Document:

WORLDWIDE FIBER INC.

                            STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 22nd day
of December, 1999 (the "Effective Date"), by and between WORLDWIDE FIBER INC., a
corporation incorporated under the laws of Canada (the "Company"), and GREGORY
B. MAFFEI (the "Purchaser") (collectively, the "Parties").

                                    RECITALS

     WHEREAS, the Company and the Purchaser have entered into an Employment
Agreement, dated December 22, 1999, pursuant to which the Company has agreed to
employ the Purchaser, and the Purchaser has agreed to serve as the President and
Chief Executive Officer of the Company (the "Employment Agreement"); and

     WHEREAS, the Company desires to issue, and Purchaser desires to acquire,
stock of the Company as herein described, on the terms and conditions
hereinafter set forth.

     NOW, THEREFORE, IT IS AGREED between the Parties as follows:

     Section 1. Purchase and Sale of Stock. Purchaser hereby agrees to purchase
from the Company, and the Company hereby agrees to sell to Purchaser, an
aggregate of thirty one million (31,000,000) shares of common stock of the
Company, of which twenty six million eighty thousand (26,080,000) shares will be
Class A Non-voting Shares of the Company (the "Class A Shares") and four million
nine hundred twenty thousand (4,920,000) shares will be Class C Multiple Voting
Shares of the Company (the "Class C Shares") (collectively, the "Shares"), at
two dollars and fifty cents (U.S. $2.50) per share (the "Purchase Price Per
Share"), for an aggregate purchase price of seventy seven million five hundred
thousand dollars (U.S. $77,500,000) (the "Purchase Price"). The Purchase Price
shall be payable by certified check or wire transfer. The Company will cause its
affiliate Worldwide Fiber Finance Ltd. to lend the Purchase Price to Purchaser
against delivery of a promissory note payable to Worldwide Fiber Finance Ltd. in
the form attached hereto at Tab 1. The closing hereunder, including the loan of
the Purchase Price and payment for and delivery of the Shares, shall occur at
the offices of the Company immediately following the execution of this
Agreement, or at such other time and place as the Parties may mutually agree.

     Section 2. Repurchase Option.

     (a) Repurchase Option. In the event Purchaser's employment by the Company,
(A) terminates for any or no reason, or (B) Purchaser fails to commence
employment with the Company on or before January 31, 2000 as a result of (i) his
death or Disability or (ii) for a reason which would have constituted a
termination by the Purchaser without Good Reason pursuant to Section 5(d) of the
Employment Agreement had the Purchaser commenced his employment with the Company
and then terminated his employment for such reason then the

<PAGE>

Company shall have an irrevocable option (the "Repurchase Option"), which shall
be exercisable during the ninety (90) day period after said termination or such
longer period as may be agreed to by the Company and the Purchaser in writing,
to repurchase from Purchaser for the Option Price, subject to adjustment
pursuant to Section 2(d), that number of Shares that have not ceased to be
subject to the Repurchase Option in accordance with the provisions of Section
2(b) below as of such termination date.

     (b) Lapse of Repurchase Option.

          (i) General Provisions. Seventy five percent (75%) of the Shares, all
     of which will be Class A Shares, shall initially be subject to the
     Repurchase Option and, therefore, 7,750,000 Shares, of which 4,920,000
     Shares will be Class C Shares and 2,830,000 Shares will be Class A Shares,
     are immediately vested upon the execution of this Agreement and will never
     be subject to the Repurchase Option; provided, however, that if the
     Purchaser fails to commence employment with the Company on or before
     January 31, 2000 as a result of (i) his death or Disability or (ii) for a
     reason which would have constituted a termination by the Purchaser without
     Good Reason pursuant to Section 5(d) of the Employment Agreement had the
     Purchaser commenced his employment with the Company and then terminated his
     employment for such reason then, in addition to the Company's repurchase
     right outlined in Section 2(a) of this Agreement: (1) the Company shall
     have the option, which shall be exercisable during the thirty (30) day
     period after said termination to repurchase from Purchaser for an amount
     equal to the lesser of (i) the Fair Market Value of the Shares calculated
     on the date of repurchase, or (ii) the Option Price, subject to adjustment
     pursuant to Section 2(d), the 7,750,000 Vested Shares and (2) neither the
     Purchaser nor the Company shall have any further obligations or liabilities
     to the other Party under this Agreement, the Employment Agreement, after
     Purchaser has repaid that certain promissory note dated December 22, 1999
     by and between the Purchaser and Worldwide Fiber Finance Ltd., such
     promissory note, or otherwise (except for Purchaser's obligations under
     Section 7 of the Employment Agreement). Subject to the provisions of
     Section 2(b)(ii) and Section 2(b)(iii) of this Agreement, the Shares that
     are initially subject to the Repurchase Option shall cease to be subject to
     the Repurchase Option according to the following schedule, provided that
     the Purchaser is employed by the Company (or a parent or subsidiary of the
     Company) on such date:

                                            Number of Shares that cease to be
     Date                                    subject to the Repurchase Option
     ----                                   ---------------------------------

     December 22, 2000                                  6,200,000

     The last day of each calendar month                  568,332
     following December 22, 2000

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<PAGE>

          (ii) Change of Control Provisions. Notwithstanding the preceding
     provisions of Section 2(b)(i): (A) upon the occurrence of a Change of
     Control, 40% of the remaining unvested Shares shall cease to be subject to
     the Repurchase Option (i.e., the Repurchase Option shall lapse on such date
     with respect to 40% of the Shares that remain subject to the Repurchase
     Option immediately prior to such date), and (B) if at any time during the
     two-year period immediately following the occurrence of a Change of
     Control, Purchaser ceases for any reason other than a termination of
     service or employment by the Company or its successor for Cause pursuant to
     Section 5(a) of the Employment Agreement or by the Executive without Good
     Reason pursuant to Section 5(d) of the Employment Agreement, to be (1) a
     member of the Board of the surviving entity, and/or (2) the President
     and/or Chief Executive Officer of the surviving entity on terms that are at
     least as favorable as the then current terms of the Employment Agreement,
     then 100% of the remaining unvested Shares shall cease to be subject to the
     Repurchase Option (i.e., the Repurchase Option shall lapse in its entirety
     on the date Purchaser ceases to be the President, Chief Executive Officer,
     or a member of the Board of the surviving entity).

          (iii) Termination of Employment Without Cause or For Good Reason.
     Notwithstanding the preceding provisions of Section 2(b)(i), upon the
     earliest to occur of: (a) the date that Purchaser's employment is
     terminated by the Company without Cause pursuant to Section 5(d) of the
     Employment Agreement; or (b) the date that Purchaser's employment is
     terminated as a result of his death or Disability pursuant to Section 5(b)
     of the Employment Agreement, or (c) the date the Purchaser terminates his
     employment with the Company for Good Reason pursuant to Section 5(c) of the
     Employment Agreement (clauses (a), (b) and (c) each being a "Termination
     Event" and, collectively, the "Termination Events"), (x) if a Termination
     Event occurs on or prior to December 22, 2000, that amount of Shares will
     cease to be subject to the Repurchase Option equal to the sum of: (A)
     twenty percent (20%) of the Shares plus (B) that number of Shares obtained
     by multiplying the total number of Shares purchased under this Agreement by
     the product of .0183333 by the number of calendar months that the Company
     employed Purchaser for the period beginning on the Effective Date and
     ending on the date that his employment by the Company terminated and (y) if
     a Termination Event occurs after December 22, 2000, twenty two percent
     (22%) of the Shares will cease to be subject to the Repurchase Option.

     (c) Exercise of Repurchase Option. The Repurchase Option shall be exercised
by written notice signed by an officer of the Company or by any assignee or
assignees of the Company and delivered or mailed as provided in Section 19(a).
Such notice shall identify the number of Shares to be purchased and shall notify
Purchaser of the time, place and date for settlement of such purchase, which
shall be scheduled by the Company within thirty (30) days of receipt of such
notice. The Company, or any assignee or assignees of the Company, shall, at its
or their option, pay for any Shares purchased pursuant to the Repurchase Option
by certified check, by offset against any indebtedness owing to the Company (or
to such assignee

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<PAGE>

or assignees, in the case of an exercise of the Repurchase Option by such
assignee or assignees) by Purchaser or by reducing Purchaser's outstanding debt
under the promissory note delivered to Worldwide Fiber Finance Ltd. by Purchaser
pursuant to Section 1 of this Agreement, or by any combination thereof. Upon
delivery of such notice and payment of the purchase price in any of the ways
described above, the Company, or any assignee or assignees of the Company (as
applicable), shall become the legal and beneficial owner of the Shares being
repurchased and all rights and interest therein or related thereto, and the
Company shall have the right to transfer to its own name or the name of any
assignee or assignees of the Company the Shares being repurchased by the
Company, or any assignee or assignees of the Company without further action by
Purchaser.

     (d) Adjustments to Stock. If, from time to time, during the term of the
Repurchase Option there is any change affecting the outstanding Stock as a class
that is effected without the receipt of consideration by the Company (through
merger, consolidation, reorganization, reincorporation, stock dividend, dividend
in property other than cash, stock split, liquidating, dividend, combination of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), then any and all new, substituted or
additional securities or other property which Purchaser receives and/or to which
Purchaser is entitled by reason of Purchaser's ownership of Shares shall be
immediately subject to the Repurchase Option and be included in the word
"Shares" for all purposes of the Repurchase Option with the same force and
effect as the Shares currently subject to the Repurchase Option, but only to the
extent the Shares are, at the time, covered by such Repurchase Option. While the
total Option Price shall remain the same after each such event, the Option Price
per Share upon exercise of the Repurchase Option shall be appropriately
adjusted.

     (e) Termination of Repurchase Option. Section 2 of this Agreement shall
terminate upon the exercise in full or expiration of the Repurchase Option,
whichever first occurs.

     Section 3. Joinder to the Shareholders Agreement. As of the Effective Date,
the Purchaser hereby agrees to join the Shareholders Agreement and, for all
purposes of such Shareholders Agreement to constitute, and be entitled to the
benefits, rights and features (subject to the obligations) associated with his
constituting, a "Shareholder" as that term is defined in the Shareholders
Agreement.

     Section 4. Demand Registration Rights.

     (a) Request for Registration. Subject to Section 4(b) of this Agreement,
Purchaser shall be entitled to make a written request ("Demand Registration
Request") to the Company for registration with the Commission under and in
accordance with the provisions of the Securities Act of all or part of the
Shares owned by him (a "Demand Registration") (which Demand Registration Request
shall specify the intended number of Shares to be disposed of by Purchaser and
the intended method of disposition thereof); provided, that the Company may, if
the Board so determines in the exercise of its reasonable, good faith judg-

                                      -4-
<PAGE>

ment that due to a pending or contemplated acquisition or disposition or public
offering or other similar occurrence it would be inadvisable to effect such
Demand Registration at such time, defer such Demand Registration for a single
period not to exceed one hundred eighty (180) days; provided, however, in the
event that the Company proposes to register shares of its stock under the
Securities Act, whether or not for sale for its own account, during such single
period, Purchaser shall have the right to exercise his Incidental Registration
Rights as outlined in Section 5 of this Agreement with respect to such
registration. Within ten (10) days after receipt of such request, the Company
will use its best efforts to effect the registration under the Securities Act of
the Shares which the Company has been so requested to register by Purchaser.

     (b) Number of Demand Registrations. At any time on or after the earlier of:
(A) the date of the Company's IPO or (B) September 7, 2001, Purchaser shall be
entitled to make one Demand Registration Request at any time; provided, that (i)
the number of Shares subject to any such Demand Registration represents at least
twenty five percent (25%) of the number of Shares held, directly or indirectly,
by Purchaser immediately prior to his Demand Registration Request, (ii) the
Company shall not be obligated to effect more than one Demand Registration and
(iii) Purchaser shall not be entitled to make a Demand Registration Request
during any period during which (A) all of the Shares may be freely transferred
at the same time pursuant to Rule 144 promulgated under the Securities Act, or
(B) all of the Shares have been properly registered on a registration statement,
such registration statement is effective under the Securities Act and all of the
Shares may be freely transferable pursuant to such registration statement.

     (c) Effective Registration and Expenses. A registration will not count as a
Demand Registration until it has become effective (unless Purchaser withdraws
the Shares, in which case such demand will count as a Demand Registration unless
Purchaser agrees to pay all Registration Expenses). The Company shall be solely
responsible for any and all costs and expenses of all registrations and
qualifications under the Securities Act, and of all other actions the Company is
required to take in order to effect the registration of Shares under the
Securities Act whether pursuant to this Agreement or otherwise.

     (d) Priority on Demand Registrations. If the offering of Purchaser's Shares
pursuant to such Demand Registration is in the form of an underwritten offering
and the managing underwriter or underwriters of such offering advise the Company
and Purchaser in writing that in their opinion the number of Shares requested to
be included in such offering is sufficiently large to adversely affect the
success of such offering, the Company will include in such registration the
aggregate number of shares which in the opinion of such managing underwriter or
underwriters can be sold without any such adverse effect, and such amount shall
be allocated in the following order of priority: (i) first, the Shares of the
Purchaser subject to any such Demand Registration and (ii) second, any shares of
common stock that the Company or any other holder proposes to sell.

                                      -5-
<PAGE>

     Section 5. Incidental Registration Rights. As of the Effective Date, the
Company, certain shareholders of the Company and the Purchaser will enter into a
Joinder to the Shareholders Agreement substantially in the form attached hereto
at Tab 5, which shall provide that for purposes of Section 2.2 and all related
Sections of the Registration Rights Agreement, Purchaser shall constitute, and
shall be entitled to all of the benefits, rights and features associated with
being, a "Holder of record of Registrable Securities."

     Section 6. Commitment to Register Shares. As soon as permitted under the
Securities Act following an IPO, the Company will register the Shares purchased
or otherwise acquired by the Purchaser pursuant to this Agreement on a Form S-8
and/or such other form as may be required to permit the sale of such Shares then
held by Purchaser or any "permitted transferee," within the meaning of Form S-8
and/or any other applicable form, in the public market without any restriction,
other than restrictions that arise from the volume limitations of Rule 144.

     Section 7. Additional Registration Rights. If at any time, whether before
or after the Effective Date, the Company has granted or grants to any individual
or entity (an "Additional Investor") rights to register under an effective
registration statement pursuant to the Securities Act any shares of common stock
owned, directly or indirectly, by such Additional Investor, then the Company
shall also grant such registration rights to Purchaser with respect to any
Shares to the extent that such registration rights granted to such Additional
Investor in any way exceed, supplement, or otherwise provide increased benefit
or protection to such Additional Investor than the registration rights granted
to Purchaser under Sections 4, 5 or 6 of this Agreement; provided, that, the
Company will not grant registration rights to any Additional Investor unless
approved by the Board.

