Document:

EXHIBIT 10.1
                                CREDIT AGREEMENT

         THIS AGREEMENT ("Agreement") is entered into as of December 16, 2004,
by and between COLUMBIA SPORTSWEAR COMPANY, an Oregon corporation ("Borrower"),
and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

                                    RECITALS

A. Bank and Borrower previously entered into that certain Credit Agreement dated
as of July 31, 1997 (as amended from time to time, the "Prior Credit
Agreement").

B. Bank and Borrower wish to amend and restate the Prior Credit Agreement in its
entirety with this Agreement to evidence the extension or continued extension of
credit to Borrower as described below, on the terms and conditions contained
herein.

         NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Bank and Borrower hereby agree as follows:

ARTICLE I.                 DEFINITIONS

         1.1               DEFINED TERMS

         All terms defined above shall have the meanings set forth above. Any
accounting term used in this Agreement which is not specifically defined herein
shall have the meaning customarily given to it under GAAP, and all other terms
contained in this Agreement which are not defined herein shall, unless the
context indicates otherwise, have the meanings provided for by the Uniform
Commercial Code in effect in the state of Oregon as of the Closing Date to the
extent such terms are defined therein. All references to "$" shall mean United
States Dollars, unless otherwise indicated. The following terms shall have the
meanings set forth below (with all such meanings to be equally applicable to
both the singular and plural forms of the terms defined):

         "AAA" means the American Arbitration Association.

         "ADVANCE BASIS" means: (a) for the months of January through April, an
amount equal to 60% of the sum of: (i) net accounts receivable and inventory
minus (without duplication) (ii) accounts payable, notes payable and import
trade payables, all as reflected on Borrower's most recent balance sheet
delivered to Bank under Section 5.3; and (b) for the months of May through
December, an amount equal to 70% of the sum of: (i) net accounts receivable and
inventory, minus (without duplication) (ii) accounts payable, notes payable and
import trade payables, all as reflected on Borrower's most recent balance sheet
delivered to Bank pursuant to Section 5.3.

         "AUTHORIZED REPRESENTATIVE" means a person designated by Borrower on
the most current Notice of Authorized Representatives delivered by Borrower to
Bank as being authorized to request any borrowing or make any interest rate
selection on behalf of Borrower hereunder, or to give Bank any other notice
hereunder which is required by the terms hereof to be made through an Authorized
Representative.

         "AVAILABLE CREDIT" means, at any time, the amount by which the
aggregate of the outstanding principal amount of the Loans at such time is less
than (a) $50,000,000 during the

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period of August 15 through November 15 of the calendar year, and (b) $5,000,000
at all other times from the date of this Agreement through the Maturity Date.

         "BANKRUPTCY CODE" means the Bankruptcy Reform Act, Title 11 of the
United States Code, as amended or recodified from time to time, including
(unless the context otherwise requires) any rules or regulations promulgated
thereunder.

         "BASE RATE" means, for any day, an interest rate per annum equal to the
rate of interest most recently announced by Bank at its principal office in San
Francisco, California, as its prime rate, with any change in the prime rate to
be effective as of the day such change is announced by Bank and with the
understanding that the prime rate is one of Bank's base rates used to price some
loans and may not be the lowest rate at which Bank makes any loan, and is
evidenced by the recording thereof in such internal publication or publications
as Bank may designate.

         "BASE RATE LOAN" means the outstanding principal amount of any Loan
that bears interest with reference to the Base Rate.

         "BASE RATE MARGIN" means the number of basis points determined in
accordance with Schedule I.

         "BUSINESS DAY" means (a) for all purposes other than as covered by
clause (b) below, any day other than a Saturday, Sunday or other day on which
commercial banks in Portland, Oregon are authorized or required by law to be
closed, and (b) with respect to all notices, determinations, fundings and
payments in connection with an LIBOR interest selection or LIBOR Loan, any day
that is a Business Day described in clause (a) above and that also is a day for
trading by and between banks in U.S. dollar deposits in the London interbank
Eurocurrency market.

         "CAPITAL RATIO" means the ratio determined in accordance with
Schedule I.

         "CAPITALIZED LEASE OBLIGATIONS" means lease obligations of a Person
that are or should be capitalized under GAAP.

         "CD LOAN" means the outstanding principal amount of any Loan that bears
interest with reference to the CD Rate.

         "CD MARGIN" means the number of basis points determined in accordance
with Schedule I.

         "CD RATE" means, for each Fixed Rate Term, the rate per annum (rounded
upward if necessary to the nearest whole 1/8 of 1%) and determined pursuant to
the following formula:

         CD Rate =       Base CD Rate           + Assessment Rate
                   -----------------------------
                    100% -CD Reserve Percentage

         As used herein, (a) "Base CD Rate" means the rate per annum quoted by
Bank as the secondary-market bid rate, with the understanding that such rate is
quoted by Bank for the purpose of calculating effective rates of interest for
loans making reference thereto, at approximately 10:00 A.M. (San Francisco
time), or as soon thereafter as practicable on a

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Business Day, for the purchase of certificates of deposit for a term comparable
to the number of days in such Fixed Rate Term and in an amount approximately
equal to the principal amount to which such Fixed Rate Term shall apply, (b) "CD
Reserve Percentage" means the maximum percentage (expressed as a decimal,
rounded upward if necessary to the nearest 1/8 of 1%) determined by Bank (which
determination shall be conclusive absent manifest error) as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, without limitation,
supplemental, marginal or emergency reserve requirements) with respect to new
nonpersonal time deposits in U.S. dollars having a maturity comparable to the
applicable Fixed Rate Term, adjusted by Bank for changes in such reserve
percentage during the applicable Fixed Rate Term, and (c) "Assessment Rate"
means the rate per annum (rounded upward, if necessary, to the nearest 1/8 of
1%) determined by Bank (which determination shall be conclusive absent manifest
error) to be the maximum effective assessment rate per annum payable by Bank to
the Federal Deposit Insurance Corporation (or any successor) for such date for
insurance on U.S. dollars time deposits.

         "CHANGE OF LAW" means the adoption of any Governmental Rule, any change
in any Governmental Rule or the application or requirements thereof (whether
such change occurs in accordance with the terms of such Governmental Rule as
enacted, as a result of amendment or otherwise), any change in the
interpretation or administration of any Governmental Rule by any Governmental
Authority, or compliance by Bank (or any entity controlling Bank) with any
guideline or directive (whether or not having the force of law) of any
Governmental Authority.

         "CLOSING DATE" means the date of this Agreement.

         "COLUMBIA USA" means Columbia Sportswear USA Corporation, an Oregon
corporation.

         "CONTAMINANT" means any pollutant, hazardous substance, toxic
substance, hazardous waste or other substance regulated or forming the basis of
liability under any Environmental Law.

         "CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness or Contractual Obligation of another Person, if the purpose or
intent of such Person in incurring the Contingent Obligation is to provide
assurance to the obligee of such Indebtedness or Contractual Obligation that
such Indebtedness or Contractual Obligation will be paid or discharged, or that
any agreement entered into by such other Person relating to such Indebtedness or
Contingent Obligation will be complied with, or that any holder of such
Indebtedness or Contractual Obligation will be protected against loss in respect
thereof. Contingent Obligations of a Person include, without limitation, (a) the
direct or indirect guarantee, endorsement (other than for collection or deposit
in the ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of an obligation of another Person, and (b)
any liability of such Person for an obligation of another Person through any
agreement (contingent or otherwise), (i) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of a loan, advance,
stock purchase, capital contribution or otherwise), (ii) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another Person, (iii) to make take-or-pay or similar payments, if required,
regardless of non-performance by any other party or parties to an agreement,
(iv) to purchase, sell or lease (as lessor or lessee) property, or to purchase
or sell services, primarily for the purpose of enabling the debtor to make
payment of such obligation or to assure the holder of such

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obligation against loss, or (v) to supply funds to or in any other manner invest
in such other Person (including, without limitation, to pay for property or
services irrespective of whether such property is received or such services are
rendered), if in the case of any agreement or liability described under
sub-clauses (i), (ii), (iii), (iv) or (v) of this sentence the primary purpose
or intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the lesser of (x) the amount payable
under such Contingent Obligation (if quantifiable), or (y) the portion of the
Indebtedness or Contractual Obligation so guaranteed or otherwise supported.

         "CONTRACTUAL OBLIGATION" of any Person means any obligation, agreement,
undertaking or similar provision of any security issued by such Person or of any
agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or
other instrument to which such Person is a party by which it or any of its
property is bound or to which any of its property is subject.

         "DEFAULT" means an Event of Default or an event or condition which with
the giving of notice or the passage of time, or both, would constitute an Event
of Default.

         "DISCLOSURE SCHEDULE" means Schedule II attached hereto.

         "DISPUTE" means any action, dispute, claim or controversy of any kind,
whether in contract or tort, statutory or common law, legal or equitable, now
existing or hereafter arising under or in connection with, or in any way
pertaining to, any of the Loan Documents, or any past, present or future
extensions of credit and other activities, transactions or obligations of any
kind related directly or indirectly to any of the Loan Documents, including
without limitation, any of the foregoing arising in connection with the exercise
of any self help, ancillary or other remedies pursuant to any of the Loan
Documents.

         "DOMESTIC SUBSIDIARY" means a Subsidiary that is incorporated or
organized under the laws of the United States of America or a state thereof.

         "EBITDA" has the meaning set forth in Section 5.17(c) hereof.

         "EBITDA COVERAGE RATIO" has the meaning set forth in Section 5.17(c)
hereof.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.

         "ENVIRONMENTAL LAW" means all applicable federal, state and local laws,
statutes, ordinances and regulations, and any applicable judicial or
administrative interpretation, order, consent decree or judgment, relating to
the regulation and protection of the environment. Environmental Laws include but
are not limited to the Comprehensive Environmental Response, Compensation,
Anti-Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.); the
Hazardous Material Transportation Act, as amended (49 U.S.C. ss. 180 et seq.);
the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C.
ss. 136 et seq.); the Resource Conservation and Recovery Act, as amended (42
U.S.C. ss. 6901 et seq.); the Toxic Substance Control Act, as amended (42 U.S.C.
ss. 7401 et seq.); the Clean Air Act, as amended (42 U.S.C. ss.1740 et seq.);
the Federal Water Pollution Control Act, as amended (33 U.S.C. ss.11251 et
seq.); and the Safe Drinking Water Act, as amended (42 U.S.C. ss. 300f et seq.),
and their state and local counterparts or equivalents and any applicable
transfer of ownership notification or approval statutes.

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         "ENVIRONMENTAL LIABILITIES AND COSTS" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of counsel
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand by any other Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including, without
imitation, any thereof arising under any Environmental Law, Permit, order or
agreement with any Governmental Authority or other Person, in each case which
relate to any violation or alleged violation of an Environmental Law or a
Permit, or a Release or threatened Release.

         "EVENT OF DEFAULT" has the meaning set forth in Section 7.1 hereof.

         "FOREIGN SUBSIDIARY" is a Subsidiary that is not a Domestic Subsidiary.

         "FEDERAL FUNDS RATE" means, for any day, the weighted average of the
per annum rates on overnight federal funds transactions with member banks of the
Federal Reserve System arranged by federal funds brokers as published by the
Federal Reserve Bank of New York for such day (or, if such rate is not so
published for any day, the average rate quoted to Bank on such day by three
federal funds brokers of recognized standing selected by Bank).

         "FIXED RATE TERM" means, with respect to a LIBOR Loan, a period of one,
two, three or six months, as designated by Borrower and, with respect to a CD
Loan, a period of 30, 60, 90 or 180 days, as designated by Borrower; provided
however, that no Fixed Rate Term may extend beyond the Maturity Date, and if the
last day of a Fixed Rate Term is not a Business Day, such term shall be extended
to the next succeeding Business Day, and such extension of time shall be
included in the computation of interest or fees, as the case may be.

         "GAAP" means generally accepted accounting principles as in effect in
the United States from time to time, consistently applied.

         "GOVERNMENTAL AUTHORITY" means any domestic or foreign, national, state
or local government, any political subdivision thereof, any department, agency,
authority or bureau of any of the foregoing, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the Federal Deposit Insurance Corporation,
the Federal Reserve Board, the Comptroller of the Currency, any central bank or
any comparable authority.

         "GOVERNMENTAL RULE" means any applicable law, rule, regulation,
ordinance, order, code interpretation, judgment, decree, directive, guidelines,
policy or similar form of decision of any Governmental Authority.

         "INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured) or for the deferred
purchase price of property or services, (b) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (c) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale

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of such property), (d) all Capitalized Lease Obligations of such Person, (e) all
Contingent Obligations of such Person, (f) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any Stock or
Stock Equivalents of such Person with a mandatory repurchase or redemption date
of less than ten years from the date of issuance thereof, (g) all obligations of
such person under Interest Rate Contracts and commodity contracts, (h) all
Indebtedness referred to in clause (a), (b), (c), (d), (e), (f) or (g) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and general intangibles) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, (i) in the case of Borrower, its Obligations, (j) all
liabilities of such Person which would be shown on a balance sheet of such
Person prepared in accordance with GAAP, and (k) all liabilities of such Person
in connection with the failure to make when due any contribution or payment
pursuant to or under any Plan.

         "INVESTMENT" has the meaning set forth in Section 6.4 hereof.

         "INDEMNITEES" has the meaning set forth in Section 8.4 hereof.

         "INTEREST RATE CONTRACTS" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance,
foreign exchange contracts and other agreements or arrangements designed to
provide protection against fluctuations in interest rates.

         "LIBOR" means, for each Fixed Rate Term, the rate per annum (rounded
upward if necessary to the nearest whole 1/16 of 1%) and determined pursuant to
the following formula:

         LIBOR =                    Base LIBOR
                           ------------------------------
                           100% -LIBOR Reserve Percentage

as used herein, (a) "Base LIBOR" means the average of the rates per annum at
which U.S. dollar deposits are offered to Bank in the London interbank
Eurocurrency market on the second Business Day prior to the commencement of a
Fixed Rate Term at or about 11:00 A.M. (London time), for delivery on the first
day of such Fixed Rate Term, for a term comparable to the number of days in such
Fixed Rate Term and in an amount approximately equal to the principal amount to
which such Fixed Rate Term shall apply, and (b) "LIBOR Reserve Percentage" means
the reserve percentage prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for "Eurocurrency Liabilities" (as defined in
Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for
changes in such reserve percentage during the applicable Fixed Rate Term.

         "LIBOR LOAN" means the outstanding principal amount of any Loan that
bears interest with reference to LIBOR.

         "LIBOR MARGIN" means the number of basis points determined in
accordance with Schedule I.

         "LIEN" means any (a) mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, priority or other security agreement or (b) preferential
arrangement of any kind or nature whatsoever that has the same practical effect
as a security interest, including, without limitation, any conditional sale or
other title retention agreement or the interest of a lessor under a Capitalized
Lease Obligation

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or any other lease.

         "LOAN" has the meaning set forth in Section 2.1(a) hereof.

         "LOAN DOCUMENTS" means this Agreement and all notes, guarantees,
security agreements, subordination agreements, and other agreements, documents
and instruments now or at any time hereafter executed and/or delivered by
Borrower or any obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.

         "MATERIAL ADVERSE EFFECT" means (a) a materially adverse effect on the
condition (financial or otherwise), business, performance, prospects, operations
or properties of Borrower and its Subsidiaries on a consolidated basis, (b)
material impairment of the ability of Borrower to perform the Obligations, or
(c) material impairment of the rights and remedies of Bank under the Loan
Documents other than as a result of an act or omission by Bank.

         "MATERIAL SUBSIDIARY" has the meaning set forth in Section 7.1(h)
hereof.

         "MATURITY DATE" means July 1, 2006.

         "NOTE" means a promissory note executed by Borrower in favor of Bank
evidencing the Loans, substantially in the form attached as Exhibit A hereto.

         "NOTICE OF AUTHORIZED REPRESENTATIVES" has the meaning set forth in
Section 2.7 hereof.

         "NOTICE OF BORROWING" has the meaning set forth in Section 2.1(d)
hereof.

         "OBLIGATIONS" means all of Borrower's obligations under the Loan
Documents, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising.

         "PERMIT" means any permit, approval, authorization, license, variance
or permission required from a Governmental Authority under an applicable
Governmental Rule.

         "PERMITTED LIENS" means (a) Liens arising by operation of law for
taxes, fees, assessments or governmental charges not yet delinquent or that
remain payable without penalty or which are being contested in good faith by
appropriate proceedings and with adequate reserves in accordance with GAAP and
being maintained by Borrower, (b) statutory or common law Liens of mechanics,
materialmen, shippers, warehousemen, carriers, landlords and other similar
persons for services or materials arising in the ordinary course of business for
which payment is not yet delinquent or which remain payable without penalty or
are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property subject
thereto, (c) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security, (d) Liens existing on the date of this Agreement and
disclosed on the Disclosure Schedule and any related payment and performance
obligations in respect of the Indebtedness secured thereby, and (e) Liens in
favor of Bank and/or any of its affiliates.

         "PERSON" means an individual, partnership, corporation (including,
without limitation, a

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business trust), joint stock company, limited liability company, limited
liability partnership, trust, unincorporated association, joint venture or other
entity, or a Governmental Authority.

         "PLAN" means an employee benefit plan, as defined in Section 3(3) of
ERISA, which Borrower maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.

         "RELEASE" means, as to any Person, any unpermitted spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of a contaminant into the environment.

         "REMEDIAL ACTION" means all actions required to clean up, remove,
prevent or minimize a Release or threat of Release or to perform pre-remedial
studies and investigations and post-remedial monitoring and care.

         "REPORTABLE EVENT" has the meaning as defined in Title IV of ERISA.

         "STOCK" means shares of capital stock, beneficial or partnership
interests, membership interests in a limited liability company, participations
or other equivalents (regardless of how designated) of or in a corporation or
other business entity, whether voting or non-voting, and includes, without
limitation, common stock and preferred stock.

         "STOCK EQUIVALENTS" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.

         "SUBSIDIARY" means any corporation, partnership, joint venture, limited
liability company, trust or estate of which (or in which) more than 50% of (a)
the issued and outstanding capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such limited liability company,
partnership or joint venture, or (c) the beneficial interest in such trust or
estate, is at the time directly or indirectly owned or controlled by Borrower,
by Borrower and one or more of its other Subsidiaries, or by one or more of
Borrower's other Subsidiaries.

         "TANGIBLE NET WORTH" means stockholders' equity plus subordinated debt
less any intangible assets (net of amortization) and any treasury stock.

         "TRANCHE" means a collective reference to LIBOR Loans or CD Loans, and
the then-current Fixed Rate Term with respect to all of which begin on the same
date and end on the same later date (whether or not such LIBOR Loans or CD Loans
shall have originally been made on the same day).

         "UNUSED COMMITMENT FEE" has the meaning set forth in Section 2.1(e)
hereof.

         1.2               HEADINGS

         Headings in the Loan Documents are for convenience of reference only
and are not part of the substance hereof or thereof.

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ARTICLE II.                THE CREDITS

         2.1               REVOLVING LOANS

         (a) On the terms and subject to the conditions contained in this
Agreement, Bank agrees to make loans (each a "Loan," and collectively, "Loans")
to Borrower from time to time until the Maturity Date in an aggregate amount not
to exceed at any time outstanding (i) $50,000,000 during the period of August 15
through November 14 of the calendar year, and (ii) $5,000,000 at all other times
from the date of this Agreement through the Maturity Date. Borrower may, from
time to time, borrow, partially or wholly repay the outstanding Loans, and
reborrow, subject to all the limitations, terms and conditions contained herein.

         (b) If at any time the Available Credit is negative, Borrower, without
demand or notice, shall immediately repay that portion of the Loans necessary to
cause the Available Credit to be no less than zero. Borrower shall repay the
outstanding principal balance of the Loans, together with all accrued and unpaid
interest and related fees, on the earlier of the Maturity Date or the due date
determined pursuant to Section 7.2.

