

except as otherwise provided in this
Section 2.3, the Exercise Price and the number of Rights outstanding, or, if the
payment or effective date therefor shall occur after the Separation Time, the
securities purchasable upon exercise of Rights shall be adjusted as of the
payment or effective date such that: 

	 	(A) 	
      if the Exercise Price and number of Rights outstanding
      are to be adjusted;

	 	 	 	 
	 		(I) 	
      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 capital stock)
      (the "Expansion Factor") that a holder of one Common Share
      immediately prior to such dividend, subdivision, change, combination or
      issuance would hold thereafter as a result thereof;
and

- 18 - 

	 	(II) 	
      each Right held prior to such adjustment will become that
      number of Rights equal to the Expansion
Factor;

	 		
      and the adjusted number of Rights will be deemed to be
      distributed among the Common Shares with respect to which the original
      Rights were associated (if they remain outstanding) and the shares issued
      in respect of such dividend, subdivision, change, combination or issuance,
      so that each such Common Share (or other capital stock) will have exactly
      one Right associated with it; and

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

		
      If after the Record Time and prior to the Expiration Time
      the Company shall issue any securities other than Common Shares in a
      transaction of a type described in paragraphs 2.3(a)(i) or (iv), such
      securities shall be treated herein as nearly equivalent to Common Shares
      as may be practicable and appropriate under the circumstances and the
      Company and the Rights Agent agree to amend this Agreement in order to
      effect such treatment.

	 	 	 
	(b) 	
      If the Company shall at any time after the Record Time
      and prior to the Separation Time fix a record date for the issuance of
      rights, options or warrants to all holders of Common Shares entitling them
      (for a period expiring within 45 calendar days after such record date) to
      subscribe for or purchase Common Shares (or securities convertible into or
      exchangeable for or carrying a right to purchase Common Shares) at a price
      per Common Share (or, if a security convertible into or exchangeable for
      or carrying a right to purchase or subscribe for Common Shares having a
      conversion, exchange or exercise price, including the price required to be
      paid to purchase such convertible or exchangeable security or right per
      share) less than the Market Price per Common Share on such record date,
      the Exercise Price to be in effect after such record date shall be
      adjusted to that price determined by multiplying the Exercise Price in
      effect immediately prior to such record date by a fraction:

	 	 	 
		(i) 	
      the numerator of which shall be the number of Common
      Shares outstanding on such record date, plus the number of Common Shares
      that the aggregate offering price of the total number of Common Shares 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 shall be the number of Common
      Shares outstanding on such record date, plus the number of additional
      Common Shares to be offered for subscription or purchase (or into which
      the convertible or exchangeable securities or rights so to be offered are
      initially convertible, exchangeable or exercisable).

	 	 	 
		
      If such subscription price may be paid by delivery of
      consideration, part or all of which may be in a form other than cash, the
      value of such consideration shall be as determined in good faith by the
      Board of Directors, whose determination shall be described in a statement
      filed with the Rights Agent and shall be binding on the Rights Agent and
      the holders of the Rights. Such adjustment shall be made successively
      whenever such a record date is fixed, and in the event that such
    rights or warrants are not so issued, the Exercise Price shall
      be adjusted to be the Exercise Price which would then be in effect if such
  record date had not been fixed.

- 19 - 

		
      For purposes of this Agreement, the granting of the right
      to purchase Common Shares (whether from treasury shares or otherwise)
      pursuant to any dividend or interest reinvestment plan and/or any Common
      Share purchase plan providing for the reinvestment of dividends or
      interest payable on securities of the Company and/or the investment of
      periodic optional payments and/or employee benefit, stock option or
      similar plans (so long as such right to purchase is in no case evidenced
      by the delivery of rights or warrants) shall not be deemed to constitute
      an issue of rights or warrants by the Company; provided, however, that, in
      the case of any Dividend Reinvestment Plan, the right to purchase Common
      Shares is at a price per share of not less than 90 percent of the Market
      Price of the Common Shares.

	 	 	 
	(c) 	
      If the Company shall at any time after the Record Time
      and prior to the Separation Time fix a record date for a distribution to
      all holders of Common Shares (including any such distribution made in
      connection with a merger or amalgamation in which the Company is the
      continuing corporation) of evidences of indebtedness, cash (other than an
      ordinary course dividend or a dividend referred to in paragraph
      2.3(a)(i)), assets or rights or warrants (excluding those referred to in
      subsection 2.3(b)), the Exercise Price to be in effect after such record
      date shall be determined by multiplying the Exercise Price in effect
      immediately prior to such record date by a fraction:

	 	 	 
		(i) 	
      the numerator of which shall be the Market Price per
      Common Share on such record date, less the fair market value (as
      determined in good faith by the Board of Directors, whose determination
      shall be described in a statement filed with the Rights Agent and shall be
      binding on the Rights Agent and the holders of Rights), on a per share
      basis, of the portion of the cash, assets, evidences of indebtedness,
      rights, options or warrants so to be distributed; and

	 	 	 
		(ii) 	
      the denominator of which shall be such Market Price per
      Common Share.

	 	 	 
		
      Such adjustments shall be made successively whenever such
      a record date is fixed, and in the event that such a distribution is not
      so made, the Exercise Price shall be adjusted to be the Exercise Price
      which would have been in effect if such record date had not been
    fixed.

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

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

	 	 	 
		(ii) 	
      the record date for the applicable distribution, in the
      case of an adjustment made pursuant to subsection (b) or (c) above,
      subject to readjustment to reverse the same if such distribution shall not
      be made.

	 	 	 
	(e) 	
      Notwithstanding anything herein to the contrary, no
      adjustment in the Exercise Price shall be required unless such adjustment
      would require an increase or decrease of at least one percent in the
      Exercise Price; provided, however, that any adjustments which by reason of
      this subsection 2.3(e) are not required to be made shall be carried
      forward and taken into account in any subsequent adjustment. All
      calculations under this Section 2.3 shall be made to the nearest cent or
      to the nearest hundredth of a share. Notwithstanding the first sentence of
      this subsection 2.3(e), any adjustment required by this
  Section 2.3 shall be made no later than the earlier of (i) three years from the
  date of the transaction which mandates such adjustment and (ii) the Termination
  Date. Whenever an adjustment to the Exercise Price is made pursuant to this
  Section 2.3, the Company shall: 

- 20 - 

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

	 	 	 
	 	(ii) 	
      promptly file with the Rights Agent and with each
      transfer agent for the Common Shares a copy of such certificate, mail a
      brief summary thereof to each holder of Rights, and issue a press release
      advising of the relevant adjustment.

	(f) 	
      If the Company shall at any time after the Record Time
      and prior to the Separation Time issue any shares of capital stock (other
      than Common Shares), or rights or warrants to subscribe for or purchase
      any such capital stock, or securities convertible into or exchangeable for
      any such capital stock, in a transaction referred to in paragraph (a)(i)
      or (a)(iv) above, if the Board of Directors acting in good faith
      determines that the adjustments contemplated by subsections (a), (b) and
      (c) above in connection with such transaction will not appropriately
      protect the interests of the holders of Rights, the Board of Directors may
      determine what other adjustments to the Exercise Price, number of Rights
      and/or securities purchasable upon exercise of Rights would be appropriate
      and, notwithstanding subsections (a), (b) and (c) above, but subject to
      the prior consent of the holders of Common Shares or Rights obtained in
      accordance with section 5.4, such adjustments, rather than the adjustments
      contemplated by subsections (a), (b) and (c) above, shall be made. The
      Company and the Rights Agent shall amend this Agreement as appropriate to
      provide for such adjustments.

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

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

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

	 	 
	(j) 	
      Notwithstanding anything in this Section 2.3 to the
      contrary, the Company shall be entitled to make such reductions in the
      Exercise Price, in addition to those adjustments expressly required by
      this Section 2.3, as and to the extent that the Board of Directors shall
      in good faith determine to be advisable in order that any (i)
      consolidation or subdivision of the Common Shares, (ii) issuance wholly or
      in part for cash or Common Shares 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 2.3, hereafter made by the Company to holders of its
  Common Shares shall not be taxable to such shareholders.

- 21 - 

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

	 	 
	(l) 	
      If an event occurs which would require an adjustment
      under both this Section 2.3 and Section 3.1, the adjustment provided for
      in this Section 2.3 shall be in addition to and shall be made prior to,
      any adjustment required pursuant to Section 3.1.

	 	 
	(m) 	
      If the Company shall at any time after the Record Time
      and prior to the earlier of the Separation Time and the Expiration Time
      issue any Common Shares otherwise than in a transaction referred to in
      subsection 2.3(a) each such Common Share so issued shall automatically
      have one new Right associated with it, which Right shall be evidenced by
      the certificate representing such share.