     Section 8. Put by the Purchaser. Upon the occurrence of any of the events
specified below, Purchaser or any Permitted Transferee shall have the right to
sell all or any portion of his Shares, whether vested or unvested, to the
Company (the "Put") as set forth below:

     (a) After Termination of Employment.

          (i) Pre-IPO. Prior to an IPO of the Company, if the Purchaser ceases
     to be employed by the Company for any reason, the Purchaser or any
     Permitted Transferee or, upon the death of either the Purchaser or any
     Permitted Transferee, his or her beneficiary shall at any time after such
     date of termination be entitled to exercise the Put (A) with respect to any
     Vested Share at a per Share price equal to the Fair Market Value of the
     Shares calculated as of the Exercise Date and (B) with respect to any
     Unvested Share at a per Share price equal to the lesser of (x) the Fair
     Market Value of a Share calculated as of the Exercise Date or (y) the
     Option Price per Share; and

          (ii) Post-IPO. Following an IPO of the Company, if the Purchaser
     ceases to be employed by the Company for any reason, the Purchaser or any
     Permitted Trans-

                                      -6-
<PAGE>

     feree or, upon the death of either the Purchaser or any Permitted
     Transferee, his or her beneficiary shall at any time after such date of
     termination be entitled to exercise the Put (A) with respect to any Vested
     Share at a per Share price equal to the Fair Market Value of the Shares
     calculated as of the Exercise Date; provided, however, that the aggregate
     amount of Shares that may be put to the Company pursuant to this clause (A)
     shall not exceed the Aggregate Put Amount and (B) with respect to any
     Unvested Share at a per Share price equal to the lesser (x) of the Fair
     Market Value of a Share calculated as of the Exercise Date or (y) the
     Option Price per Share.

     (b) During Employment.

          (i) Pre-IPO. Prior to an IPO of the Company, the Purchaser or any
     Permitted Transferee or, upon the death of either the Purchaser or any
     Permitted Transferee, his or her beneficiary shall be entitled to exercise
     the Put with respect to any Vested Share at a per Share price equal to the
     Fair Market Value of the Shares calculated as of the Exercise Date;
     provided, however, that the aggregate amount of Shares that may be put to
     the Company pursuant to this Section 8(b)(i) shall not exceed the Aggregate
     Put Amount.

          (ii) Post-IPO. Following an IPO of the Company, the Purchaser or any
     Permitted Transferee or, upon the death of either the Purchaser or any
     Permitted Transferee, his or her beneficiary shall be entitled to exercise
     the Put with respect to any Vested Share at a per Share price equal to the
     Fair Market Value of the Shares calculated as of the Exercise Date;
     provided, however, that the aggregate amount of Shares that may be put to
     the Company pursuant to this Section 8(b)(ii) shall not exceed the
     Aggregate Put Amount.

     Section 9. Escrow of Unvested Stock. As security for Purchaser's faithful
performance of the terms of this Agreement and to insure the availability for
delivery of Shares upon exercise of the Repurchase Option herein provided for,
Purchaser agrees, immediately upon receipt of the Stock certificate(s)
evidencing the Shares, to deliver to and deposit with the Secretary of the
Company or the Secretary's designee ("Escrow Agent"), as Escrow Agent in this
transaction, three (3) Stock assignments duly endorsed (with date and number of
shares blank) in the form attached hereto at Tab 2, together with a certificate
or certificates evidencing all of the Shares subject to the Repurchase Option;
said documents are to be held by the Escrow Agent and delivered by said Escrow
Agent pursuant to the Joint Escrow Instructions of the Company and Purchaser set
forth at Tab 3 attached hereto and incorporated by this reference, which
instructions shall also be delivered to the Escrow Agent at the closing
hereunder. As Shares cease to be subject to the Repurchase Option such Shares
will be released from escrow.

     Section 10. Rights of Purchaser. Subject to the provisions of Sections 3,
4, 5, 6, 7 or 8 of this Agreement, Purchaser shall exercise all rights and
privileges of a stockholder of the Company with respect to the Shares from and
after the date that Purchaser deliv-

                                      -7-
<PAGE>

ers payment of the Purchase Price until such time as Purchaser disposes of the
Shares or the Company, or any assignee or assignees of the Company, exercises
its or their right to repurchase the Shares pursuant to Section 2 of this
Agreement. Purchaser shall be deemed to be the holder for purposes of receiving
any dividends that may be paid with respect to such Shares and for the purpose
of exercising any voting rights relating to such Shares, even if some or all of
such Shares have not yet vested and been released from the Repurchase Option.

     Section 11. Limitations on Transfer. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
hypothecate, donate, encumber or otherwise dispose of any interest in the Shares
while the Shares are subject to the Repurchase Option. After any Shares have
been released from the Repurchase Option, Purchaser shall not assign,
hypothecate, donate, encumber or otherwise dispose of any interest in the Shares
except in compliance with the provisions of this Agreement and applicable
securities laws. Notwithstanding anything to the contrary in this Section and to
the extent permitted by applicable securities laws, the following transfers of
shares will be exempt from this Section 11: (i) the transfer of any or all of
the Shares during Purchaser's lifetime by gift or on Purchaser's death by will
or intestacy to a Permitted Transferee (as defined below), provided that each
Permitted Transferee agrees in a writing satisfactory to the Company that (A)
the provisions of this Agreement including without limitation acknowledgement
that the Shares are subject to the lien securing that certain promissory note
dated December 22, 1999 by an between the Purchaser and Worldwide Fiber Finance
Ltd., will continue to apply to the transferred Shares in the hands of such
Permitted Transferee and (B) such Permitted Transferee will not transfer, or
permit any transfer, of the equity in such Permitted Transferee to any entity
other than one that also constitutes a Permitted Transferee; (ii) any transfer
of Shares made pursuant to a statutory merger or statutory consolidation of the
Company with or into another corporation or corporations (except that the right
of first refusal will continue to apply thereafter to such Shares, in which case
the surviving corporation of such merger or consolidation shall succeed to the
rights of the Company under this Section 11 unless the agreement of merger or
consolidation expressly provides otherwise); (iii) any transfer of Shares,
pursuant to the winding up and dissolution of the Company; or (iv) any transfer
of Shares to the Company or any assignee or assignees of the Company, in
accordance with Sections 2 and 8 of this Agreement.

     Section 12. Restrictive Legends. All certificates representing the Unvested
Shares shall have endorsed thereon legends in substantially the following forms
(in addition to any other legend which may be required by other agreements
between the Parties hereto, including the Shareholders Agreement):

          (a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
     OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
     HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON
     FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY. ANY TRANSFER OR ATTEMPTED

                                      -8-
<PAGE>

     TRANSFER OF ANY SHARES SUBJECT TO SUCH OPTION IS VOID WITHOUT THE PRIOR
     EXPRESS WRITTEN CONSENT OF THE COMPANY."

          (b) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE
     SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
     EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
     OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
     NOT REQUIRED."

          (c) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT
     OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR ITS ASSIGNEE(S) AS
     PROVIDED IN THE BYLAWS OF THE COMPANY."

          (d) Any legend required by applicable blue sky laws.

     Section 13. Representations of the Company. The Company hereby represents
and warrants to the Purchaser as of the date of this Agreement as follows:

          (a) Organization, Good Standing and Qualification. The Company is a
     corporation duly organized, validly existing and in good standing under the
     laws of Canada. The Company has all requisite corporate power and authority
     to execute and deliver this Agreement, to issue and sell the Shares, and to
     carry out the provisions of this Agreement.

          (b) Capitalization. As of the Effective Date, the capitalization of
     the Company is set forth at Tab 4.

          (c) Authorization; Binding Obligations. All corporate action on the
     part of the Company necessary for the authorization of this Agreement, the
     performance of all obligations of the Company hereunder at the closing and
     the authorization, sale, issuance and delivery of the Shares pursuant
     hereto have been taken or will be taken prior to the closing. The
     Agreement, when executed and delivered, will be valid and binding
     obligations of the Company enforceable in accordance with their terms,
     except (i) as limited by applicable bankruptcy, insolvency, reorganization,
     moratorium or other laws of general application affecting enforcement of
     creditors' rights, and (ii) general principles of equity that restrict the
     availability of equitable remedies. The sale of the Shares are not and will
     not be subject to any preemptive rights or rights of first refusal that
     have not been properly waived or complied with.

     Section 14. Section 83(b) Election. The Parties acknowledge that Purchaser
will file an election under Section 83(b) of the Internal Revenue Code of 1986,
as amended, (the "Code") with respect to his purchase of the Shares hereunder
and will report in such elec-

                                      -9-
<PAGE>

tion that the purchase price for the Shares is equal to the fair market value of
the Shares (determined without regard to restrictions that will lapse) at the
time of transfer. The Parties shall not voluntarily take (and the Parties shall
cause their respective affiliates not to voluntarily take) any tax reporting
position that is inconsistent with such Section 83(b) election, including the
valuation of the Shares. Purchaser assumes all responsibility for filing the
Section 83(b) election and paying all of Purchaser's taxes resulting from such
election or the lapse of the restrictions on the Shares. Purchaser acknowledges
that the Company is not responsible for any tax obligation of the Purchaser
regardless of his filing an election under Section 83(b) with respect to his
purchase of the Shares.

     Section 15. Provisions Regarding Promissory Note. With respect to the
promissory note of Purchaser provided for under Section 1 of this Agreement, the
Company will provide or shall cause Worldwide Fiber Finance Ltd. to provide an
IRS Form W-8 BEN and a statement that the Worldwide Fiber Finance Ltd. is not a
bank within the meaning of section 881(c)(3)(A) of the Code or a controlled
foreign corporation within the meaning of section 881(c)(3)(C) of the Code and
intends to claim exemption from U.S. Federal withholding tax under section
881(c) of the Code. The Company shall also indicate or cause Worldwide Fiber
Finance Ltd. to indicate whether it is entitled to treaty benefits on such Form
W-8 BEN. The Company shall provide or cause Worldwide Fiber Finance Ltd. to
provide a duly executed Form W-8 BEN to Purchaser within thirty (30) days after
Purchaser's execution of the promissory note. The Company represents that
neither it nor Worldwide Fiber Finance Ltd. is a U.S. person (as such term is
defined in section 7701(a)(30) of the Code) and agrees that it will deliver or
cause Worldwide Fiber Finance Ltd. to deliver to Purchaser new, accurate and
complete forms or documentation prescribed by applicable law if such forms and
documentation are required to be updated so as to permit such payments to be
made without withholding tax or at a reduced rate of withholding tax.

     Section 16. Refusal to Transfer. The Company shall not be required (a) to
transfer on its books any Shares which shall have been transferred in violation
of any of the provisions set forth in this Agreement or (b) to treat as owner of
such Shares or to accord the right to vote as such owner or to pay dividends to
any transferee to whom such shares shall have been so transferred.

     Section 17. No Employment Rights. This Agreement is not an employment
contract and nothing in this Agreement shall affect in any manner whatsoever the
right or power of the Company (or a parent or subsidiary of the Company) to
terminate Purchaser's employment for any reason at any time, with or without
Cause and with or without notice.

     Section 18. Definitions. As used in this Agreement the following terms
shall have the following respective meanings:

          "Aggregate Put Amount" shall mean that amount of Shares, which when
     multiplied by the Fair Market Value applicable to such Shares on the
     Exercise Date, yields a payment from the Company to the Purchaser in an
     amount that will be sufficient for

                                      -10-
<PAGE>

     him to satisfy the following obligations: (A) the outstanding principal and
     accrued interest on any promissory note used to purchase the Shares from
     the Company and (B) any federal, state or local taxes payable by the
     Purchaser as a result of any amount paid to Purchaser pursuant to clause
     (A) or clause (B) of this sentence.

          "Board" shall mean the Company's Board of Directors.

          "Cause" shall have the meaning set forth in Section 5(f)(i) of the
     Employment Agreement.

          "Change of Control" shall have the meaning set forth in Section
     5(f)(ii) of the Employment Agreement.

          "Commission" shall mean the Securities and Exchange Commission.

          "Disability" shall have the meaning set forth in Section 5(f)(iii) of
     the Employment Agreement.

          "Exercise Date" shall mean the date on which the Company purchases
     Shares from the Purchaser pursuant to the Purchaser's exercise of his Put
     under Section 8 of this Agreement.

          "Fair Market Value" shall mean, for purposes of Section 10, the fair
     market value of a share of Class A Non-voting Shares or a share of Class C
     Multiple Voting Shares of the Company as determined, at the Company's
     expense, by an appraisal firm or investment bank of national standing
     experienced in the valuation of such securities ("Valuation Firm") selected
     in good faith by the Purchaser and approved by the Board, which approval
     shall not be unreasonably withheld or delayed. The determination of Fair
     Market Value of a share of Class A Non-voting Shares or a share of Class C
     Multiple Voting Shares shall be based on the value that a willing buyer
     with knowledge of all relevant facts would pay a willing seller for all the
     outstanding equity securities of the Company in connection with an auction
     of the Company as a going concern assuming bidders are prepared to pay a
     control premium and without any discount for lesser voting rights, lack of
     liquidity, lack of control, minority holder status or similar factors. The
     Valuation shall be determined by the Valuation Firm as soon as practicable
     but in any event not later than 60 days following the date of the
     appointment of the Valuation Firm. If the Board has not approved a
     Valuation Firm within 15 days of the proposal of such Valuation Firm by the
     Purchaser hereunder, then (without prejudice to the Purchaser's other
     rights and remedies) the Purchaser may request the President of the
     American Arbitration Association to appoint a Valuation Firm, which will
     then be the Valuation Firm for the transaction in question. The Company
     shall furnish to the Valuation Firm all reasonably available information
     requested by the Valuation Firm. The fair market value established by the
     Valuation Firm (or by the written

                                      -11-
<PAGE>

     agreement of all parties to the transaction) shall be final and binding
     with respect to each required Valuation.

          "Good Reason" shall have the meaning set forth in Section 5(f)(iv) of
     the Employment Agreement.

          "Investor Securities" shall mean any stock or other securities of the
     Company held by any Investor.

          "IPO" shall have the meaning set forth in the Shareholders Agreement.

          "Option Price" means, with respect to one (1) Share, the sum of: (A)
     the Purchase Price Per Share with respect to such Share and (B) the amount
     of any interest accrued by the Purchaser with respect to such Share
     pursuant to any promissory note payable to Worldwide Fiber Finance Ltd. the
     proceeds of which were used by the Purchaser to purchase such Share.