         (c) The Loans shall be evidenced by a Note payable to the order of
Bank.

         (d) Borrower, through one of the Authorized Representatives, shall
request each advance under Section 2.1(a) by giving Bank irrevocable written
notice or telephonic notice (confirmed promptly in writing), in the form of
Exhibit B attached hereto (each, a "Notice of Borrowing"), which specifies,
among other things:

                  (i) the principal amount of the requested advance;

                  (ii) the proposed date of borrowing, which shall be a Business
         Day;

                  (iii) whether such advance is to be a Base Rate Loan, a LIBOR
         Loan or a CD Loan; and

                  (iv) if such advance is to be a LIBOR Loan or CD Loan, the
         length of the Fixed Rate Term applicable thereto.

          Each such Notice of Borrowing must be received by Bank not later than
(i) 10:00 a.m. (San Francisco time) on the date of borrowing if a Base Rate
Loan, or (ii) at least 3 Business Days prior to the date of borrowing if a LIBOR
Loan or a CD Loan. In addition to advances requested by Borrower, advances of
Loans may be made automatically pursuant to certain cash management arrangements
made by Borrower with Bank and each such advance shall be a Base Rate Loan.

         (e) Borrower shall pay to Bank a fee equal to 0.075% per annum
(computed on the basis of a 360-day year, actual days elapsed) on the average
daily Available Credit ("Unused Commitment Fee"). The Unused Commitment Fee
shall be calculated on a quarterly basis by Bank and shall be due and payable by

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Borrower in arrears within 15 days after each billing is sent by Bank.

         2.2               INTEREST

         (a) The outstanding principal balance of each Loan which is a Base Rate
Loan shall bear interest at a fluctuating rate per annum equal to the aggregate
of the Base Rate in effect from time to time plus the applicable Base Rate
Margin. The outstanding principal balance of each Loan which is a LIBOR Loan
shall bear interest at a fixed rate per annum determined by Bank to be equal to
the aggregate of LIBOR in effect on the first day of the applicable Fixed Rate
Term plus the applicable LIBOR Margin in effect on the first day of the
applicable Fixed Rate Term. The outstanding principal balance of each CD Loan
shall bear interest at a fixed rate per annum determined by Bank to be equal to
the aggregate of the CD Rate in effect on the first day of the applicable Fixed
Rate Term plus the applicable CD Margin in effect on the first day of the
applicable Fixed Rate Term. The foregoing notwithstanding, the rate of interest
applicable at all times during the continuation of an Event of Default shall be
the applicable rate set forth above plus an additional 200 basis points. All
fees, expenses and other amounts not paid when due shall bear interest (from the
date due until paid) at a fluctuating rate per annum equal to the Base Rate in
effect from time to time plus 200 basis points.

         (b) All interest and per annum fees shall be computed on the basis of a
360- day year for the actual days elapsed. Interest on Base Rate Loans shall be
payable monthly in arrears, on the first day of each month. Interest on LIBOR
Loans shall be paid on the last day of each Fixed Rate Term and at the end of
the third month with respect to each Fixed Rate Term in excess of three months.
Interest on CD Loans shall be paid by Borrowers on the last day of each Fixed
Rate Term and at the end of the 90th day with respect to each Fixed Rate Term in
excess of 90 days.

         2.3               INTEREST OPTIONS

         (a) Subject to the requirement that each LIBOR Loan or CD Loan be in a
minimum amount of $500,000 and in integral multiples of $100,000, and the
limitation
in Section 2.3(b) regarding the number of Tranches outstanding at any time,
except as otherwise provided herein, at any time when an Event of Default is not
continuing, Borrower may (i) convert all or any portion of a Base Rate Loan to a
LIBOR Loan or CD Loan of a Fixed Rate Term designated by Borrower, or (ii)
convert all or a portion of a LIBOR Loan or CD Loan at the end of the Fixed Rate
Term to a LIBOR Loan or CD Loan for a new Fixed Rate Term. Borrower may convert
all or a portion of a LIBOR Loan or CD Loan at the end of the Fixed Rate Term
applicable thereto to a Base Rate Loan at any time. If Borrower has not made the
required interest rate conversion or continuation election prior to the last day
of any Fixed Rate Term, Borrower shall be deemed to have elected to convert such
LIBOR Loan or CD Loan to a Base Rate Loan.

         (b) There shall not be more than 12 Tranches outstanding at any time.

         (c) Borrower, through one of the Authorized Representatives, shall
request each interest rate conversion or continuation by giving Bank a Notice of
Borrowing, which specifies, among other things:

                  (i) the Loan to which such Notice of Borrowing applies;

                  (ii) the principal amount that is the subject of such
conversion;

                  (iii) the proposed date of such conversion or continuation,
which shall be a

                                       10
<PAGE>
Business Day; and

                  (iv) if such Notice pertains to a LIBOR or CD Rate selection,
the length of the applicable Fixed Rate Term.

         Any such Notice of Borrowing must be received by Bank not later than
(i) 10:00 a.m. (San Francisco time) on the effective date of any Base Rate
interest selection, and (ii) at least 3 Business Days prior to the effective
date of any LIBOR or CD Rate selection.

         2.4               OTHER PAYMENT TERMS

         (a) Borrower shall pay Bank all outstanding principal, accrued interest
and other charges with respect to the Loans on the Maturity Date.

         (b) Bank may, and Borrower hereby authorizes Bank to, debit any deposit
account of Borrower with Bank for all payments of principal, interest and fees
as they become due, provided that Bank shall first debit account no. 4159601087
of Borrower with Bank before debiting any other account.

         (c) Borrower shall make all payments due to Bank by payment to Bank at
Bank's office as designated in Section 8.2, in lawful money of the United States
and in same day or immediately available funds, not later than 12:00 noon
(Portland time) on the date due.

         (d) Whenever any payment due hereunder shall fall due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall be included in the computation of interest
or fees, as the case may be.

         (e) All payments under the Loan Documents (including prepayments) shall
be applied first to unpaid fees, costs and expenses then due and payable under
the Loan Documents, second to accrued interest then due and payable under the
Loan Documents, third to all principal then due and payable under the Loan
Documents and fourth to reduce the outstanding principal of the Loans. If an
Event of Default has occurred and is continuing, Bank shall apply all payments
as determined by it in its discretion.

         2.5               CHANGE OF CIRCUMSTANCES

         (a) Borrower shall pay to Bank immediately upon demand, in addition to
any other amounts due or to become due hereunder, any and all (i) withholdings,
interest equalization taxes, stamp taxes or other taxes (except income and
franchise taxes) imposed by any Governmental Authority and related in any manner
to LIBOR or the CD Rate, and (ii) future, supplemental, emergency or other
changes in the LIBOR Reserve Percentage or the CD Reserve Percentage, assessment
rates imposed by the Federal Deposit Insurance Corporation, or similar
requirements or costs imposed by any Governmental Authority or resulting from
compliance by Bank with any directive (whether or not having the force of law)
from any central bank or other governmental authority and related in any manner
to LIBOR or the CD Rate to the extent they are not included in the calculation
of LIBOR or the CD Rate, as applicable. In determining which of the foregoing
are attributable to any LIBOR option or CD Rate option available to Borrower
hereunder, any reasonable allocation made by Bank among its operations shall be
conclusive and binding upon Borrower.

         (b) If Bank shall have determined that any Change of Law regarding
capital

                                       11
<PAGE>
adequacy has or shall have the effect of reducing the rate of return on
the capital of Bank (or any entity controlling Bank) as a consequence of Bank's
obligations' hereunder to a level below that which Bank or such entity would
have achieved but for such Change of Law (taking into consideration Bank's or
such entity's policies with respect to capital adequacy), by an amount deemed by
Bank to be material, then from time to time, within 15 days after demand by
Bank, Borrower shall pay to Bank or such entity such additional amounts as shall
compensate Bank or such entity for such reduction. Any such request by Bank
under this Section shall set forth the basis of the calculation of such
additional amounts and shall, in the absence of manifest error, be conclusive
and binding on Borrower for all purposes.

         2.6               FUNDING LOSS INDEMNIFICATION

         If Borrower shall (a) repay or prepay any portion of a LIBOR Loan or CD
Loan on any day other than the last day of the Fixed Rate Term therefor (whether
an optional prepayment, a mandatory prepayment, a payment upon acceleration or
otherwise), (b) fail to borrow the full amount of a LIBOR Loan or CD Loan set
forth in any Notice of Borrowing which has been delivered to Bank (whether as a
result of the failure to satisfy any applicable conditions or otherwise), or (c)
fail to convert or continue at the LIBOR or CD Rate interest based option any
portion of a Loan in accordance with a Notice of Borrowing delivered to Bank
(whether as a result of the failure to satisfy any applicable conditions or
otherwise), Borrower shall, upon demand by Bank, reimburse Bank and hold Bank
harmless for all costs and losses incurred by Bank as a result of such
repayment, prepayment or failure. Borrower understands that such costs and
losses may include, without limitation, losses incurred by Bank as a result of
funding and other contracts entered into by Bank to fund any LIBOR Loan or CD
Loan. Bank shall deliver to Borrower a certificate setting forth the amount of
costs and losses for which demand is made. Such a certificate so delivered to
Borrower shall, in the absence of manifest error, be conclusive and binding on
Borrower as to the amount of such loss for all purposes. The agreements in this
Section shall survive the termination of this Agreement.

         2.7               AUTHORIZED REPRESENTATIVES

         On the Closing Date, and from time to time subsequent thereto at
Borrower's option, Borrower shall deliver to Bank a written notice in the form
of Exhibit C, attached hereto, which designates by name each Authorized
Representative and includes each of their respective specimen signatures (each,
a "Notice of Authorized Representatives"). Bank shall be entitled to rely
conclusively on the authority of each officer or employee designated as an
Authorized Representative in the most current Notice of Authorized
Representatives delivered by Borrower to Bank, to request borrowings and select
interest rate options hereunder, and to give to Bank such other notices as are
specified in this Agreement as being made through one of Borrower's Authorized
Representatives, until such time as Borrower has delivered to Bank, and Bank has
actual receipt of, a new written Notice of Authorized Representatives. Bank
shall have no duty or obligation to Borrower to verify the authenticity of any
signature appearing on any Notice of Borrowing or any other written notice from
an Authorized Representative or to verify the authenticity of any person
purporting to be an Authorized Representative giving any telephonic notice
permitted hereby.

ARTICLE III.      REPRESENTATION AND WARRANTIES

         Borrower makes the following representations and warranties to Bank,
subject to the exceptions set forth on the Disclosure Schedule, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full

                                       12
<PAGE>
and final payment in cash and satisfaction and discharge of all Obligations:

         3.1               LEGAL STATUS

         Borrower and each Subsidiary are duly organized and existing under the
laws of the jurisdiction of their incorporation or formation except, with
respect to any Subsidiary (other than Columbia USA), as could not reasonably be
expected to have a Material Adverse Effect, and each is qualified or licensed to
do business (and is in good standing as a foreign corporation, if applicable) in
all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could reasonably be
expected to have a Material Adverse Effect.

         3.2               OWNERSHIP; SUBSIDIARIES

         (a) All of Borrower's outstanding capital stock has been validly issued
and is fully paid and nonassessable. On the date hereof (i) no authorized but
unissued shares, no treasury shares and no other outstanding shares of its
capital stock are subject to any option, warrant, right of conversion or
purchase or any similar right granted by Borrower, and (ii) it is not a party to
any agreement or understanding with respect to the voting, sale or transfer of
any shares of its capital stock.

         (b) As of the Closing Date, Borrower has no Subsidiaries except as set
forth on Schedule 3.2(b) attached hereto and does not own or hold, directly or
indirectly, any capital stock or equity security of, or any equity interest in,
any Person.

         3.3               AUTHORIZATION AND VALIDITY

         The Loan Documents have been duly authorized and the performance by
Borrower of the Obligations constitutes a proper corporate purpose under
applicable law. The Loan Documents, upon their execution and delivery in
accordance with the provisions hereof, will constitute legal, valid and binding
agreements and obligations of Borrower, enforceable in accordance with their
respective terms.

         3.4               NO VIOLATION

         The execution, delivery and performance by Borrower of each of the Loan
Documents do not violate or contravene any provision of the articles of
incorporation or by-laws of Borrower or of the formation or organizational
documents of any Subsidiary, and do not violate any Governmental Rule or result
in a breach of or constitute a default under any contract, obligation, indenture
or other instrument to which Borrower or any Subsidiary is a party or by which
Borrower or any Subsidiary may be bound, which violation, breach or default
could reasonably be expected to have a Material Adverse Effect.

         3.5               NO CLAIMS

         There are no pending, or to the best of Borrower's knowledge
threatened, actions, claims, investigations, suits or proceedings before any
Governmental Authority or arbitrator which could reasonably be expected to have
a Material Adverse Effect.

                                       13
<PAGE>
         3.6               CORRECTNESS OF FINANCIAL STATEMENTS

         Borrower's financial statements dated as of and for the period ended
September 30, 2004, heretofore delivered by Borrower to Bank, (a) present fairly
the consolidated financial condition of Borrower and each Subsidiary, (b)
disclose, by footnotes or otherwise, all liabilities of Borrower and each
Subsidiary that are required to be reflected or reserved against in such
financial statements under GAAP, whether liquidated or unliquidated, fixed or
contingent; and (c) have been prepared in accordance with GAAP (except for the
absence of footnote disclosure and subject to year-end audit adjustments).
Except as disclosed to Bank pursuant to Section 5.3, since the date of such
financial statements there have been no change or changes which have or which
could reasonably be expected to have a Material Adverse Effect.

         3.7               INCOME TAX RETURNS

         Borrower does not have any knowledge of any pending assessments or
adjustments of any income tax payable by it or by any Subsidiary with respect to
any year the payment of which could reasonably be expected to have a Material
Adverse Effect.

         3.8               NO SUBORDINATION

         There is no agreement, indenture, contract or instrument to which
Borrower or any Subsidiary is a party or by which Borrower or any Subsidiary may
be bound that requires the subordination in right of payment of any of
Borrower's Obligations to any other obligation of Borrower or such Subsidiary
except, with respect to any Subsidiary (other than Columbia USA) which could not
reasonably be expected to have a Material Adverse Effect.

         3.9               ERISA

         Borrower and each Subsidiary are in compliance in all material respects
with the applicable provisions of ERISA. Neither Borrower nor any Subsidiary has
violated any provision of any Plan maintained or contributed to by Borrower or
any Subsidiary in a manner that could reasonably be expected to have a Material
Adverse Effect. No Reportable Event as defined in ERISA has occurred and is
continuing with respect to any Plan initiated by Borrower or any Subsidiary
which could reasonably be expected to have a Material Adverse Effect. Borrower
and each Subsidiary have met minimum funding requirements under ERISA with
respect to each Plan and each Plan will be able to fulfill its benefit
obligations as they come due in accordance with the Plan documents and under
GAAP, any non-compliance with which could not reasonably be expected to have a
Material Adverse Effect.

         3.10              OTHER OBLIGATIONS

         Neither Borrower nor any Subsidiary is in default on any material
Contractual Obligations or any material Indebtedness that, in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

         3.11              ENVIRONMENTAL MATTERS

         Borrower and each Subsidiary is in compliance in all material respects
with all Environmental Laws applicable to it, other than such non-compliance as
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. Neither Borrower nor any Subsidiary has received notice that it is the
subject of any federal or state investigation

                                       14
<PAGE>
evaluating whether any Remedial Action is needed except for such notices
received which in the aggregate do not refer to Remedial Actions that could
reasonably be expected to have a Material Adverse Effect. There have been no
Releases by Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect.

         3.12              LIENS

         There are no Liens of any nature whatsoever on any of Borrower's or any
Subsidiary's properties other than Permitted Liens.

         3.13              NO BURDENSOME RESTRICTIONS; NO DEFAULTS

         (a) Neither Borrower nor any Subsidiary is a party to any Contractual
Obligation the compliance with which could reasonably be expected to have a
Material Adverse Effect or the performance of which, either unconditionally or
upon the happening of an event, will result in the creation of a Lien (other
than Liens permitted by Section 6.1) on the property or assets of Borrower or
any Subsidiary.

         (b) No Default has occurred and is continuing.

         (c) There is no Governmental Rule applicable to Borrower or any
Subsidiary or any of their businesses, the compliance with which could
reasonably be expected to have a Material Adverse Effect.

         3.14              INVESTMENT COMPANY ACT

         Neither Borrower nor any Subsidiary is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.

         3.15              INSURANCE

         All current policies of insurance of any kind or nature owned by or
issued to Borrower or any Subsidiary, including, without limitation, policies of
fire, theft, product liability, public liability, property damage, other
casualty, employee fidelity, workers' compensation and employee health and
welfare insurance, are in full force and effect and are of a nature and provide
such coverage as is customarily carried by companies of respective size and
character. Borrower has no reason to believe that it will be unable to comply
with Section 5.4.

         3.16              LABOR MATTERS

         (a) There are no strikes, work stoppages, slowdowns or lockouts pending
or, to Borrower's knowledge, threatened against or involving Borrower or any
Subsidiary, other than those which in the aggregate could not reasonably be
expected to have a Material Adverse Effect.

         (b) As of the Closing Date, Borrower is not a party to, and has no
obligations under, any collective bargaining agreement.

         (c) There is no organizing activity involving Borrower or any
Subsidiary pending or,

                                       15
<PAGE>
to Borrower's knowledge, threatened, by any labor union or group of employees,
other than those which in the aggregate could not reasonably be expected to have
a Material Adverse Effect. There are no representation proceedings pending
against Borrower or any Subsidiary or, to Borrower's knowledge, threatened with
the National Labor Relations Board, and no labor organization or group of their
employees has made a pending demand on them for recognition, other than those
which in the aggregate could not reasonably be expected to have a Material
Adverse Effect.

         (d) There are no unfair labor practice charges, arbitrations,
grievances or complaints pending or in process or, to Borrower's knowledge,
threatened, by or on behalf of any employee or group of employees of Borrower or
any Subsidiary, other than those which in the aggregate could not reasonably be
expected to have a Material Adverse Effect.

         (e) There are no complaints or charges against Borrower or any
Subsidiary pending or, to Borrower's knowledge, threatened to be filed with any
Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment by Borrower or any Subsidiary of
any individual, other than those which in the aggregate could not reasonably be
expected to have a Material Adverse Effect.

         (f) Borrower and each Domestic Subsidiary are in material compliance
with all laws, and all orders of all Governmental Authorities and arbitrators,
relating to the employment of labor including all such laws relating to wages,
hours, collective bargaining, discrimination, civil rights, and the payment of
withholding and/or social security and similar taxes, other than those that the
non-compliance with which in the aggregate could not reasonably be expected to
have a Material Adverse Effect.

         3.17              FORCE MAJEURE

         Neither the businesses nor the properties of Borrower or any Subsidiary
are currently suffering from the effects of any fire, explosion, accident,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance), other than those the
consequences of which in the aggregate could not reasonably be expected to have
a Material Adverse Effect.

         3.18              INTELLECTUAL PROPERTY

         Borrower and each Subsidiary own or license or otherwise have the right
to use all material licenses, Permits, patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, copyright
applications, franchises, authorizations and other intellectual property rights
that are necessary for the operation of their businesses, without infringement
upon or conflict with the rights of any other Person with respect thereto,
including, without limitation, all trade names. No slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by Borrower or any Subsidiary
infringes upon or conflicts with any rights owned by any other Person, which
infringement or conflict is not reasonably expected to have a Material Adverse
Effect, and no claim or litigation regarding any of the foregoing is pending or,
to Borrower's knowledge, threatened, the existence of which could reasonably be
expected to have a Material Adverse Effect.

                                       16
<PAGE>
         3.19              CERTAIN INDEBTEDNESS

         The Disclosure Schedule identifies as of the Closing Date all
Indebtedness of Borrower and all material Indebtedness of each Subsidiary which
is either (a) for borrowed money or (b) incurred outside of the ordinary course
of the business.