	2.4 	
      Date on Which Exercise is
  Effective

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

	2.5 	
      Execution, Authentication, Delivery and Dating of
      Rights Certificates

	(a) 	
      The Rights Certificates shall be executed on behalf of
      the Company by any two of its Chairman, President, Chief Executive
      Officer, Chief Financial Officer or Secretary. The signature of any of
      these officers on the Rights Certificates may be manual or facsimile.
      Rights Certificates bearing the manual or facsimile signatures of
      individuals who were at any time the proper officers of the Company shall
      bind the Company notwithstanding that such individuals or any of them have
      ceased to hold such offices prior to the countersignature and delivery of
      such Rights Certificates.

	 	 
	(b) 	
      Promptly after the Company learns of the Separation Time,
      the Company will notify the Rights Agent in writing of such Separation
      Time and will deliver Rights Certificates executed by the Company to the
      Rights Agent for countersignature, and disclosure statements describing
      the Rights, and the Rights Agent shall countersign (manually or by
      facsimile signature in a manner satisfactory to the Company) and send such
      Rights Certificates to the holders of the Rights pursuant to subsection
      2.2(c). No Rights Certificate shall be valid for any purpose until
      countersigned by the Rights Agent as aforesaid.

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

- 22 - 

	2.6 	
      Registration, Registration of Transfer and
      Exchange

	(a) 	
      After the Separation Time, the Company will cause to be
      kept a register (the "Rights Register") in which, subject to such
      reasonable regulations as it may prescribe, the Company will provide for
      the registration and transfer of Rights. The Rights Agent is hereby
      appointed registrar for the Rights (the "Rights Registrar") for the
      purpose of maintaining the Rights Register for the Company and registering
      Rights and transfers of Rights as herein provided and the Rights Agent
      hereby accepts such appointment. If the Rights Agent shall cease to be the
      Rights Registrar, the Rights Agent will have the right to examine the
      Rights Register at all reasonable times.

	 	 
	(b) 	
      After the Separation Time and prior to the Expiration
      Time, upon surrender for registration of transfer or exchange of any
      Rights Certificate, and subject to the provisions of subsections 2.6(d)
      and 3.1(b), the Company will execute, and the Rights Agent will
      countersign and deliver, in the name of the holder or the designated
      transferee or transferees, as required pursuant to the holder's
      instructions, one or more new Rights Certificates evidencing the same
      aggregate number of Rights as did the Rights Certificates so
      surrendered.

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

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

	 	 
	(e) 	
      The Company shall not be required to register the
      transfer of Rights after the Rights have been terminated pursuant to the
      provisions of this Agreement.

	2.7 	
      Mutilated, Destroyed, Lost and Stolen Rights
      Certificates

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

	 	 	 
	(b) 	
      If there shall be delivered to the Company and the Rights
      Agent prior to the Expiration Time:

	 	 	 
		(i) 	
      evidence to their reasonable satisfaction of the
      destruction, loss or theft of any Rights Certificate; and

	 	 	 
		(ii) 	
      such security or indemnity as may be reasonably required
      by each of them in their sole discretion to save each of them and any of
      their agents harmless,

	 	 	 
		
      then, in the absence of notice to the Company or the
      Rights Agent that such Rights Certificate has been acquired by a bona
      fide purchaser, the Company shall execute and upon the Company's
      request the Rights Agent shall countersign and deliver, in lieu of any
      such destroyed, lost or stolen Rights Certificate, a new Rights Certificate
      evidencing the same number of Rights as did the Rights Certificate so
  destroyed, lost or stolen.

- 23 - 

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

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

	2.8 	
      Persons Deemed Owners

The Company, the Rights Agent and any agent of the Company 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 the Rights
evidenced thereby for all purposes whatsoever and the Company and the Rights
Agent shall not be affected by any notice or knowledge to the contrary except as
required by statute or by order of a court of competent jurisdiction. As used in
this Agreement, unless the context otherwise requires, the term "holder" of any
Rights shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated Common Shares). 

	2.9 	
      Delivery and Cancellation of
  Certificates

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

	2.10 	
      Agreement of Rights
Holders

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

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

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

	 	 
	(c) 	
      that after the Separation Time, the Rights Certificate
      will be transferable only upon registration of the transfer on the Rights
      Register as provided herein;

- 24 - 

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

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

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

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

	2.11 	
      Rights Certificate Holder not Deemed a
      Shareholder

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

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

	3.1 	
      Flip-in Event

	(a) 	
      Subject to subsections 3.1(b), and 5.1(d) and 5.1(e), if
      prior to the Expiration Time a Flip-in Event occurs, each Right shall
      constitute, effective at the close of business on the tenth Trading Day
      after the Stock Acquisition Date, the right to purchase from the Company,
      upon payment of the Exercise Price and otherwise exercising such Right in
      accordance with the terms hereof, that number of Common Shares having an
      aggregate Market Price on the date of consummation
or occurrence of such Flip-in Event equal to twice the
      Exercise Price for an amount in cash equal to the Exercise Price (such
      Right to be appropriately adjusted in a manner analogous to the applicable
      adjustment provided for in Section 2.3 in event that after the Stock
      Acquisition Date an event of a type analogous to any of the events
  described in Section 2.3 has occurred).

- 25 - 

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

	 	 	 
		(i) 	
      an Acquiring Person (or any Affiliate or Associate of an
      Acquiring Person or any Person acting jointly or in concert with an
      Acquiring Person or any Associate or Affiliate of an Acquiring Person);
      or

	 	 	 
		(ii) 	
      a transferee of Rights, direct or indirect, of an
      Acquiring Person (or of any Affiliate or Associate of an Acquiring Person
      or of any Person acting jointly or in concert with an Acquiring Person or
      any Associate or Affiliate of an Acquiring Person) who becomes a
      transferee 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 Associate or Affiliate of an
      Acquiring Person), that has the purpose or effect of avoiding paragraph
      3.1(b)(i);

	 	 	 
		
      shall become null and void without any further action,
      and any holder of such Rights (including any transferee of, or other
      successor to, such Rights, whether directly or indirectly) shall not have
      any right whatsoever to exercise such Rights under any provision of this
      Agreement and shall not have thereafter any right whatsoever with respect
      to such Rights, whether under any provision of this Agreement or
      otherwise. The holder of any Rights represented by a Rights Certificate
      which is submitted to the Rights Agent upon exercise or for registration
      of transfer or exchange which does not contain the necessary
      certifications set forth in the Rights Certificate establishing that such
      Rights are not void under this subsection 3.1(b) shall be deemed to be an
      Acquiring Person for the purposes of this subsection 3.1(b) and such
      Rights shall become null and void.

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

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

provided that the Rights Agent shall
not be under any responsibility to ascertain the existence of facts that would
require the imposition of such legend but shall be required to impose such
legend only if instructed to do so in writing by the Company or if a holder
fails to certify upon transfer or exchange in the space provided on the Rights
Certificate that such holder is not a Person described in either paragraph
3.1(b)(i) or (b)(ii). 

- 26 - 

	(d) 	
      From and after the Separation Time, the Company shall do
      all such acts and things as shall be necessary and within its power to
      ensure compliance with the provisions of this Section 3.1, including
      without limitation, all such acts and things as may be required to satisfy
      the requirements of the Business Corporations Act and the
      Securities Act and any other applicable laws in respect of the
      issue of Common Shares upon the exercise of Rights in accordance with this
      Agreement.

	3.2 	
      Fiduciary Duties of the Board of Directors of the
      Company

For clarification it is understood that nothing contained in
this Article 3 shall be considered to affect the obligations of the Board of
Directors to exercise its fiduciary duties. Without limiting the generality of
the foregoing, nothing contained herein shall be construed to suggest or imply
that the Board of Directors shall not be entitled to recommend that holders of
the Voting Shares reject or accept any Take-over Bid or take any other action
(including, without limitation, the commencement, prosecution, defence or
settlement of any litigation and the submission of additional or alternative
Take-over Bids or other proposals to the shareholders of the Company 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). 