          "Permitted Transferee" shall mean: (i) Purchaser's spouse or children
     or grandchildren (in each case, natural or adopted), (ii) any trust
     established solely for such Purchaser's benefit or the benefit of such
     Purchaser's spouse or children or grandchildren (in each case, natural or
     adopted), (iii) any corporation or partnership in which the direct and
     beneficial owner of all of the equity interest is such individual Purchaser
     or such Purchaser's spouse or children or grandchildren (in each case,
     natural or adopted) (or any trust for the benefit of such persons) or (iv)
     the heirs, executors, administrators or personal representatives upon the
     death of Purchaser or upon the incompetency or disability of Purchaser for
     purposes of the protection and management of the assets of the Purchaser.

          "Registration Rights Agreement" shall mean the Registration Rights
     Agreement by and among Worldwide Fiber Inc., DWF SRL, GSCP3 WWF (Barbados)
     SRL, WWF (Barbados) SRL, Providence Equity Fiber, L.P., Tyco Group
     S.A.R.L., dated as of September 9, 1999.

          "Securities Act" shall mean the Securities Act of 1933, as amended.

          "Shareholders Agreement" shall mean the Shareholders Agreement by and
     among Worldwide Fiber Inc., DWF SRL, GS Capital Partners III, L.P., GSCP3
     WWF (Barbados) SRL, WWF (Barbados) SRL, Providence Equity Fiber, L.P., Tyco
     Group S.A.R.L., Worldwide Fiber Holdings Ltd., Ledcor Inc., and The Several
     Shareholders Named in Schedule I, dated as of September 9, 1999, as amended
     to reflect the transaction(s) contemplated by this Agreement and the
     Employment Agreement.

          "Vested Shares" are Shares that have never been (i.e., all of the
     Class C Shares) or have otherwise ceased to be subject to the Repurchase
     Option.

                                      -12-
<PAGE>

          "Unvested Shares" are Shares that, as of a given date, remain subject
     to the Repurchase Option.

     Section 19. Miscellaneous.

     (a) Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or
facsimile transmission, three (3) days after deposit in the United States mail,
certified or registered mail (return receipt requested), or one (1) business day
after its deposit with any express courier (prepaid), addressed to the other
party hereto at his address (or facsimile number, in the case of transmission by
facsimile) hereinafter shown below its signature to this Agreement or to such
other address (or facsimile number) as such party may designate by ten (10)
days' advance written notice to the other party hereto.

     (b) Successors and Assigns. This Agreement shall inure to the benefit of
the successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, be binding upon Purchaser, Purchaser's heirs,
executors, administrators, successors, and assigns. The Repurchase Option
hereunder shall be assignable by the Company at any time or from time to time,
in whole or in part.

     (c) Governing Law; Venue. This Agreement shall be governed by and construed
in accordance with the laws of the State of Washington. The Parties agree that
any action brought by either party to interpret or enforce any provision of this
Agreement shall be brought in, and each party agrees to, and does hereby, submit
to the jurisdiction and venue of, the appropriate state or federal court for the
district encompassing Seattle, Washington.

     (d) Further Execution. The Parties agree to execute such further
instruments and to take all such further action(s) as may reasonably be
necessary to carry out and consummate the purpose and intent of this Agreement.

     (e) Entire Agreement; Amendment. This Agreement and each of the Tabs
thereto, the Employment Agreement and each of the Exhibits thereto, constitute
the entire agreement between the Parties with respect to the subject matter of
this Agreement and supersedes and merges all prior agreements or understandings,
whether written or oral. This Agreement may not be amended, modified or revoked,
in whole or in part, except by an agreement in writing signed by each of the
Parties hereto.

     (f) Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the Parties agree to renegotiate such
provision in good faith. In the event that the Parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain fully effective and enforceable.

                                      -13-
<PAGE>

     (g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

     (h) Headings. The captions and headings of this Agreement are included for
ease of reference only and will be disregarded in interpreting or construing
this Agreement. Unless specifically indicated otherwise, all references herein
to Sections will refer to Sections of this Agreement.

                      [This space intentionally left blank]

                                      -14-
<PAGE>

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the day and year first above written.

                                  WORLDWIDE FIBER INC.

                                  -----------------------------------------
                                  David Lede, Chairman
                                  Worldwide Fiber Inc.

                                  PURCHASER:

                                  -----------------------------------------
                                  Gregory B. Maffei

Attachments:

Tab 1      --      Promissory Note
Tab 2      --      Stock Assignment Separate from Certificate
Tab 3      --      Joint Escrow Instructions
Tab 4      --      The Company's Capitalization
Tab 5      --      Joinder to the Shareholder's Agreement

                                      -15-
<PAGE>

                                 PROMISSORY NOTE

$ 77,500,000                                                December 22, 1999

     FOR VALUE RECEIVED, Gregory B. Maffei, ("Borrower"), hereby promises to pay
to WORLDWIDE FIBER FINANCE LTD., a corporation incorporated under the laws of
Canada ("Holder"), or registered assigns, the principal sum SEVENTY SEVEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($77,500,000) (the "Principal Amount" as
adjusted from time to time in accordance with the terms of this Agreement), on
December 22, 2005, together with interest accrued thereon through the date of
payment; provided, however, that (A) with respect to each Share, as that term is
defined in the Stock Purchase Agreement dated December 22, 1999 by and between
Borrower and Worldwide Fiber Inc. (the "Agreement"), that Borrower sells in an
arms-length transaction to an unrelated third-party (a "Sale"), Borrower
promises to pay to Holder, or any registered assigns, within thirty (30) days of
the closing of such a Sale, as a partial payment of the Principal Amount, an
amount equal to the lesser of (i) the per Share consideration received by
Borrower as a result such Sale or (ii) the Option Price of such Share and (B)
Borrower promises to pay to Holder, or any registered assigns, any then unpaid
Principal Amount together with interest accrued thereon through the date of
payment no later than the earlier of: (i) the two hundred and seventieth (270th)
day following the date that Borrower's employment with Worldwide Fiber Inc. (the
"Company") terminates as a result of a termination by the Company for Cause
pursuant to Section 5(a) of the employment agreement dated December 22, 1999 by
and between Borrower and the Company (the "Employment Agreement"), a termination
by Borrower without Good Reason pursuant to Section 5(d) of the Employment
Agreement or the Borrower's suffering a Disability pursuant to Section 5(b) of
the Employment Agreement or (ii) on or prior to the five hundred and forty fifth
(545th) day following the date that Borrower's employment with the Company
terminates as a result of a termination by the Company without Cause pursuant to
Section 5(d) of the Employment Agreement, a termination by Borrower for Good
Reason pursuant to Section 5(c) of the Employment Agreement or the Borrower's
death pursuant to Section 5(b) of the Employment Agreement.

     This Promissory Note shall bear interest on the outstanding principal
balance hereunder at the rate of 6.20 percent per annum compounded annually.
Interest shall be calculated on the basis of a 365-day year for the actual
number of days elapsed and shall be payable at maturity. Interest accrued but
unpaid during any Yearly Period shall become part of the Principal Amount
effective at 11:59 P.M. E.S.T. on the last day of such Yearly Period. As used
herein, the term "Yearly Period" means each successive twelve-month period,
beginning on the date of this Agreement and ending on the first anniversary of
the date of this Agreement and continuing to each successive anniversary
thereafter, during which the Principal Amount remains outstanding.

                                    TAB 1-1
<PAGE>

     All payments hereunder shall be made in immediately available funds in
lawful money of the United States of America.

     Except as set forth in the next sentence, the obligations of the Borrower
and the rights of the Holder under this Promissory Note shall be absolute and
shall not be subject to any counterclaim, set-off, deduction or defense. This
Promissory Note represents a recourse obligation of the Borrower only to the
extent of 35% of the Principal Amount. If for any reason the Borrower fails to
pay the full amount due hereunder, the Borrower's maximum personal liability
shall be an amount equal to 35% of the Principal Amount.

     The Borrower hereby pledges to the Holder on the date of this Agreement,
the 31,000,000 Shares of the Company acquired by the Borrower pursuant to the
employment agreement dated December 22, 1999 by and between Borrower and the
Company to secure the satisfaction by Borrower of all his obligations to the
Holder under this Promissory Note. All applicable provisions of the Uniform
Commercial Code shall apply to and be deemed to govern this pledge.

     All or any portion of the Principal Amount evidenced by this Promissory
Note may be prepaid at any time without premium or penalty.

     In the event of default under this Promissory Note, the Holder shall have
all rights and remedies provided at law and in equity.

     No interest or other amount shall be payable in excess of the maximum
permissible rate under applicable law.

     This Promissory Note may not be changed, modified or terminated orally, but
only by an agreement in writing signed by the party sought to be charged.

     This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of Washington, without giving effect to the
principles of conflict of laws thereof.

     This Promissory Note shall be binding upon the successors and assigns of
the Borrower and shall inure to the benefit of the Holder and its successors and
assigns. Transfer of this Promissory Note may be effected only by surrender of
this Promissory Note to Borrower whereupon Borrower shall reissue this
Promissory Note to the Holder's transferee as a successor registered Holder.

                                              --------------------------------
                                              Gregory B. Maffei

                                    TAB 1-2
<PAGE>

                   STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

     FOR VALUE RECEIVED, GREGORY B. MAFFEI hereby sells, assigns and transfers
unto WORLDWIDE FIBER INC., a Delaware corporation (the "Company"), pursuant to
the Repurchase Option under that certain Stock Purchase Agreement, dated
December 22, 1999, by and between the undersigned and the Company (the
"Agreement"), ______________________________________ (___________) shares of
common stock of the Company standing in the undersigned's name on the books of
the Company represented by Certificate No(s) _________ and does hereby
irrevocably constitute and appoint the Company's Secretary attorney to transfer
said stock on the books of the Company with full power of substitution in the
premises. This Assignment may be used only in accordance with and subject to the
terms and conditions of the Agreement, in connection with the repurchase of
shares of common stock issued to the undersigned pursuant to the Agreement, and
only to the extent that such shares remain subject to the Company's Repurchase
Option under the Agreement.

Dated:  ________________________________

                                          _____________________________________

                                    TAB 2-1
<PAGE>

                   STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

     FOR VALUE RECEIVED, GREGORY B. MAFFEI hereby sells, assigns and transfers
unto WORLDWIDE FIBER INC., a Delaware corporation (the "Company"), pursuant to
the Repurchase Option under that certain Stock Purchase Agreement, dated
December 22, 1999, by and between the undersigned and the Company (the
"Agreement"), ______________________________________ (___________) shares of
common stock of the Company standing in the undersigned's name on the books of
the Company represented by Certificate No(s) _________ and does hereby
irrevocably constitute and appoint the Company's Secretary attorney to transfer
said stock on the books of the Company with full power of substitution in the
premises. This Assignment may be used only in accordance with and subject to the
terms and conditions of the Agreement, in connection with the repurchase of
shares of common stock issued to the undersigned pursuant to the Agreement, and
only to the extent that such shares remain subject to the Company's Repurchase
Option under the Agreement.

Dated: ___________________________

                                      ______________________________________

                                    TAB 2-2
<PAGE>

                   STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

     FOR VALUE RECEIVED, GREGORY B. MAFFEI hereby sells, assigns and transfers
unto WORLDWIDE FIBER INC., a Delaware corporation (the "Company"), pursuant to
the Repurchase Option under that certain Stock Purchase Agreement, dated
December 22, 1999, by and between the undersigned and the Company (the
"Agreement"), ______________________________________ (___________) shares of
common stock of the Company standing in the undersigned's name on the books of
the Company represented by Certificate No(s) _________ and does hereby
irrevocably constitute and appoint the Company's Secretary attorney to transfer
said stock on the books of the Company with full power of substitution in the
premises. This Assignment may be used only in accordance with and subject to the
terms and conditions of the Agreement, in connection with the repurchase of
shares of common stock issued to the undersigned pursuant to the Agreement, and
only to the extent that such shares remain subject to the Company's Repurchase
Option under the Agreement.

Dated:  _____________________________

                                       ______________________________________

                                    TAB 2-3
<PAGE>

                            JOINT ESCROW INSTRUCTIONS

Secretary
Worldwide Fiber Inc.

Ladies and Gentlemen:

     As Escrow Agent for both WORLDWIDE FIBER INC., a corporation incorporated
under the laws of Canada (the "Company") and GREGORY B. MAFFEI ("Purchaser"),
you are hereby authorized and directed to hold the documents (the "Property")
delivered to you pursuant to the terms of that certain Stock Purchase Agreement
dated as of December 22, 1999 ("Agreement"), to which a copy of these Joint
Escrow Instructions is attached as Tab 4, in accordance with the following
instructions:

     1. In the event the Company or an assignee shall elect to exercise the
Repurchase Option set forth in the Agreement, the Company or its assignee will
give to Purchaser and you a written notice specifying the number of shares of
stock to be purchased, the purchase price, and the time for a closing thereunder
at the principal office of the Company. Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.

     2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver the same, together with the certificate
evidencing the shares of stock to be transferred, to the Company against the
simultaneous delivery to you of the purchase price (which may include suitable
acknowledgment of cancellation of indebtedness) for the number of shares of
Stock being purchased pursuant to the exercise of the Repurchase Option.

     3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and complete any transaction herein contemplated,
including but not limited to any appropriate filing with state or government
officials or bank officials. Subject to the provisions of this paragraph 3,
Purchaser shall exercise all rights and privileges of a shareholder of the
Company while the stock is held by you.

     4. This escrow shall terminate upon the exercise in full or expiration of
the Repurchase Option, whichever occurs first.

                                    TAB 3-1
<PAGE>

     5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder; provided, however, that if at the time of
termination of this escrow you are advised by the Company that any property
subject to this escrow is the subject of a pledge or other security agreement,
you shall deliver all such property to the pledgeholder or other person
designated by the Company.

     6. Except as otherwise provided in these Joint Escrow Instructions, your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the Parties hereto.

     7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or Parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.

     8. You are hereby expressly authorized to disregard any and all warnings
given by any of the Parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the Parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.

     9. You shall not be liable in any respect on account of the identity,
authorities or rights of the Parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

     10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

     11. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by written
notice to each party. In the event of any such termination, the Company shall
appoint any officer or assistant officer of the Company as successor Escrow
Agent, and Purchaser hereby confirms the ap-

                                    TAB 3-2
<PAGE>

pointment of such successor as his attorney-in-fact and agent to the full extent
of your appointment.

     12. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary Parties hereto shall join in furnishing such instruments.

     13. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
Parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

     14. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery, including delivery
by express courier, or five (5) days after deposit in the United States Post
Office, by registered or certified mail with postage and fees prepaid, addressed
to each of the other Parties entitled to such notice at the following addresses,
or at such other addresses as a party may designate by ten (10) days' advance
written notice to each of the other Parties hereto.

      Company:         Worldwide Fiber Inc.
      Purchaser:       Gregory B. Maffei
                       [At the address on file with
                       Company] With a Copy to:

                       Barton J. Winokur, Esq.
                       Dechert, Price & Rhoads
                       4000 Bell Atlantic Tower
                       1717 Arch Street
                       Philadelphia, PA  19103
      Escrow Agent:

     By signing these Joint Escrow Instructions, you become a party hereto only
for the purpose of said Joint Escrow Instructions; you do not become a party to
the Agreement.