         3.20              SENIORITY

         Borrower's obligations hereunder rank at least pari passu to all of its
other Indebtedness, except Indebtedness secured by Permitted Liens.

         3.21              TRUTH, ACCURACY OF INFORMATION

         All financial and other information furnished to Bank in connection
with this Agreement is accurate in all material respects as of the date
furnished and does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the information furnished in
light of the circumstances under which furnished, not misleading; provided,
however, that with respect to any such information which is a forecast or
projection, Borrower represents only that it acted in good faith and utilized
reasonable assumptions based on due and careful consideration and on the
information known to it at the time of the preparation of such forecast or
projection.

         3.22              USE OF PROCEEDS

         The proceeds of the Loans are being used by Borrower only (a) to
finance acquisitions permitted by the terms of this Agreement, (b) for working
capital, and (c) for general corporate purposes.

ARTICLE IV.       CONDITIONS

         4.1               CONDITIONS OF INITIAL EXTENSION OF CREDIT

         The obligation of Bank to make the initial Loans contemplated by this
Agreement is subject to the fulfillment to Bank's satisfaction of all of the
following conditions:

         (a) All legal matters incidental to the extension of credit hereunder
shall be reasonably satisfactory to counsel for Bank.

         (b) Bank shall have received, in form and substance reasonably
satisfactory to Bank, each of the following, duly executed:

                  (i)      this Agreement and the Note;

                  (ii)     Corporate Resolution: Borrowing from Borrower;

                  (iii)    status certificate for Borrower from its state of
                           incorporation and a copy of Borrower's articles of
                           incorporation and all amendments thereto, certified
                           by Borrower's secretary to be correct and complete;

                  (iv)     a copy of Borrower's bylaws and all amendments
                           thereto, certified by its

                                       17
<PAGE>
                           secretary as correct and complete;

                  (v)      certificate of incumbency from Borrower;

                  (vi)     Notice of Authorized Representatives;

                  (vii)    such other documents as Bank may reasonably require.

         (c) Borrower shall have paid all fees and costs and expenses then due
pursuant to the terms of this Agreement and invoiced by Bank to Borrower.

         4.2               CONDITIONS OF EACH EXTENSION OF CREDIT

         The obligation of Bank to make any Loan (including any Loan being made
by Bank on the Closing Date), other than a continuation or conversion of a Loan
as provided in Section 2.3(a), shall be subject to the further conditions
precedent that:

         (a) The following statements shall be true on the date of such Loan,
both before and after giving effect thereto and to the application of the
proceeds therefrom (and the acceptance by Borrower of the proceeds of such Loan
shall constitute a representation and warranty by Borrower that on the date of
such Loan or such issuance such statements are true):

                  (i)      the representations and warranties of Borrower
                           contained in the Loan Documents are correct in all
                           material respects on and as of such date or as though
                           made on and as of such date, or as to those
                           representations and warranties limited by their terms
                           to a specified date, were correct in all material
                           respects on and as of such date; and

                  (ii)     no Default is continuing or would result from the
                           Loans being made on such date;

         (b) The making of the Loans on such date does not violate any
Governmental Rule and is not enjoined, temporarily, preliminarily or
permanently;

         (c) Bank shall have received such additional documents, information and
materials as Bank may reasonably request; and

         (d) No event or circumstance exists which could reasonably be expected
to have a Material Adverse Effect.

         4.3 COLUMBIA USA. Borrower shall cause Columbia USA to execute a
guaranty in form and substance reasonably satisfactory to Bank guaranteeing all
Indebtedness of Borrower to Bank no later than sixty (60) days after the Closing
Date.

ARTICLE V.                 AFFIRMATIVE COVENANTS

         Borrower covenants that so long as Bank remains committed to extend
credit to Borrower pursuant to the terms hereof, or any liabilities (whether
direct or contingent, liquidated or unliquidated but excluding unmatured
indemnity obligations) of Borrower under any of the Loan Documents remain
outstanding, and until payment in full in cash of all Obligations, unless Bank
otherwise consents in writing:

                                       18
<PAGE>
         5.1               PUNCTUAL PAYMENTS

         Borrower shall punctually pay all principal, interest, fees and other
liabilities due under any of the Loan Documents at the times and place and in
the manner specified therein.

         5.2               ACCOUNTING RECORDS

         Borrower shall, and shall cause each Subsidiary to, keep accurate books
and records of their financial affairs, sufficient to permit the preparation of
financial statements therefrom in accordance with GAAP.

         5.3               FINANCIAL STATEMENTS

         Borrower shall provide to Bank all of the following, in form and detail
reasonably satisfactory to Bank:

         (a) Not later than 90 days after and as of the end of each fiscal year
of Borrower, the following audited financial statements of Borrower (on a
consolidated basis), prepared in accordance with GAAP and certified by an
independent certified public accountant reasonably acceptable to Bank and such
accountant's opinion with respect thereto (which shall not be qualified in any
material respect): balance sheet and statements of earnings, shareholders'
equity and cash flows (Borrower being permitted to satisfy the requirements of
this sub-clause (a) by delivery in the manner provided in Section 8.2 of its
annual report on form 10-K (or any successor form), as filed with the Securities
and Exchange Commission);

         (b) Not later than 60 days after and as of the end of each of the first
three fiscal quarters of Borrower, the following financial statements of
Borrower (on a consolidated basis), prepared in accordance with GAAP (except for
the absence of footnote disclosures and subject to year-end audit adjustments),
including a comparison of Borrower's financial condition for said fiscal quarter
and year to date with respect to the same fiscal quarter and period of the
immediately preceding fiscal year, together with a certificate by a senior
financial officer of Borrower certifying that such financial statements fairly
present in all material respects Borrower's financial condition as of the end of
such fiscal quarter: balance sheet and statements of earnings, shareholders'
equity and cash flows (Borrower being permitted to satisfy the requirements of
this sub-clause (b) by delivery in the manner provided in Section 8.2 of its
quarterly report on form 10-Q (or any successor form), as filed with the
Securities and Exchange Commission);

         (c) Contemporaneously with the delivery of the financial statements
required hereby, a certificate of a senior financial officer of Borrower
reasonably acceptable to Bank (i) stating that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, specifying the
nature and extent thereof in reasonable detail together with a statement of any
action taken or proposed to be taken by Borrower with respect thereto and (ii)
setting forth the calculations required to establish compliance by Borrower with
the covenants set forth in Section 5.17, as well as the Capital Ratio described
in Schedule I; and

         (d) From time to time such other information as Bank may reasonably
request, which may include, without limitation, budgets, forecasts, projections
and other information respecting the businesses of Borrower or any Subsidiary.

                                       19
<PAGE>
         5.4               INSURANCE

         Borrower shall, and shall cause each Subsidiary to, maintain and keep
in force such insurance (including self-insurance) covering such risks
customarily insured against by corporations similarly situated, with reputable
companies or with the United States government or any agency or instrumentality
thereof, in such amounts and by such methods as shall be reasonably adequate.

         5.5               COMPLIANCE

         Borrower shall, and shall cause each Subsidiary to, preserve and
maintain all licenses, permits, governmental approvals, rights, privileges and
franchises necessary for the conduct of their businesses, and comply in all
material respects with all Governmental Rules, Contractual Obligations,
commitments, instruments, licenses, Permits and franchises, other than such
failure to preserve or maintain or non-compliance, the consequences of which in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.

         5.6               FACILITIES

         Borrower shall, and shall cause each Subsidiary to, keep all material
properties useful or necessary to their businesses in good repair and condition,
and from time to time make necessary repairs, renewals and replacements thereto
so that such properties shall be efficiently preserved and maintained, provided,
however, that nothing in this covenant shall preclude Borrower from disposing of
such properties in the ordinary course of its business.

         5.7               TAXES AND OTHER LIABILITIES

         Borrower shall, and shall cause each Subsidiary to, pay and discharge
before delinquency any and all indebtedness, obligations, assessments and taxes,
both real or personal, including, without limitation, federal and state income
taxes and state and local property taxes and assessments, except such as they
may in good faith contest or as to which a bona fide dispute may exist and for
which they have made provision for adequate reserves in accordance with GAAP.

         5.8               LITIGATION

         Borrower shall, and shall cause each Subsidiary to, promptly give
notice in writing to Bank of any litigation, arbitration or other legal
proceeding pending or threatened against Borrower or any Subsidiary with any
claim in excess of $10,000,000.

         5.9               NOTICE TO BANK.  Borrower shall, and shall cause each
Subsidiary to,

         (a) promptly (but in no event more than 5 Business Days after the
occurrence of each such event or matter) give written notice to Bank in
reasonable detail of: (i) the occurrence of any Default which has not been cured
before the giving of such notice, (ii) any termination or cancellation of any
material insurance policy which Borrower or any Subsidiary is required to
maintain unless such policy is replaced without any break in coverage with an
equivalent or better policy, (iii) any uninsured or partially uninsured loss or
losses through liability or property damage, or through fire, theft or any other
cause affecting the property of Borrower or any Subsidiary in excess of an
aggregate of $10,000,000 during any twelve-month period; (iv) any

                                       20
<PAGE>
change in the name or the organizational structure of Borrower; or (v) any
change in the name or the organizational structure of any Subsidiary that would
have a Material Adverse Effect; and

         (b) as soon as possible and in any event within 30 days after Borrower
knows or has reason to know that any Reportable Event that triggers an
obligation to file a notice with the Pension Benefit Guaranty Corporation with
respect to any Plan has occurred that alone or together with any other
Reportable Event is reasonably likely to result in an increase in the present
value of future liabilities under all Plans of Borrower or any Subsidiary of
more than $10,000,000, deliver to Bank a statement of the-president or chief
financial officer of Borrower setting forth details as to such reportable event
and the action that Borrower proposes to take with respect thereto, together
with a copy of the notice of such reportable event to the Pension Benefit
Guaranty Corporation.

         5.10              CONDUCT OF BUSINESS

         Except as otherwise permitted by this Agreement or where the failure
could not reasonably be expected to have a Material Adverse Effect, Borrower
shall, and shall cause each Subsidiary to, (a) conduct their businesses in the
ordinary course; and (b) use reasonable efforts, consistent with past practices,
to (i) preserve the business and the goodwill and business of the customers,
advertisers, suppliers and others with whom they have business relations, (ii)
keep available the services and goodwill of their present employees, and (iii)
preserve all material rights, Permits, licenses, approvals, privileges,
registered patents, trademarks, trade names, copyrights and service marks and
other intellectual property with respect to their businesses.

         5.11              PRESERVATION OF CORPORATE EXISTENCE, ETC.

         Borrower shall, and shall cause each Subsidiary to, preserve and
maintain their corporate existence, rights (charter and statutory) and material
franchises, unless the failure to so preserve and maintain could not reasonably
be expected to have a Material Adverse Effect. Notwithstanding the foregoing,
Borrower shall at all times maintain its corporate existence.

         5.12              ACCESS

         At any reasonable time and from time to time upon at least 2 Business
Days' prior notice from Bank (unless a Default shall have occurred and be
continuing, in which case no prior notice is necessary), Borrower shall, and
shall cause each Subsidiary to, permit Bank, or any agents or representatives
thereof, to (i) examine and make copies of and abstracts from the records and
books of account of Borrower or any Subsidiary, (ii) visit the properties of
Borrower or any Subsidiary, and (iii) discuss the affairs, finances and accounts
of Borrower or any Subsidiary with any of its officers or directors who may then
be reasonably available and with Borrower's independent certified public
accountants in the presence of an officer or director of Borrower. Borrower
shall authorize its independent certified public accountants to disclose to Bank
any and all financial statements and other written information of any kind,
including, without limitation, copies of any management letters, with respect to
the business, financial condition or results of operations of Borrower or any
Subsidiary.

         5.13              PERFORMANCE AND COMPLIANCE WITH OTHER COVENANTS

         Borrower shall, and shall cause each Subsidiary to, perform and observe
all the terms, covenants and conditions required to be performed and observed by
them under their

                                       21
<PAGE>
Contractual Obligations (including, without limitation, to pay all rent and
other charges payable under any lease and all debts and other obligations as the
same become due), and do all things necessary to preserve and to keep unimpaired
their rights under such Contractual Obligations, other than such as are being
contested in good faith and as to which adequate reserves have been established
or such failures the consequences of which in the aggregate could not reasonably
be expected to have a Material Adverse Effect.

         5.14              APPLICATION OF PROCEEDS

         Borrower shall use the entire amount of the proceeds of each Loan as
provided in Section 3.22.

         5.15              FISCAL YEAR; ACCOUNTING CHANGES

         Borrower shall notify Bank at least 60 days in advance of any action
Borrower or any Subsidiary intends to take to change (i) their fiscal year, or
(ii) their method of accounting or any accounting practice used by any of them,
in either case which is inconsistent with GAAP.

         5.16              ENVIRONMENTAL.  Borrower shall, and shall cause each
Subsidiary to,

         (a) promptly give notice to Bank upon obtaining knowledge of (i) any
claim, injury, proceeding, investigation or other action, including a request
for information or a notice of potential environmental liability, by or from any
Governmental Authority or any third-party claimant that could reasonably be
expected to result in Borrower or any Subsidiary incurring any material
Environmental Liabilities and costs or (ii) the discovery of any Release at, on,
under or from any real property, facility or equipment owned or leased by
Borrower or any Subsidiary in excess of reportable or allowable standards or
levels under any applicable Environmental Law, or in any manner or amount that
could reasonably be expected to result in Borrower or any Subsidiary incurring
Environmental Liabilities and Costs which could reasonably be expected to have a
Material Adverse Effect; and

         (b) upon discovery of the presence on any property owned or leased by
Borrower or any Subsidiary of any Contaminant that reasonably could be expected
to result in material Environmental Liabilities and Costs, take all Remedial
Action required by applicable Environmental Law.

         5.17              FINANCIAL COVENANTS

         (a) Borrower shall maintain (on a consolidated basis) Indebtedness
divided by Tangible Net Worth not greater than 1.25 to 1.0 as of the end of each
first fiscal quarter and as of the end of each fiscal year, and not greater than
1.75 to 1.0 as of the end of each second and third fiscal quarter.

         (b) As of the end of each fiscal quarter of Borrower, Borrower shall
maintain the Advance Basis in an amount equal to or greater than the aggregate
outstanding principal balance of the Loans as of each such date.

         (c) Borrower shall maintain (on a consolidated basis) an EBITDA
Coverage Ratio not less than 4.0 to 1.0 measured on a trailing four quarter
basis as of the end of each fiscal quarter, with "EBITDA" defined as net profit
before tax plus interest expense (net of capitalized interest expense),
depreciation expense and amortization expense, and with "EBITDA

                                       22
<PAGE>
Coverage Ratio" defined as EBITDA divided by the aggregate of total interest
expense plus the current maturities of long-term debt and subordinated debt in
the four quarter period ending on such date.

         5.18              FURTHER ASSURANCES

         At the request of Bank at any time and from time to time, Borrower
shall, and shall cause each Subsidiary to, duly execute and deliver, or cause to
be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts, as may be reasonably
necessary or proper to effectuate the provisions or purposes of this Agreement
or any of the other Loan Documents, at Borrower's expense. Bank may at any time
and from time to time request a certificate from an officer of Borrower
representing that all conditions precedent to the making of Loans contained
herein are satisfied. In the event of such request by Bank, Bank may, at its
option, cease to make any further Loans until Bank has received such certificate
and, in addition, Bank has determined that such conditions are satisfied.

ARTICLE VI.       NEGATIVE COVENANTS

         Borrower covenants that so long as Bank remains committed to extend
credit to Borrower pursuant to the terms hereof or any liabilities (whether
direct or contingent, liquidated or unliquidated other than unmatured indemnity
obligations) of Borrower under any of the Loan Documents remain outstanding, and
until payment in full in cash of all Obligations, without the prior written
consent of Bank:

         6.1               LIENS

         Borrower will not, nor permit any Domestic Subsidiary to, create or
suffer to exist any Lien upon or with respect to any of their properties,
whether now owned or hereafter acquired, or assign any right to receive income,
except for the following:

         (a) Permitted Liens;

         (b) zoning restrictions, easements, rights of way, survey exceptions,
encroachments, covenants, licenses, reservations, leasehold interests,
restrictions on the use of real property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or use
of any property or assets of Borrower or any Subsidiary or impair, in any
material manner, the use of such property for the purposes for which such
property is held by Borrower or any Subsidiary;

         (c) Liens to secure Capitalized Lease Obligations, purchase money
security interests, and any related payment and performance obligations;
provided, however, that: (i) any such Lien is created solely for the purpose of
securing Indebtedness representing, or incurred to finance, refinance or refund,
the cost (including, without limitation, the cost of acquisition, construction,
capitalized interest and the reasonable fees and expenses relating to such
Indebtedness) of the property subject thereto, (ii) any such Lien attaches to
such property concurrently with or within 90 days after the acquisition or
completion of construction thereof, (iii) the principal amount of the
Indebtedness secured thereby does not exceed 100% of the cost of such property,
and (iv) such Lien attaches solely to the property (including proceeds thereof)
so acquired or constructed in such transaction;

                                       24
<PAGE>
         (d) the interests of lessors or lessees of property leased pursuant to
operating leases;

         (e) Liens securing (i) the nondelinquent performance of bids, trade
contracts (other than for borrowed money) and statutory obligations, (ii)
Contingent Obligations on surety and appeal bonds, and (iii) other nondelinquent
obligations of a like nature, in each case incurred in the ordinary course of
business, provided that all such Liens in the aggregate could not (even if
enforced) reasonably be expected to have a Material Adverse Effect;

         (f) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by Borrower in excess of those set forth in regulations promulgated by
the Federal Reserve Board and (ii) such deposit account is not intended to
provide collateral to any depository institution;

         (g) any Lien existing on any specific item of real or personal property
or asset prior to the acquisition thereof, or of any Person owning such real or
personal property by Borrower or any Subsidiary securing Indebtedness not to
exceed $25,000,000 in the aggregate; provided that (i) such Lien is not created
in contemplation of or in connection with such acquisition and (ii) such Lien
does not apply to any other property or assets of Borrower or any Subsidiary;

         (h) Liens created by or relating to any legal proceeding which at the
time is being tested in good faith by appropriate proceedings, provided, that in
the case of a Lien consisting of an attachment or judgment Lien, the judgment it
secures shall, within 60 days thereof, have been discharged or execution thereof
stayed pending appeal or discharged within 60 days after the expiration of any
such stay and provided further that all such Liens outstanding do not exceed at
any time $10,000,000 in the aggregate; or

         (i) Liens securing Indebtedness, the proceeds of which are used to
refinance the Indebtedness secured by any Lien permitted hereunder, provided
that such Lien does not apply to any additional property or assets of Borrower
or any Subsidiary (other than the proceeds of the property or assets subject to
such Lien).

         6.2               RESTRICTED PAYMENTS, REDEMPTIONS.  During the
continuation of any Event of Default or if the proposed transaction would result
in the occurrence of an Event of Default, Borrower shall not, and shall not
permit any Subsidiary to,

         (a) declare or make any dividend payment or other distribution of
assets, properties, cash, rights, obligations or securities on account or in
respect of any of their Stock or Stock Equivalents (other than payments and
distributions to Borrower); or

         (b) purchase, redeem or otherwise acquire for value any of Borrower's
or any Subsidiary's Stock or Stock Equivalents.

         6.3              MERGERS, SALE OF ASSETS, ETC.  Borrower shall not, and
shall not permit any Subsidiary to,

         (a) merge or consolidate with any Person, acquire, either directly or
through any affiliate, all or a substantial portion of the Stock, Stock
Equivalents or assets of another Person, such that as a result of such merger,
consolidation or acquisition, Borrower or such Subsidiary

                                       25
<PAGE>
is not the surviving entity; provided that Borrower may, without the prior
written consent of Bank, (i) cause any of its Subsidiaries to be merged with or
liquidated into Borrower, (ii) cause any Domestic Subsidiary to merge with or be
liquidated into any other Domestic Subsidiary , (iii) cause any Foreign
Subsidiary to merge with or be liquidated into any other Foreign Subsidiary or
any Domestic Subsidiary, or (iv) form one or more Subsidiaries; or

         (b) sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its assets (including, without limitation, the Stock of a
Subsidiary) or any interest therein to any Person other than as permitted by
Section 6.3(a).