ARTICLE 4 
THE RIGHTS AGENT 

	4.1 	
      General

	(a) 	
      The Company hereby appoints the Rights Agent to act as
      agent for the Company in accordance with the terms and conditions hereof,
      and the Rights Agent hereby accepts such appointment. The Company may from
      time to time appoint such co-Rights Agents ("Co-Rights Agents") as
      it may deem necessary or desirable, subject to the approval of the Rights
      Agent. In the event the Company appoints one or more Co-Rights Agents, the
      respective duties of the Rights Agents and the Co-Rights Agents shall be
      as the Company may determine with the approval of the Rights Agent and the
      Co-Rights Agent. The Company 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 reasonable fees and disbursements of any expert
      retained by the Rights Agent. The Company also agrees to indemnify the
      Rights Agent, its officers, directors, employees and agents for, and to
      hold them harmless against, any loss, liability, costs, claims, actions,
      damages or expenses, incurred without gross negligence, bad faith or
      wilful default on the part of the Rights Agent, for anything done or
      suffered or omitted by the Rights Agent in connection with the acceptance,
      execution and administration of this Agreement and the performance of its
      duties hereunder, including the costs and expenses of defending against
      any claim of liability, which right to indemnification will survive the
      termination of this Agreement or the resignation or removal of the Rights
      Agent. In no event will the Rights Agent be liable for special, indirect,
      consequential or punitive loss or damages of any kind whatsoever
      (including but not limited to lost profits), even if the Rights Agent has
      been advised of the possibility of such damages. Any liability of the
      Rights Agent will be limited in the aggregate to an amount equal to the
      annual fee paid by the Company pursuant to this Agreement.

	 	 
	(b) 	
      The Rights Agent shall be protected and shall incur no
      liability for or in respect of any action taken, suffered or omitted by it
      in connection with its acceptance, execution and administration of this
      Agreement in reliance upon any certificate for Voting Shares or Common
      Shares, or any Rights Certificate or certificate for other securities of
      the Company, 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.

- 27 - 

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

	4.2 	
      Merger or Amalgamation or Change of Name of Rights
      Agent

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

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

	4.3 	
      Duties of Rights Agent

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

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

- 28 - 

	(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 Company prior to taking or
      suffering any action hereunder, such fact or matter (unless other evidence
      in respect thereof be herein specifically prescribed) may be deemed to be
      conclusively proved and established by a certificate signed by a Person
      believed by the Rights Agent to be the Chairman of the Board, the
      President or any Vice President, the Secretary or Assistant Secretary of
      the Company 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 gross negligence, bad faith or wilful default;

	 	 
	(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 Voting Shares or 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 Company only;

	 	 
	(e) 	
      the Rights Agent will not be under any responsibility in
      respect of the validity of this Agreement or the authorization, 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 Company of any covenant or condition contained in this Agreement or in
      any Rights Certificate; nor will it be responsible for any change in the
      exercisability of the Rights (including the Rights becoming void pursuant
      to subsection 3.1(b)) or any adjustment required under the provisions of
      Section 2.3 or be responsible for the manner, method or amount of any such
      adjustment or the ascertaining of the existence of facts that would
      require any such adjustment (except with respect to the exercise of Rights
      after receipt of the certificate contemplated by Section 2.3 describing
      any such adjustment); nor will it by any act hereunder be deemed to make
      any representation or warranty as to the authorization of any Common
      Shares to be issued pursuant to this Agreement or any Rights or as to
      whether any Common Shares will, when issued, be duly and validly
      authorized, executed, issued and delivered and fully paid and
      non-assessable;

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

	 	 
	(g) 	
      the Rights Agent is hereby authorized and directed to
      accept written instructions with respect to the performance of its duties
      hereunder from any person believed by the Rights Agent to be the Chairman
      of the Board, President, a Vice President, the Secretary or the Assistant
      Secretary or any Assistant Secretary of the Company, and to apply to such
      individual for advice or instructions in connection with its duties, and
      it shall not be liable for any action taken or suffered by it in good
      faith in reliance upon instructions of any such individual;

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

- 29 - 

	 	(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 Company
      resulting from any such act, default, neglect or misconduct, provided
      reasonable care was exercised in the selection and continued employment
      thereof.

	4.4 	
      Change of Rights Agent

The Rights Agent may resign and be discharged from its duties
under this Agreement upon 60 days' notice (or such lesser notice as is
acceptable to the Company) in writing delivered or mailed to the Company and to
each transfer agent of Common Shares by registered or certified mail and to the
holders of the Rights in accordance with Section 5.9 at the expense of the
Company. The Company 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 5.9. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, the Company will appoint a successor to
the Right Agent. If the Company fails to make such appointment within a period
of 30 days after such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent then
the resigning Rights Agent (at the Company'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 Company
or by such a court, shall be a corporation or a company incorporated under the
laws of Canada or a province thereof. After appointment, the successor Rights
Agent will be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed;
but upon payment of its outstanding fees and expenses the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company will file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
and give notice thereof to the holders of the Rights in accordance with Section
5.9. Failure to give any notice provided for in this Section 4.4, however, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be. 

	4.5 	
      Compliance with Money Laundering
  Legislation

The Rights Agent shall retain the right not to act and shall
not be liable for refusing to act if, due to a lack of information or for any
other reason whatsoever, the Rights Agent reasonably determines that such an act
might cause it to be in non-compliance with any applicable anti-money laundering
or anti-terrorist legislation, regulation or guideline. Further, should the
Rights Agent reasonably determine at any time that its acting under this
Agreement has resulted in it being in non-compliance with any applicable
anti-money laundering or anti-terrorist legislation, regulation or guideline,
then it shall have the right to resign on 10 days' written notice to the
Company, provided: (i) that the Rights Agent's written notice shall describe the
circumstances of such non-compliance; and (ii) that if such circumstances are
rectified to the Rights Agent's satisfaction within such 10-day period, then
such resignation shall not be effective. 

- 30 - 

	4.6 	
      Privacy Provision

The parties acknowledge that federal and/or provincial
legislation that addresses the protection of individual's personal information
(collectively, "Privacy Laws") applies to obligations and activities
under this Agreement. Despite any other provision of this Agreement, neither
party will take or direct any action that would contravene, or cause the other
to contravene, applicable Privacy Laws. The Company will, prior to transferring
or causing to be transferred personal information to the Rights Agent, obtain
and retain required consents of the relevant individuals to the collection, use
and disclosure of their personal information, or will have determined that such
consents either have previously been given upon which the parties can rely or
are not required under the Privacy Laws. The Rights Agent will use commercially
reasonable efforts to ensure that its services hereunder comply with Privacy
Laws. 

ARTICLE 5
 MISCELLANEOUS 

	5.1 	
      Redemption and Waiver

	(a) 	
      Subject to the prior consent of the holders of Voting
      Shares or Rights obtained in accordance with subsection 5.4(b) or 5.4(c),
      as applicable, and prior to the occurrence of a Flip-in Event as to which
      the application of section 3.1 has not been waived pursuant to this
      section 5.1, the Board of Directors may, acting in good faith, elect to
      redeem all but not less than all of the then outstanding Rights at a
      redemption price of $0.0001 per Right appropriately adjusted in a manner
      analogous to the applicable adjustment provided for in Section 2.3 if an
      event of the type analogous to any of the events described in Section 2.3
      shall have occurred (such redemption price being herein referred to as the
      "Redemption Price").

	 	 
	(b) 	
      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 shall be to receive the
      Redemption Price.

	 	 
	(c) 	
      Within 10 days after the Board of Directors electing or
      having been deemed to have elected to redeem the Rights, the Company shall
      give notice of redemption to the holders of the Rights in accordance with
      Section 5.9. Each such notice of redemption will state the method by which
      the payment of the Redemption Price will be made. The Company may not
      redeem, acquire or purchase for value any Rights at any time in any manner
      other than that specifically set forth in this Section 5.1 or other than
      in connection with the purchase of Common Shares prior to the Separation
      Time.

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

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

- 31 - 

	(f) 	
      If a Person makes a Permitted Bid or a Competing
      Permitted Bid pursuant to which any of the then outstanding Voting Shares
      (other than those Voting Shares Beneficially Owned by the Persons making
      the Permitted Bid or the Competing Permitted Bid, at the date of the
      Permitted Bid or the Competing Permitted Bid) are taken up and paid for by
      such Person, then the Board of Directors shall, immediately upon the
      consummation of such acquisition, without further formality, be deemed to
      have elected to redeem the Rights at the Redemption Price on the expiry
      date of the Permitted Bid or Competing Permitted Bid, as the case may
      be.

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

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

	5.2 	
      Expiration

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

	5.3 	
      Issuance of New Rights
  Certificates

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

	5.4 	
      Supplements and
Amendments

	(a) 	
      Without the approval of any holders of Voting Shares or
      Rights, the Company may make amendments or supplements to this Agreement
      to correct any clerical or typographical error or which are required to
      maintain the validity of the Agreement as a result of any change in any
      applicable legislation, regulations or rules thereunder. The Company may
      in addition 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.
      Notwithstanding anything in this Section 5.4 to the contrary, no
      supplement or amendment shall be made to the provisions of Article 4
      except with the written concurrence of the Rights Agent to such change,
      supplement or amendment.