     15. You acknowledge that you are holding the Property in addition to in
your capacity as escrow agent, as collateral agent for Worldwide Fiber Finance
Ltd. for the

                                    TAB 3-3
<PAGE>

purpose of perfecting the lien securing that certain promissory note dated
December 22, 1999 by and between the Purchaser and Worldwide Fiber Finance Ltd.

     16. You shall be entitled to employ such legal counsel and other experts
(excluding, the firm of [Company's Firm] and the firm of Dechert Price and
Rhoads) as you may deem necessary properly to advise you in connection with your
obligations hereunder. You may rely upon the advice of such counsel, and you may
pay such counsel reasonable compensation therefor. The Company shall be
responsible for all fees generated by such legal counsel in connection with your
obligations hereunder.

     17. This instrument shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors and permitted assigns. It is
understood and agreed that references to "you" and "your" herein refer to the
original Escrow Agents. It is understood and agreed that the Company may at any
time or from time to time assign its rights under the Agreement and these Joint
Escrow Instructions.

     18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington. The Parties agree that any action brought
by either party to interpret or enforce any provision of this Agreement shall be
brought in, and each party agrees to, and does hereby, submit to the
jurisdiction and venue of, the appropriate state or federal court for the
district encompassing Seattle, Washington.

                                        Very truly yours,

                                        WORLDWIDE FIBER INC.

                                        ____________________________________
                                        By:

                                        PURCHASER

                                        ____________________________________
                                        Gregory B. Maffei

ESCROW AGENT:

____________________________________
By:

                                    TAB 3-4
<PAGE>

                     CAPITALIZATION OF WORLDWIDE FIBER INC.

     As of the Effective Date of the Stock Purchase Agreement, the
capitalization of Worldwide Fiber Inc. is as follows:

Class A Non-Voting Shares

Ledcor Industries Limited as general partner for Ledcor Limited Partnership -
150,633,200 shares.

Class B Subordinate Shares

MacKenzie Partners, LLC  - 1,200,000 shares;
Madison Square Inc. (Pledge) - 463,200 shares; and
Worldwide Fiber Holdings Ltd. - 39,651,200 shares.

Series A Non-Voting Preferred Shares

DWF SRL - 15,077,888 shares;
GFCP3 (Barbados) SRL - 11,102,056 shares;
WWF (Barbados) SRL - 3,975,832 shares;
Providence Equity Fiber, L.P. - 15,077,888 shares; and
Tyco Group S.A.R.L. - 25,700,800 shares.

Class C Multiple Voting Shares

Ledcor Industries Limited - 36,000,000 shares.

                                    TAB 4-1
<PAGE>

                     JOINDER TO THE SHAREHOLDER'S AGREEMENT

                                    TAB 5-1SHAREHOLDER PROTECTION RIGHTS AGREEMENT

         THIS AGREEMENT made as of January 13, 2000

B E T W E E N:

                   SALIX PHARMACEUTICALS, LTD., a corporation
              existing under the laws of the British Virgin Islands

                               (the "Corporation")

                                     - and -

                    MONTREAL TRUST COMPANY OF CANADA, a trust
                    company incorporated under the laws of
                    Canada, as Rights Agent

                              (the "Rights Agent").

         WHEREAS the Board of Directors has determined that it is advisable and
in the best interests of the Corporation to adopt a shareholder protection
rights plan (the "Rights Plan") to ensure, to the extent possible, that all
shareholders of the Corporation are treated fairly in connection with any
take-over offer for the Corporation;

         AND WHEREAS in order to implement the Rights Plan the Board of
Directors has:

(a)               authorized and declared a distribution of one (1) right (a
                  "Right") effective at the Record Time in respect of each
                  Common Share outstanding at that time;

(b)               authorized the issuance of one (1) Right in respect of each
                  Common Share issued after the Record Time and prior to the
                  earlier of the Separation Time and the Expiration Time;

(c)               authorized the issuance of Rights Certificates to holders of
                  Rights pursuant to the terms and subject to the conditions set
                  forth herein;

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

         AND WHEREAS the Corporation desires to appoint the Rights Agent to act
on behalf of the Corporation, and the Rights Agent is willing to so act, in
connection with the issuance, transfer, exchange and replacement of Rights
Certificates, the exercise of Rights and other matters referred to herein;

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

<PAGE>

                            ARTICLE 1 - INTERPRETATION

1.1      CERTAIN DEFINITIONS

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

         (a)      "ACQUIRING PERSON" means any Person who is the Beneficial
                  Owner of 20% or more of the outstanding Voting Shares, but
                  shall not include:

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

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

A.                  a Voting Share Reduction;

B.                  a Permitted Bid Acquisition;

C.                  an Exempt Acquisition; or

D.                  a Pro Rata Acquisition;

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

(iii)               for the period of 10 days after the Disqualification Date
                    (as defined below), any Person who becomes the Beneficial
                    Owner of 20% or more of the outstanding Voting Shares as a
                    result of such Person becoming disqualified from relying on
                    Clause 1.1(d)(vii) solely because such Person or the
                    Beneficial Owner of such Voting Shares is making or has
                    announced an intention to make a Take-over Bid, either alone
                    or by acting jointly or in concert with any other Person.
                    For the purposes of this definition, "DISQUALIFICATION DATE"
                    means the first date of public announcement of facts
                    indicating that any Person is making or has announced an
                    intention to make a Take-over Bid;

          (iv)      an underwriter or member of a banking or selling group that
                    becomes the Beneficial Owner of 20% or more of the Voting
                    Shares in connection with a bona fide distribution to the
                    public of securities; or

          (v)       a Person (a "Grandfathered Person") who is the Beneficial
                    Owner of 20% or more of the outstanding Voting Shares of the
                    Corporation determined as at the date hereof, provided,
                    however, that this exception shall not be, and shall cease
                    to

                                      -2-
<PAGE>

                    be, applicable to a Grandfathered Person in the event that
                    such Grandfathered Person shall, after the date hereof,
                    become the Beneficial Owner of additional Voting Shares of
                    the Corporation that increases its Beneficial Ownership of
                    Voting Shares by more than 1% of the number of Voting Shares
                    outstanding, other than through a Permitted Bid 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 through one or
          more intermediaries, controls, or is controlled by, or is under common
          control with, such specified Person.

(c)       "ASSOCIATE", when used to indicate a relationship with any Person,
          means:

          (i)       any body corporate of which the Person beneficially owns,
                    directly or indirectly, voting securities carrying more than
                    10 per cent of the voting rights attached to all voting
                    securities of the body corporate for the time being
                    outstanding;

          (ii)      any partner, spouse or child of that Person;

          (iii)     any trust or estate in which the Person has a substantial
                    beneficial interest or as to which the Person serves as
                    trustee or in a similar capacity;

          (iv)      any relative of the Person, where the relative has the same
                    home as the Person; or

          (v)       any relative of the spouse of the Person where the relative
                    has the same home as the Person.

(d)       A Person is deemed the "BENEFICIAL OWNER" 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 beneficial owner
                    (and, for the purposes of this Agreement, a "beneficial
                    owner" of securities shall include a Person who is the owner
                    at law or in equity of such securities);

          (ii)      any securities as to which such Person or any of such
                    Person's Affiliates or Associates has, directly or
                    indirectly:

A.        the right to become beneficial owner (whether such right is
          exercisable immediately or after the passage of time or upon the
          occurrence of a contingency or payment of instalments or otherwise)
          pursuant to any agreement, arrangement, pledge or understanding or
          otherwise, whether or not in writing (other than (x) customary
          agreements with and between underwriters and/or banking group and/or
          selling group members with respect to a bona fide distribution to the
          public of securities and (y) pledges of securities in the ordinary
          course of business that meet all of the conditions specified in Rule
          13d-3(d)(3) under the 1934 Exchange Act), or upon the exercise of
          conversion rights, exchange rights, rights (other than the Rights),
          warrants or options, or otherwise; or

                                      -3-
<PAGE>

B.        the right to vote (whether such right is exercisable immediately or
          after the passage of time or upon the occurrence of a contingency or
          payment of instalments or otherwise) pursuant to any agreement,
          arrangement or understanding or otherwise whether or not in writing
          (other than (x) pledges of securities in the ordinary course of
          business that meet all of the circumstances specified in Rule
          13-3(d)(3) under the 1934 Exchange Act other than the condition in
          Rule 13d-3(3)(3)(ii) and (y) a pledge agreement with a registered
          securities dealer relating to the extension of credit for purchases of
          securities on margin in the ordinary course of the dealer's business);
          and

(iii)     any securities which are beneficially owned by any other Person with
          which such Person or any of such Person's Affiliates is acting jointly
          or in concert (other than pursuant to (x) customary agreements with
          and between underwriters and/or banking group and/or selling group
          members with respect to a bona fide distribution to the public of
          securities and (y) pledges of securities in the ordinary course of
          business that meet all of the conditions specified in Rule 13d-3(d)(3)
          under the 1934 Exchange Act);

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)      solely because such security has been deposited or tendered pursuant
          to a tender or exchange offer or Take-over Bid made by such Person or
          any of such Person's Affiliates or Associates until the earlier of
          such deposited or tendered security being accepted unconditionally for
          payment or exchange or being taken up and paid for;

(v)       solely because such Person or any of such Person's Affiliates or
          Associates has or shares the power to vote or direct the voting of
          such security pursuant to a revocable proxy given in response to a
          public proxy solicitation made pursuant to, and in accordance with,
          the applicable rules and regulations under the Corporations Act, the
          Securities Act and the 1934 Exchange Act, except if such power (or the
          arrangements relating thereto) is then reportable under Section 101 of
          the Securities Act or under Item 6 of Schedule 13D under the 1934
          Exchange Act;

(vi)      solely because such Person or any of such Person's Affiliates or
          Associates has or shares the power to vote or direct the voting of
          such security in connection with, or in order to participate in, a
          public proxy solicitation made or to be made pursuant to, and in
          accordance with, the applicable rules and regulations referred to in
          Clause 1.1(d)(v), except if such power (or the arrangements relating
          thereto) is then reportable under Section 101 of the Securities Act or
          under Item 6 of Schedule 13D under the 1934 Exchange Act;

(vii)     solely because such Person (hereinafter in this Clause 1.1(d)(vii)
          referred to as the "MANAGER"), being principally engaged in the
          business of managing investment funds for other Persons (which others,
          for greater certainty, may include and be limited to one or more
          employee benefit plans or pension plans) who are not Affiliates or
          Associates of the Manager and who do not act jointly or

                                      -4-
<PAGE>

          in concert with the Manager as part of the Manager's duties as agent
          for fully managed accounts, holds or exercises voting or dispositive
          power over such security and such voting or dispositive power over
          such security is held in the ordinary course of such business in the
          performance of the duties of the Manager for the account of the other
          Person; provided, however, that:

          A.        such security shall be deemed, in such case, to be
                    Beneficially Owned by such other Persons; and

          B.        neither the Manager nor any Person acting jointly or in
                    concert with the Manager is then making a Take-over Bid or
                    has not then publicly announced an intention to make a
                    Take-over Bid, either alone or by acting jointly or in
                    concert with any other Person;

          and provided further that, notwithstanding the foregoing, the Board of
          Directors shall have the right to and may determine, acting in good
          faith, that conditions exist which should disentitle the Manager from
          relying on this Clause 1.1(d)(vii) and, in such event, the Manager's
          Beneficial Ownership of securities shall be determined without
          reference to this Clause 1.1(d)(vii); or

(viii)    solely because such Person (hereinafter in this Clause 1.1(d)(viii)
          referred to as the "TRUST COMPANY") holds or exercises voting or
          dispositive power over such securities, provided that:

          A.        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 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 voting or dispositive power
                    over such security in the ordinary course of such duties for
                    the estate of any such deceased or incompetent Person or for
                    such other accounts; and

          B.        the Trust Company is not then making a Take-over Bid or has
                    not then publicly announced an intention to make a Take-over
                    Bid, either alone or by acting jointly or in concert with
                    any other Person;

          and provided further that, notwithstanding the foregoing, the Board of
          Directors shall have the right to and may determine, acting in good
          faith, that conditions exist which should disentitle the Trust Company
          from relying on this Clause 1.1(d)(viii) and, in such event, the Trust
          Company's Beneficial Ownership of securities shall be determined
          without reference to this Clause 1.1(d)(viii); or

(ix)      solely because such Person is a client of the same Manager as another
          Person on whose account the Manager holds or exercises voting or
          dispositive power over such security, or solely because such Person is
          an Estate Account or an Other Account of the same Trust Company as
          another Person on whose account the Trust Company holds or exercises
          voting or dispositive power over such security; or

                                      -5-
<PAGE>

          (x)       solely because any such Person, any of such Person's
                    Affiliates or Associates or any other Person referred to in
                    paragraph (iii) of this definition has an agreement,
                    arrangement or understanding, whether or not in writing (but
                    other than of the nature otherwise referred to in this
                    Subsection 1.1(d)), with respect to one or more shareholder
                    proposals or a matter or matters to come before a particular
                    meeting of shareholders, including the election of
                    directors.

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

(e)       "BOARD OF DIRECTORS" means the board of directors of the Corporation.

(f)       "BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
          which chartered banks in the City of Toronto, Ontario or banks in the
          City of Raleigh, North Carolina or Palo Alto, California (or, if the
          Corporation's principal place of business ceases to be in Palo Alto,
          California, such other city in which the principal place of business
          of the Corporation is located) are authorized or obliged by law to
          close.

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

(h)       "CANADIAN-U.S. EXCHANGE RATE" means, on any date, the inverse of the
          U.S.-Canadian Exchange Rate in effect 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 office of the transfer agent for the Common
          Shares in the City of Toronto (or, after the Separation Time, the
          office of the Rights Agent in the City of Toronto), is closed to the
          public.

(j)       "COMMON SHARES" means the common shares in the capital of the
          Corporation and "COMMON SHARES", when used with reference to any
          Person other than the Corporation, means the class or classes of
          shares (or similar equity interest) with the greatest per share voting
          power entitled to vote generally in the election of all directors of
          such other Person or the equity securities or other equity interest
          having power (whether or not exercised) to control or direct the
          management of such other Person or, if such other Person is a
          Subsidiary of another Person, the Person or Persons which ultimately
          control such first-mentioned other Person.

(k)       "COMPETING PERMITTED BID" means a Take-over Bid made while another
          Permitted Bid is in existence and that satisfies all of the provisions
          of a Permitted Bid except that the condition set forth in subparagraph
          1.1(bb)(ii) may provide that the Voting Shares may be taken up or paid
          for on, and may not be withdrawn after, a date which is not earlier
          than the later of 21 days after the date of the Take-over Bid or the
          earliest date on which Voting Shares may be taken up or paid for under
          any other Permitted Bid that is then in existence for the Voting
          Shares.