         6.4               INVESTMENTS IN OTHER PERSONS

         Except as otherwise permitted by Section 6.2 or 6.3, Borrower shall
not, and shall not permit any Subsidiary to, directly or indirectly, make or
maintain any loan or advance to any other Person or own, purchase or otherwise
acquire any Stock, Stock Equivalents, other equity interest, obligations or
other securities of, or otherwise invest in, any other Person (any such
transaction being an "Investment"), except:

         (a) Investments in accounts, contract rights and chattel paper, notes
receivable and similar items arising or acquired in the ordinary course of
business consistent with past practices of Borrower or any Subsidiary;

         (b) incidental advances to employees of Borrower or any Subsidiary in
the ordinary course of business;

         (c) Investments in existence on the Closing Date;

         (d) loans and capital contributions to Borrower's Subsidiaries in the
ordinary course of business consistent with Borrower's past practice; or

         (e) Investments made for cash management purposes and other investments
in accordance with the investment policies of Borrower and its Subsidiaries in
effect as of the Closing Date.

         6.5               CHANGE IN NATURE OF BUSINESS

         Borrower shall not, and shall not permit any Subsidiary to, directly or
indirectly engage in any business activity other than their current business
activities and business activities reasonably related thereto.

         6.6               GUARANTIES

         Borrower shall not, and shall not permit any Subsidiary to, guarantee
or become liable in any way as surety, endorser (other than as endorser of
negotiable instruments for deposit or collection in the ordinary course of
business), accommodation endorser or otherwise for, or pledge or hypothecate any
assets of Borrower or any Subsidiary as security for, any liabilities or
obligations of any other Person except:

         (a) Any of the foregoing required by this Agreement;

         (b) Guaranties by Borrower of the Indebtedness of a Subsidiary incurred
in the ordinary course of business;

         (c) Guaranties in connection with Investments permitted by Section 6.4;

         (d) Guaranties existing on the Closing Date that are described in the
Disclosure Schedule; and

         (e) Guaranties by Subsidiaries of Indebtedness of the Borrower or any
other Subsidiary.

         6.7               PLANS

         (a) Except as provided in subsection (b) below, Borrower shall not, nor
permit any Domestic Subsidiary to, (i) adopt or become obligated to contribute
to any Plan or any multiemployer plan or any other plan subject to Section 412
of the Internal Revenue Code (except for any such Plan listed on the Disclosure
Schedule on the Closing Date), (ii) establish or become obligated with respect
to any new welfare benefit plan, or modify any existing welfare benefit plan,
which is reasonably likely to result in an increase of the present value of
future liabilities for post-retirement life insurance and medical benefits, or
(iii) establish or become obligated with respect to any new welfare benefit
plan, or modify any existing unfunded pension plan, which is reasonably likely
to result in a material increase in the present value of future unfunded
liabilities under all such plans.

         (b) The provisions of (a) shall not apply to the following if the
actions, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect:

                  (i) Acquisition, by merger or otherwise, of a business or the
assets and employees of a business that maintains one or more plans described in
(a)(i) or welfare benefit plans or adoption, assumption or continuance of such
plans or contributions to such plans;

                  (ii) Change of funding of, or addition or enhancement of
benefits or features to, a welfare benefit plan, other than funding, benefits or
features related to post-retirement life insurance or medical benefits, whether
or not the change, addition or enhancement results in the designation of a new
plan for purposes of ERISA or COBRA;

                  (iii) The addition of directors, employees or classes of
employees as participants of an unfunded pension plan; or

                  (iv) The modification of an unfunded pension plan or creation
of a new unfunded pension plan primarily for the purpose of compliance with
changes to or clarification of law applicable to unfunded pension plans.

         6.8               ACCOUNTING CHANGES

         Borrower shall not make any change in accounting practices, except such
changes as are in conformity with GAAP and disclosed to Bank pursuant to Section
5.15.

         6.9               CANCELLATION OF INDEBTEDNESS OWED TO BORROWER

         Borrower shall not, and shall not permit any Subsidiary to, cancel any
material claim of

                                       26
<PAGE>
or Indebtedness owed to Borrower other than for legitimate business purposes in
the reasonable judgment of Borrower and in the ordinary course of business.

         6.10              NO SPECULATIVE TRANSACTIONS

         Borrower shall not, and shall not permit any Subsidiary to, engage in
any commodity contract or Interest Rate Contract other than foreign exchange
contracts and Interest Rate Contracts in the ordinary course of business and in
no event for speculative purposes.

         6.11              MARGIN REGULATIONS

         Borrower shall not, and shall not permit any Subsidiary to, use the
proceeds of any Loans to purchase or carry any margin stock in violation of
Regulation U of the Board of-Governors of the Federal Reserve System.

         6.12              ENVIRONMENTAL

         Borrower shall not, and shall not permit any Subsidiary to, permit any
lessee or any other Person to, dispose of any Contaminant by placing it in or on
the ground or waters of any property owned or leased by Borrower or any of its
Subsidiaries, except in material compliance with Environmental Law or the terms
of any Permit or other than those which in the aggregate would not reasonably be
expected to have a Material Adverse Effect.

         6.13              TRANSACTIONS WITH AFFILIATES

         Except as otherwise permitted by Sections 6.2, 6.3, 6.4 or 6.6,
Borrower shall not, and shall not permit any Subsidiary to, enter into any
transaction directly or indirectly with or for any affiliate except in the
ordinary course of business on a basis no less favorable to such affiliate than
would be obtained in a comparable arm's length transaction with a Person not an
affiliate involving assets that are not material to the business and operations
of Borrower or any Subsidiary.

         6.14              INDEBTEDNESS OF SUBSIDIARIES

         Borrower shall not permit or cause any Subsidiary to, create, incur,
assume or permit to exist any Indebtedness resulting from borrowings, loans,
advances or letters of credit, whether secured or unsecured, matured or
unmatured, liquidated or unliquidated, joint or several, except (i) any
Indebtedness of Subsidiaries to Bank, (ii) Indebtedness of Subsidiaries existing
on and disclosed to Bank prior to, the Closing Date, and (iii) any Indebtedness
of Subsidiaries incurred in the ordinary course of business.

         6.15.             OTHER RESTRICTIONS.

         Borrower shall not permit or cause any Subsidiary to agree to, incur,
assume or suffer to exist any restriction, limitation or other encumbrance (by
covenant or otherwise) on the ability of such Subsidiary to make any payment to
the Borrower or any of its Subsidiaries (in the form of dividends, intercompany
advances or otherwise), except: (i) restrictions and limitations existing as of
the Closing Date and disclosed in the Disclosure Schedule (ii) restrictions and
limitations applicable to a Subsidiary existing at the time such Subsidiary
becomes a Subsidiary of the Borrower and not incurred in contemplation thereof,
as long as no such restriction or limitation is made more restrictive after the
date such Subsidiary becomes a Subsidiary of the Borrower or

                                       27
<PAGE>
(iii) other restrictions and limitations that in the aggregate would not
reasonably be expected to have a Material Adverse Effect.

ARTICLE VII.      EVENTS OF DEFAULT

         7.1               EVENTS OF DEFAULT

         The occurrence of any of the following shall constitute an "Event of
Default" under this Agreement:

         (a) Borrower shall fail to pay (i) any principal of any Loan when due,
(ii) any other Obligation (including payment of interest on any Loan) within 5
days after any such amount becomes due in accordance with the terms of the Loan
Documents, or (iii) any Indebtedness of Borrower to Bank not evidenced by the
Loan Documents when due or within any applicable cure period provided for in the
documents evidencing such Indebtedness;

         (b) Any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower under any of
the Loan Documents shall prove to be false or misleading in any material respect
when furnished or made;

         (c) Borrower shall fail to provide any certificate, report or other
information which it is required to provide pursuant to Section 5.3 on the date
specified in Section 5.3; provided that unless Borrower has previously failed to
provide any required certificate, report or other information by the required
date on two prior occasions within the preceding 12 months, such failure shall
be considered an Event of Default only if Borrower fails to provide such
certificate, report or other information within 5 Business Days of the earlier
of (i) the date an executive officer of Borrower has knowledge of its failure to
so provide such certificate, report or other information or (ii) the date Bank
notifies Borrower of such failure;

         (d) Any default by Borrower in the performance of or compliance with
any obligation, agreement or other provision contained in Sections 5.4, 5.11,
5.12, 5.14, 5.15, 5.17, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11,
6.12, 6.13, 6.14 or 6.15;

         (e) Any default by Borrower in the performance of or compliance with
any Obligation (other than those referred to in subsections (a) through (d)
above) for 30 days after written notice thereof has been given to Borrower by
Bank;

         (f) Any default by Borrower or any Subsidiary in the payment or
performance of any obligation, or the occurrence and continuation of any defined
event of default, under the terms of any contract or instrument (other than any
of the Loan Documents) evidencing Indebtedness (other than trade payables
incurred in the ordinary course of business) in excess of $10,000,000 to any
Person where (i) the event of default consists of the outstanding principal
balance not being paid at its scheduled maturity date, or (ii) the effect of
such default or event of default is to permit or cause the acceleration of such
obligation or Indebtedness;

         (g) Any judgment, order or writ in excess of $10,000,000 is rendered or
entered against Borrower and/or one or more Subsidiaries of Borrower, except any
judgment for which Borrower and/or any Subsidiary is fully insured or
indemnified against (by an indemnitor that, in Bank's reasonable judgment, is
financially able to satisfy its indemnification obligation) and with respect to
which the insurer or indemnitor (as the case may be) has admitted in writing its
liability for the full amount thereof or except if the enforcement of such
judgment, order or writ

                                       28
<PAGE>
has been stayed or the liability thereon bonded within 30 days after the entry
of the judgment, order or writ in a manner and on terms reasonably satisfactory
to Bank; or the service of a notice of levy and/or a writ of attachment or
execution, or other like process, against any of the assets of Borrower and/or
one or more Subsidiaries with respect to obligations in excess of $10,000,000;

         (h) Borrower or any Subsidiary holding assets (excluding inter-company
assets) in excess of one percent (1%) of the consolidated assets of Borrower
("Material Subsidiary") shall become insolvent, or shall suffer or consent to or
apply for the appointment of a receiver, trustee, custodian or liquidator of
itself or any of its property, or shall generally be unable to or fail to pay
its debts as they become due, or shall make a general assignment for the benefit
of creditors; Borrower or any Material Subsidiary shall file a voluntary
petition in bankruptcy, or seek to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Code, or under any state or
other federal law granting relief to debtors, whether now or hereafter in
effect; or any involuntary petition or proceeding pursuant to the Bankruptcy
Code or any other applicable state or other federal law relating to bankruptcy,
reorganization or other relief for debtors is filed or commenced against
Borrower or any Material Subsidiary and is not dismissed, stayed or vacated
within 60 days thereafter; Borrower or any Material Subsidiary shall file an
answer admitting the jurisdiction of the court and the material allegations of
any involuntary petition; or Borrower or any Material Subsidiary shall be
adjudicated a bankrupt, or an order for relief shall be entered by any court of
competent jurisdiction under the Bankruptcy Code or any other applicable state
or federal law relating to bankruptcy, reorganization or other relief for
debtors as used herein;

         (i) There shall exist or occur any event or condition which Bank in
good faith believes impairs, or is substantially likely to impair, the prospect
of payment or performance by Borrower of its obligations under any of the Loan
Documents;

         (j) The dissolution or liquidation of Borrower, or Borrower or its
directors or stockholders shall take action seeking to effect the dissolution or
liquidation of Borrower; or

         (k) The dissolution or liquidation of any Material Subsidiary except if
such liquidation or dissolution is effected in connection with a transaction
otherwise permitted under the terms of this Agreement.

         7.2               REMEDIES

         Upon the occurrence or existence of any Event of Default (other than an
Event of Default referred to in Section 7.1(h) hereof) and at any time
thereafter during the continuance of such Event of Default, Bank may, by written
notice to Borrower, (a) terminate Bank's obligation to extend any further credit
under any of the Loan Documents, and/or (b) declare all Obligations of Borrower
under the Loan Documents to be immediately due and payable without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by Borrower. Upon the occurrence or existence of any Event of
Default described in Section 7.1(h) hereof, immediately and without notice, (i)
the obligations, if any, of Bank to extend any further credit under any of the
Loan Documents shall automatically cease and terminate, and (ii) all Obligations
of Borrower under the Loan Documents shall automatically become immediately due
and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by Borrower. In addition to the
foregoing remedies, upon the occurrence and during the continuance of any Event
of Default, Bank may exercise any other right, power or remedy granted to it
under any Loan Document or permitted to it by law,

                                       29
<PAGE>
either by suit in equity or by action at law, or both.

ARTICLE VIII.     MISCELLANEOUS

         8.1               NO WAIVER

         No delay, failure or discontinuance of Bank in exercising any right,
power or remedy under any of the Loan Documents shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver, permit, consent or approval of any kind by Bank of any breach of or'
default under any of the Loan Documents must be in writing and shall be
effective only to the extent set forth in such writing.

         8.2               NOTICES

         All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be
in writing delivered to each party at the following address:

         BORROWER:                Columbia Sportswear Company
                                  14375 NW Science Park Drive
                                  Portland, OR 97229
                                  Attn: Bryan L. Timm
                                  Telecopy No.: (503) 985-4000

         BANK:                    Wells Fargo Bank, National Association
                                  Portland Regional Commercial Banking Office
                                  1300 S.W. Fifth Avenue, T-13
                                  Portland, OR 97201
                                  MAC: P6101-133
                                  Attn: James L. Franzen
                                  Telecopy No.: (503) 886-2288

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery by a nationally
recognized courier service, (b) if sent by mail, upon delivery of registered or
certified mail, return receipt requested and postage prepaid; and (c) if sent by
telecopy, upon receipt, with transmission confirmed, and the sender will
endeavor to send a hard copy of such telecopied notice to the recipient by mail.

         8.3               COSTS, EXPENSES AND ATTORNEYS' FEES

         Borrower shall pay to Bank immediately upon demand the full amount of
all payments, advances, charges, costs and expenses, including reasonable
attorneys' fees (whether incurred at the trial or appellate level, in an
arbitration proceeding, in bankruptcy, including, without limitation, any
adversary proceeding, contested matter or motion), incurred by Bank in
connection with (a) the negotiation and preparation of the Loan Documents
(provided that the amount of attorneys fees and related disbursements incurred
in connection with the negotiation and preparation of the Loan Documents shall
not exceed $10,000), (b) the enforcement, preservation or protection (or
attempted enforcement, preservation or protection) of Bank's

                                       30
<PAGE>
rights, including, without limitation, the collection of any amounts which
become due to Bank, under any of the Loan Documents, and (c) the prosecution or
defense of any action in any way related to any of the Loan Documents, including
without limitation, any action for declaratory relief, and including any of the
foregoing incurred in connection with any bankruptcy proceeding relating to
Borrower.

         8.4               INDEMNIFICATION

         To the fullest extent permitted by law, Borrower hereby agrees to
protect, indemnify, defend and hold harmless Bank and its officers, directors,
shareholders, employees, agents, attorneys and affiliates, together with their
respective heirs, beneficiaries, executors, administrators, trustees,
predecessors, successors and assigns (collectively, "Indemnitees") from and
against any liability, loss, damage or expense of any kind or nature (including
in respect of reasonable attorneys' fees (whether incurred at the trial or
appellate level, in an arbitration proceeding, in bankruptcy (including, without
limitation, any adversary proceeding, contested matter or motion) or otherwise)
and other expenses) arising from any suit, claim or demand on account of or in
connection with any matter or thing or action or failure to act by Indemnitees,
or any of them, arising out of relating to any Loan Document, except to the
extent such liability arises from the willful misconduct or gross negligence of
the Indemnitees. Upon receiving knowledge of any suit, claim or demand asserted
by a third party that Bank believes is covered by this indemnity, Bank shall
give Borrower notice of the matter and an opportunity to defend it, at
Borrower's sole cost and expense, with legal counsel reasonably satisfactory to
Bank. Bank may also require Borrower to defend the matter. Any failure or delay
of Bank to notify Borrower of any suit, claim or demand shall not relieve
Borrower of its obligations of this Section 8.4, but shall reduce such
obligations to the extent of any increase in those obligations caused solely by
an unreasonable failure or delay in providing such notice. The obligations of
Borrower under this Section 8.4 shall survive the payment in full and
performance of the other Obligations.

         8.5               SUCCESSORS, ASSIGNMENT

         This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties; provided, that Borrower may not assign or
transfer its interest hereunder. Bank reserves the right, subject (unless an
Event of Default has occurred and is continuing) to the prior written consent of
Borrower (which consent shall not be unreasonably withheld or delayed), to sell,
assign, transfer, negotiate or grant participations in all or any part of, or
any interest in, Bank's rights and benefits under each of the Loan Documents.

         8.6               ENTIRE AGREEMENT; AMENDMENT

         This Agreement and the other Loan Documents constitute the entire
agreement between Borrower and Bank with respect to the extension of credit by
Bank contemplated by this Agreement and supersede any prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only by a written instrument
executed by each party hereto.

         8.7               NO THIRD PARTY BENEFICIARIES

         This Agreement is made and entered into for the sole protection and
benefit of the parties hereto and their respective permitted successors and
assigns, and no other person or entity shall be a third party beneficiary of, or
have any direct or indirect cause of action or claim

                                       31
<PAGE>
in connection with this Agreement or any other of the Loan Documents to which it
is not a party.

         8.8               TIME

         Time is of the essence of each and every provision of this Agreement
and each other of the Loan Documents.

         8.9               SEVERABILITY OF PROVISIONS

         If any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or any remaining provisions of this Agreement.

         8.10              COUNTERPARTS

         This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be deemed to be an original, and all of
which when taken together shall constitute one and the same Agreement.

         8.11              GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
the internal laws of the state of Oregon, without regard to choice of law rules.

         8.12              ARBITRATION

         (a) Arbitration. The parties hereto agree, upon demand by any party, to
submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and
other agents), whether in tort, contract or otherwise arising out of or relating
to in any way (i) the Loans and related Loan Documents which are the subject of
this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional
credit.

         (b) Governing Rules. Any arbitration proceeding will (i) proceed in a
location in Portland, Oregon selected by the American Arbitration Association
("AAA"); (ii) be governed as to procedure by the Federal Arbitration Act (Title
9 of the United States Code), notwithstanding any conflicting choice of law
provision in any of the documents between the parties; and (iii) be conducted by
the AAA, or such other administrator as the parties shall mutually agree upon,
in accordance with the AAA's commercial dispute resolution procedures, unless
the claim or counterclaim is at least $1,000,000.00 exclusive of claimed
interest, arbitration fees and costs in which case the arbitration shall be
conducted in accordance with the AAA's optional procedures for large, complex
commercial disputes (the commercial dispute resolution procedures or the
optional procedures for large, complex commercial disputes to be referred to, as
applicable, as the "Rules"). If there is any inconsistency between the terms
hereof and the Rules, the terms and procedures set forth herein shall control.
Any party who fails or refuses to submit to arbitration following a demand by
any other party shall bear all costs and expenses incurred by such other party
in compelling arbitration of any dispute. Nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded to
it under 12 U.S.C. ss.91 or any similar applicable state law.

                                       32
<PAGE>
         (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

         (d) Arbitrator Qualifications and Powers. Any arbitration proceeding in
which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Oregon or a neutral retired judge of the state
or federal judiciary of Oregon, in either case with a minimum of ten years
experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Oregon and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Oregon Rules of Civil Procedure or other applicable law.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction. The institution and maintenance of an action for judicial
relief or pursuit of a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such action for
judicial relief.