- 32 - 

	(b) 	
      Subject to subsection 5.4(a), the Company may, with the
      prior consent of the holders of Shares obtained as set forth below, at any
      time before the Separation Time, amend, vary, rescind, supplement any of
      the provisions of this Agreement and the Rights (whether or not such
      action would materially adversely affect the interests of the holders of
      Rights generally). Such consent shall be deemed to have been given if the
      action requiring such approval is approved by the affirmative vote of a
      majority of the votes cast by Independent Shareholders represented in
      person or by proxy at the Special Meeting.

	 	 	 
	(c) 	
      The Company may, with the prior consent of the holders of
      Rights obtained as set forth below, at any time after the Stock
      Acquisition Date amend, vary or rescind any of the provisions of this
      Agreement and the Rights (whether or not such action would materially
      adversely affect the interests of the holders of Rights generally),
      provided that no such amendment, variation or deletion shall be made to
      the provisions of Article 4 except with the written concurrence of the
      Rights Agent thereto. Such consent shall be deemed to have been given if
      such amendment, variation or deletion is authorized by the affirmative
      votes of the holders of Rights present or represented at and entitled to
      vote at a meeting of the holders and representing a majority of the votes
      cast in respect thereof.

	 	 	 
		
      Any such amendment shall be effective from the date of
      the resolution of the Board of Directors adopting such amendment, until it
      is confirmed or rejected or until it ceases to be effective (as described
      in the next sentence) and, where such amendment is confirmed, it continues
      in effect in the form so confirmed. If such amendment is rejected by the
      shareholders or the holders of Rights or is not submitted to the
      shareholders or holders of Rights as required, then such amendment shall
      cease to be effective from and after the termination of the meeting at
      which it was rejected or to which it should have been but was not
      submitted (being a meeting of the holders of Rights to be called for on a
      date not later than immediately following the next meeting of shareholders
      of the Company) or from and after the date of the meeting of holders of
      Rights that should have been but was not held, and no subsequent
      resolution of the Board of Directors to amend this Agreement to
      substantially the same effect shall be effective until confirmed by the
      shareholders or holders of Rights, as the case may be.

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

	 	 	 
	(e) 	
      Any amendments or supplements made by the Company to this
      Agreement pursuant to Subsection 5.4(a) (other than an amendment or
      supplement to correct any clerical or typographical error) after this
      Agreement has been ratified and approved by the holders of Shares in
      accordance with the requirements of The Exchange shall:

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

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

- 33 - 

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

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

	5.5 	Fractional Rights and Fractional Shares
    

	(a) 	
      The Company shall not be required to issue fractions of
      Rights or to distribute Rights Certificates which evidence fractional
      Rights. In lieu of such fractional Rights, there shall be paid to the
      registered holders of the Rights Certificates with regard to which such
      fractional Rights would otherwise be issuable an amount in cash equal to
      the same fraction of the Market Price of a whole Right determined on the
      date on which such fractional Right would otherwise be issuable.

	 	 
	(b) 	
      The Company shall not be required to issue fractions of
      Common Shares upon exercise of the Rights or to distribute certificates
      which evidence fractional Common Shares. Fractions of Common Shares may,
      at the election of the Company, be evidenced by scrip certificates or in
      lieu of issuing fractional Common Shares, the Company shall pay to the
      registered holders of Rights Certificates, at the time such Rights are
      exercised as herein provided, an amount in cash equal to the same fraction
      of the Market Price of one Common Share at the date of such
    exercise.

	 	 
	(c) 	
      The Rights Agent shall have no obligation to make any
      payments in lieu of issuing fractions of Rights or Common Shares pursuant
      to paragraph (a) or (b), respectively, unless and until the Company shall
      have provided to the Rights Agent the amount of cash to be paid in lieu of
      issuing such fractional Rights or Common Shares, as the case may
  be.

	5.6 	
      Rights of Action

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

- 34 - 

	5.7 	
      Regulatory Approvals

Any obligation of the Company or action or event contemplated
by this Agreement shall be subject to the receipt of any requisite approval or
consent from any governmental or regulatory authority, and, without limitation,
necessary approval of the Exchange shall be obtained, such as to the issuance of
Common Shares upon the exercise of Rights under subsection 2.2(d) .
Notwithstanding any provision of this Agreement, any amendment to this Agreement
will be subject to the prior written consent of the Exchange. 

	5.8 	
      Unlawful Distributions

If in the opinion of the Board of Directors (who may rely upon
the advice of counsel) any action or event contemplated by this Agreement would
require compliance by the Company with the securities laws or comparable
legislation of a jurisdiction outside Canada or the United States, the Board of
Directors acting in good faith shall take such actions as it may deem
appropriate to ensure that such compliance is not required, including, without
limitation, establishing procedures for the issuance to a Canadian or the United
States resident trustee of Rights or securities issuable on exercise of Rights,
the holding thereof in trust for the Persons entitled thereto (but reserving to
the trustee or to the trustee and the Company, as the Company may determine,
absolute investment discretion with respect thereto) and the sale thereof and
remittance of proceeds of such sale, if any, to the Persons entitled thereto. In
no event shall the Company or the Rights Agent be required to issue or deliver
Rights or securities issuable on exercise of Rights to Persons who are citizens,
residents or nationals of any jurisdiction other than Canada or the United
States, in which such issue or delivery would be unlawful without registration
of the relevant Persons or securities for such purposes. Notwithstanding the
foregoing, to the extent that the issuance or delivery of the Rights or
securities issuable on exercise of Rights to Persons who are citizens, residents
or nationals of any such jurisdiction in which such issue or delivery would be
so unlawful, such Rights or securities shall be issued and delivered to such
Persons to the extent the same may be so issued and delivered in reliance upon
applicable exemptions from registration requirements in such jurisdictions. 

	5.9 	
      Notices

Any notice or demand 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 Company shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows: 

	 	Passport Potash Inc. 
	 	608 – 1199 West Pender Street 
	 	Vancouver, British Columbia V6E 2R1 
	 	  
	 	Fax: (604) 687-0151 
	 	Attention: Chief Executive Officer
  

Any such notice or demand shall be deemed to have been received
if delivered, on the date of delivery, or if sent by prepaid first class mail,
on the fifth Business Day after mailing thereof, except in the case of
interruption of regular mail service, in which case such notice shall be
delivered. 

- 35 - 

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

	 	Computershare Trust Company of Canada 
	 	3rd Floor, 510 Burrard Street 
	 	Vancouver, British Columbia V6C 3B9 
	 	  
	 	Fax No. (604) 661-9401 
	 	Attention: General Manager, Client Services
  

Any such notice or demand shall be deemed to have been received
if delivered, on the date of delivery, or if sent by prepaid first class mail,
on the fifth Business Day after mailing thereof, except in the case of
interruption of regular mail service, in which case such notice shall be
delivered. 

Any notice or demand authorized or required by this Agreement
to be given or made by the Company or the Rights Agent to or on the holder of
any Rights shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as it appears upon the register of the Rights Agent or, prior to the
Separation Time, on the register of the Company for its Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. In the event of any interruption
of mail service, such notice required or permitted to be given hereunder will be
deemed to be sufficiently given by advertisement of such notice in daily
newspapers published in Vancouver. 

	5.10 	Costs of Enforcement

The Company agrees that if the Company 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 Company or such Person
will reimburse the holder of any Rights for the costs and expenses (including
legal fees) incurred by such holder in actions to enforce his rights pursuant to
any Rights or this Agreement. 

	5.11 	Successors 

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

	5.12 	
      Benefits of this Agreement

Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the holders of the Rights
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the holders of the Rights. 

	5.13 	
      Governing Law

This Agreement and each Right issued hereunder shall be deemed
to be a contract made under the laws of the Province of British Columbia and for
all purposes shall be governed by and construed in accordance with the laws of
such province applicable to contracts to be made and performed entirely within
such province. 

- 36 - 

	5.14 	Severability 

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

	5.15 	
      Effective Date

This Agreement is effective and in full force and effect in
accordance with its terms from August 25, 2011. If this Agreement is not
confirmed by resolution passed by a majority of greater than 50% of the votes
cast by shareholders present in person or voting by proxy at a duly called
meeting of shareholders of the Company, held not later than six months from the
date hereof, then this Agreement and all outstanding Rights shall terminate and
be void and of no further force and effect on and from the date which is the
earlier of: (a) the close of business on the date of termination of such
meeting; and (b) the close of business on that date which is six months from the
date hereof. 

	5.16 	Determinations and Actions by the Board of
      Directors 

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

	5.17 	Time of the Essence 

Time shall be of the essence in this Agreement. 

	5.18 	Execution in Counterparts

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

- 37 - 

	5.19 	Language 

Les parties aux présentes ont exigé que la présente convention
ainsi que tous les documents et avis qui s'y rattachent et/ou que en découlent
soient redigés en langue anglaise. The parties hereto have required that this
Agreement and all documents and notices related thereto and/or resulting
therefrom be drawn up in English. 