                                      -6-
<PAGE>

(l)       "CONTROLLED" means, in determining whether a corporation is deemed to
          be "CONTROLLED" by another Person or Persons, a situation where a
          Person is controlled by another Person or Persons in any manner
          whatsoever that results in control in fact by that other Person or
          Persons, whether directly or indirectly, and whether through share
          ownership, a trust, a contract or otherwise, including in the case of
          control of a corporation where

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

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

           (ii)     the corporation is otherwise controlled by such other Person
                    or Persons;

                    and "CONTROL" and "CONTROLLING" shall be interpreted
                    accordingly.

(m)       "CORPORATIONS ACT" means the International Business Companies Act
          (Cap.291) of the British Virgin Islands, as amended, or such other
          corporate legislation under which the Corporation may exist under or
          be subject to from time to time, and the regulations made thereunder,
          as now in effect or as the same may from time to time be amended,
          re-enacted or replaced.

(n)       "ELECTION TO EXERCISE" has the meaning attributed thereto in Clause
          2.2(d)(i).

(o)       "EXEMPT ACQUISITION" means a share acquisition 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).

(p)       "EXERCISE PRICE" means, as of any date, the price at which a holder of
          a Right may purchase the securities issuable upon exercise of one
          whole Right. Until adjustment thereof in accordance with the terms
          hereof, the Exercise Price shall be $60.

(q)       "EXPIRATION TIME" means the earlier of (i) the Termination Time and
          (ii) the Close of Business on the fifth anniversary of the date of
          this Agreement.

(r)       "EXPIRY DATE OF THE PERMITTED BID" means the date, which shall not be
          less than 60 days following the date on which the proper Take-over Bid
          documentation relating to such Permitted Bid is sent to the
          shareholders of the Corporation, which is indicated in such
          documentation as the date until which such Permitted Bid is open for
          acceptance.

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

(t)       "INDEPENDENT SHAREHOLDERS" means beneficial owners of Voting Shares,
          other than (i) any Acquiring Person, (ii) any Offeror, (iii) any
          Affiliate or Associate of any Acquiring Person or Offeror, (iv) any
          Person acting jointly or in concert with any Acquiring Person or
          Offeror or any Affiliate of any Acquiring Person or Offeror, in each
          case in respect of Voting Shares beneficially owned by such persons.

                                      -7-
<PAGE>

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

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

          (ii)      if for any reason none of such prices is available on such
                    day or the securities are not listed or admitted to trading
                    on a stock exchange or quotation system, the last sale
                    price, or in case no sale takes place on such date, the
                    average of the high bid and low asked prices for each of
                    such securities in the over-the-counter market, as quoted by
                    any reporting system then in use (as determined by the Board
                    of Directors); 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 stock exchange or quotation system 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 selected by the Board of
                    Directors;

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

          Notwithstanding the foregoing, where the Board is Directors is
          satisfied that the Market Price of securities as determined herein was
          affected by an anticipated or actual Take-over Bid or by improper
          manipulation, the Board of Directors may determine the Market Price of
          securities, such determination to be based upon a finding as to the
          price at which a holder of securities of that class could reasonably
          have expected to dispose of his securities immediately prior to the
          relevant date excluding any change in price reasonably attributable to
          the anticipated or actual Take-over Bid or to the improper
          manipulation.

                                      -8-
<PAGE>

(v)       "1934 EXCHANGE ACT" means the SECURITIES EXCHANGE ACT OF 1934 of the
          United States, as amended, and the rules and regulations thereunder as
          now in effect or as the same may from time to time be amended,
          re-enacted or replaced.

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

(x)       "OFFER TO ACQUIRE" includes:

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

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

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

(y)       "OFFEROR" means a Person who has publicly announced an intention to
          make, or who has made, a Take-over Bid, including a Permitted Bid.

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

(aa)      "OFFICER'S CERTIFICATE" of a Person shall mean a certificate signed by
          the Chairman of the board of directors, the President or any Vice
          President and by the Secretary, the Treasurer, and Assistant Secretary
          or an Assistant Treasurer of such Person.

(bb)      "PERMITTED BID" means a Take-over Bid made in compliance with, and not
          on a basis which is exempt from or otherwise not subject to, the
          provisions of Sections 95 through 98, inclusive, and Section 100 of
          the Securities Act and, if applicable, Sections 10, 13(d) and 14 of
          the 1934 Exchange Act and the rules and regulations thereunder (or in
          each case such comparable or successor laws or regulations as shall
          then be in effect, or if all such provisions shall be repealed and
          there shall be no comparable or successor laws then in effect,
          pursuant to Sections 95 through 98, inclusive, and Section 100 of the
          Securities Act as in effect on the date of this Agreement) and in
          compliance with all other applicable laws (including the securities
          laws and regulations of all other relevant jurisdictions) and which is
          also made in compliance with the following additional provisions and
          conditions:

(i)       the Take-over Bid shall be made for all of the Common Shares to all
          holders of record of Common Shares wherever resident or registered on
          the books of the Corporation;

(ii)      the Take-over Bid contains, and the take-up and payment for securities
          tendered or deposited is subject to, an irrevocable and unqualified
          provision that no Voting Shares will be taken up or paid for pursuant
          to the Take-over Bid prior to the close of business on the date which
          is not less than 60 days following the date of the Take-over Bid and
          only if at such date more than 50%

                                      -9-
<PAGE>

          of the Voting Shares held by Independent Shareholders shall have been
          deposited or tendered pursuant to the Take-over Bid and not withdrawn;

(iii)     unless the Take-over Bid is withdrawn in accordance with applicable
          law, the Take-over Bid contains an irrevocable and unqualified
          provision that Voting Shares may be deposited pursuant to such
          Take-over Bid at any time during the period of time described in
          Clause 1.1(bb)(ii) and that any Voting Shares deposited pursuant to
          the Take-over Bid may be withdrawn until taken up and paid for;

(iv)      the Take-over Bid contains an irrevocable and unqualified provision
          that in the event that the deposit condition set forth in Clause
          1.1(bb)(ii) 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; and

          (v)       the Offeror shall make arrangements reasonably required by
                    the Board of Directors of the Corporation to allow for the
                    deposit in acceptance of such Take-over Bid of shares issued
                    on exercise of options held by employees of the Corporation
                    and its subsidiaries;

                  and the Board of Directors acting in good faith determines,
                  prior to the expiry of the Take-over Bid, that the Take-over
                  Bid complies with the provisions of this Subsection 1.1(bb).

                  For purposes of this Agreement, if a Permitted Bid ceases to
                  be a Permitted Bid because it ceases to meet any or all of the
                  requirements mentioned above at any time, any acquisition of
                  Voting Shares made pursuant to such Permitted Bid, including
                  any acquisition of Voting Shares theretofore made, shall cease
                  to be a Permitted Bid Acquisition.

(cc)      "PERMITTED BID ACQUISITION" means an acquisition of Common Shares or
          Voting Shares made pursuant to a Permitted Bid or a Competing
          Permitted Bid made after the Board of Directors, acting in good faith,
          has determined, that the Take-over Bid complies with the provisions of
          Subsection 1.1(bb).

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

(ee)      "PRO RATA ACQUISITION" means an acquisition by a Person of Voting
          Shares pursuant to (w) any dividend reinvestment plan or share
          purchase plan of the Corporation, (x) a stock dividend, a stock split
          or other event pursuant to which such Person becomes the Beneficial
          Owner of Voting Shares on the same pro rata basis as all other holders
          of Voting Shares of the same class or series, (y) the exercise
          (including the grant) of rights granted to such Person to purchase
          Voting Shares distributed to all holders of Voting Shares pursuant to
          a bona fide rights offering which complies with the requirements of

                                      -10-
<PAGE>
          Policy 6.2 of the Ontario Securities Commission or is made pursuant to
          a prospectus or (z) a distribution to the public of Voting Shares, or
          securities convertible into or exchangeable for Voting Shares, made
          pursuant to a prospectus or by way of a private placement completed in
          accordance with applicable securities legislation; provided, however,
          in the case of an acquisition referred to in Subclauses (y) or (z),
          such acquisitions are made for not more than such number of Voting
          Shares or of such securities as is necessary for such Person to
          maintain the percentage of Voting Shares it held immediately prior to
          the announcement of such rights offering or distribution to the public
          or private placement, as the case may be.

(ff)      "RECORD TIME" means the Close of Business on January 13, 2000.

(gg)      "REDEMPTION PRICE" has the meaning attributed thereto in Subsection
          5.1(a).

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

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

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

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

(jj)      "RIGHTS REGISTER" has the meaning attributed thereto in Subsection
          5.1(a).

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

(ll)      "SEPARATION TIME" means the Close of Business on the tenth day after
          the earlier of:

          (i)       the Stock Acquisition Date; and

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

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

                                      -11-
<PAGE>

          (A)  if any such Take-over Bid expires, is cancelled, is terminated or
               is otherwise withdrawn prior to the Separation Time, such offer
               shall be deemed, for the purposes of this Subsection 1.1(kk),
               never to have been made; and

          (B)  if the Board of Directors determines pursuant to Subsection
               5.1(d) or (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.

(mm)      "SPECIAL MEETING" means a special meeting of the holders of Voting
          Shares called by the Board of Directors for the purpose of:

          (i)  ratifying the distribution and continued existence of the Rights
               in accordance with Subsection 5.4(f); or

          (ii) approving an amendment, variation or rescission of any of the
               provisions of this Agreement pursuant to Subsections 5.4(b),
               5.4(c) or 5.4(e).

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

(oo)      "SUBSIDIARY" means a corporation which, in respect of another
          corporation, is:

(i)       controlled by:

A.        that other; or

B.        that other and one or more corporations each of which is controlled by
          that other; or

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

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

(pp)      "TAKE-OVER BID" means an Offer to Acquire Voting Shares or other
          securities which (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), 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 (including all Voting Shares that may be acquired upon
          exercise of all rights of conversion, exchange or purchase attaching
          to the other securities.

          (qq)      "TERMINATION TIME" means the time at which the right to
                    exercise Rights shall terminate pursuant to Subsections
                    3.2(b) or 5.1(c).

                                      -12-
<PAGE>

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

(ss)      "U.S.-CANADIAN EXCHANGE RATE" means, on any date:

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

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

(tt)      "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.

(uu)      "VOTING SHARES" means the Common Shares of the Corporation and any
          other shares of capital stock or voting interests of the Corporation
          entitled to vote generally in the election of directors and "VOTING
          SHARES", when used with reference to any Person other than the
          Corporation, means common shares of such other Person and any other
          shares of capital stock or voting interests of such other Person
          entitled to vote generally in the election of the directors of such
          other Person. For purposes of this Agreement, the percentage of Voting
          Shares Beneficially Owned by any Person shall be, and be deemed to be,
          the product determined by the formula:

                                     A
                                    ---
                           100 X     B

                  where

          A=        the aggregate number of votes for the election of all
                    directors generally attaching (or which would be attached)
                    to the Voting Shares Beneficially Owned by such Person; and

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

          Where any Person is deemed to Beneficially Own unissued Voting Shares,
          such Voting Shares shall be deemed to be outstanding for the purpose
          of both A and B above.

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

1.2      ACTING JOINTLY OR IN CONCERT

                                      -13-
<PAGE>

         For the purposes of this Agreement, whether Persons are acting jointly
or in concert is a question of fact in each circumstance. Notwithstanding the
foregoing, a Person shall be deemed to be acting jointly or in concert with
another Person if such Person is presumed to be acting jointly or in concert
with such other Person for purposes of Section 91 of the Securities Act.

         Notwithstanding the foregoing, and for greater certainty, the phrase,
"acting jointly or in concert", wherever used in this Agreement, shall not
include conduct:

(a)       unrelated to Voting Shares of the Corporation; or

(b)       consisting solely of:

(i)       voting or directing the vote of securities of the Corporation pursuant
          to a revocable proxy given in response to a public proxy solicitation;

(ii)      voting or directing the vote of securities of the Corporation in
          connection with or in order to participate in a public proxy
          solicitation made or to be made; or

(iii)     having an agreement, arrangement or understanding with respect to a
          shareholder proposal or a matter or matters to come before a
          particular meeting of shareholders, including the election of
          directors.

1.3      CURRENCY

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

1.4      NUMBER AND GENDER

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

1.5      SECTIONS AND HEADINGS

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

1.6      STATUTORY REFERENCES

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

                                      -14-
<PAGE>

                             ARTICLE 2 -- THE RIGHTS

2.1      THE RIGHTS; LEGEND ON COMMON SHARE CERTIFICATES

          (a)       Certificates representing Common Shares that are issued and
                    outstanding at the later of the Record Time shall evidence
                    one Right for each Common Share evidenced thereby,
                    notwithstanding the absence of the legend referred to below,
                    until the earlier of (i) the Separation Time and (ii) the
                    Expiration Time. Certificates for Common Shares issued after
                    the later of (i) the Record Time and (ii) the date on which
                    all regulatory approvals for this Agreement have been
                    received but prior to the earlier of (i) the Separation Time
                    and (ii) the Expiration Time shall also evidence one Right
                    for each Common Share represented thereby.

          (b)       All such certificates for Common Shares 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
          Protection Rights Agreement made as of January 13, 2000 (the "Rights
          Agreement"), between Salix Pharmaceuticals, Ltd. (the "Corporation")
          and Montreal Trust Company of Canada (the "Rights Agent"), the terms
          of which are incorporated herein by this reference and a copy of which
          is on file at the principal office of the Corporation. Under certain
          circumstances, as set forth in the Rights Agreement, such Rights may
          be amended or redeemed, may expire, may become void (if, in certain
          cases, they are "Beneficially Owned" by an "Acquiring Person", as such
          terms are defined in the Rights Agreement, or a transferee thereof),
          or may be evidenced by separate certificates and may no longer be
          evidenced by this certificate. The Corporation will mail, or arrange
          for the mailing of, a copy of the Rights Agreement to the holder of
          this certificate without charge promptly after the receipt of a
          written request therefor."

          Certificates representing Common Shares 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 Close of Business on 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, after the Separation Time and
                    prior to the Expiration Time, to purchase one Common Share
                    for the Exercise Price, or the U.S. Dollar Equivalent of the
                    Exercise Price as at the Business Day immediately preceding
                    the Separation Time (which Exercise Price and number of
                    Common Shares are subject to adjustment as set forth below).
                    Notwithstanding any other provision of this Agreement, any
                    Rights held by the Corporation or any of its Subsidiaries
                    shall be void.