         (e) Discovery. In any arbitration proceeding discovery will be
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date and within 180 days of
the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.

         (f) Class Proceedings and Consolidations. The resolution of any dispute
arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding.

         (g) Payment Of Arbitration Costs And Expenses. The arbitrator shall
award all costs and expenses of the arbitration proceeding.

         (h) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and

                                       33
<PAGE>
the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.

         8.13              WAIVER OF JURY TRIAL

         EACH OF BORROWER, AND BANK, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION IN ANY WAY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS OR EVENTS REFERENCED HERE OR THEREIN OR CONTEMPLATED HEREBY OR
THEREBY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND/OR ANY OTHER OF THE LOAN DOCUMENTS. A COPY
OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF
THE RIGHT TO TRIAL BY JURY AND THE CONSENT TO TRIAL BY COURT.

         8.14              OREGON STATUTORY NOTICE

        UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.

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

                           COLUMBIA SPORTSWEAR COMPANY

                           By:/s/ BRYAN L. TIMM
                              --------------------------------------------------

                           Title: Vice President and Chief Financial Officer

                           WELLS FARGO BANK, NATIONAL ASSOCIATION

                           By: /s/ JAMES L. FRANZEN
                               -------------------------------------------------
                           Title: Vice President
                                  ----------------------------------------------

                                       34<PAGE>
Exhibit 4.1: Form of Shareholder Rights Agreement between Novelis Inc. and CIBC
             Mellon Trust Company

<PAGE>

                          SHAREHOLDER RIGHTS AGREEMENT

                                     BETWEEN

                                  NOVELIS INC.

                                       AND

                            CIBC MELLON TRUST COMPANY

<PAGE>
                          SHAREHOLDER RIGHTS AGREEMENT

<TABLE>
<S>                                                                                                                  <C>
ARTICLE 1 - INTERPRETATION.......................................................................................     2
   1.01 Definitions..............................................................................................     2
   1.02 Headings.................................................................................................    10
   1.03 Extended Meanings........................................................................................    11
   1.04 Currency.................................................................................................    11
   1.05 Schedule.................................................................................................    11
   1.06 Language Clause..........................................................................................    11
   1.07 Acting Jointly or in Concert.............................................................................    11
   1.08 As Now Enacted...........................................................................................    11
ARTICLE 2 - THE RIGHTS...........................................................................................    11
   2.01 Initial Exercise Price, Exercise of Rights and Detachment of Rights......................................    11
   2.02 Legend on Common Share Certificates......................................................................    14
   2.03 Adjustments..............................................................................................    14
   2.04 Date on Which Exercise is Effective......................................................................    17
   2.05 Execution, Authentication, Delivery and Dating of Rights Certificates....................................    17
   2.06 Registration of Rights...................................................................................    18
   2.07 Mutilated, Destroyed, Lost and Stolen Rights Certificates................................................    18
   2.08 Persons Deemed Owners....................................................................................    19
   2.09 Delivery and Cancellation of Certificates................................................................    19
   2.10 Agreement of Rights Holders..............................................................................    19
ARTICLE 3 - EFFECT OF CERTAIN TRANSACTIONS.......................................................................    20
   3.01 Flip-In Event............................................................................................    20
ARTICLE 4 - THE RIGHTS AGENT.....................................................................................    21
   4.01 General..................................................................................................    22
   4.02 Merger or Consolidation or Change of Name of the Rights Agent............................................    22
   4.03 Entitlements of the Rights Agent.........................................................................    23
   4.04 Change of the Rights Agent...............................................................................    24
ARTICLE 5 - MISCELLANEOUS........................................................................................    25
   5.01 Redemption, Waiver and Termination.......................................................................    25
   5.02 Expiration...............................................................................................    26
   5.03 Issuance of New Rights Certificates......................................................................    26
   5.04 Supplements and Amendments...............................................................................    26
   5.05 Fractional Rights and Fractional Shares..................................................................    27
   5.06 Rights of Action.........................................................................................    28
   5.07 Holder of Rights Not Deemed to be a Shareholder..........................................................    28
   5.08 Notices..................................................................................................    28
   5.09 Costs of Enforcement.....................................................................................    29
   5.10 Benefit of the Agreement.................................................................................    29
   5.11 Governing Law............................................................................................    29
   5.12 Counterparts.............................................................................................    30
   5.13 Severability.............................................................................................    30
   5.14 Determinations and Actions by the Board..................................................................    30
   5.15 Effective Date...........................................................................................    30
   5.16 Re-confirmation after Three Years........................................................................    30
   5.17 Regulatory Approvals.....................................................................................    31
   5.18 Declaration as to Non-Canadian Holders...................................................................    31
ARTICLE 6 - PERMITTED BIDS.......................................................................................    31
   6.01 Permitted Bids...........................................................................................    31
   6.02 Competing Permitted Bids.................................................................................    32
   SCHEDULE 1....................................................................................................    33
</TABLE>

<PAGE>

                          SHAREHOLDER RIGHTS AGREEMENT

THIS AGREEMENT made as of    December 2004.

B E T W E E N:
                  NOVELIS INC., a corporation incorporated under the laws of
                  Canada (hereinafter referred to as the "Corporation"),

                                                              OF THE FIRST PART,

A N D:

                  CIBC MELLON TRUST COMPANY, a trust company existing under the
                  laws of Canada (hereinafter referred to as the "Rights
                  Agent"),

                                                              OF THE SECOND PART

WITNESSES that:

WHEREAS the Corporation will, upon the effectiveness of an arrangement under
section 192 of the Canada Business Corporations Act proposed by Alcan Inc.
("Alcan") and described in Alcan's Management Proxy Circular dated 23 November
2004 (the "Arrangement"), become a publicly traded corporation with its Common
Shares listed on the Toronto Stock Exchange and the New York Stock Exchange;

WHEREAS the Board has determined that it is advisable for the Corporation to
adopt and maintain a shareholder rights plan inter alia in order to (i) provide
a framework in which Take-Over Bids for the Corporation can be made for the
Voting Shares of the Corporation including providing the Board with sufficient
time to explore and develop alternatives, (ii) facilitate the maximization of
shareholder values if a substantial portion of the Voting Shares is to be
acquired by any Person, and (iii) protect the Corporation and its shareholders
from abusive acquisition tactics or acquisitions which may not be in the best
interests of the Corporation;

AND WHEREAS it is not the intention of the Board to adopt the Rights Plan as a
means of preventing or deterring any Person from seeking to acquire the Voting
Shares, provided they do so fairly, or of foreclosing the ability of the Board
to take any action that in its discretion it considers reasonable in the
circumstances of any such transaction;

AND WHEREAS, in order to implement the Rights Plan, the Board authorized and
declared a distribution of one Right effective at the earliest possible time
following the effectiveness of the Arrangement ("Record Time") in respect of
each Common Share outstanding as at the Record Time and has authorized the
issuance of one Right in respect of each Common Share issued after such date and
prior to the earlier of the Separation Time and the Expiration Time;

AND WHEREAS each Right entitles the holder thereof, after the Separation Time
but prior to the Expiration 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 in connection with the issuance, transfer, exchange and
replacement of Rights Certificates, the exercise of the Rights and the other
matters relating to the Corporation referred to herein and to act as the trustee
for the holders of the Rights in connection with the promise of the Corporation
herein to issue Rights Certificates to the Rights Agent for distribution to the
holders of Common Shares after the Separation Time, and the Rights Agent is
willing to so act;

NOW THEREFORE in consideration of the premises and the agreements herein
contained the parties hereto agree as follows:

                                                                               1
<PAGE>

                           ARTICLE 1 - INTERPRETATION

1.01 DEFINITIONS

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

         (a)      "Acquiring Person" means any Person (other than the
                  Corporation or any Subsidiary of the Corporation) who is a
                  Beneficial Owner of 20% or more of the outstanding Voting
                  Shares. Notwithstanding the foregoing, no Person shall become
                  an "Acquiring Person"

                  (i)      (A)      as a result of the purchase, redemption or
                                    other acquisition of Voting Shares by the
                                    Corporation which, by reducing the number of
                                    Voting Shares then outstanding, increases
                                    the proportionate number of shares
                                    Beneficially Owned by such Person to 20% or
                                    more of the Voting Shares then outstanding;

                           (B)      as a result of share acquisitions made
                                    pursuant to a Permitted Bid or Competing
                                    Permitted Bid;

                           (C)      as a result of share acquisitions made
                                    pursuant to a Permitted Acquisition;

                           (D)      as a result of an Exempt Acquisition; or

                           (E)      as a result of a Convertible Security
                                    Acquisition;

                  provided, however, that if a Person becomes the Beneficial
                  Owner of 20% or more of the Voting Shares then outstanding as
                  a result of a purchase, redemption or other acquisition of
                  Voting Shares by the Corporation as provided for in clause (A)
                  above, or as a result of a Permitted Bid or Competing
                  Permitted Bid as provided for in clause (B) above, or as a
                  result of a Permitted Acquisition as provided for in clause
                  (C) above, or as a result of the waiver of the application of
                  Section 3.01 pursuant to Section 5.01(2) as provided for in
                  clause (D) above, or as a result of a Convertible Security
                  Acquisition as provided for in clause (E) above, or as a
                  result of any combination of acquisitions referred to in
                  clauses (A) to (E) above, and after such acquisition or
                  acquisitions such Person becomes the Beneficial Owner of more
                  than an additional 1% of the Voting Shares then outstanding
                  other than pursuant to clauses (A), (B), (C), (D) or (E) above
                  or any combination thereof, such Person shall thereupon
                  immediately be deemed to be an "Acquiring Person";

                  (ii)     as a result of such person (a "Grandfathered Person")
                           being the Beneficial Owner of 20% or more of the
                           outstanding Voting Shares of the Corporation
                           determined as at the Record Time provided, however,
                           that this exception shall not be, and shall cease to
                           be, applicable to such Grandfathered Person in the
                           event that such Grandfathered Person shall, after the
                           Record Time, become the Beneficial Owner of any
                           additional Voting Shares of the Corporation that
                           increase its Beneficial Ownership of Voting Shares by
                           more than 1% of the number of Voting Shares
                           outstanding as at the Record Time, other than as a
                           result of a Permitted Bid, a Competing Permitted Bid,
                           a Permitted Acquisition or any Take-Over Bid in
                           respect of which a waiver is, or is deemed to have
                           been, granted under Section 5.01(2);

                  (iii)    for a period of ten calendar days after the
                           Disqualification Date (as defined below), where such
                           Person becomes the Beneficial Owner of 20% or more of
                           the outstanding Voting Shares as a result of such
                           Person becoming disqualified from relying on Section
                           1.01(e)(v) solely because

                                                                               2
<PAGE>

                           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 that any
                           Person is making or has announced an intention to
                           make a Take-Over Bid;

                  (iv)     being 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
                           distribution of securities of the Corporation.

         (b)      "Affiliate" when used to indicate a relationship with a
                  specified Person, shall mean a Person that controls, or is
                  controlled by, or is under common control with, such specified
                  Person.

         (c)      "Agreement" means this agreement and all amendments made
                  hereto by written agreement between the Corporation and the
                  Rights Agent.

         (d)      "Alcan" has the meaning ascribed to that term in the first
                  recital hereto.

         (e)      "Arrangement" has the meaning ascribed to that term in the
                  first recital hereto.

         (f)      "Associate" means, when used to indicate a relationship with a
                  specified Person, a spouse of that Person or any Person with
                  whom that Person is living in a conjugal relationship outside
                  marriage or a child of that Person or a relative of that
                  Person who has the same residence as that Person.

         (g)      A Person shall be deemed to be the "Beneficial Owner" of and
                  to have "Beneficial Ownership" of and to "Beneficially Own"
                  any securities which:

                  (i)      such Person or any of such Person's Affiliates or
                           Associates owns at law or in equity;

                  (ii)     such Person or any of such Person's Affiliates or
                           Associates has the right to become the owner of at
                           law or in equity (whether such right is exercisable
                           immediately or within a period of 60 calendar days
                           thereafter and whether or not on condition or on the
                           happening of any contingency), (A) upon the exercise
                           of any Convertible Securities or (B) pursuant to any
                           agreement, arrangement, pledge or understanding,
                           whether or not in writing, (other than (x) customary
                           agreements with and between underwriters and/or
                           banking group members and/or selling group members
                           with respect to a public offering or private
                           placement of securities and (y) pledges of securities
                           in the ordinary course of business) or upon the
                           exercise of any conversion right, exchange right,
                           share purchase right (other than the Rights), warrant
                           or option; or

                  (iii)    without limiting the generality of the foregoing, are
                           beneficially owned within the meaning of paragraphs
                           (i) and (ii) of this definition by any other Person
                           with which such Person is acting jointly or in
                           concert;

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

                  (iv)     where such security has been, or has agreed to be,
                           deposited or tendered pursuant to a Lock-up
                           Agreement, or is otherwise deposited or tendered, to
                           any Take-Over Bid made by such Person or by any of
                           such Person's Affiliates or Associates or made by any
                           Person

                                                                               3
<PAGE>

                           acting jointly or in concert with such Person until
                           such deposited or tendered security has been taken up
                           and paid for, whichever shall first occur;

                  (v)      where such Person, any of such Person's Affiliates or
                           Associates or any other Person acting jointly or in
                           concert with such Person holds such security provided
                           that:

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

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

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

                           (D)      such Person (the "Administrator") is the
                                    administrator or trustee of one or more
                                    pension funds or plans (a "Plan"), or is a
                                    Plan, registered under the laws of Canada or
                                    any Province thereof or the laws of the
                                    United States of America or any State
                                    thereof;

                           provided, in any of the above cases, that the
                           Investment Manager, the Trust Company, the Statutory
                           Body, the Administrator or the Plan, as the case may
                           be, is not then making a Take-Over Bid or has not
                           then announced an intention to make a Take- over Bid
                           alone or acting jointly or in concert with any other
                           Person, other than an Offer to Acquire Voting Shares
                           or other securities (x) pursuant to a distribution by
                           the Corporation (y) by means of a Permitted Bid or
                           (z) by means of ordinary market transactions
                           (including prearranged trades entered into in the
                           ordinary course of business of such Person) executed
                           through the facilities of a stock exchange or
                           organized over-the-counter market;

                  (vi)     where such Person is:

                           A.       a Client of the same Investment Manager as
                                    another Person on whose account the
                                    Investment Manager holds such security,

                           B.       an Estate Account or an Other Account of the
                                    same Trust Company as another Person on
                                    whose account the Trust Company holds such
                                    security, or

                           C.       a Plan with the same Administrator as
                                    another Plan on whose account the
                                    Administrator holds such security;

                                                                               4
<PAGE>

                  (vii)    where such Person is:

                           A.       a Client of an Investment Manager and such
                                    security is owned at law or in equity by the
                                    Investment Manger,

                           B.       an Estate Account or an Other Account of a
                                    Trust Company and such security is owned at
                                    law or in equity by the Trust Company, or

                           C.       a Plan and such security is owned at law or
                                    in equity by the Administrator of the Plan;
                                    or

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

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

         (h)      "Board" means the board of directors of the Corporation.

         (i)      "Business Day" means any day, other than a Saturday or Sunday,
                  on which banks are generally open for business in the City of
                  Montreal.

         (j)      "Canadian-U.S. Exchange Rate" means, on any date, the inverse
                  of the U.S.-Canadian Exchange Rate in effect on such date.

         (k)      "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.

         (l)      "close of business" means, with respect to any date, the time
                  on such date at which the offices of the Rights Agent in the
                  City of Montreal are, after having been open to the public for
                  business, closed to the public.

         (m)      "Common Shares", when used with reference to the Corporation,
                  means the common shares in the capital of the Corporation and,
                  when used with reference to any Person other than the
                  Corporation, means the class of shares in the capital of such
                  other Person with the greatest voting power per share.

         (n)      "Competing Permitted Bid" has the meaning set out in Section
                  6.02.

         (o)      "controlled": a corporation is "controlled" by another Person
                  if:

                  (i)      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; and

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

                  and "controls", "controlling" and "under common control with"
                  shall be interpreted accordingly.

                                                                               5
<PAGE>

         (p)      "Convertible Securities" means at any time:

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

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

                  which is then exercisable or exercisable within a period of 60
                  calendar days from that time, pursuant to which the holder
                  thereof may acquire Voting Shares or other securities which
                  are convertible into, exercisable or exchangeable for Voting
                  Shares (in each case, whether such right is then exercisable
                  or exercisable within a period of 60 calendar days from that
                  time and whether or not on condition or the happening of any
                  contingency).

         (q)      "Convertible Security Acquisition" means the acquisition of
                  Voting Shares upon the exercise of a Convertible Security
                  received by a Person pursuant to a Permitted Acquisition.

         (r)      "Dividend Reinvestment Acquisition" shall mean an acquisition
                  of Voting Shares of any class pursuant to a Dividend
                  Reinvestment Plan.

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

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

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

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

                  (iv)     optional cash payments;

                  be applied to the purchase from the Corporation of Voting
                  Shares.

         (t)      "Election to Exercise" has the meaning set out in Section
                  2.01(4).

         (u)      "Exempt Acquisition" means a share acquisition in respect of
                  which the Board has waived the application of Section 3.01
                  pursuant to the provisions of Sections 5.01(2).

         (v)      "Exercise Price" means, as of any date, the price at which a
                  holder may purchase the securities issuable upon the exercise
                  of one Right which, until the adjustment thereof in accordance
                  with the provisions hereof, shall equal $200.

         (w)      "Expansion Factor" has the meaning set out in Section
                  2.03(2)(e).

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

                  (i)      the Termination Time, or

                  (ii)     subject to Sections 5.15 and 5.16, the close of
                           business on 1 May 2014.

                                                                               6
<PAGE>

         (y)      "Flip-In Event" means a transaction or event in which any
                  Person becomes an Acquiring Person.

         (z)      "holder" has the meaning set out in Section 2.08.

         (aa)     "Independent Shareholders" means holders of Voting Shares, but
                  shall not include any Acquiring Person or any Offeror
                  (including an Offeror who is making a Permitted Bid or
                  Competing Permitted Bid) other than any Person who by virtue
                  of Section 1.01 (g) (v) is not deemed to Beneficially Own the
                  Voting Shares held by such Person, any Affiliate or Associate
                  of any such Acquiring Person or Offeror or any Person acting
                  jointly or in concert with such Acquiring Person or Offeror,
                  or Persons with rights or powers under any employee stock
                  ownership plans, benefit plans, deferred profit sharing and
                  any other similar plan or trust for the benefit of employees
                  of the Corporation or a Subsidiary of the Corporation, unless
                  the beneficiaries of such plan or trust direct the manner in
                  which such Voting Shares are to be voted or direct whether the
                  Voting Shares are to be tendered to a Take-Over Bid.

         (bb)     "Lock-up Agreement" means an agreement between an Offeror, any
                  of its Affiliates or Associates or any other Person acting
                  jointly or in concert with the Offeror and a Person (the
                  "Locked-up Person") who is not an Affiliate or Associate of
                  the Offeror or a Person acting jointly or in concert with the
                  Offeror whereby the Locked-up Person agrees to deposit or
                  tender the Voting Shares held by the Locked-up Person to the
                  Offeror's Take-Over Bid or to any Take-Over Bid made by any of
                  the Offeror's Affiliates or Associates or made by any other
                  Person acting jointly or in concert with the Offeror, where
                  the agreement permits the Locked-up Person to withdraw the
                  Voting Shares from the agreement in order to tender or deposit
                  the Voting Shares to another Take-Over Bid that contains an
                  offering price for each Voting Share that is at least 5%
                  higher than the offering price contained in or proposed to be
                  contained in the Take-Over Bid that the Locked-up Person has
                  agreed to deposit or tender Voting Shares pursuant to the
                  Lock-up Agreement.