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

	 	PASSPORT POTASH INC. 
	 	  	 
	 	By: 	 
	 	 	 
	 	 	 
	 	COMPUTERSHARE TRUST COMPANY OF
      CANADA 
	 	 	 
	 	By: 	 
	 	 	 
	 	By: 	 

EXHIBIT A 
[Form of Rights Certificate] 

	Certificate No. 	 _______________Rights

	
      THE RIGHTS ARE SUBJECT TO TERMINATION ON THE TERMS SET
      FORTH IN THE SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN
      CIRCUMSTANCES (SPECIFIED IN SECTION 3.1(b) OF THE SHAREHOLDER RIGHTS PLAN
      AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
      TRANSFEREES OF AN ACQUIRING PERSON OR ITS AFFILIATES OR ASSOCIATES (AS
      SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY PERSON ACTING
      JOINTLY OR IN CONCERT WITH ANY OF THEM MAY BECOME VOID.

Rights Certificate 

This certifies that _______________________________________ ,
or its registered assigns, is the registered holder of the number of Rights set
forth above, each of which entitles the registered holder thereof, subject to
the terms, provisions and conditions of the Shareholder rights plan Agreement
dated as of the 25th day of August, 2011 (the "Rights Agreement") between
Passport Potash Inc., a company incorporated under the British
Columbia Business Corporations Act (the "Company") and
Computershare Trust Company of Canada, a company, as rights agent (the
"Rights Agent") (which term shall include any successor Rights Agent
under the Rights Agreement), to purchase from the Company at any time after the
Separation Time (as such term is defined in the Rights Agreement) and prior to
the Expiration Time (as such term is defined in the Rights Agreement), one fully
paid common share of the Company (a "Common Share") at the Exercise Price
referred to below, upon presentation and surrender of this Rights Certificate
together with the Form of Election to Exercise duly executed and submitted to
the Rights Agent at its principal office in the city of Vancouver. Until
adjustment thereof in certain events as provided in the Rights Agreement, the
Exercise Price is fifty ($50.00) dollars. 

The Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement which terms, provisions and
conditions are hereby incorporated herein by reference and made a part thereof
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 Company and the holders of the Rights Certificates.
Copies of the Rights Agreement are on file at the principal office of the
Company and are available upon written request. 

The 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 the date evidencing an aggregate number of
Rights equal to the aggregate number of Rights evidenced by the Rights
Certificate or Rights Certificates surrendered. If this Rights Certificate shall
be exercised in part, the registered holder shall be entitled to receive, upon
surrender hereof, another Rights Certificate or Rights Certificates for the
number of whole Rights now exercised. No fractional Common Shares will be issued
upon the exercise of any Rights evidenced hereby, but in lieu thereof a cash
payment will be made as provided in the Rights Agreement. 

Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at a redemption
price of $0.0001 per Right, subject to adjustment in certain events, under
certain circumstances at its option. 

- 2 - 

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

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

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

	DATE: 	 	 	PASSPORT POTASH INC. 
	  	 	 	  	 
	  	 	 	By: 	 
	Countersigned: 	 	  	 
	 	 	 	 	 
	COMPUTERSHARE TRUST COMPANY OF
      CANADA 	 	 	 
	 	 	 	 
	By: 	 	 	  	 
	 	 	 	 	 
	By: 	 	 	  	 

FORM OF ASSIGNMENT 

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

FOR VALUE RECEIVED ________________________ hereby sells,
assigns and transfers unto 

	 
	 
	 
	 
	(please print name and address of transferee)
  

the Rights represented by this Rights Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint ______________________________________ attorney, to
transfer the within Rights Certificate on the books of the within-named company,
with full power of substitution. 

	 Date: 	 		 
	 	 		 Signature 

	Signature Guarantee: 	(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) 

Note: Signature must be guaranteed by a major Canadian trust
company, a Schedule I Canadian chartered bank, or a member of a recognized
Medallion Guarantee program. 

	 
	(To be completed by the assignor if true)

The undersigned hereby represents, for the benefit of all
holders of Rights and Common Shares, that the Rights evidenced by this Rights
Certificate are not, and, to the knowledge of the undersigned, have never been,
Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof
or by any Person acting jointly or in concert therewith. Capitalized terms shall
have the meaning ascribed thereto in the Rights Agreement. 

	 	 
	 	Signature 
	 	 
	 	 
	 	(please print name of Signatory)

(To be attached to each Rights Certificate) 

FORM OF ELECTION TO EXERCISE 

TO: COMPUTERSHARE TRUST COMPANY OF CANADA 

RE: PASSPORT POTASH INC. 

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

	 
	 
	 
	 
	 
	Address 
	 
	 
	Social Insurance, Social Security or Other Taxpayer
      Identification Number 

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

	 
	 
	 
	 
	 
	Address 
	 
	 
	Social Insurance, Social Security or Other Taxpayer
      Identification Number 

	 Date: 	 		 
	 	 		 Signature 

	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) 

Note: Signature must be guaranteed by a major Canadian trust
company, a Schedule I Canadian chartered bank, or a member of a recognized
Medallion Guarantee program. 

	 
	(To be completed by exercisor if true)

The undersigned hereby represents, for the benefit of all
holders of Rights and Common Shares, that the Rights evidenced by this Rights
Certificate are not, and, to the knowledge of the undersigned, have never been,
Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof
or by any Person acting jointly or in concert therewith. Capitalized terms shall
have the meaning ascribed thereto in the Rights Agreement. 

- 2 - 

	 	 
	 	Signature 
	 	 
	 	 
	 	(please print name of Signatory)

NOTICE 

In the event the Certificate set forth above in the applicable
Forms of Assignment or Election is not completed, the Company will deem the
Beneficial Owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof and, in the case of an
Assignment, will affix a legend to that effect on any Rights Certificates issued
in exchange for this Rights Certificate. Capitalized terms shall have the
meaning ascribed thereto in the Rights Agreement.Passport Potash Inc.: Exhibit 10.1 - Filed by newsfilecorp.com

MINERAL PROPERTY OPTION AGREEMENT 

THIS AGREEMENT is dated for reference as of the 30th day
of September, 2008 

BETWEEN: 

SOUTHWEST EXPLORATION INC., an

Arizona corporation having an address at 
19935 E Sonoqui Blvd., Queen
Creek, Arizona, 85242 

(the “Optionor”) 

OF THE FIRST PART 

AND: 

PASSPORT METALS INC., a company
duly 
incorporated pursuant to the laws of the Province 
of Quebec and
having an address at 608 – 1199 
West Pender Street, Vancouver, British
Columbia, V6E 2R1 

(the “Optionee”) 

OF THE SECOND PART 

WHEREAS: 

(A)                    
The Optionor is the recorded and beneficial owner of an undivided 100% interest
in certain potash Leases situated in the State of Arizona, United States of
America, as detailed in the specific description of the Arizona State Land
Department Exploration Permit/Lease attached hereto as Schedule “A” (the
“Property”); 

(B)                    
The Optionor has agreed to grant an exclusive option to the Optionee to acquire
a 100% undivided interest in and to the Property, subject to a retained NSR as
defined below, by paying certain consideration and by incurring certain
exploration Expenditures as detailed herein; 

NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of $10.00 now paid by Optionee to Optionor and for other good and
valuable consideration, the receipt and sufficiency whereof is by Optionor
hereby acknowledged, the parties agree as follows: 

- 2 - 

PART 1 

DEFINITIONS 

1.1            
In this Agreement, except as otherwise expressly provided or as the context
otherwise requires, 

(a)          
“Area of Common Interest” means, subject to Part 17 the area included
within five (5) miles of the boundaries of the Property, but excluding any third
party mineral claims in good standing as of the date of this Agreement; 

(b)          
“Effective Date” means the date upon which the TSX Venture Exchange
grants to the Optionee its acceptance respecting this Agreement subject to §4.4;

(c)          
“Expenditures” means all direct or indirect costs and expenses incurred
by the Optionee in respect of prospecting and exploring the Property (plus an
allowance of 10% of such costs and expenses for a general overhead allowance)
after the date of this Agreement pursuant to Part 4 hereof. The certificate of
the Controller or other financial officer of the Optionee, together with a
statement of Expenditures in reasonable detail shall be prima facie evidence of
such Expenditures; 

(d)          
“Force Majeure” has the meaning set forth in Part 13; 

(e)          
“Leases” means collectively those Exploration Permits/Leases situate in
Arizona, all of which are listed and more particularly described in Schedule
“A”; 

(f)          
“Net Smelter Returns” means the proceeds received by the Optionee from
any smelter or other purchaser from the sale of any ores, concentrates or
minerals produced from the Claims after deducting from such proceeds the
following charges only to the extent that they are not deducted by the smelter
or other purchaser in computing the proceeds: 