                                      -15-
<PAGE>

         (b)      Until the Separation Time, (i) the Rights shall not be
                  exercisable and no Right may be exercised and (ii) for
                  administrative purposes, each Right will be evidenced by the
                  certificate for the associated Common Share registered in the
                  name of the holder thereof (which certificate shall be deemed
                  to represent a Rights Certificate) and will be transferable
                  only together with, and will be transferred by a transfer of,
                  such associated Common Share.

         (c)      After the Separation Time and prior to the Expiration Time,
                  the Rights may be exercised and the registration and transfer
                  of the Rights shall be separate from and independent of Common
                  Shares. Promptly following the Separation Time, the Rights
                  Agent will mail to each holder of record of Common Shares as
                  of the Separation Time (other than an Acquiring Person and, in
                  respect of any Rights Beneficially Owned by such Acquiring
                  Person which are not held of record by such Acquiring Person,
                  the holder of record of such Rights), at such holder's address
                  as shown on the records of the Corporation (the Corporation
                  hereby agreeing to furnish copies of such records to the
                  Rights Agent for this purpose):

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

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

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

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

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

         (e)      Upon receipt of a Rights Certificate, with an Election to
                  Exercise appropriately completed and duly executed, which does
                  not indicate that such Right is void (or which is not
                  otherwise void) as provided by Subsection 3.1(b), accompanied
                  by payment as set

                                      -16-
<PAGE>

                  forth in Clause 2.2(d)(ii), the Rights Agent (unless otherwise
                  instructed by the Corporation) will thereupon promptly:

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

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

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

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

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

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

         (g)      The Corporation covenants and agrees that it will:
                  (i)      take all such action as may be necessary and within
                           its power to ensure that all Common Shares delivered
                           upon exercise of Rights shall, at the time of
                           delivery of the certificates for such Common Shares
                           (subject to payment of the Exercise Price and subject
                           further to the provisions of Subsection 3.1(b)), be
                           duly and validly authorized, executed, issued and
                           delivered as fully paid and non-assessable;

                  (ii)     take all such action as may reasonably be considered
                           to be necessary and within its power to comply with
                           any applicable requirements of the Corporations Act,
                           the Securities Act and the securities legislation of
                           each of the other provinces and territories of
                           Canada, the 1933 Securities Act and the 1934 Exchange
                           Act, and the rules and regulations thereunder or any
                           other applicable law, rule or regulation, in
                           connection with the issuance and delivery of the
                           Rights Certificates and the issuance of any Common
                           Shares upon exercise of Rights;

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

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

                                      -17-
<PAGE>
                           issuance  or  delivery  of certificates  for Common
                           Shares  issued  upon  exercise  of Rights in a name
                           other than that of the holder of the Rights being
                           exercised; and

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

2.3      ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS

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

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

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

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

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

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

                  then

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

B.                                       in a case to which clause (ii) or (iii)
                                    applies or if clause (i) or (iv) applies to
                                    an issue of securities made after the
                                    Separation Time, the number of Rights
                                    outstanding shall be adjusted so that each
                                    Right held prior to such adjustment will
                                    become that number of Rights equal to the
                                    Adjustment Factor, and the adjusted number
                                    of Rights will be deemed to be distributed
                                    among the Common Shares with respect to
                                    which the original Rights were associated
                                    (if they remain outstanding) and the shares
                                    issued in respect of such dividend,

                                      -18-
<PAGE>
                                    subdivision, change, consolidation or
                                    issuance, so that each such Common Share
                                    will have exactly one Right associated with
                                    it.

                  In the event the Corporation shall at any time after the
                  Record Time and prior to the Separation Time issue any Common
                  Shares otherwise than in a transaction referred to in the
                  preceding paragraph, 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.

         (c)       In the event that the Corporation at any time after the
                   Record Time and prior to the Expiration Time fixes a record
                   date for the making of a distribution to substantially all
                   holders of Common Shares of rights or warrants entitling them
                   (for a period expiring within 45 calendar days after such
                   record date) to subscribe for or purchase Common Shares (or
                   securities convertible into or exchangeable for or carrying a
                   right to purchase or subscribe for Common Shares) at a price
                   per Common Share (or, in the case of a security convertible
                   into or exchangeable for or carrying a right to purchase or
                   subscribe for Common Shares, having a conversion, exchange or
                   exercise price per share (including the price required to be
                   paid to purchase such convertible or exchangeable security or
                   right)) less than 90 percent of the Market Price per Common
                   Share on such record date, the Exercise Price shall be
                   adjusted. The Exercise Price in effect after such record date
                   will equal the Exercise Price in effect immediately prior to
                   such record date multiplied by a fraction, of which the
                   numerator shall be the number of Common Shares outstanding on
                   such record date plus the number of Common Shares which the
                   aggregate offering price of the total number of Common Shares
                   so to be offered (and/or the aggregate initial conversion,
                   exchange or exercise price of the convertible or exchangeable
                   securities or rights so to be offered, including the price
                   required to be paid to purchase such convertible or
                   exchangeable securities or rights) would purchase at such
                   Market Price per Common Share and of which the denominator
                   shall be the number of Common Shares outstanding on such
                   record date plus the number of additional Common Shares to be
                   offered for subscription or purchase (or into which the
                   convertible or exchangeable securities or rights to be so
                   offered are initially convertible, exchangeable or
                   exercisable). In case such subscription price may be paid in
                   a consideration part or all of which will be in a form other
                   than cash, the value of such consideration shall be as
                   determined by the Board of Directors. To the extent that such
                   rights or warrants are not exercised prior to the expiration
                   thereof, the Exercise Price shall be readjusted on the
                   expiration thereof to the Exercise Price which would then be
                   in effect based on the number of Common Shares (or securities
                   convertible into or exchangeable for Common Shares) actually
                   issued upon the exercise of such rights. For purposes of this
                   Agreement, the granting of the right to purchase Common
                   Shares (whether from treasury shares or otherwise) pursuant
                   to any dividend reinvestment plan and/or any share purchase
                   plan providing for the reinvestment of dividends or interest
                   payable on securities of the Corporation and/or the
                   investment of periodic optional payments and/or employee
                   benefit, stock option or similar plans (so long as such right
                   to purchase is in no case evidenced by the delivery of rights
                   or warrants by the Corporation) shall not be deemed to
                   constitute an issue of rights or warrants by the Corporation;
                   provided, however, that, in the case of any dividend
                   reinvestment plan or share purchase plan, the right to
                   purchase Common Shares is at a price per share of not less
                   than 90 percent of the current market price per share
                   (determined in accordance with such plans) of the Common
                   Shares.

                                      -19-
<PAGE>

         (d)       In the event that the Corporation at any time after the
                   Record Time and prior to the Expiration Time fixes a record
                   date for the making of a distribution to substantially all
                   holders of Common Shares of evidences of indebtedness or
                   assets (other than a Regular Periodic Cash Dividend or a
                   dividend paid in Common Shares but including any dividend
                   payable in securities other than a dividend or distribution
                   referred to in Subsection 2.3(b)(i) or 2.3(b)(iv)) or rights
                   or warrants entitling them to subscribe for or purchase
                   Common Shares (or securities convertible into or exchangeable
                   for or carrying a right to purchase or subscribe for Common
                   Shares) at a price per Common Share (or, in the case of a
                   security convertible into or exchangeable for or carrying a
                   right to purchase or subscribe for Common Shares, having a
                   conversion, exchange or exercise price per share (including
                   the price required to be paid to purchase such convertible or
                   exchangeable security or right)) less than 90 percent of the
                   Market Price per Common Share on such record date (excluding
                   rights or warrants referred to in Subsection 2.3(c)), the
                   Exercise Price in effect after such record date shall be
                   equal to the Exercise Price in effect immediately prior to
                   such record date less the fair market value (as determined by
                   the Board of Directors) of the portion of the assets,
                   evidences of indebtedness, rights or warrants so to be
                   distributed applicable to a Common Share.

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

(i)                              the record or effective date for the applicable
                           dividend, subdivision, change, consolidation or
                           issuance, in the case of an adjustment made pursuant
                           to Subsection 2.3(b); and

                  (ii)     the record date for the applicable dividend or
                           distribution, in the case of an adjustment made
                           pursuant to Subsection 2.3(c) or (d).

         (f)       In the event that the Corporation 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 Clauses
                   2.3(b)(i) or (iv), if the Board of Directors determines that
                   the adjustments contemplated by Subsections 2.3(b), (c) and
                   (d) in connection with such transaction will not
                   appropriately protect the interests of the holders of Rights,
                   the Corporation 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 2.3(b), (c) and (d), such
                   adjustments, rather than the adjustments contemplated by
                   Subsections 2.3(b), (c) and (d), shall be made. The
                   Corporation and the Rights Agent shall amend this Agreement
                   as appropriate to provide for such adjustments.

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

         (h)      All Rights originally issued by the Corporation subsequent to
                  any adjustment made to an Exercise Price hereunder shall
                  evidence the right to purchase, at the adjusted Exercise

                                      -20-
<PAGE>

                  Price, the number of Common Shares purchasable from time to
                  time hereunder upon exercise of the Rights, all subject to
                  further adjustment as provided herein.

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

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

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

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

         (k)      Irrespective of any adjustment or change in the Exercise Price
                  or the number of securities issuable upon 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 so issuable which were
                  expressed in the initial Rights Certificates issued hereunder.

         (l)      In any case in which this Section 2.3 shall require that
<PAGE>

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

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

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

                                      -21-
<PAGE>

(o)                         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.

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

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

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

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

2.4      DATE ON WHICH EXERCISE IS EFFECTIVE

         Each Person in whose name any certificate for Common Shares is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Common Shares

                                      -22-
<PAGE>

represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered (together
with an appropriately completed and duly executed Election to Exercise) and
payment of the Exercise Price for such Rights (and any applicable transfer taxes
or charges payable by such Person hereunder) was made in accordance with
Subsection 2.2(d); provided, however, that if the date of such surrender and
payment is a date upon which the Common Share transfer books of the Corporation
are closed, such Person shall be deemed to have become the holder of record of
such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Common Share transfer books of the Corporation are
open.

2.5      EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES

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

         (b)      Promptly following the Separation Time, the Corporation will
                  notify the Rights Agent of such Separation Time and will
                  deliver Rights Certificates executed by the Corporation to the
                  Rights Agent for countersignature and a disclosure statement
                  describing the Rights, and the Rights Agent will manually
                  countersign such Rights Certificates and deliver such Rights
                  Certificates and statement to the holders of the Rights
                  pursuant to Subsection 2.2(c). No Rights Certificate shall be
                  valid for any purpose until countersigned by the Rights Agent
                  as aforesaid.

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

2.6      REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE

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

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

         (c)      All Rights issued upon any registration of transfer or
                  exchange of Rights Certificates shall be the valid obligations
                  of the Corporation, and such Rights shall be entitled to the

                                      -23-
<PAGE>

                  same benefits under this Agreement as the Rights surrendered
                  upon such registration of transfer or exchange.

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

2.7      MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES

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

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

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

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

2.8      PERSONS DEEMED OWNERS

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

                                      -24-

<PAGE>

2.9      DELIVERY AND CANCELLATION OF CERTIFICATES

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

2.10     AGREEMENT OF RIGHTS HOLDERS

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

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

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

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

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

         (e)       such  holder is not  entitled  to receive  any  fractional
                   Rights or  fractional  Common  Shares upon the
                   exercise of Rights;

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

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

                                      -25-

<PAGE>

                  commission, or any statute, rule, regulation or executive
                  order promulgated or enacted by a governmental authority,
                  prohibiting or otherwise restraining performance of such
                  obligations.

                     ARTICLE 3 -- ADJUSTMENTS TO THE RIGHTS

3.1  FLIP-IN EVENT

(a)                         Subject to Section 3.1(b) and Subsections 5.1(d)
                  and 5.1(e), and except as provided below, if prior to the
                  Expiration Time a Flip-in Event shall occur, each Right shall
                  constitute, effective at the Close of Business on the 10th day
                  after the Stock Acquisition Date, the right to purchase from
                  the Corporation, upon exercise thereof 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 the event that,
                  after such date of consummation or occurrence, or event, an
                  event of a type analogous to any of the events described in
                  Section 2.3 shall have occurred with respect to such Common
                  Shares).

(b)                         Notwithstanding anything to the contrary in this
                  Agreement, 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 or the Stock Acquisition Date
                  by:

(i)                                 (A)  an Acquiring Person;

                           (B)   any Affiliate or Associate of an Acquiring
                                 Person;

                           (C)   any Person acting jointly or in concert with an
                                 Acquiring Person or any of its Affiliates;

                           (D)   any other Person whose securities are deemed to
                                 be Beneficially Owned by an Acquiring Person

                           (each such Person being herein referred to as the
                           "INELIGIBLE SHAREHOLDER"); or

(ii)                             a transferee, direct or indirect, of an
                           Ineligible Shareholder who becomes a transferee in a
                           transfer, whether or not for consideration, that the
                           Board of Directors has determined is part of a plan,
                           arrangement or scheme of an Ineligible Shareholder
                           that has the purpose or effect of avoiding Clause
                           3.1(b)(i),

                  shall become null and void without any further action, and any
                  holder of such Rights (including a transferee of, or other
                  successor to, such Rights, whether directly or indirectly)
                  shall thereafter have no right 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

                                      -26-
<PAGE>
                  under this Subsection 3.1(b), shall be deemed to be an
                  Acquiring Person or other Ineligible Shareholder for the
                  purposes of this Subsection 3.1(b) and such Rights shall
                  become null and void.

         (c)      Any Rights Certificates that represent Rights Beneficially
                  Owned by a Person described in either Clause (i) or (ii) of
                  Subsection 3.1(b) 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 issued to a Person who was an Acquiring Person
                           or an Affiliate or an Associate of an Acquiring
                           Person or other Ineligible Shareholder (as such terms
                           are defined in the Rights Agreement), including a
                           Person, or an Affiliate or Associate of a Person, who
                           was acting jointly or in concert with any of them or
                           any other Person whose securities are deemed to be
                           Beneficially Owned by such Acquiring Person. This
                           Rights Certificate and the Rights represented hereby
                           shall become void in the circumstances specified in
                           Subsection 3.1(b) of the Rights Agreement."

                  Provided, however, that the Rights Agent shall not be under
                  any responsibility to ascertain the existence of facts that
                  would require the imposition of such legend but shall impose
                  such legend only if instructed to do so by the Corporation in
                  writing of if a holder fails to certify upon transfer or
                  exchange in the space provided on the Rights Certificate that
                  such holder is not a Person described in such legend.