         (cc)     "Market Price" per share of any securities on any date of
                  determination shall mean the average of the daily Closing
                  Prices Per Share of such securities (determined as described
                  below) on each of the 20 consecutive Trading Days through and
                  including the Trading Day immediately preceding such date;
                  provided, however, that if an event of a type analogous to any
                  of the events described in Section 2.03 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 such date of determination or, if the date of
                  determination is not a Trading Day, on the immediately
                  preceding Trading Day, each such closing price so used shall
                  be appropriately adjusted in a manner analogous to the
                  applicable adjustment provided for in Section 2.03 hereof in
                  order to make it fully comparable with the closing price on
                  such date of determination or, if the date of determination is
                  not a Trading Day, on the immediately preceding Trading Day.
                  The "Closing Price Per Share" of any securities on any date
                  shall be:

                  (i)      the closing board lot sale price or, if such price is
                           not available, the average of the closing bid and
                           asked prices, for each share as reported in the
                           principal consolidated transaction reporting system
                           with respect to securities listed or admitted to
                           trading on The Toronto Stock Exchange;

                  (ii)     if the securities are not listed or admitted to
                           trading on The Toronto Stock Exchange, the last sale
                           price, regular way, or, in the case no such sale
                           takes place on such date, the average of the closing
                           bid and asked prices, regular way, for each share of
                           such securities as reported in the principal
                           consolidated transaction reporting system with
                           respect to securities listed or admitted to trading
                           on the New York Stock Exchange;

                  (iii)    if for any reason none of such prices is available on
                           such day or the securities are not listed

                                                                               7
<PAGE>
                           or admitted to trading on any of The Toronto Stock
                           Exchange or the New York Stock Exchange, the average
                           of the high bid and low asked prices for each share
                           of such securities in the over-the-counter market if
                           such high bid and low asked prices are regularly
                           published in a newspaper or business or financial
                           publication of regular or paid circulation; or

                  (iv)     if on any such date the securities are not quoted by
                           any such organization, the average of the closing bid
                           and asked prices as furnished by a professional
                           market maker making a market in the securities;

                  provided, however, that if on any such date the securities are
                  not traded in the over-the-counter market, the closing price
                  per share of such securities on such date shall mean the fair
                  value per share of securities on such date as determined by a
                  nationally or internationally recognized Canadian investment
                  dealer (or investment banker) with respect to the fair value
                  per share of such securities. The Market Price shall be
                  expressed in United States dollars and if initially determined
                  in respect of any day forming part of the 20 consecutive
                  Trading Day period in question in Canadian dollars, such
                  amount shall be translated into United States dollars at the
                  U.S. Dollar Equivalent thereof on the relevant Trading Day.

         (dd)     "Offer to Acquire" includes:

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

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

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

         (ee)     "Offeror" means any Person who has announced an intention to
                  make or who is making, but has not completed, a Take-Over Bid
                  (including a Permitted Bid or a Competing Bid) but only so
                  long as the Take-Over Bid so made or announced has not been
                  withdrawn or terminated or has not expired.

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

         (gg)     "Permitted Acquisition" means an acquisition by a Person of
                  Voting Shares pursuant to:

                  (i)      a Dividend Reinvestment Acquisition;

                  (ii)     a stock dividend, stock split or other event in
                           respect of securities of the Corporation of one or
                           more particular classes or series pursuant to which
                           such Person becomes the Beneficial Owner of Voting
                           Shares on the same pro rata basis as all other
                           holders of securities of the particular class,
                           classes or series;

                  (iii)    the acquisition or the exercise by the Person of only
                           those rights to purchase Voting Shares distributed to
                           that Person in the course of a distribution to all
                           holders of securities of the Corporation of one or
                           more particular classes or series pursuant to a
                           rights offering or rights offering prospectus; or

                  (iv)     a distribution by the Corporation of Voting Shares or
                           Convertible Securities (and the conversion or
                           exchange of such ), made pursuant to a prospectus or
                           by way of a private

                                                                               8
<PAGE>

                           placement, provided that the Person does not thereby
                           acquire a greater percentage of such Voting Shares,
                           or securities convertible into or exchangeable for
                           Voting Shares, so offered than the Person's
                           percentage of Voting Shares Beneficially Owned
                           immediately prior to such acquisition.

         (hh)     "Permitted Bid" has the meaning set out in Section 6.01.

         (ii)     "Person" includes any individual, partnership, association,
                  body corporate, unincorporated syndicate, unincorporated
                  organization, trust, trustee, executor, administrator or other
                  legal representative or entity and any successor thereto.

         (jj)     "Record Time" has the meaning ascribed to that term in the
                  fourth recital hereto.

         (kk)     "Regular Periodic Cash Dividend" means cash dividends declared
                  payable on the Common Shares of the Corporation and paid at
                  regular intervals in any fiscal year of the Corporation to the
                  extent that such cash dividends do not in any fiscal year
                  exceed, in the aggregate, 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 average 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.

         (ll)     "Right" means the right of each holder of Common Shares to
                  purchase additional securities upon and subject to the terms
                  and conditions hereof.

         (mm)     "Rights Agent" means CIBC Mellon Trust Company or any
                  successor thereto appointed pursuant to Section 4.04.

         (nn)     "Rights Certificate" has the meaning set out in Section
                  2.01(3)(c).

         (oo)     "Rights Plan" means the shareholder rights plan established
                  hereby.

         (pp)     "Rights Register" has the meaning set out in Section 2.06(1).

         (qq)     "Rights Registrar" has the meaning set out in Section 2.06(1).

         (rr)     "Separation Time" means the close of business on the tenth
                  Business Day after the earliest of:

                  (i)      the Stock Acquisition Date;

                  (ii)     the date of the commencement of, or the first public
                           announcement of the intent of any Person (other than
                           a Person making a Permitted Bid or Competing
                           Permitted Bid or the Corporation or any Subsidiary of
                           the Corporation) to commence a Take-Over Bid (other
                           than a Permitted Bid or a Competing Permitted Bid, as
                           the case may be); and

                  (iii)    the date on which a Permitted Bid or Competing Bid
                           ceases to qualify as such or on such later day as the
                           Board shall determine acting in good faith; provided
                           that, if any such

                                                                               9
<PAGE>

                           Take-Over Bid expires, is cancelled, terminated or
                           otherwise withdrawn prior to the Separation Time,
                           such Take-Over Bid shall be deemed, for the purposes
                           of this definition, never to have been made.

         (ss)     "Stock Acquisition Date" means the first date of public
                  announcement by the Corporation or an Acquiring Person that an
                  Acquiring Person has become such.

         (tt)     "Subsidiary": a corporation shall be a Subsidiary of another
                  corporation if:

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

         (uu)     "Take-Over Bid" means an Offer to Acquire Voting Shares where
                  the Voting Shares subject to the Offer to Acquire, together
                  with the Offeror's Securities, constitute in the aggregate 20%
                  or more of the outstanding Voting Shares at the date of the
                  Offer to Acquire.

         (vv)     "Termination Time" means the time at which the right to
                  exercise the Rights shall terminate pursuant to Section 5.01
                  hereof.

         (ww)     "Trading Day", when used with respect to any securities, shall
                  mean a day on which the principal securities exchange in
                  Canada or the United States of America on which such
                  securities are listed or admitted to trading is open for the
                  transaction of business or, if the securities are not listed
                  or admitted to trading on any securities exchange in Canada or
                  the United States of America, a Business Day.

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

                  (i)      if on such date the Bank of Canada sets a noon spot
                           rate of exchange for the conversion of United States
                           dollars into Canadian dollars, such rate, or

                  (ii)     in any other case, the rate for the conversion of
                           United States dollars into Canadian dollars as
                           determined by the Board acting in good faith.

         (yy)     "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.

         (zz)     "Voting Shares" means the Common Shares of the Corporation and
                  any other shares in the capital of the Corporation entitled to
                  vote generally in the election of directors.

1.02 HEADINGS

         The division of this Agreement into Articles and Sections and the
         insertion of headings and a table of contents 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 supplemental hereto. Unless something in the subject matter
         or context is inconsistent therewith, references herein to Articles and
         Sections

                                                                              10
<PAGE>

         are to Articles and Sections of this Agreement.

1.03 EXTENDED MEANINGS

         In this Agreement words importing the singular number only shall
         include the plural and vice versa and words importing the masculine
         shall include the feminine gender and vice versa.

1.04 CURRENCY

         All references to currency herein are to lawful money of the United
         States of America unless otherwise specified.

1.05 SCHEDULE

         The form of the Rights Certificate is annexed hereto as Schedule 1 and
         incorporated by reference and deemed to be a part hereof.

1.06 LANGUAGE CLAUSE

         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
         decouleront soient rediges en langue anglaise. The parties hereto have
         required that this Agreement and all documents and notices related
         thereto or resulting therefrom be drawn up in English.

1.07 ACTING JOINTLY OR IN CONCERT

         For purposes of this Agreement, a Person is acting jointly or in
         concert with every Person who is a party to any agreement, commitment
         or understanding, whether formal or informal, with the first Person or
         any Associate or Affiliate thereof for the purpose of acquiring or
         offering to acquire Voting Shares (other than customary agreements with
         and between underwriters and/or banking group members and/or selling
         group members with respect to a public offering or private placement of
         securities or pledges of securities in the ordinary course of
         business).

1.08 AS NOW ENACTED

         For the purposes of this Agreement, references to statutes, as now
         enacted, shall mean as in force and effect on [10] December 2004.

                             ARTICLE 2 - THE RIGHTS

2.01 INITIAL EXERCISE PRICE, EXERCISE OF RIGHTS AND DETACHMENT OF RIGHTS

(1)      Subject to the provisions hereof including, without limiting the
         generality of the foregoing, Section 2.03, each

                                                                              11
<PAGE>

         Common Share now or, until the earlier of the Separation Time and the
         Expiration Time, hereafter issued shall have one Right associated
         therewith. Subject to the provisions hereof and subject to adjustment
         as herein set forth, each Right shall entitle the holder thereof, after
         the Separation Time, to purchase one Common Share for the Exercise
         Price or its Canadian Dollar Equivalent. Notwithstanding any other
         provision of this Agreement, any Rights held by the Corporation or by
         any of its Subsidiaries or Beneficially Owned by an Acquiring Person
         shall be void.

(2)      Until the Separation Time:

         (a)      no Right shall be exercisable and no Right may be exercised,

         (b)      each Right shall be evidenced by the certificate for the
                  associated Common Share, and

         (c)      each Right shall be transferable only together with, and shall
                  be transferred by a transfer of, such associated Common Share.

(3)      After the Separation Time but prior to the Expiration Time the Rights:

         (a)      may be exercised in accordance with the provisions hereof, and

         (b)      shall be transferable independently of the Common Shares.

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

         (c)      a certificate (a "Rights Certificate") substantially in the
                  form annexed hereto as Schedule 1 appropriately completed,
                  representing the number of Rights held by such holder as 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

         (d)      a disclosure statement describing the Rights.

(4)      Rights may be exercised on any Business Day after the Separation Time
         and prior to the Expiration Time by submitting to the Rights Agent the
         Rights Certificate evidencing such Rights with an election to exercise
         such Rights (an "Election to Exercise") substantially in the form
         attached to the Rights Certificate duly completed and accompanied by
         payment by certified cheque or money order payable to the order of the
         Rights Agent of a sum equal to the Exercise Price multiplied by the
         number of Rights being exercised and a sum sufficient to cover any
         transfer tax or charge which may be payable in respect of any transfer
         involved in the transfer or delivery of Rights Certificates or the
         issuance or delivery of certificates for Common Shares in a name other
         than that of the holder of the Rights being exercised.

(5)      Upon receipt of a Rights Certificate together with a duly completed
         Election to Exercise and the payments provided for in Section 2.01(4),
         the Rights Agent (unless otherwise instructed by the Corporation in the
         event that the Corporation is of the opinion that the Rights cannot be
         exercised in accordance with this Agreement)

                                                                              12
<PAGE>

         shall thereupon promptly:

         (a)      requisition from the Corporation or its transfer agent for
                  Common Shares, certificates for the number of Common Shares to
                  be purchased;

         (b)      after receipt of such Common Share certificates, remit the
                  payments provided for in Section 2.01(4) to the Corporation
                  and deliver the share 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;

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

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

(6)      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 remaining unexercised Rights shall be issued by the
         Rights Agent to such holder or to such holder's duly authorized
         assigns.

(7)      The Corporation shall:

         (a)      promptly deliver the share certificates requisitioned by the
                  Rights Agent pursuant to Section 2.01(5)(a) to the Rights
                  Agent;

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

         (c)      take all such action as may be necessary and reasonably within
                  its power to comply with the applicable requirements of
                  securities laws in Canada and the United States of America in
                  connection with the issuance and delivery of the Rights
                  Certificates and the issuance of Common Shares upon the
                  exercise of the Rights;

         (d)      use reasonable efforts to cause all Common Shares issued upon
                  the exercise of the Rights to be listed upon issuance on The
                  Toronto Stock Exchange, the New York Stock Exchange and such
                  other exchanges, if any, that the Corporation determines are
                  appropriate;

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

         (f)      pay when due and payable any and all federal, provincial and
                  state transfer taxes of Canada and the United States of
                  America (except, for greater certainty, any income taxes of
                  the holder or exercising holder or any liability of the
                  Corporation to withhold tax) and charges which may be payable
                  in respect of the original issuance or delivery of the Rights
                  Certificates, provided that the Corporation shall not be
                  required to pay any transfer tax or charge which may be
                  payable in respect of any transfer involved in the transfer or
                  delivery of Rights Certificates or the issuance or delivery of
                  certificates for Common Shares in a name other than that of
                  the holder of the Rights being transferred or exercised; and

         (g)      after the Separation Time, except as permitted by Section
                  5.01, not take (or permit any Subsidiary to

                                                                              13
<PAGE>

                  take) any action if at the time such action is taken it is
                  reasonably foreseeable that such action will diminish
                  substantially or otherwise eliminate the benefits intended to
                  be afforded by the Rights.

2.02 LEGEND ON COMMON SHARE CERTIFICATES

(1)      Certificates issued for Common Shares after the Record Time but prior
         to the earlier of the Separation Time and the Expiration Time shall
         have printed on or affixed to them the following legend in, if
         appropriate, both the English and French languages:

                  "Until the Separation Time (as defined in the Shareholder
                  Rights Agreement referred to below), this certificate also
                  evidences and entitles the holder hereof to certain Rights as
                  set forth in a Shareholder Rights Agreement made as of [10]
                  December 2004, (the "Rights Agreement") between Novelis Inc.
                  (the "Corporation") and CIBC Mellon Trust Company, as Rights
                  Agent, the terms of which are incorporated herein by reference
                  and a copy of which is on file at the principal executive
                  offices of the Corporation. Under certain circumstances, as
                  set forth in the Rights Agreement, such Rights may be amended,
                  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 within five days after the
                  receipt of a written request therefor."

(2)      Certificates representing Common Shares that are issued and outstanding
         at any time shall evidence one Right for each Common Share evidenced
         thereby notwithstanding the absence of a legend in accordance with
         Section 2.02(1).

2.03 ADJUSTMENTS

(1)      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 2.03.

(2)      If the Corporation shall at any time after the Record Time but prior to
         the Expiration Time:

         (a)      declare or pay a dividend on the Common Shares payable in
                  Common Shares or Convertible Securities other than pursuant to
                  any optional stock dividend programme,

         (b)      subdivide or change the then outstanding Common Shares into a
                  greater number of Common Shares,

         (c)      combine or change the then outstanding Common Shares into a
                  smaller number of Common Shares, or

         (d)      issue any Common Shares or Convertible Securities in respect
                  of, in lieu of or in exchange for existing Common Shares in a
                  reclassification, amalgamation, arrangement or consolidation,

         the Exercise Price and the number of Rights outstanding or, if the
         payment or effective date thereof shall occur after the Separation
         Time, the securities purchasable upon exercise of the Rights shall be
         adjusted in the following manner.

                                                                              14
<PAGE>

         If the Exercise Price and the number of Rights outstanding are to be
         adjusted:

         (e)      the Exercise Price in effect after such adjustment shall be
                  equal to the Exercise Price in effect immediately prior to
                  such adjustment divided by the number of Common Shares that a
                  holder of one Common Share immediately prior to such dividend,
                  subdivision, change, combination or issuance would hold
                  thereafter as a result thereof (such denominator being the
                  "Expansion Factor"), and

         (f)      each Right held prior to such adjustment shall become that
                  number of Rights equal to the Expansion Factor and, if such
                  adjustment is to be made prior to the Separation Time, the
                  adjusted number of Rights shall be deemed to be distributed
                  among the Common Shares with respect to which the original
                  Rights were associated (if they remain outstanding) and the
                  shares issued in respect of such dividend, subdivision,
                  change, combination or issuance, so that each such Common
                  Share shall have exactly one Right associated with it.

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

         If, after the Record Time but prior to the Expiration Time, the
         Corporation issues any securities in a transaction of a type described
         in the first sentence of this Section 2.03(2) which are exchangeable
         for or convertible into or give a right to acquire Common Shares, such
         securities shall be treated herein as nearly equivalent to Common
         Shares as may be practicable and appropriate under the circumstances
         and the Corporation and the Rights Agent shall amend this Agreement in
         order to effect such treatment; provided that no such amendment may
         materially adversely affect the interests of the holders of the Rights
         generally.

         In the event the Corporation shall at any time after the Record Time
         and prior to the Separation Time issue any Common Share otherwise than
         in a transaction referred to in this Section 2.03(2), each Common Share
         so issued shall automatically have one new Right associated with it
         which Right shall be evidenced by the certificate representing such
         Common Share.

(3)      If the Corporation at any time after the Record Time but prior to the
         Expiration Time fixes a record date for the making of a distribution to
         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, if a security
         convertible into or exchangeable for or carrying a right to purchase or
         subscribe for Common Shares, having a conversion, exchange or exercise
         price (including the price required to be paid to purchase such
         convertible or exchangeable security or right per share)) less than 95%
         of the Market Price per Common Share on such record date, the Exercise
         Price shall be adjusted by multiplying the Exercise Price in effect
         immediately prior to such record date by a fraction, the numerator of
         which shall be the number of Common Shares outstanding on such record
         date plus the number of Common Shares 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 and the denominator of which shall be the number of Common Shares
         outstanding on such record date plus the number of additional Common
         Shares to be offered for subscription or purchase (or into which the
         convertible or exchangeable securities or rights so to be offered are
         initially convertible, exchangeable or exercisable). In case such
         subscription price may be paid in a consideration all or part of which
         is in a form other than cash, the value of such consideration shall be
         as determined in good faith by the Board. To the extent that such
         rights or warrants are not exercised prior to the

                                                                              15
<PAGE>

         expiration thereof, the Exercise Price shall be readjusted to the
         Exercise Price that 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 the purposes of this Agreement, the granting of the right to
         purchase Common Shares (whether from treasury or otherwise) pursuant to
         any (i) Dividend Reinvestment Plan and/or (ii) Common Share purchase
         plan providing for the investment of periodic optional payments and/or
         (iii) employee or executive or director benefit or similar plans (so
         long as such right to purchase is in no case evidenced by the delivery
         of rights or warrants) shall not be deemed to constitute an issue of
         rights or warrants by the Corporation; provided, however, that, in the
         case of any Dividend Reinvestment Plan or Common Share purchase plan,
         the right to purchase Common Shares is at a price per share not less
         than 90% of the then Market Price of the Common Shares.

(4)      If the Corporation at any time after the Record Time but prior to the
         Expiration Time fixes a record date for the making of a distribution to
         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) or rights or warrants (excluding those referred to in
         Section 2.03(3)), the Exercise Price shall be adjusted by multiplying
         the Exercise Price in effect immediately prior to such record date by a
         fraction, the numerator of which shall be the Market Price per Common
         Share on such record date less the fair market value per Common Share
         (as determined in good faith by the Board) of the evidences of
         indebtedness, assets, rights or warrants to be so distributed and the
         denominator of which shall be the Market Price per Common Share on such
         record date. Such adjustments shall be made successively whenever such
         a record date is fixed, and in the event that such a distribution is
         not so made, the Exercise Price shall be adjusted to be the Exercise
         Price that would have been in effect if such record date had not been
         fixed.