(i)          
charges for treatment in the smelting, refining and other beneficiation process
(including handling, processing, interest, and provisional settlement fees,
weighing, sampling, assaying samples and representation costs, penalties, and
other processor deductions); 

(ii)          
actual costs of transportation (including loading freight, insurance, security,
transaction taxes, handling, port, damages, delay and forwarding expenses
incurred by reason of or in the course of transportation) of products from the
Leases to the place of treatment and then to the place of sale; 

(iii)          
costs or charges of any nature for or in connection with insurance, storage, or
representation at a smelter or refinery of products or refused metals; and 

- 3 - 

(iv)          
sales, use, severance, excise, net proceeds of mine, and ad valorem taxes and
any other tax on or measured by minerals production, but not including income
taxes of the Optionee or the holder of the NSR Royalty; 

(g)          
“NSR Royalty” means a net smelter returns royalty to be paid by the
Optionee to the Optionor pursuant to Part 5 of this Agreement; 

(h)          
“Option” means the exclusive right herein granted by the Optionor to the
Optionee to permit the Optionee to acquire the 100% right, title and interest of
the Optionor to and in the Property all as provided in Part 4; 

(i)          
“Option Period” means the period during the term of this Agreement from
the date hereof to and including the date of exercise of the Option; 

(j)          
“Property” means the mineral Leases described in Schedule ”A” hereto, and
all other mining interests derived from any such Leases, any reference to any
mineral Leases comprised in the Property to include any mineral leases or other
interests into which the mineral Leases may have been converted, 

(k)          
“Property Rights” means all licenses, permits, easements, rights-of-way,
surface or water rights and other rights, approvals obtained by either of the
parties either before or after the date of this Agreement and necessary or
desirable for the development of the Property, or for the purpose of placing the
Property into production or continuing production therefrom; and 

PART 2 

REPRESENTATIONS, WARRANTIES AND COVENANTS OF OPTIONOR

2.1            
The Optionor represents and warrants to the Optionee that: 

(a)           it
has been duly incorporated and validly exists as a corporation in good standing
under the laws of Arizona and is authorized to hold mineral Leases in the State
of Arizona, and it is exclusively legally entitled to hold the Property and all
mineral claims comprised therein, and all Property Rights held by it and will
remain so entitled until all interests of the Optionor in the Property earned by
the Optionee have been duly transferred to the Optionee as contemplated hereby
or this Option has terminated, 

(b)           it
is, and will be at the time of transfer to the Optionee of mineral Leases
comprising the Property, the recorded holder and beneficial owner of all of the
mineral Leases comprising the Property free and clear of all liens, charges and
claims of others and no taxes or rentals are due in respect of any thereof and
the mineral Leases comprised in the Property have been duly and validly located
and recorded pursuant to the Mineral Tenure Laws of Arizona and, are in
good standing in the office of the Arizona State Land Department on the date
hereof and until the dates set opposite the respective names thereof in Schedule
“A”, 

- 4 - 

(c)          
there is no adverse claim or challenge against or to the ownership of or title
to any of the mineral Leases comprising the Property, nor to the knowledge of
the Optionor is there any basis therefor, and there are no outstanding
agreements or options to acquire or purchase the Property or any portion
thereof, and no person other than the Optionor, pursuant to the provisions
hereof, has any royalty or other interest whatsoever in production from any of
the mineral Leases comprising the Property, 

(d)           no
third party consent of any kind is required by the Optionor to enter into this
Agreement and grant the Option contemplated hereby, 

(e)          
upon request by the Optionee, the Optionor shall deliver or cause to be
delivered to the Optionee copies of all available maps and other documents and
data in its possession respecting the Leases, 

(f)          
the Optionor shall assume sole responsibility and liability for any obligations
outstanding as of the date hereof with respect to reclamation of the property
comprising the Leases, 

(g)          
the execution and delivery of this Agreement and the agreements contemplated
hereby by the Optionor will not violate or result in the breach of the laws of
any jurisdiction applicable or pertaining thereto or of its constating
documents, and 

(h)          
this Agreement constitutes a legal, valid and binding obligation of the
Optionor. 

2.2            
The representations and warranties contained in §2.1 are provided for the
exclusive benefit of the Optionee, and a breach of any one or more thereof may
be waived by the Optionee in whole or in part at any time without prejudice to
its rights in respect of any other breach of the same or any other
representation or warranty; and the representations and warranties contained in
§2.1 will survive the execution hereof and continue throughout the Option
Period. 

2.3            
This Agreement constitutes a legal, valid, and binding obligation to the
Optionor. 

PART 3 

REPRESENTATIONS AND WARRANTIES OF OPTIONEE 

3.1           
 The Optionee represents and warrants to the Optionor that 

(a)           it
has been duly incorporated and validly exists as a corporation in good standing
under the laws of Quebec and on exercise of the option and transfer of title to
the Leases will be authorized to hold mineral Leases in the State of Arizona;

(b)          
neither the execution and delivery of this Agreement by the Optionee nor the
performance by the Optionee of its obligations hereunder conflicts with the
Optionee’s constating documents or any agreement to which it is bound; 

- 5 - 

3.2       
     The representations and warranties contained in §3.1
are provided for the exclusive benefit of the Optionor and a breach of any one
or more thereof may be waived by the Optionor in whole or in part at any time
without prejudice to its rights in respect of any other breach of the same or
any other representation or warranty; and the representations and warranties
contained in §3.1 will survive the execution hereof and continue throughout the
Option Period. 

3.3         
   This Agreement constitutes a legal, valid and binding obligation of
the Optionee. 

PART 4 

GRANT AND EXERCISE OF OPTION 

4.1           
 The Optionor hereby grants to the Optionee the sole and exclusive right
and option, subject to the terms of this Agreement, to earn a 100% undivided
interest in the Property free and clear of all charges and encumbrances, save
and except the NSR Royalty defined above, by: 

(a)          
paying to the Optionor: 

              
(i)           US$100,000 upon
execution of this Agreement; and 

              
(ii)           1,000,000
options, exercisable for three years, at the 10-day trading average of the
Optionee from the signing of this Agreement which options will be granted on
receipt of regulatory approval; 

(b)          
(i)           on April
1st, 2009 pay the Optionor US$125,000 in cash and 250,000 shares of
the Optionee; 

                (ii)          
on October 1st, 2009 pay the Optionor US$225,000 in cash; 

               
(iii)           on April
1st, 2010 pay the Optionor US$250,000 in cash; and 

              
(iv)           on October
1st, 2010 pay the Optionor US$350,000 in cash; 

(c)          
funding Expenditures of a minimum of US$200,000 which is to complete a National
Instrument 43-101 technical report (the “43-101 Report”) on the Property; and

(d)           on
completion of the 43-101 Report the Optionee shall have thirty (30) days from
the date of the final 43-101 Report to pay the Optionor 250,000 shares. 

4.2            
The Optionor acknowledges that each share certificate issued pursuant to this
Part 4 shall have imprinted thereon a legend restricting transfer in Canada for
four months plus one day from the date of the issuance of the shares. 

- 6 - 

4.3           
 All issuances of shares to be made by the Optionee pursuant to this Part 4
shall be registered in the name of Southwest Exploration Inc. 

4.4           
 If the Effective Date has not occurred within 90 days of the date of
execution hereof, then either party may terminate this Option Agreement without
liability, by notice to the other party. 

4.5            
If Optionee acquires title to the Leases by exercising its Option granted
herein, Optionee will pay to Optionor a 1% NSR Royalty as set out in Part 5.

PART 5 

NSR ROYALTY 

5.1     
       The Optionee pay to the Optionor a royalty
(the “NSR Royalty” ) equal to a 1% percent in aggregate of Net Smelter Returns
(as defined in Subsection 1.1), subject to §5.4 of this Agreement. This NSR
Royalty will be payable for so long as the Optionee and/or its successors and
assigns hold any interest in the Leases. 

5.2      
      Payment of the NSR Royalty will be made quarterly
70 days after the end of each quarter of the Optionee. Within 70 days after the
end of each quarter for which the NSR Royalty is payable, the records relating
to the calculation of the NSR Royalty for such quarter will be paid by the
Optionee and any adjustments in the payment of the NSR Royalty will be made
forthwith after completion of the annual audit. All payments of the NSR Royalty
for a year will be deemed final and in full satisfaction of all obligations of
the Optionee in respect thereof if such payments or calculations thereof are not
disputed by the Optionor within 30 days after receipt by the Optionor of the
said payment. The Optionee will maintain accurate records relevant to the
determination of the NSR Royalty and the Optionor, or its authorized agent,
shall be permitted the right to examine such records at all reasonable times.