         (d)      From and after the Separation Time, the Corporation 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
                  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      EXCHANGE OPTION

         (a)      In the event that the Board of Directors determines that
                  conditions exist which would eliminate or otherwise materially
                  diminish in any respect the benefits intended to be afforded
                  to the holders of Rights pursuant to this Agreement, the Board
                  of Directors may, at its option and without seeking the
                  approval of the holders of Common Shares or Rights, at any
                  time after a Flip-in Event has occurred, authorize the
                  Corporation to issue or deliver in respect of each Right which
                  is not void pursuant to Subsection 3.1(b), either:

                  (i)      in return for the Exercise Price and the Right, cash,
                           debt or equity securities or other assets (or a
                           combination thereof) having a cash value equal to
                           twice the Exercise Price; or

                  (ii)     in return for the Right and without further charge,
                           subject to any amounts that may be required to be
                           paid under applicable law, cash, debt or equity
                           securities or other assets (or a combination thereof)
                           having a cash value equal to the Exercise Price,

                                      -27-
<PAGE>
                  in full and final settlement of all rights attaching to the
                  Rights, where in either case the value of such debt or equity
                  securities or other assets shall be determined by the Board of
                  Directors who may rely upon the advice of a nationally
                  recognized investment dealer or investment banker selected by
                  the Board of Directors. To the extent that the Board of
                  Directors determines that some action need be taken pursuant
                  to this Section 3.2, the Board of Directors may suspend the
                  exercisability of the Rights for a period of up to 90 days
                  following the date of the occurrence of the relevant Flip-in
                  Event in order to decide the appropriate form of distribution
                  to be made and to determine the value thereof. In the event of
                  any such suspension, the Corporation shall notify the Rights
                  Agent and issue as promptly as practicable a public
                  announcement stating that the exercisability of the Rights has
                  been temporarily suspended.

         (b)      If the Board of Directors authorizes the exchange of debt or
                  equity securities or other assets (or a combination thereof)
                  for Rights pursuant to Subsection 3.2(a), then, without any
                  further action or notice, the right to exercise the Rights
                  will terminate and the only right thereafter of a holder of
                  Rights shall be to receive such debt or equity securities or
                  other assets (or a combination thereof) in accordance with the
                  exchange formula authorized by the Board of Directors. Within
                  10 Business Days after the Board of Directors has authorized
                  the exchange of debt or equity securities or other assets (or
                  a combination thereof) for Rights pursuant to Subsection
                  3.2(a), the Corporation shall give notice of such exchange to
                  the holders of such Rights. Each such notice of exchange will
                  state the method by which the exchange of debt or equity
                  securities or other assets (or a combination thereof) for
                  Rights will be effected.

         (c)      The Corporation shall not be required to issue fractions of
                  securities or to distribute certificates evidencing fractional
                  securities. In lieu of issuing such fractional securities,
                  there shall be paid to the registered holders of Rights to
                  whom such fractional securities would otherwise be issuable,
                  an amount in cash equal to the same fraction of the Market
                  Price of a whole security.

3.3      FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS OF THE CORPORATION

                  For clarification it is understood that nothing contained
in this Article 3 shall be considered to affect the obligations of the members
of the Board of Directors to exercise their 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 of the Corporation 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
Special Meeting) with respect to any Take-over Bid that the Board of Directors
believes is necessary or appropriate in the exercise of the fiduciary duties of
its members.

                                      -28-
<PAGE>
                          ARTICLE 4 -- THE RIGHTS AGENT

4.1      GENERAL

         (a)      The Corporation hereby appoints the Rights Agent to act as
                  agent for the Corporation and the holders of Rights in
                  accordance with the terms and conditions hereof, and the
                  Rights Agent hereby accepts such appointment. The Corporation
                  may from time to time appoint such Co-Rights Agents as it may
                  deem necessary or desirable subject to the prior approval of
                  the Rights Agent. In the event the Corporation appoints one or
                  more Co-Rights Agents, the respective duties of the Rights
                  Agents and Co-Rights Agents shall be as the Corporation may
                  determine with the approval of the Rights Agent. The
                  Corporation agrees to pay to the Rights Agent reasonable
                  compensation for all services rendered by it hereunder (as per
                  the attached Fee Schedule) and, from time to time, on demand
                  of the Rights Agent, its reasonable expenses and counsel fees
                  and other disbursements incurred in the administration and
                  execution of this Agreement and the exercise and performance
                  of its duties hereunder (including the fees and disbursements
                  of any expert or advisor retained by the Rights Agent with the
                  approval of the Corporation). The Corporation also agrees to
                  indemnify the Rights Agent, its officers, directors and
                  employees for, and to hold them harmless against, any loss,
                  liability, or expense, incurred without negligence, bad faith
                  or wilful misconduct on the part of the Rights Agent, for
                  anything done or omitted by the Rights Agent in connection
                  with the acceptance and administration of this Agreement,
                  including 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. The Corporation shall inform
                  the Rights Agent in a reasonably timely manner of events which
                  may materially affect the administration of this Agreement by
                  the Rights Agent and at any time, upon request, shall provide
                  to the Rights Agent an incumbency certificate with respect to
                  the then current directors of the Corporation.

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

4.2      MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT

         (a)      Any corporation into which the Rights Agent or any successor
                  Rights Agent may be merged or amalgamated or with which it may
                  be consolidated, or any corporation resulting from any merger,
                  amalgamation or consolidation to which the Rights Agent or any
                  successor Rights Agent is a party, or any corporation
                  succeeding to the shareholder or stockholder services business
                  of the Rights Agent or any successor Rights Agent, will be the
                  successor to the Rights Agent under this Agreement without the
                  execution or filing of any paper or any further act on the
                  part of any of the parties hereto, provided that such
                  corporation would be eligible for appointment as a successor
                  Rights Agent under the provisions of Section 4.4 hereof. In
                  case at the time such successor Rights Agent succeeds to the
                  agency created by this Agreement any of the Rights
                  Certificates have

                                      -29-
<PAGE>
                  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)      In case at any time the name of the Rights Agent is changed
                  and at such time any of the Rights Certificates shall have
                  been countersigned but not delivered, the Rights Agent may
                  adopt the countersignature under its prior name and deliver
                  Rights Certificates so countersigned; and in case at that time
                  any of the Rights Certificates shall not have been
                  countersigned, the Rights Agent may countersign such Rights
                  Certificates either in its prior name or in its changed name;
                  and in all such cases such Rights Certificates shall have the
                  full force provided in the Rights Certificates and in this
                  Agreement.

4.3      DUTIES OF RIGHTS AGENT

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

         (a)      The Rights Agent may retain and consult with legal counsel
                  (who may be legal counsel for the Corporation), and the
                  opinion of such counsel will be full and complete
                  authorization and protection to the Rights Agent as to any
                  action taken or omitted by it in good faith and in accordance
                  with such opinion; the Rights Agent may also, with the
                  approval of the Corporation (where such approval may
                  reasonably be obtained and 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 rely
                  in good faith on the advice of any such expert;

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

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

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

                                      -30-
<PAGE>
         (e)      The Rights Agent will not be under any responsibility in
                  respect of the validity of this Agreement or the execution and
                  delivery hereof (except the due authorization, execution and
                  delivery hereof by the Rights Agent) or in respect of the
                  validity or execution of any Common Share certificate or
                  Rights Certificate (except its countersignature thereof); nor
                  will it be responsible for any breach by the Corporation of
                  any covenant or condition contained in this Agreement or in
                  any Rights Certificate; nor will it be responsible for any
                  change in the exercisability of the Rights (including the
                  Rights becoming void pursuant to Subsection 3.1(b)) or any
                  adjustment required under the provisions of Section 2.3 or
                  responsible for the manner, method or amount of any such
                  adjustment or the ascertaining of the existence of facts that
                  would require any such adjustment (except with respect to the
                  exercise of Rights after receipt of the certificate
                  contemplated by Subsection 2.3(p) hereof describing any such
                  adjustment); nor will it by any act hereunder be deemed to
                  make any representation or warranty as to the authorization of
                  any Common Shares to be issued pursuant to this Agreement or
                  any Rights or as to whether any Common Shares will, when
                  issued, be duly and validly authorized, executed, issued and
                  delivered and fully paid and non-assessable;

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

         (g)      The Rights Agent is hereby authorized and directed to accept
                  instructions with respect to the performance of its duties
                  hereunder from any Person designated in writing by the
                  Corporation, and to apply to such persons for advice or
                  instructions in connection with its duties and it shall not be
                  liable for any action taken or suffered by it in good faith in
                  accordance with instructions of any such person;

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

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

                                      -31-
<PAGE>
4.4      CHANGE OF RIGHTS AGENT

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

         ARTICLE 5 -- MISCELLANEOUS

5.1      REDEMPTION AND WAIVER

         (a)      The Board of Directors may, at its option, at any time prior
                  to the occurrence of a Flip-in Event, elect to redeem all but
                  not less than all of the then outstanding Rights at a
                  redemption price of $0.0001 per Right appropriately adjusted
                  in a manner analogous to the applicable adjustment provided
                  for in Section 2.3 in the event that an event of the type
                  analogous to any of the events described in Section 2.3 shall
                  have occurred (such redemption price being herein referred to
                  as the "REDEMPTION PRICE"). The redemption of the Rights by
                  the Board of Directors may be made effective at such time, on
                  such basis and with such conditions as the Board of Directors
                  in its sole discretion may establish.

         (b)      If an Offeror successfully completes a Permitted Bid by having
                  taken up and paid for not less than 50 per cent of the Voting
                  Shares held by Independent Shareholders pursuant to Permitted
                  Bid Acquisitions, the Board of Directors shall, without
                  further formality, be deemed to have elected to redeem the
                  Rights at the Redemption Price on the Expiry Date of the
                  Permitted Bid.

         (c)                If the Board of Directors elects to or is deemed to
                  have elected to redeem the Rights, the right to exercise the
                  Rights will thereupon without further action and without

                                      -32-
<PAGE>
                  notice terminate and the only right thereafter of the holder
                  of a Right shall be to receive the Redemption Price. Within 10
                  days of the Board of Directors electing or being deemed to
                  have elected to redeem the Rights, the Corporation shall give
                  notice of such redemption to the holders of the then
                  outstanding Rights. Each such notice of redemption shall state
                  the method by which the payment of the Redemption Price shall
                  be made.

         (d)      The Board of Directors may until the occurrence of a Flip-in
                  Event determine, upon prior written notice delivered to the
                  Rights Agent, to waive the application of Section 3.1 to any
                  particular Flip-in Event (which for greater certainty shall
                  not include the circumstances described in Subsection 5.1(e));
                  provided that if the Board of Directors waives the application
                  of Section 3.1 to a particular Flip-in Event pursuant to this
                  Subsection 5.1(d), subject to as provided below 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
                  any Take-over Bid which is made by means of a take-over bid
                  circular (i) prior to the granting of such waiver, (ii)
                  thereafter and prior to the expiry of any Take-over Bid (as
                  the same may be extended from time to time) outstanding at the
                  time of the granting of such waiver or (iii) thereafter and
                  prior to the expiry of any Take-over Bid in respect of which a
                  waiver is, or is deemed to have been, granted under this
                  Subsection 5.1(d); provided further that if the first waiver
                  pursuant to this Subsection 5.1(d) is in respect of any bid
                  which would have been a Permitted Bid but for the absence of
                  one or more of the elements of a Permitted Bid set out in
                  subclauses 1.1(bb) (i), (ii), (iii) or (iv) (the "Waived
                  Conditions"), any such second or further waiver which is
                  deemed to occur by reason of Subsection 5.1(d) shall only be
                  deemed to occur if each such second or further Take-over Bid
                  would also be a Permitted Bid but for the Waived Conditions.

         (e)      The Board of Directors may prior to the Close of Business on
                  the tenth day following the Stock Acquisition Date determine,
                  upon prior written notice delivered to the Rights Agent, to
                  waive or to agree to waive the application of Section 3.1 to
                  the Flip-in Event giving rise to the Stock Acquisition Date,
                  provided that the Acquiring Person has (i) reduced its
                  Beneficial Ownership of Voting Shares or (ii) has entered into
                  a contractual arrangement with the Corporation, acceptable to
                  the Board of Directors, to do so within 30 days of the date on
                  which such contractual arrangement is entered into (the expiry
                  of which period is herein referred to as the "DISPOSITION
                  DATE"), such that at the time the waiver becomes effective
                  pursuant to this Subsection 5.1(e) such Person is no longer an
                  Acquiring Person. In the event of such a waiver becoming
                  effective, for the purposes of this Agreement, such Flip-in
                  Event shall be deemed not to have occurred. Without limiting
                  the generality of the foregoing, 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.

         (f)      Where a Take-over Bid, or other events giving rise to a
                  Separation Time, is withdrawn or otherwise terminated after
                  the Separation Time has occurred and prior to the occurrence
                  of a Flip-in Event, or in any other circumstances 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. Without restricting the rights of the Board of
                  Directors to elect to redeem the Rights pursuant to section
                  5.1(a) rather than pursuant to section 5.1(f), upon the Rights
                  being redeemed pursuant to this section 5.1(f), all of 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

                                      -33-
<PAGE>
                  Shares as of the Separation Time had not been mailed to each
                  such holder and for all purposes of this Agreement the events
                  giving rise to the Separation Time shall be deemed not to have
                  occurred.

         (g)      The Corporation shall give prompt written notice to the Rights
                  Agent of any waiver of the application of Section 3.1 made by
                  the Board of Directors under this Section 5.1.

5.2      EXPIRATION

         No Person shall have any rights pursuant to this Agreement or in
respect of any Right after the Expiration Time, except the Rights Agent as
specified in Subsection 4.1(a) hereof.

5.3      ISSUANCE OF NEW RIGHTS CERTIFICATES

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

5.4      SUPPLEMENTS AND AMENDMENTS

         (a)      Without the approval of any holders of Voting Shares or
                  Rights, the Corporation may make amendments 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 or regulations
                  thereunder, or which are made to cure any ambiguity, defect or
                  inconsistency, or which are to make changes which do not
                  adversely affect the interests of holders of Rights (excluding
                  the interests of any Acquiring Person or other persons
                  identified in section 3.1(b) hereof), or which are to shorten
                  or lengthen any time period under the Rights Agreement;
                  provided, however, that no amendment to adjust the timer
                  period governing redemption shall be made at such time as the
                  Rights are not redeemable.. The Corporation may, prior to the
                  date of the shareholders' meeting referred to in Section
                  5.4(f), 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.

         (b)      Subject to subsection 5.4(a), the Corporation may, with the
                  prior consent of the holders of Voting Shares obtained as set
                  forth below, at any time before the Separation Time, amend,
                  vary or rescind any of the provisions of this Agreement and
                  the Rights (whether or not such action would materially
                  adversely affect the interests of the holders of Rights
                  generally). Such consent shall be deemed to have been given if
                  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 Corporation 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

                                      -34-
<PAGE>
                  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 50% plus one of the votes cast in
                  respect thereof.