(5)      Each adjustment made pursuant to this Section 2.03 shall be made as of:

         (a)      the payment or effective date for the applicable dividend,
                  subdivision, change, combination or issuance, in the case of
                  an adjustment made pursuant to Section 2.03(2), or

         (b)      the record date for the applicable dividend or distribution,
                  in the case of an adjustment made pursuant to Sections 2.03(3)
                  or (4).

(6)      Subject to a prior consent of the holders of Voting Shares or Rights
         obtained as set forth in Sections 5.04(3) or (4) as applicable, if the
         Corporation at any time after the Record Time but prior to the
         Expiration Time issues any shares in the capital of the Corporation
         (other than Common Shares), any rights or warrants to subscribe for or
         purchase any such shares, or any securities convertible into or
         exchangeable for any such shares and the Board, acting in good faith,
         determines that the adjustments contemplated by Sections 2.03(2), (3)
         or (4) are not applicable and the interests of the holders of the
         Rights will, as a result thereof, be adversely affected or, if
         applicable, such adjustments will not appropriately protect the
         interests of the holders of the Rights, the Board may determine what
         adjustments to the Exercise Price, number of Rights and/or securities
         purchasable upon exercise of the Rights would be appropriate to protect
         the interests of the holders of the Rights and, notwithstanding
         Sections 2.03(2), (3) or (4), such adjustments, rather than, if
         applicable, the adjustments contemplated by Sections 2.03(2), (3) or
         (4), shall be made and the Corporation and the Rights Agent shall amend
         this Agreement as appropriate to provide for such adjustments.

(7)      Notwithstanding anything herein to the contrary, no adjustment to the
         Exercise Price shall be required unless such adjustment would require
         an increase or decrease of at least 1% in the Exercise Price, provided
         that any adjustment which is not made as a result of the provisions of
         this Section 2.03(7) shall be carried forward and taken into account in
         any subsequent adjustment. Each adjustment to the Exercise Price made
         pursuant to this Section 2.03 shall be rounded upward or downward to
         the nearest cent. Whenever an adjustment to the

                                                                              16
<PAGE>

         Exercise Price is made pursuant to this Section 2.03, the Corporation
         shall promptly:

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

         (b)      file a copy of such certificate with the Rights Agent and each
                  transfer agent for the Common Shares, and

         (c)      mail a brief summary thereof to each holder of a Right.

(8)      Irrespective of any adjustment or change in the securities purchasable
         upon exercise of the Rights, the Rights Certificates theretofore and
         thereafter issued shall continue to express the securities so
         purchasable which were expressed in the initial Rights Certificates
         issued hereunder.

(9)      Notwithstanding anything contained in this Section 2.03 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 2.03, as and to the extent that in their good faith
         judgment the Board shall determine to be advisable, in order that any:

         (a)      stock dividend;

         (b)      consolidation or subdivision of Common Shares;

         (c)      issuance (wholly or in part for cash) of Common Shares or
                  securities that by their terms are convertible into or
                  exchangeable for Common Shares; or

         (d)      issuance of rights, options or warrants referred to in this
                  Section 2.03,

         hereafter made by the Corporation to holders of its Common Shares,
         shall not be taxable to such shareholders.

2.04 DATE ON WHICH EXERCISE IS EFFECTIVE

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

2.05 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES

(1)      The Rights Certificates shall be executed (either manually or by
         facsimile signature) on behalf of the Corporation by any two officers
         of the Corporation under its corporate seal or a facsimile thereof.
         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 as herein
         provided

                                                                              17
<PAGE>

         for.

(2)      Promptly after the Corporation learns of the Separation Time, the
         Corporation shall notify the Rights Agent of such Separation Time and,
         subject to compliance with Section 2.01(7), shall deliver Rights
         Certificates executed by the Corporation to the Rights Agent for
         countersignature, and the Rights Agent shall countersign (manually or
         by facsimile signature in a manner satisfactory to the Corporation) and
         give such Rights Certificates to the holders of the Rights pursuant to
         Section 2.01(3) hereof. No Rights Certificates shall be valid for any
         purpose unless countersigned by the Rights Agent as aforesaid.

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

2.06 REGISTRATION OF RIGHTS

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

(2)      After the Separation Time and prior to the Expiration Time, upon
         surrender of any Rights Certificate and subject to the provisions of
         Sections 2.06(4) and (5), the Corporation shall execute, and the Rights
         Agent shall countersign and deliver in the name of the holder or the
         designated transferee or transferees, as required pursuant to the
         holder's instructions, one or more new Rights Certificates evidencing
         the same aggregate number of Rights as did the Rights Certificates so
         surrendered.

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

(4)      Every Rights Certificate surrendered for transfer or exchange shall be
         duly endorsed, or be accompanied by a written instrument of transfer in
         a 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.

(5)      As a condition to the issuance of any new Rights Certificate under this
         Section 2.06, 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.

2.07 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES

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

(2)      If prior to the Expiration Time there is delivered to the Corporation
         and the Rights Agent:

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

                                                                              18
<PAGE>

         (b)      such security or indemnity as may be required by each of 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 the Rights Agent shall
         countersign and deliver in the name of the holder, 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.

(3)      As a condition to the issuance of any new Rights Certificate under this
         Section 2.07, 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 expense (including the fees
         and expenses of the Rights Agent) connected therewith.

(4)      Every new Rights Certificate issued pursuant to this Section 2.07 in
         lieu of any destroyed, lost or stolen Rights Certificate shall evidence
         an original additional contractual obligation of the Corporation,
         whether or not the destroyed, lost or stolen Rights Certificate shall
         be at any time enforceable by anyone, and shall be entitled to all the
         benefits of this Agreement equally and proportionally with any and all
         other Rights duly issued hereunder.

2.08 PERSONS DEEMED OWNERS

         Prior to due presentment of a Rights Certificate (or, prior to the
         Separation Time, the associated Common Share certificate) for
         registration of transfer, the Corporation, the Rights Agent and any
         agent of the Corporation or the Rights Agent 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 Rights shall mean the
         registered holder of such Rights (or, prior to the Separation Time, the
         associated Common Shares).

2.09 DELIVERY AND CANCELLATION OF CERTIFICATES

         All Rights Certificates surrendered upon exercise 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 2.09, except as expressly permitted by this Agreement. The
         Rights Agent shall destroy all cancelled Rights Certificates and
         promptly thereafter deliver a certificate of destruction to the
         Corporation on request.

2.10 AGREEMENT OF RIGHTS HOLDERS

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

                                                                              19
<PAGE>

         (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 Shares and after the Separation Time,
                  the Rights shall be transferable only on the Rights Register
                  as provided herein;

         (c)      prior to due presentment of a Rights Certificate (or, prior to
                  the Separation Time, the associated Common Share certificate)
                  for transfer, the Corporation, the Rights Agent and any agent
                  of the Corporation or the Rights Agent may deem and treat the
                  person in whose name the Rights Certificate (or, prior to the
                  Separation Time, the associated Common Share certificate) is
                  registered as the absolute owner thereof and of the Rights
                  evidenced thereby (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;

         (d)      without the approval of any holder of Rights and upon the sole
                  authority of the Board acting in good faith this Agreement may
                  be supplemented or amended from time to time pursuant and
                  subject to Section 2.03 or Section 5.04;

         (e)      if such holder at any time becomes an Acquiring Person or
                  otherwise becomes subject to the provisions of Section
                  3.01(2), the Rights held by such holder shall immediately
                  become void pursuant to the provisions of Section 3.01(2);

         (f)      such holder of Rights has waived his right to receive any
                  fractional Right or any fractional Share or other security
                  upon exercise of a Right (except as specifically 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 commission, or any statute, rule,
                  regulation or executive order promulgated or enacted by any
                  governmental authority, prohibiting or otherwise restraining
                  performance of such obligation.

                   ARTICLE 3 - EFFECT OF CERTAIN TRANSACTIONS

3.01     FLIP-IN EVENT

         (1)      Subject to Section 3.01(2) and Section 5.01, if a Flip-In
                  Event occurs prior to the Expiration Time, the Corporation
                  shall take such action as is necessary to ensure and provide
                  that, except as provided below, each Right shall thereafter
                  constitute the right to purchase from the Corporation, upon
                  the exercise thereof in accordance with the terms hereof, that
                  number of Common Shares of the Corporation having an aggregate
                  Market Price on the date of 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 2.03 in the event that
                  after such date of consummation or occurrence an event of a
                  type analogous to any of the events described in Section 2.03
                  shall have occurred with respect to such Common Shares).

                                                                              20
<PAGE>

         (2)      Notwithstanding the foregoing, upon the occurrence of any
                  Flip-In Event, any Rights that are or were Beneficially Owned
                  on or after the Stock Acquisition Date by:

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

                  (ii)     a transferee, direct or indirect, from an Acquiring
                           Person (or any Affiliate or Associate of an Acquiring
                           Person or any Person acting jointly or in concert
                           with an Acquiring Person or any Affiliate or
                           Associate of an Acquiring Person) in a transfer,
                           whether or not for consideration, that the Board,
                           acting in good faith has determined is part of a
                           plan, arrangement or scheme of an Acquiring Person
                           (or any Affiliate or Associate of an Acquiring
                           Person) that has the purpose or effect of avoiding
                           clause (i) of this Section 3.01(2),

                  shall become void and any holder of such Rights (including
                  transferees) shall thereafter have no right to exercise such
                  Rights under any provision of this Agreement or otherwise.

                  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
                  3.01, including without limitation, all such acts and things
                  as may be required to satisfy the requirements of the Canada
                  Business Corporations Act, the Securities Act (Ontario) and
                  the securities laws or comparable legislation of each of the
                  provinces of Canada, the United States of America and each of
                  the states thereof in respect of the issue of Common Shares
                  upon the exercise of Rights in accordance with this Agreement.

         (3)      Any Rights Certificate issued pursuant to Section 2.01 that
                  represents Rights Beneficially Owned by a Person described in
                  either clauses (i) or (ii) of Section 3.01(2) or transferred
                  to any nominee of any such Person and any Rights Certificates
                  issued upon transfer, exchange, replacement or adjustment of
                  any other Rights Certificates referred to in this sentence
                  shall contain or will be deemed to contain the following
                  additional legend:

                           "The Rights represented by this Rights Certificate
                           represent Rights Beneficially Owned by an Acquiring
                           Person (as such terms are defined in the Rights
                           Agreement). This Rights Certificate and the Rights
                           represented hereby shall become void in the
                           circumstances specified in Section 3.01(2) of the
                           Shareholder Rights Agreement.";

                  provided that the Rights Agent shall not be under any
                  responsibility to ascertain the existence of facts that would
                  require the imposition of such legend but shall be required to
                  impose such legend only if instructed to do so by the
                  Corporation in writing or if a holder fails to certify upon
                  transfer or exchange in the space provided on the Rights
                  Certificate that the Rights represented thereby are not, and,
                  to the best of such holder's knowledge, never have been,
                  Beneficially Owned by an Acquiring Person after such person
                  became an Acquiring Person.

                          ARTICLE 4 - THE RIGHTS AGENT

                                                                              21
<PAGE>

4.01 GENERAL

(1)      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
         appointments. The Corporation may upon such terms as it considers
         appropriate from time to time appoint such Co-Rights Agents as it may
         deem necessary or desirable subject to the Rights Agent receiving
         notice of such appointment. If the Corporation appoints one or more
         Co-Rights Agents, the respective duties of the Rights Agent and
         Co-Rights Agents shall be as the Corporation may determine subject to
         the approval of the Rights Agent. The Corporation agrees to pay to the
         Rights Agent reasonable compensation for all services rendered by it
         hereunder and, from time to time, on demand by 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. The Corporation also agrees to
         indemnify the Rights Agent, its officers, directors, employees and
         agents for, and to hold them harmless against, any loss, liability or
         expense, if incurred without negligence, bad faith or wilful misconduct
         on the part of the Rights Agent for anything done or omitted to be done
         by the Rights Agent in connection with the exercise and performance of
         its duties hereunder, including the costs and expenses of defending
         against any claim of liability, which right to indemnification shall
         survive the termination of this Agreement or the removal or resignation
         of the Rights Agent.

(2)      The Rights Agent shall be protected and shall incur no liability for or
         in respect of any action taken, suffered or omitted to be taken by it
         in connection with the exercise and performance of its duties hereunder
         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.

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

4.02 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF THE RIGHTS AGENT

(1)      Any corporation into which the Rights Agent or any successor Rights
         Agent may be merged or amalgamated or with which it may be
         consolidated, or any corporation resulting from any merger,
         amalgamation 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 4.04. In case at the time
         such successor Rights Agent succeeds to the agency created by this
         Agreement any of the Rights Certificates have been countersigned but
         not delivered, any such successor Rights Agent may adopt the
         countersignature of the predecessor Rights Agent and deliver such
         Rights Certificates so countersigned; and in case at that time any of
         the Rights Certificates have not been countersigned, any successor
         Rights Agent may countersign such Rights Certificates either in the
         name of the predecessor Rights Agent or in the name of the successor
         Rights Agent; and in all such cases such Rights Certificates shall have
         the full force provided for in the Rights Certificates and in this
         Agreement.

(2)      In case at any time the name of the Rights Agent is changed and at such
         time any of the Rights Certificates

                                                                              22
<PAGE>

         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 for in the Rights Certificates and in this
         Agreement.

4.03 ENTITLEMENTS OF THE RIGHTS AGENT

         The Rights Agent undertakes the duties and obligations imposed by this
         Agreement upon the following terms and conditions, by which the
         Corporation and every holder of Rights, by accepting the same, shall be
         bound:

         (a)      the Rights Agent may retain and consult with legal counsel
                  (who may be legal counsel for the Corporation), or such other
                  experts or advisors as the Rights Agent deems necessary to
                  carry out its duties under this Agreement, and the opinion of
                  such counsel or other expert or advisor shall be full and
                  complete authorization and protection to the Rights Agent with
                  respect to any action taken or omitted by it in good faith and
                  in accordance with such opinion;

         (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 persons
                  believed by the Rights Agent to be Chairman of the Board,
                  President, Chief Executive Officer, any Vice President, Chief
                  Financial Officer, the Secretary, or any Assistant Secretary
                  of the Corporation and delivered to the Rights Agent; and such
                  certificate shall 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 shall be liable hereunder for its own
                  negligence, bad faith or wilful misconduct;

         (d)      the Rights Agent shall 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, and all such statements and
                  recitals are and shall be deemed to have been made by the
                  Corporation only;

         (e)      the Rights Agent shall 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
                  shall it be responsible for any breach by the Corporation of
                  any covenant or condition contained in this Agreement or in
                  any Rights Certificate; nor shall it be responsible for any
                  change in the exercisability of the Rights (including the
                  Rights becoming void pursuant to Section 3.01(2)) or any
                  adjustment required under the provisions of Section 2.03 or
                  for the manner, method or amount of any such adjustment or the
                  ascertaining of the existence of facts that would require any
                  such adjustment (except with respect to the exercise of Rights
                  after receipt of the certificate contemplated by Section 2.03
                  describing any such adjustment); nor shall 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 as fully paid and
                  non-assessable;

         (f)      the Corporation shall perform, execute, acknowledge and
                  deliver or cause to be performed,

                                                                              23
<PAGE>

                  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 agency
                  duties hereunder from any person believed by the Rights Agent
                  to be the Chief Executive Officer or the Chief Legal Officer
                  or the Chief Financial Officer of the Corporation, and to
                  apply to such persons for advice or instructions in connection
                  with its duties, and it shall not be liable for any action
                  taken or suffered by it in good faith in accordance with
                  instructions of any such person;

         (h)      the Rights Agent and any shareholder, director, officer or
                  employee of the Rights Agent may buy, sell or deal in Common
                  Shares, Rights or other securities of the Corporation or
                  become pecuniarily interested in any transaction in which the
                  Corporation may be interested, or contract with or lend money
                  to the Corporation or otherwise act as fully and freely as
                  though it were not 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 shall 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.

4.04 CHANGE OF THE RIGHTS AGENT

         The Rights Agent may resign and be discharged from its duties under
         this Agreement upon 60 calendar days' notice (or such lesser notice as
         is acceptable to the Corporation) to the Corporation, to each transfer
         agent of Common Shares by registered or certified mail and to the
         holders of Rights in accordance with Section 5.08 at the Corporation's
         expense. The Corporation may remove the Rights Agent upon 60 calendar
         days' notice to the Rights Agent, to each transfer agent of the Common
         Shares by registered or certified mail and to the holders of Rights in
         accordance with Section 5.08. If the Rights Agent resigns or is removed
         or otherwise becomes incapable of acting, the Corporation shall appoint
         a successor to the Rights Agent. If the Corporation fails to make such
         appointment within a period of 30 CALENDAR days after such removal or
         after it has been notified in writing of such resignation or incapacity
         by the resigning or incapacitated Rights Agent or by the holder of any
         Rights (which holder shall, with such notice, submit such holder's
         Rights Certificate for inspection by the Corporation), then the Rights
         Agent at the Corporation's expense or the holder of any Rights may
         apply to any court of competent jurisdiction for the appointment of a
         new Rights Agent. Any successor Rights Agent, whether appointed by the
         Corporation or by such a court, shall be a corporation incorporated
         under the laws of Canada or a province thereof authorized to carry on
         the business of a trust company in the Province of Ontario. After
         appointment, the successor Rights Agent shall be vested with the same
         powers, rights, duties and responsibilities as if it had been
         originally named as Rights Agent without further act or deed; but the
         predecessor Rights Agent upon payment of all outstanding fees expenses
         owed to it under this Agreement shall deliver and transfer to the
         successor Rights Agent any property at the time held by it hereunder,
         and execute and deliver any further assurance, conveyance, act or deed
         necessary for the purpose. Not later than the effective date of any
         such appointment, the Corporation shall file notice thereof in writing
         with the predecessor Rights Agent and each transfer agent of the Common
         Shares, and give a notice thereof to the holders of the Rights. Failure
         to give any notice provided for in this Section 4.04 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.

                                                                              24
<PAGE>

                            ARTICLE 5 - MISCELLANEOUS

5.01 REDEMPTION, WAIVER AND TERMINATION

(1)      Subject to the prior consent of the holders of Voting Shares or Rights
         obtained as set forth in Sections 5.04(3) or (4), as applicable, the
         Board acting in good faith may, at its option, at any time prior to the
         provisions of Sections 3.01 becoming applicable as a result of 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 $0.01 per
         Right appropriately adjusted in a manner analogous to the applicable
         adjustment provided for in Section 2.03 in the event that an event of
         the type analogous to any of the events described in Section 2.03 shall
         have occurred (such redemption price being herein referred to as the
         "Redemption Price").

(2)      The Board may, until a Flip-In Event shall occur, upon written notice
         delivered to the Rights Agent, determine to waive the application of
         Section 3.01 to such particular Flip-In Event but only if such Flip-In
         Event would occur as a result of a Take-Over Bid made by way of a
         Take-Over Bid circular to all holders of Voting Shares of record;
         provided that if the Board waives the application of Section 3.01 to a
         particular Flip-In Event, the Board shall be deemed to have waived the
         application of Section 3.01 to any other Flip-In Event, that would
         occur as a result of a Take-Over Bid which is made by means of a
         Take-Over Bid circular to all holders of Voting Shares of record 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 Section 5.01(2).

(3)      Notwithstanding Section 5.01(2), upon written notice delivered to the
         Rights Agent, the Board may also, with respect to any Flip-In Event,
         waive the application of Section 3.01 to that Flip-In Event, provided
         that both of the following conditions are satisfied:

         (i)      the Board has determined that the Acquiring Person became an
                  Acquiring Person by inadvertence and without any intent that
                  he would become an Acquiring Person; and

         (ii)     such Acquiring Person has reduced his Beneficial Ownership of
                  Voting Shares such that at the time of waiver pursuant to this
                  Section 5.01(3) he is no longer an Acquiring Person.