5.3 
           The determination
of the NSR Royalty hereunder is based on the premise that production will be
developed solely on the Leases except that the Optionee will have the right to
commingle ore mined from the Leases with ore mined and produced from other
properties provided the Optionee will adopt and employ reasonable practices an
procedures weighing, sampling and assaying, in order to determine the amounts of
products derived from, or attributable to ore mined and produced from the
Leases. The Optionee will deliver the Optionor a description of Optionee’s
commingling plan not less than 30 days before commencing of commingling. The
Optionee will maintain accurate records of the results of such sampling,
weighing and analysis with respect to any ore mined and produced from the
Leases. The Optionor or its authorized agents will be permitted the right to
examine at all reasonable time such records pertaining to commingling of ore or
to the calculation of Net Smelter Returns. 

5.4       
     The Optionee shall have the right to purchase the 1%
NSR Royalty for US$1,000,000, at any time. 

- 7 - 

PART 6 

ASSIGNMENT OF OPTION 

6.1           
 Subject to Part 11, the Optionee may assign all or part of its obligations
under this Option Agreement during the Option Period to a third party (the
“Assignee”) with consent of the Optionor, such consent not to be unreasonably
withheld, providing also that the Assignee agrees to execute an acknowledgement
to be bound by the terms hereof insofar as the Optionor’s rights hereunder are
concerned. Such Assignee shall issue shares in its capital to fulfill the share
obligations in §4.1. 

PART 7 

EXERCISE OF OPTION 

7.1            
The Optionee may in its sole discretion at any time accelerate the payment of
the consideration and incur the Expenditures on the Property required by §4.1 to
exercise the Option and thereby earlier acquire its interest in the Property.

7.2           
 If and when the Option has been exercised, the 100% right, title and
interest in and to the Property will vest in the Optionee free and clear of all
charges, encumbrances and claims, except for the NSR Royalty. 

7.3           
 The cost of transfer of title to the Optionee shall be paid by the
Optionee. 

PART 8 

RIGHT OF ENTRY 

8.1           
 Throughout the Option Period, the Directors and Officers of the Optionee
and its servants, agents and independent contractors, abiding by the rules and
regulations set forth by the Arizona State Land Department, will have the sole
and exclusive right in respect of the Property to 

(a)          
enter thereon, 

(b)          
have exclusive and quiet possession thereof, 

(c)           do
such prospecting, exploration, development and/or other mining work thereon and
thereunder as the Optionee in its sole discretion may determine advisable, 

(d)          
bring upon and erect upon the Property buildings, plant, machinery and equipment
as the Optionee may deem advisable, and 

(e)          
remove therefrom and dispose of reasonable quantities of ores, mineral and
metals for the purpose of obtaining assays or making other tests. 

- 8 - 

PART 9 

OBLIGATIONS OF OPTIONEE DURING OPTION PERIOD 

9.1            
During the Option Period the Optionee will 

(a)          
maintain in good standing those mineral Leases comprised in the Property that
are in good standing on the date hereof by the doing and filing of the maximum
available assessment work credits on the Property or by making of payments in
lieu of the minimum requirements, by the payment of taxes and rentals and the
performance of all other actions which may be necessary in that regard and in
order to keep such mineral Leases free and clear of all liens and other charges
arising from the Optionee’s activities thereon except those at the time
contested in good faith by the Optionee, 

(b)          
permit the directors, officers, employees and designated consultants of the
Optionor, at their own risk, access to the Property at all reasonable times
subject always to Part 15, and providing the Optionor agrees to indemnify the
Optionee against and to save the Optionee harmless from all costs, claims,
liabilities and expenses that the Optionee may incur or suffer as a result of
any injury (including injury causing death) to any director, officer, employee
or designated consultant of the Optionor while on the Property, 

(c)          
deliver to the Optionor on or before six months after each anniversary hereof, a
report (including up-to-date maps if there are any) describing the results of
work done in the last completed expenditure year, together with reasonable
details of Expenditures made, 

(d)           do
all work on the Property in a good and workmanlike fashion and in accordance
with all applicable laws, regulations, orders and ordinances of any governmental
authority and file for all available assessment credits, and 

(e)          
indemnify and save the Optionor harmless in respect of any and all costs,
claims, liabilities and expenses arising out of the Optionee’s activities on the
Property and, without limiting the generality of the foregoing will, during the
currency of this Agreement, cause any of its independent contractors to carry
not less than $1 million in third party liability insurance in respect of their
operations conducted on the Property on behalf of the Optionee, such insurance
to be for the benefit of the Optionee and the Optionor as their interests
appear; provided that neither the Optionee nor its independent contractors will
incur any obligation thereunder in respect of claims arising or damages suffered
after termination of the Option if upon termination of the Option any workings
on or improvements to the Property made by the Optionee are left in a safe
condition and substantially in the same condition as existed on the date hereof.

- 9 - 

PART 10 

TERMINATION OF OPTION 

10.1          
If the Option is terminated otherwise than upon the exercise thereof pursuant to
Part 4, the Optionee will 

(a)          
leave in good standing for a period of at least two years from the termination
of the Option Period those mineral Leases comprised in the Property that are in
good standing on the date hereof and any other mineral Leases comprised in the
Property that the Optionee acquires after the date hereof, and 

(b)          
deliver at no cost to the Optionor within 90 days of such termination copies of
all reports, maps, assay results and other relevant technical data compiled by
or in the possession of the Optionee with respect to the Property and not
theretofore furnished to the Optionor. 

10.2          
Notwithstanding termination of the Option, the Optionee will have the right,
within a period of 90 days following the end of the Option Period, to remove
from the Property all buildings, plant, equipment, machinery, tools, appliances
and supplies which have been brought upon the Property by or on behalf of the
Optionee, and any such property not removed within such 90-day period will
thereafter, only if the Optionor elects in writing, become the property of the
Optionor. 

PART 11 

TRANSFERS 

11.1          
The Optionee may at any time (and from time to time) either during the Option
Period or thereafter, sell, transfer or otherwise dispose of all or any portion
of its interest in and to the Property and this Agreement provided that any
purchaser, grantee or transferee of any such interest will have first delivered
to the Optionor its agreement related to this Agreement and to the Property,
containing 

(a)           a
covenant by such transferee to perform all the obligations of the Optionee to be
performed under this Agreement in respect of the interest to be acquired by it
from the Optionee to the same extent as if this Agreement had been originally
executed by the Optionee and such transferee as joint and several obligors
making joint and several covenants, and 

(b)           a
provision subjecting any further sale, transfer or other disposition of such
interest in the Property and this Agreement or any portion thereof to the
restrictions contained in this §11.1. 

11.2          
No assignment by the Optionee of any interest less than its entire interest in
this Agreement and in the Property will, as between the Optionee and the
Optionor, discharge it from any of its obligations hereunder, but upon the
transfer by the Optionee of the entire interest at the time held by it in this Agreement (whether to one or more
transferees and whether in one or in a number of successive transfers), the
Optionee will be deemed to be discharged from all obligations hereunder save and
except for the fulfilment of contractual commitments accrued due before the date
on which the Optionee will have no further interest in this Agreement. 

- 10 - 

PART 12 

SURRENDER AND ACQUISITION OF PROPERTY INTERESTS BEFORE
TERMINATION OF AGREEMENT 

12.1          
The Optionee may during the Option Period, elect to abandon any one or more of
the mineral Leases comprised in the Property by giving 30 days notice to the
Optionor of such intention. 

12.2          
For a period of 30 days after the date of delivery of such notice the Optionor
may elect to have any or all of the mineral Leases in respect of which such
notice has been given transferred to it by delivery of a request therefor to the
Optionee, whereupon the Optionee will deliver to the Optionor a quit claim or
Bill of Sale or other appropriate Deed or assurance in registrable form
transferring such mineral Leases to the Optionor if the Optionor is not then
already the registered owner of such mineral Leases. 

12.3          
Any Leases so transferred, if in good standing at the date hereof or if the
Optionee causes the same to be placed in good standing after the date hereof,
will be in good standing under the Mineral Tenure Act of Arizona for at
least six months from the date of transfer. If the Optionor fails to make
request for the transfer of any mineral Leases as aforesaid within such 30-day
period, the Optionee may then abandon such mineral Leases without further notice
to the Optionor. Upon any such transfer or abandonment the mineral Leases so
transferred or abandoned will for all purposes of this Agreement cease to form
part of the Property. 