         (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 purposes hereof, each outstanding Right
                  (other than Rights which are void pursuant to the provisions
                  hereof) shall be entitled to one vote, and the procedures for
                  the calling, holding and conduct of the meeting shall be
                  those, as nearly as may be, which are provided in the
                  Corporation's by-laws and the Corporations Act with respect to
                  meetings of shareholders of the Corporation.

         (e)      Any amendments made by the Corporation to this Agreement
                  pursuant to Subsection 5.4(a) which are required to maintain
                  the validity of this Agreement as a result of any change in
                  any applicable legislation or regulation thereunder shall:

         (i)                if made before the Separation Time, be submitted to
                     the shareholders of the Corporation at the next meeting of
                     shareholders and the shareholders may, by the majority
                     referred to in 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 Corporation and the holders of
                     Rights may, by resolution passed by the majority referred
                     to in Subsection 5.4(d) confirm or reject such amendment.

                     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 Board of Directors shall call and hold a Special Meeting
                  of holders of Voting Shares to consider and, if thought
                  appropriate, ratify the distribution and the continued
                  existence of the Rights. The Special Meeting shall be held on
                  a date fixed by the Board of Directors, which date shall be no
                  later than July 6, 2000 (or such later date as The Toronto
                  Stock Exchange may approve). The Board of Directors shall fix
                  a record date for

                                      -35-
<PAGE>
                  determining the holders of Voting Shares entitled to receive
                  notice of the Special Meeting in accordance with all
                  applicable laws and the articles and by-laws of the
                  Corporation. Unless a majority of the votes cast by the
                  Independent Shareholders on such resolution are voted in
                  favour of the continued existence of the Rights, then the
                  Board of Directors shall immediately upon the confirmation by
                  the Chairman of such shareholders' meeting of the result of
                  the vote on such resolution, without further formality, be
                  deemed to have elected to redeem the Rights at the Redemption
                  Price.

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

         (h)      Any supplement or amendment to this Agreement pursuant to
                  Section 5.4(b) through (g) shall be subject to the receipt of
                  any requisite approval or consent from any governmental or
                  regulatory authority having jurisdiction over the Corporation,
                  including without limitation an requisite approval of stock
                  exchanges on which the Shares are listed (which supplement or
                  amendment shall be effective upon receipt of such approval
                  (whether or not such approval is subject to one or more
                  conditions which must be satisfied)).

5.5      FRACTIONAL RIGHTS AND FRACTIONAL SHARES

         (a)      The Corporation shall not be required to issue fractions of
                  Rights or to distribute Rights Certificates which evidence
                  fractional Rights. After the Separation Time, there shall be
                  paid to the registered holders of the Rights Certificates with
                  regard to which fractional Rights would otherwise be issuable,
                  an amount in cash equal to the same fraction of the Market
                  Price of a whole Right in lieu of such fractional Rights. The
                  Rights Agent shall have no obligation to make any payments in
                  lieu of fractional Rights unless the Corporation shall have
                  provided the Rights Agent with the necessary funds to pay in
                  full all amounts payable in accordance with Section 2.2 (e).

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

5.6      RIGHTS OF ACTION

         Subject to the terms of this Agreement, rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the respective holders of the Rights; and any holder of any
Rights, without the consent of the Rights Agent or of the holder of any other
Rights may, on such holder's own behalf and for such holder's own benefit and
the benefit of other holders of Rights, enforce, and may institute and maintain
any suit, action or proceeding against the Corporation to enforce, or otherwise
act in respect of, such holder's right to exercise such holder's Rights to which
such Person is entitled, in the manner provided in such holders 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

                                      -36-
<PAGE>
Agreement and will be entitled to specific performance of the obligations under,
and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.

5.7      HOLDER OF RIGHTS DEEMED NOT A SHAREHOLDER

         No holder, as such, of any Rights shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Shares or any other
securities which may at any time be issuable on the exercise of such Rights, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights as such, any of the rights of a shareholder
of the Corporation or any right to vote for the election of directors or upon
any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders, or to receive dividends or subscription
rights or otherwise.

5.8      NOTICES

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

SALIX PHARMACEUTICALS, LTD.
c/o Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina  27607
U.S.A.

Facsimile No.:             (919) 781-4865
Attention:                 Donald R. Reynolds

Any such notice or demand shall be deemed to have been received, if delivered
personally, on the date of delivery (if such date is a Business Day, failing
which it shall be deemed delivered on the next Business Day), if sent by
facsimile, on the next Business Day following transmission or if sent by
registered or certified mail, on the fifth Business Day after the mailing
thereof, except in the case of interruption of regular mail service, in which
case such notice shall be sent by facsimile or personally delivered.

         Any notice or demand authorized or required by this Agreement to be
given or made by the Corporation or by the holder of any Rights to or on the
Rights Agent shall be sufficiently given or made if delivered personally or if
delivered or sent by registered or certified mail, postage prepaid, or by
facsimile transmission addressed as follows:

MONTREAL TRUST COMPANY OF CANADA
151 Front Street West
8th Floor
Toronto, Ontario
M5J 2N1

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

                                      -37-
<PAGE>

Any such notice or demand shall be deemed to have been received, if delivered
personally, on the date of delivery (if such date is a Business Day, failing
which it shall be deemed delivered on the next Business Day), if sent by
facsimile, on the next Business Day following transmission or if sent by
registered or certified mail, on the fifth Business Day after the mailing
thereof, except in the case of interruption of regular mail service, in which
case such notice shall be sent by facsimile or personally delivered.

         Notices or demands authorized or required by this Agreement to be given
or made by the Corporation or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears on the Rights Register or, prior to the Separation Time, on the
registers of the Corporation for the Common Shares. Any notice which is mailed
in the manner herein provided shall be deemed given on the fifth Business Day
after the date of mailing thereof, 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 a newspaper of general circulation in the City
of Toronto.

5.9      COSTS OF ENFORCEMENT

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

5.10     REGULATORY APPROVALS

         Any obligation of the Corporation or action or event contemplated by
this Agreement, or any amendment to this Agreement, shall be subject to the
receipt of any requisite approval or consent from any governmental or regulatory
authority.

5.11     DECLARATION AS TO NON-CANADIAN AND NON-U.S. HOLDERS

                                      -38-
<PAGE>

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

5.12     SUCCESSORS

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

5.13     BENEFITS OF THIS AGREEMENT

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

5.14     GOVERNING LAW

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

5.15     LANGUAGE

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

5.16 COUNTERPARTS

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

5.17 SEVERABILITY

     If any Section, Subsection, paragraph, subparagraph,
term or provision hereof or the application thereof to any circumstance shall,
in any jurisdiction and to any extent, be invalid or unenforceable, such
Section, Subsection, paragraph, subparagraph, term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
Sections, Subsections, paragraphs, subparagraphs, terms and provisions hereof or
the application of such Section, Subsection, paragraph, subparagraph, term or
provision to circumstances other than those as to which it is held invalid or
unenforceable.

<PAGE>

5.18     EFFECTIVE DATE

                  This Agreement is effective from the date hereof.

5.19     TIME OF THE ESSENCE

                  Time shall be of the essence hereof.

5.20     DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS

         The Board of Directors shall have the exclusive power and authority to
administer and amend this Agreement in accordance with the terms hereof and to
exercise all rights and powers specifically granted hereunder to the Board of
Directors or the Corporation, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not to redeem the Rights or to
amend the Agreement, in accordance with the terms hereof). All such actions,
calculations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors in good faith, shall (x) be final, conclusive and binding on the
Corporation, the Rights Agent, the holders of the Rights, and all other parties
and (y) not subject the Board of Directors to any liability to the holders of
the Rights, or any other parties.

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

                                          SALIX PHARMACEUTICALS, LTD.

                                          Per:
                                                   Robert P. Ruscher
                                                   Chief Executive Officer
                                                   Authorized Signing Officer

                                          MONTREAL TRUST COMPANY OF CANADA

                                          Per:

                                          Per:

<PAGE>
                                    EXHIBIT A

                          [FORM OF RIGHTS CERTIFICATE]

Certificate No.__________________________             _________________Rights

         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 PROTECTION
         RIGHTS AGREEMENT MADE AS OF JANUARY 13, 2000 (THE "RIGHTS AGREEMENT"),
         BETWEEN SALIX PHARMACEUTICALS, LTD. (THE "CORPORATION") AND MONTREAL
         TRUST COMPANY OF CANADA , AS RIGHTS AGENT, THE TERMS OF WHICH ARE
         INCORPORATED HEREIN BY THIS REFERENCE AND A COPY OF WHICH IS ON FILE AT
         THE PRINCIPAL OFFICE OF THE CORPORATION. UNDER CERTAIN CIRCUMSTANCES,
         AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS MAY BE AMENDED OR
         REDEEMED, MAY EXPIRE, MAY BECOME VOID (IF, IN CERTAIN CASES, THEY ARE
         "BENEFICIALLY OWNED" BY AN "ACQUIRING PERSON" OR AN "INELIGIBLE
         SHAREHOLDER", AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT, OR A
         TRANSFEREE THEREOF), OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND
         MAY NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE CORPORATION WILL
         MAIL, OR ARRANGE FOR THE MAILING OF, A COPY OF THE RIGHTS AGREEMENT TO
         THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE PROMPTLY AFTER THE
         RECEIPT OF A WRITTEN REQUEST THEREFOR.

                               RIGHTS CERTIFICATE

This certifies that__________________________________ is the registered holder
of the number of Rights set forth above, each of which entitles the registered
holder thereof, subject to the terms, provisions and conditions of the
Shareholder Protection Rights Agreement made as of January 13, 2000 (the "Rights
Agreement") as amended between SALIX PHARMACEUTICALS, LTD., a corporation
incorporated under the laws of British Virgin Islands (the "Corporation") and
Montreal Trust Company of Canada, a trust company incorporated under the laws of
Canada, as Rights Agent (the "Rights Agent", which term shall include any
successor Rights Agent under the Rights Agreement), to purchase from the
Corporation, at any time after the Separation Time and prior to the Expiration
Time (as such terms are defined in the Rights Agreement), one fully paid common
share of the Corporation (a "Common Share") at the Exercise Price referred to
below, upon presentation and surrender of this Rights Certificate, together with
the Form of Election to Exercise appropriately completed and duly executed, to
the Rights Agent at its principal office in the City of Toronto (or such other
locations as the Corporation and the Rights Agent may from time to time
determine). Until adjustment thereof in certain events as provided in the Rights
Agreement, the Exercise Price shall be $60 per Right (payable by bank draft,
certified cheque or money order payable to the order of the Corporation).

         In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive assets, debt securities or shares in the capital of the Corporation
other than Common Shares, or more or less than one Common Share (or a
combination thereof), all as provided in the Rights Agreement.

                                      A-1

<PAGE>

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

         This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent in the City of
Toronto (or such other locations as the Corporation and the Rights Agent may
from time to time determine), may be exchanged for another Rights Certificate or
Rights Certificates of like tenor evidencing an aggregate number of Rights equal
to the aggregate number of Rights evidenced by the Rights Certificate or Rights
Certificates surrendered. If this Rights Certificate shall be exercised in part,
the registered holder shall be entitled to receive, upon surrender hereof,
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Corporation at a redemption price
of $0.0001 per Right, subject to adjustment in certain events, or (ii) may be
exchanged, at the option of the Corporation, for cash, debt or equity securities
or other assets (or a combination thereof).

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

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

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

WITNESS the signature of the proper officers of the Corporation.

Date:___________________________

SALIX PHARMACEUTICALS, LTD.

Per:____________________________
         Chief Executive Officer

Countersigned:

MONTREAL TRUST COMPANY OF CANADA

                                      A-2
<PAGE>

Per:__________________________________
         Authorized Signature

                                      A-3
<PAGE>
                           [Continued on Reverse Side]

                          FORM OF ELECTION TO EXERCISE

TO:      SALIX PHARMACEUTICALS, LTD.

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

         ________________________________________
         Name

         ________________________________________
         Address

         ________________________________________
         City and Province/State/Country

         ________________________________________
         Social Insurance No. or other taxpayer
         identification number

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

         ________________________________________
         Name

         ________________________________________
         Address

         ________________________________________
         City and Province/State/Country

         ________________________________________
         Social Insurance Number or other
         taxpayer identification number

                                      A-4
<PAGE>

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

_______________________________________
Signature Guaranteed

                 (THE FOLLOWING IS TO BE COMPLETED ONLY IF TRUE)

         The undersigned hereby represents, for the benefit of the Corporation
and all holders of Rights and Common Shares, that the Rights evidenced by this
Rights Certificate are not and, to the knowledge of the undersigned, have never
been, Beneficially Owned by (i) an Acquiring Person, (ii) any Affiliate or
Associate of an Acquiring Person, (iii) any other Person acting jointly or in
concert with an Acquiring Person or any Affiliate of an Acquiring Person, or
(iv) any other Person whose securities are deemed to be Beneficially Owned by an
Acquiring Person. Capitalized terms shall have the meanings ascribed thereto in
the Rights Agreement.

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

_______________________________________
Signature Guaranteed

NOTE: Signature must be guaranteed by a major Canadian trust company, Canadian
chartered bank, or a member of the Securities Transfer Agents Medallion Program
(STAMP).

                                       A-5
<PAGE>

                               FORM OF ASSIGNMENT

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

--------------------------------------------------------------------------------
(Please print name and address of transferee)

_________ {INSERT NUMBER} of the Rights represented by this Rights Certificate,
together with all right, title and interest therein.

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

_______________________________________
Signature Guaranteed

                 (THE FOLLOWING IS TO BE COMPLETED ONLY IF TRUE)

         The undersigned hereby represents, for the benefit of the Corporation
and all holders of Rights and Common Shares, that the Rights evidenced by this
Rights Certificate are not and, to the knowledge of the undersigned, have never
been, Beneficially Owned by (i) an Acquiring Person, (ii) any Affiliate or
Associate of an Acquiring Person, (iii) any other Person acting jointly or in
concert with an Acquiring Person or any Affiliate of an Acquiring Person, or
(iv) any other Person whose securities are deemed to be Beneficially Owned by an
Acquiring Person. Capitalized terms shall have the meanings ascribed thereto in
the Rights Agreement.

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

_______________________________________
Signature Guaranteed

NOTE: Signature must be guaranteed by a major Canadian trust company, Canadian
chartered bank, or a member of the Securities Transfer Agents Medallion Program
(STAMP).

                                      A-6
<PAGE>
                                     NOTICE

         In the event that the certifications set forth above in the Forms of
         Election to Exercise and Assignment are not completed, the Corporation
         shall deem the Beneficial Owner of the Rights represented by this
         Rights Certificate to be an Acquiring Person or other Ineligible
         Shareholder and, accordingly, such Rights shall be null and void.
         Capitalized terms shall have the meanings ascribed thereto in the
         Rights Agreement.

                                      A-7

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