(4)      If the Board elects or is deemed to have elected to redeem the Rights,
         the right to exercise the Rights will thereupon, without further action
         and without notice, terminate and each Right will after redemption be
         null and void and the only right thereafter of the holders of Rights
         will be to receive the Redemption Price and no further Rights shall
         thereafter be issued.

(5)      Within 10 calendar days after the Board electing or having been deemed
         to have elected to redeem the Rights, the Corporation shall give notice
         of redemption to the holders of the then outstanding Rights by mailing
         such notice to each such holder at its last address as it appears upon
         the registry books of the Rights Agent or, prior to the Separation
         Time, on the registry books of the Corporation for the Common Shares.
         Any notice which is mailed in the manner herein provided will be deemed
         given, whether or not the holder receives the notice. Each such notice
         of redemption will state the method by which the payment of the
         Redemption Price will be made. The failure to give or any defect in
         such notice shall not affect the validity of such redemption.

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

                                                                              25
<PAGE>

(7)      Upon the Rights being redeemed pursuant to Section 5.01(6), all the
         provisions of this Agreement shall continue to apply as if the
         Separation Time had not occurred and Rights Certificates representing
         the number of Rights held by each holder of record of Common Shares, as
         of the Separation Time had not been mailed to each such holder and for
         all purposes of this Agreement the Separation Time shall be deemed not
         to have occurred.

(8)      In the event that prior to the occurrence of a Flip-In Event a Person
         acquires, pursuant to a Permitted Bid, a Competing Permitted Bid or an
         Exempt Acquisition, outstanding Voting Shares, then the Board shall
         immediately upon the consummation of such acquisition without further
         formality be deemed to have elected to redeem the Rights at the
         Redemption Price.

5.02 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 Section 4.01(1).

5.03 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 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.

5.04 SUPPLEMENTS AND AMENDMENTS

(1)      The Corporation may from time to time amend this Agreement with the
         approval of the Rights Agent but without the consent of any holder of
         Rights or the holders of Voting Shares in order to correct a clerical
         or typographical error or to maintain the validity and effectiveness of
         this Agreement as a result of any change in any applicable laws, rules
         or regulatory requirements.

(2)      The Corporation may, prior to the date of the shareholders' meeting
         referred to in Section 5.15, supplement or amend this Agreement without
         the approval of any of the holders of Rights or Voting Shares (whether
         or not such action would materially adversely affect the interest of
         the holders of Rights generally) where the Board acting in good faith
         deems such action necessary or desirable. Notwithstanding anything in
         this Section 5.04 to the contrary, no such supplement or amendment
         shall be made to the provisions of Article 4 except with the written
         concurrence of the Rights Agent to such supplement or amendment.

(3)      Subject to Sections 5.04(1) and 5.04(2), the Corporation may, with the
         prior consent of the holders of Voting Shares obtained as set forth
         below, at any time prior to the Separation Time, amend, vary or rescind
         any of the provisions of this Agreement and the Rights (whether or not
         such action would materially adversely affect the interests of the
         holders of Rights generally). Such consent shall be deemed to have been
         given if the action requiring such approval is authorized by the
         affirmative vote of a majority of the votes cast by Independent
         Shareholders present or represented at and entitled to be voted at a
         meeting of the holders of Voting Shares duly called and held in
         compliance with applicable laws and the articles and by-laws of the
         Corporation.

(4)      The Corporation may, with the prior consent of the holders of Rights,
         at any time on or after the Separation Time and before the Expiration
         Time, amend, vary or delete any of the provisions of this Agreement and
         the

                                                                              26
<PAGE>

         Rights (whether or not such action would materially adversely affect
         the interests of the holders of Rights generally), provided that no
         such amendment, variation or deletion shall be made to the provisions
         of Article 4 except with the written concurrence of the Rights Agent
         thereto. Such consent shall be deemed to have been given if such
         amendment, variation or deletion is authorized in the manner specified
         in Section 5.04(5).

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

(6)      Any amendment to this Agreement pursuant to Subsection 5.04(1) which is
         required to maintain the validity of this Agreement as a result of any
         change in any applicable laws, rules or regulatory requirements shall:

         (i)      if made before the Separation Time, any such amendment shall
                  be submitted to the shareholders of the Corporation at the
                  next meeting of shareholders and the shareholders may, by the
                  majority referred to in Section 5.04(3) confirm or reject such
                  amendment;

         (ii)     if made after the Separation Time, any such amendment shall 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 Section 5.04(5) confirm or reject such amendment.

         Any such amendment shall be effective from the date of the resolution
         of the Board 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 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.

(7)      The Corporation shall give notice in writing to the Rights Agent of any
         supplement, amendment, deletion, variation or rescission to this
         Agreement pursuant to this Section within five Business Days of the
         date of any such supplement, amendment, deletion, variation or
         rescission, provided that failure to give notice, or any defect
         therein, shall not affect the validity of any such supplement,
         amendment, deletion, variation or rescission.

5.05 FRACTIONAL RIGHTS AND FRACTIONAL SHARES

(1)      The Corporation shall not be required to issue fractions of Rights or
         to distribute Rights Certificates which evidence fractional Rights.
         After the Separation Time, in lieu of issuing fractional Rights, the
         Corporation shall pay to the holders of record of the Rights
         Certificates (provided the Rights represented by such Rights
         Certificates are not void pursuant to the provisions of Section
         3.01(2), at the time such fractional Rights would otherwise be
         issuable), an amount in cash equal to the fraction of the Market Price
         of one whole Right that the fraction of a Right that would otherwise be
         issuable is of one whole Right.

                                                                              27
<PAGE>

(2)      The Corporation shall not be required to issue fractions of Common
         Shares upon exercise of Rights or to distribute certificates which
         evidence fractional Common Shares. In lieu of issuing fractional Common
         Shares, the Corporation shall pay to the registered holders of Rights
         Certificates, at the time such Rights are exercised as herein provided,
         an amount in cash equal to the fraction of the Market Price of one
         Common Share that the fraction of a Common Share that would otherwise
         be issuable upon the exercise of such Right is of one whole Common
         Share at the date of such exercise.

5.06 RIGHTS OF ACTION

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

5.07 HOLDER OF RIGHTS NOT DEEMED TO BE A SHAREHOLDER

         No holder of Rights, as such, shall be entitled to vote, to receive
         dividends, to receive the remaining property of the Corporation on
         dissolution or to 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 any holder of 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, to give or withhold
         consent to any corporate action, to receive notice of meetings or other
         actions affecting shareholders (except as provided in Section 5.08) or
         to receive dividends or subscription rights or otherwise, until such
         Rights shall have been exercised in accordance with the provisions
         hereof.

5.08 NOTICES

         Any document or other communication to be given in connection with this
         Agreement to the Corporation shall be given in writing and shall be
         given by (i) personal delivery, (ii) telegraph, facsimile or other form
         of recorded electronic communication (charges prepaid and confirmed in
         writing) or (iii) by first-class postage prepaid mail (except during
         any general interruption of postal services due to strike, lockout or
         other cause) addressed to the Corporation as follows:

           Novelis Inc.
           Royal Bank Plaza, South Tower
           200 Bay Street, Suite 3800
           P.O. Box 84
           Toronto, Ontario
           Canada
           M5J 2Z4

           Attention: Chief Executive Officer

                                                                              28
<PAGE>

         Any document or other communication to be given in connection with this
         Agreement to the Rights Agent shall be given in writing and shall be
         given by (i) personal delivery, (ii) telegraph, facsimile or other form
         of recorded electronic communication (charges prepaid and confirmed in
         writing) or (iii) by first-class postage prepaid mail (except during
         any general interruption of postal services due to strike, lockout or
         other cause) addressed to the Rights Agent as follows:

                CIBC Mellon Trust Company
                2001 University Street
                16th Floor
                Montreal, Quebec
                Canada
                H3A 2A6

                Attention: Branch Manager

         Any document or other communication to be given in connection with this
         Agreement to any holder of Rights shall be given in writing and shall
         be given by (i) personal delivery, (ii) telegraph, facsimile or other
         form of recorded electronic communication (charges prepaid and
         confirmed in writing) or (iii) by first-class postage prepaid mail
         (except during any general interruption of postal services due to
         strike, lockout or other cause) addressed to such holder at the address
         of such holder as it appears upon the registry books of the Rights
         Agent or, prior to the Separation Time, on the registry books of the
         Corporation for the Common Shares (the Corporation hereby agreeing to
         furnish copies of such records to the Rights Agent). The Corporation
         and the Rights Agent may by notice to the other designate with respect
         to itself any other address or individual. Any document or other
         communication given by personal delivery shall be conclusively deemed
         to have been given on the day of actual delivery thereof and, if given
         by first class postage prepaid mail, on the fifth Business Day
         following the deposit thereof in the mail (it being acknowledged, for
         greater certainty, that any such communication mailed to a holder of a
         Right as herein provided shall be deemed to have been given whether or
         not the holder receives such communication).

5.09 COSTS OF ENFORCEMENT

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

5.10 BENEFIT OF THE AGREEMENT

         This Agreement shall inure to the benefit of and be binding upon the
         respective successors and assigns of the Corporation and the Rights
         Agent and upon the heirs, executors, administrators, successors and
         assigns of the holders of Rights. This Agreement shall be for the sole
         and exclusive benefit of the Corporation, the Rights Agent and the
         holders of Rights and nothing in this Agreement shall be construed to
         give any Person other than the Corporation, the Rights Agent and the
         holders of Rights any legal or equitable right, remedy or claim under
         this Agreement.

5.11 GOVERNING LAW

                                                                              29
<PAGE>

         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 the Province of Ontario and the laws of Canada applicable therein.

5.12 COUNTERPARTS

         This Agreement may be executed in counterparts, each of which shall be
         considered an original and both of which taken together shall
         constitute a single agreement.

5.13 SEVERABILITY

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

5.14 DETERMINATIONS AND ACTIONS BY THE BOARD

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

(2)      Nothing contained in this Agreement shall be deemed to be in derogation
         of the obligation of the Board to exercise its fiduciary duties.
         Without limiting the generality of the foregoing, nothing contained
         herein shall be construed to suggest or imply that the Board shall not
         be entitled to recommend that the holders of the Voting Shares reject
         any Permitted Bid or any Competing Permitted Bid or any Take-Over Bid,
         or to take any other action (including, without limiting the generality
         of the foregoing, the commencement, prosecution, defence or settlement
         of any litigation and the submission of additional or alternative
         Permitted Bids or Competing Permitted Bids or Take-Over Bids) with
         respect to any Permitted Bid or any Competing Permitted Bid or any
         Take-Over Bid or otherwise that the Board believes is necessary or
         appropriate in the exercise of its fiduciary duties.

5.15 EFFECTIVE DATE

         This Agreement is effective from the Record Time.

5.16 RE-CONFIRMATION AFTER THREE YEARS

         At the 2008 Annual Meeting and every third Annual Meeting of
         Shareholders of the Corporation following the 2008 Annual Meeting,
         provided that a Flip-In Event has not occurred prior to such time, the
         Board shall submit a resolution to the holders of Voting Shares of the
         Corporation for their consideration and, if thought advisable, approval
         ratifying the continued existence of the Rights. If a majority of
         greater than 50% of the votes cast by holders of Voting Shares who vote
         in respect of such reconfirmation and approval is voted against the
         continued existence of the Rights, then this Agreement, the Rights Plan
         and any outstanding Rights shall be of

                                                                              30
<PAGE>

         no further force and effect. There shall be excluded from the
         calculation of shares eligible to vote at such meeting shares held by
         an Acquiring Person or by any Person who has made or announced an
         intention to make a tender or exchange offer or Take-Over Bid which, if
         consummated, would result in such Person holding in the aggregate 20%
         or more of the outstanding Voting Shares at the date of such bid.

5.17 REGULATORY APPROVALS

         Any obligation of the Corporation or action or event contemplated by
         this Agreement, or any amendment or supplement to this Agreement, shall
         be subject to the receipt of any requisite approval or consent from any
         governmental or regulatory authority. Without limiting the generality
         of the foregoing, any issuance or delivery of debt or equity securities
         (other than non-convertible debt securities) of the Corporation upon
         the exercise of Rights and any amendment or supplement to this
         Agreement shall be subject to the prior consent of The Toronto Stock
         Exchange.

5.18 DECLARATION AS TO NON-CANADIAN HOLDERS

         If in the opinion of the Board (who may rely upon the advice of
         counsel) any action or event contemplated by this Agreement would
         require compliance by the Corporation with the securities laws or
         comparable legislation of a jurisdiction outside Canada, the Board
         acting in good faith shall take such actions as it may deem appropriate
         to ensure such compliance. In no event shall the Corporation or the
         Rights Agent be required to issue or deliver Rights or securities
         issuable on exercise of Rights to persons who are citizens, residents
         or nationals of any jurisdiction other than Canada or the United States
         of America, in which such issue or delivery would be unlawful without
         registration of the relevant Persons or securities for such purposes.

                           ARTICLE 6 - PERMITTED BIDS

6.01 PERMITTED BIDS

         The expression "Permitted Bid" referred to in Section 1.01(hh) means a
         Take-Over Bid made by an Offeror that is made by means of a Take-Over
         Bid circular sent to holders of Voting Shares and which complies with
         the following additional provisions:

         (i)      the Take-Over Bid is made to all holders of Voting Shares as
                  registered on the books of the Corporation, other than the
                  Offeror;

         (ii)     the Take-Over Bid contains, and the take-up and payment for
                  securities tendered or deposited is subject to, the following
                  irrevocable and unqualified provision that no Voting Shares
                  will be taken up or paid for pursuant to the Take-Over Bid (A)
                  prior to the close of business on the date which is not less
                  than 60 calendar days following the date of the Take-Over Bid
                  and (B) only if at such date more than 50% of the Voting
                  Shares held by Independent Shareholders shall have been
                  tendered or deposited pursuant to the Take-Over Bid and not
                  withdrawn;

         (iii)    unless the Take-Over Bid is withdrawn, 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 Section 6.01(ii)
                  and that any Voting Shares deposited pursuant to the Take-Over
                  Bid may be withdrawn until taken up and paid for; and

                                                                              31
<PAGE>

         (iv)     the Take-Over Bid also contains an irrevocable and unqualified
                  condition that in the event that the deposit condition set
                  forth in Section 6.01(ii)(B) 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 10 Business Days from the date of such public
                  announcement.

6.02 COMPETING PERMITTED BIDS

         The expression "Competing Permitted Bid" referred to in Section 1.01(n)
         means a Take-Over Bid that:

         (i)      is made for Voting Shares after a Permitted Bid or Competing
                  Permitted Bid for Voting Shares has been made but prior to the
                  expiry of such Permitted Bid or Competing Permitted Bid;

         (ii)     satisfies all of the conditions of the definition of Permitted
                  Bid other than the requirements set out in Section 6.01(ii)
                  (A); and

         (iii)    contains, and the take-up and payment for securities tendered
                  or deposited is subject to, an irrevocable and unqualified
                  condition that no Voting Shares will be taken up and paid for
                  pursuant to the Take-Over Bid prior to the close of business
                  on a date which is not earlier than the later of (A) the 60th
                  calendar day following the date on which the earliest
                  Permitted Bid which preceded the Competing Permitted Bid was
                  made and (B) 21 calendar days after the date of the Take-Over
                  Bid constituting the Competing Permitted Bid.

IN WITNESS WHEREOF the parties have executed this Agreement on the date and year
above written.

                  NOVELIS INC.
                                                                CORPORATE
                  PER:                                            SEAL
                                                                   OF
                  PER:                                        NOVELIS INC.

                  CIBC MELLON TRUST COMPANY

                                                                CORPORATE
                  PER:                                            SEAL
                                                                 OF THE
                  PER:                                      CIBC MELLON TRUST
                                                                 COMPANY

                                                                              32
<PAGE>

                                                                      SCHEDULE 1

                           FORM OF RIGHTS CERTIFICATE

Certificate No. ____________                                 ____________ Rights

         THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE CORPORATION,
         ON THE TERMS SET FORTH IN THE SHAREHOLDER RIGHTS AGREEMENT. UNDER
         CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 3.01(2) OF THE SHAREHOLDER
         RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
         SUCH TERMS ARE DEFINED IN THE SHAREHOLDER RIGHTS AGREEMENT) OR
         TRANSFEREES OF AN ACQUIRING PERSON MAY BECOME VOID.

                               RIGHTS CERTIFICATE

This certifies that _____________________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Rights Agreement made as of (the "Rights
Agreement") between Novelis Inc., a corporation incorporated under the laws of
Canada (the "Corporation") and CIBC Mellon Trust Company, a trust company
incorporated under the laws of Canada, as Rights Agent (the "Rights Agent")
(which term shall include any successor Rights Agent under the Rights Agreement)
to purchase from the Corporation at any time after the Separation Time (as such
term is defined in the Rights Agreement) and prior to the close of business on 1
may 2014 one fully paid Common Share in the capital of the Corporation (a
"Common Share") at the Exercise Price referred to below, upon presentation and
surrender of this Rights Certificate with the Form of Election to Exercise duly
executed and submitted to the Rights Agent or Co-Rights Agent at its principal
office in any one of the Cities of Montreal, Toronto, Winnipeg, Regina, Calgary,
or Vancouver. The Exercise Price shall initially be $200 (U.S.) per Right and
shall be subject to adjustment in certain events as provided in the Rights
Agreement.

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 registered office of the Corporation
and are available upon written request.

This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate 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 may be, and under certain circumstances are required to be, redeemed
by the Corporation at a redemption price of $0.01 per Right. No holder of this
Rights Certificate, as such, shall be entitled to vote or receive dividends or
be deemed for any purpose the holder of Common Shares or of any other securities
which may at any time be issuable upon the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the 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 (except as provided in the

                                                                              33
<PAGE>

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 facsimile signature of the proper officers of the Corporation and
its corporate seal.

Date:__________________________________

ATTEST:

                NOVELIS INC.

By: ____________________________________
                  Secretary

                Countersigned:

                CIBC MELLON TRUST COMPANY

By:_____________________________________
                Authorized Signature

                                                                              34
<PAGE>

                               FORM OF ASSIGNMENT

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

FOR VALUE RECEIVED _____________________________________________________________

hereby sells, assigns and transfers unto _______________________________________

________________________________________________________________________________
                  (Please print name and address of transferee)

this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ________________________,
Attorney, to transfer the within Rights Certificate on the books of the
within-named Corporation, with full power of substitution.

Dated:_________________________________      ___________________________________
                                                        Signature

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

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

                            (To be completed if true)

The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the best of the knowledge of the undersigned, never have been,
Beneficially Owned by an Acquiring Person (as defined in the Rights Agreement)
after such person became an Acquiring Person.

                                  ________________________________________
                                                 Signature

                          FORM OF ELECTION TO EXERCISE

                   (To be attached to each Rights Certificate)

TO:

                                                                              35
<PAGE>

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

Name:__

Street:_________________________________________________________________________

City, Province & Postal Code:___________________________________________________

Social Insurance, Social Security or
Other Taxpayer Identification Number:___________________________________________

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

Name:___________________________________________________________________________

Street:_________________________________________________________________________

City, Province & Postal Code:___________________________________________________

Social Insurance, Social Security or
Other Taxpayer Identification Number:___________________________________________

Dated:______________________             _______________________________
                                                 Signature

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

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

                            (To be completed if true)

The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the best of the knowledge of the undersigned, never have been,
Beneficially Owned by an Acquiring Person (as defined in the Rights Agreement)
after such person became an Acquiring Person.

                                                 ______________________________
                                                          Signature

                                                                              36
<PAGE>

                                     NOTICE

In the event the certification set forth above in the Forms of Assignment and
Election is not completed, the Corporation will deem the Beneficial Owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Shareholder Rights Agreement)
and, in the case of an Assignment, will affix a legend to that effect on any
Rights Certificate issued in exchange for this Rights Certificate.

                                                                              37

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