PART 13 

FORCE MAJEURE 

13.1          
If the Optionee is at any time either during the Option Period prevented or
delayed in complying with the work requirement provisions of this Agreement in
Part 4 by reason of strikes, walk-outs, labour shortages, power shortages, fuel
shortages, fires, wars, acts of God, governmental regulations restricting normal
operations, shipping delays or any other reason or reasons beyond the control of
the Optionee (and for greater certainty excluding factors related to a lack of
funding), the time limited for the performance by the Optionee of its
obligations hereunder will be extended by a period of time equal in length to
the period of each such prevention or delay, provided however that nothing
herein will discharge the Optionee from its obligation to timely pay the cash
and share consideration under §4.1. 

13.2          
The Optionee will within seven days give notice to the Optionor of each event of
force majeure under §13.1 and upon cessation of such event will furnish the
Optionor with notice to that effect together with particulars of the number of
days by which the obligations of the Optionee hereunder have been extended by virtue of such event
of force majeure and all preceding events of force majeure. 

- 11 - 

PART 14 

CONFIDENTIAL INFORMATION 

14.1          
No information furnished by the Optionee to the Optionor hereunder in respect of
the activities carried out on the Property by the Optionee, will be published by
the Optionor without the written consent of the Optionee, but such consent in
respect of the reporting of factual data will not be unreasonably withheld, and
will not be withheld in respect of information required to be publicly disclosed
pursuant to applicable securities or corporation laws. 

PART 15 

ARBITRATION 

15.1          
All questions or matters in dispute with respect to the interpretation of this
agreement will, insofar as lawfully possible, be submitted to arbitration
pursuant to the terms hereof. 

15.2          
It will be a condition precedent to the right of any party to submit any matter
to arbitration pursuant to the provisions hereof, that any party intending to
refer any matter to arbitration will have given not less than 30 days’ prior
written notice of its intention so to do to the other party together with
particulars of the matter in dispute. 

15.3          
On the expiration of such 30 days, the party who gave such notice may proceed to
refer the dispute to arbitration as provided in this Part 15. 

15.4          
The party desiring arbitration will appoint one arbitrator, and will notify the
other party of such appointment, and the other party will, within 30 days after
receiving such notice, appoint an arbitrator, and the two arbitrators so named,
before proceeding to act, will, within 30 days of the appointment of the last
appointed arbitrator, unanimously agree on the appointment of a third arbitrator
to act with them and be chairman of the arbitration herein provided for. 

15.5          
If the other party fails to appoint an arbitrator within 30 days after receiving
notice of the appointment of the first arbitrator, and if the two arbitrators
appointed by the parties fail to agree on the appointment of the chairman, the
chairman will be appointed under the provision of the Commercial Arbitration Act
(British Columbia). 

15.6          
Except as specifically otherwise provided in this Part 16 the arbitration herein
provided for will be conducted in accordance with such Act. 

15.7          
The chairman, or in the case where only one arbitrator is appointed, the single
arbitrator, will fix a time and place in Vancouver, British Columbia, for the
purpose of hearing the evidence and representations of the parties, and he will
preside over the arbitration and determine all questions of procedure not
provided for under Part 15. 

- 12 - 

15.8          
After hearing any evidence and representations that the parties may submit, the
single arbitrator, or the arbitrators, as the case may be, will make an award
and reduce the same to writing, and deliver one copy thereof to each of the
parties. 

15.9          
The expense of the arbitration will be paid as specified in the award. 

15.10         The
parties may agree that the award of a majority of the arbitrators, or in the
case of a single arbitrator, of such arbitrator, will be final and binding upon
each of them. 

PART 16 

DEFAULT AND TERMINATION 

16.1          
If at any time during the Option Period the Optionee fails to perform any
obligation hereunder or any representation or warranty given by it proves to be
untrue, then the Optionor may terminate this Agreement providing 

(a)           it
first gives to the Optionee a notice of default containing particulars of the
obligation which the Optionee has not performed, or the warranty breached, and

(b)           if
it is reasonably possible to cure the default, the Optionee does not, within 30
days after delivery of such notice of default, cure such default by appropriate
payment or performance if such default reasonably requires more than 30 days.

16.2          
If the Optionee fails to comply with the provisions of §16.1 the Optionor may
thereafter terminate this Agreement, and the provisions of Part 10 will then be
applicable. 

16.3          
The Optionee may at any time terminate this Option by giving notice of
termination to the Optionor and shall thereupon be relieved of any further
obligations in connection herewith but shall remain liable for obligations which
have accrued to the date of notice. 

PART 17 

AREA OF COMMON INTEREST 

17.1          
There shall exist an area of common interest within the area included within
five (5) miles of the boundaries of the Property (as detailed in the specific
description of the mineral Leases attached hereto as Schedule “A”), but
excluding any third party mineral claims in good standing as of the date of this
Agreement. If either Party (or permitted assignee) beneficially acquires any
interest in mineral claims within such area they shall, at the election of the
other party (made by it within 10 days of written notice), be made part of the
Property for all purposes and may be referred to as Additional Property. That
is, if acquired by the Optionee, such additional claims shall be transferred to the Optionor on
termination hereof without additional cost and if acquired by the Optionor shall
be optioned to the Optionee as if part of the Property (and without additional
consideration being demanded from the Optionee, save and except reimbursement of
the stating costs). 

- 13 - 

PART 18 

NOTICES 

18.1          
Each notice, demand or other communication required or permitted to be given
under this Agreement will be in writing and will be sent by personal delivery,
fax or prepaid registered mail to the addresses of the parties written on page
1. 

18.2          
The date of receipt of such notice, demand or other communication will be the
date of delivery or fax thereof if delivered or faxed during business hours, or,
if given by registered mail as aforesaid, will be deemed conclusively to be the
third day after the same will have been so mailed except in the case of
interruption of postal services for any reason whatever, in which case the date
of receipt will be the date on which the notice, demand or other communication
is actually received by the addressee. 

18.3          
Either party may at any time and from time to time notify the other party in
writing of a change of address and the new address to which notice will be given
to it thereafter until further change. 

PART 19 

GENERAL 

19.1          
This Agreement will supersede and replace any other agreement or arrangement,
whether oral or written, heretofore existing between the parties in respect of
the subject matter of this Agreement. 

19.2          
No consent or waiver expressed or implied by either party in respect of any
breach or default by the other in the performance of such other of its
obligations hereunder will be deemed or construed to be a consent to or a waiver
of any other breach or default. 

19.3          
The parties will promptly execute or cause to be executed all documents, deeds,
conveyances and other instruments of further assurance which may be reasonably
necessary or advisable to carry out fully the intent of this Agreement or to
record wherever appropriate the respective interests from time to time of the
parties in the Property. 

19.4          
This Agreement will enure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns. 

19.5          
This Agreement will be construed in accordance with the laws of the Province of
British Columbia and the laws of Canada applicable therein. This agreement is to
be construed as an option only and nothing herein shall obligate the
Optionee to do anything or pay any amount except where expressly herein
provided. 

- 14 - 

19.6          
All sums of money referred to herein are expressed in United States currency. 

19.7          
The headings appearing in this Agreement are for general information and
reference only and this Agreement will not be construed by reference to such
headings. 

19.8          
In interpreting this Agreement and the schedule hereto attached, where the
context so requires, the singular will include the plural, and the masculine
will include the feminine, the neuter, and vice versa. 

19.9          
Nothing herein will constitute or be taken to constitute the Parties as partners
or create any fiduciary relationship between them provided, however, that this
qualification will not limit the express duty of each Party to act toward the
other Party at all times in good faith with respect to all their obligations
under this Agreement. 

19.10         No
modification, alteration or waiver of the terms herein contained will be binding
unless the same is in writing, dated subsequently hereto, and fully executed by
the Parties. 

19.11         This
Agreement may be executed in counterpart and by facsimile. 

19.12         Time is of the
essence hereof. 

19.13         This
Agreement remains subject to the approval of the TSX Venture Exchange. 

- 15 - 

IN WITNESS WHEREOF this Option Agreement has been
executed on behalf of the Optionor and the Optionee by their duly authorized
officers on the day and year first above written. 

	THE COMMON SEAL of SOUTHWEST 	) 	  
	MINERAL EXPLORATION was hereto 	) 	  
	affixed in the presence of: 	) 	  
	  	) 	  
	  	) 	c/s 
	Per: __/s/ Floyd R. Bleak______________ 	) 	  
	               
         Authorized Signatory 	) 	  
	  	) 	  
	Per: _____________________________	) 	  
	               
         Authorized Signatory 	) 	  
	  	  	  
	  	  	  
	THE COMMON SEAL of PASSPORT 	) 	  
	METALS INC. was hereto affixed in the 	) 	  
	presence of: 	) 	  
	  	) 	  
	  	) 	c/s 
	Per: __/s/ Laara Shaffer_______________ 	) 	  
	               
         Authorized Signatory 	) 	  
	  	) 	  
	Per: __/s/ signed____________________ 	) 	  
	               
         Authorized Signatory 	) 	  
	  	)

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