Document:

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                                                                   EXHIBIT 10.59

                                GLAMIS GOLD LTD.

                                       AND

                        MONTREAL TRUST COMPANY OF CANADA

                                 AS RIGHTS AGENT

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                        SHAREHOLDER RIGHTS PLAN AGREEMENT

                                      DATED

                                FEBRUARY 25, 2000

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                                TABLE OF CONTENTS

<TABLE>
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                                                                                          PAGE
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ARTICLE 1 - INTERPRETATION...................................................................1

   CERTAIN DEFINITIONS.......................................................................1
   CURRENCY.................................................................................13
   HEADINGS.................................................................................14
   NUMBER AND GENDER........................................................................14
   ACTING JOINTLY OR IN CONCERT.............................................................14
   STATUTORY REFERENCES.....................................................................14
   HOLDER...................................................................................14
   CALCULATION OF VOTING SHARE PERCENTAGE...................................................14
   INTERPRETATION...........................................................................15

ARTICLE 2 - THE RIGHTS......................................................................15

   LEGEND ON VOTING SHARE CERTIFICATES......................................................15
   INITIAL EXERCISE PRICE...................................................................16
   RIGHTS NOT EXERCISABLE UNTIL SEPARATION TIME.............................................16
   MAILING OF RIGHTS CERTIFICATES AND DISCLOSURE STATEMENT..................................16
   EXERCISE OF RIGHTS.......................................................................17
   DUTIES OF RIGHTS AGENT UPON RECEIPT OF ELECTION TO EXERCISE..............................17
   PARTIAL EXERCISE OF RIGHTS...............................................................18
   DUTIES OF THE CORPORATION................................................................18
   ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS..........................................19
   DATE ON WHICH EXERCISE IS EFFECTIVE......................................................25
   EXECUTION OF RIGHTS CERTIFICATES.........................................................25
   AUTHENTICATION OF RIGHTS CERTIFICATES....................................................25
   DATING OF RIGHTS CERTIFICATES............................................................25
   REGISTER OF RIGHTS.......................................................................25
   TRANSFERS AND EXCHANGES..................................................................26
   MUTILATED RIGHTS CERTIFICATES............................................................26
   DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES...........................................26
   REPLACEMENT FEE..........................................................................27
   VALIDITY OF REPLACEMENT RIGHTS CERTIFICATES..............................................27
   PERSONS DEEMED OWNERS....................................................................27
   DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES.........................................27
   AGREEMENT OF RIGHTS HOLDERS..............................................................27
   RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.......................................28

ARTICLE 3 - ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS..................29

   FLIP-IN EVENT............................................................................29
   CANCELLATION OF RIGHTS HELD BY AN ACQUIRING PARTY........................................29
   LEGEND ON RIGHTS CERTIFICATES TRANSFERRED BY AN ACQUIRING PARTY..........................29

ARTICLE 4 - THE RIGHTS AGENT................................................................30

   APPOINTMENT OF RIGHTS AGENT..............................................................30
   PROTECTION OF RIGHTS AGENT...............................................................30
   RIGHTS AGENT TO BE KEPT INFORMED.........................................................31
   MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT.................................31
   COUNTERSIGNING OF RIGHTS CERTIFICATES....................................................31
   DUTIES OF RIGHTS AGENT...................................................................31
   CHANGE OF RIGHTS AGENT...................................................................33

ARTICLE 5 - MISCELLANEOUS...................................................................34
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<TABLE>
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   REDEMPTION AND WAIVER....................................................................34
   EXPIRATION...............................................................................36
   ISSUANCE OF NEW RIGHT CERTIFICATES.......................................................36
   SUPPLEMENTS AND AMENDMENTS...............................................................36
   TIMING OF CERTAIN APPROVALS OF THE SHAREHOLDERS..........................................37
   EFFECTIVE TIME OF SUPPLEMENTS AND AMENDMENTS.............................................37
   APPROVALS OF AMENDMENTS BY RIGHTS AGENT..................................................37
   FRACTIONAL RIGHTS AND FRACTIONAL SHARES..................................................37
   RIGHTS OF ACTION.........................................................................38
   NOTICE OF PROPOSED ACTIONS...............................................................38
   NOTICES..................................................................................38
   SUCCESSORS...............................................................................39
   BENEFITS OF THIS AGREEMENT...............................................................39
   GOVERNING LAW............................................................................39
   SEVERABILITY.............................................................................39
   EFFECTIVE DATE...........................................................................40
   DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.....................................40
   RIGHTS OF BOARD, CORPORATION AND OFFEROR.................................................40
   REGULATORY APPROVALS.....................................................................40
   DECLARATION AS TO NON-CANADIAN HOLDERS...................................................40
   TIME OF THE ESSENCE......................................................................41
   EXECUTION IN COUNTERPARTS................................................................41
</TABLE>

EXHIBITS

Exhibit    A - Form of Rights Certificate (and attached Form of Election to
           Exercise and Form of Assignment)

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                        SHAREHOLDER RIGHTS PLAN AGREEMENT

THIS AGREEMENT dated as of the 25th day of February, 2000 between Glamis Gold
Ltd. (the "Corporation"), a corporation incorporated under the Company Act
(British Columbia), and Montreal Trust Company of Canada, a trust company
incorporated under the laws of Canada, as Rights Agent (the "RIGHTS AGENT",
which term will include any successor Rights Agent hereunder).

WHEREAS:

(A) The Board of Directors of the Corporation has determined that it is
advisable and in the best interests of the Corporation and its shareholders to
adopt a shareholder rights plan (the "RIGHTS PLAN") to ensure, to the extent
possible, that all shareholders of the Corporation are treated fairly in
connection with any take-over bid for the Corporation;

(B) In order to implement the adoption of the Rights Plan the Board of Directors
has, subject to receipt of shareholder and regulatory approval:

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

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

(C) Each Right entitles the holder thereof, after the Separation Time, to
purchase securities of the Corporation pursuant to the terms and subject to the
conditions set forth herein; and

(D) The Corporation desires to appoint the Rights Agent to act on behalf of the
Corporation, and the Rights Agent is willing to so act, in connection with the
issuance, transfer, exchange and replacement of Rights Certificates, the
exercise of Rights, and other matters referred to herein.

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

                            ARTICLE 1-INTERPRETATION

CERTAIN DEFINITIONS

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

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        (a) "1933 SECURITIES ACT" means the Securities Act of 1933 of the United
        States, as amended, and the rules and regulations thereunder, and any
        comparable or successor laws or regulations thereto.

        (b) "1934 EXCHANGE ACT" means the Securities Exchange Act of 1934 of the
        United States, as amended, and the rules and regulations thereunder, and
        any comparable or successor laws or regulations thereto.

        (c) "ACQUIRING PERSON" means, any Person who is the Beneficial Owner of
        20% or more of the outstanding Voting Shares; save and except that the
        term "Acquiring Person" will not include:

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

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

                      (A)    Corporate Acquisitions,

                      (B)    Permitted Bid Acquisitions,

                      (C)    Corporate Distributions,

                      (D)    Exempt Acquisitions, or

                      (E)    Convertible Security Acquisitions;

               (each an "Exempt Transaction")

               provided, however, that if a Person becomes the Beneficial Owner
               of 20% or more of the outstanding Voting Shares by reason of one
               or more or any combination of Exempt Transactions and, after such
               becomes the Beneficial Owner of an additional 1% or more of the
               outstanding Voting Shares, other than pursuant to an Exempt
               Transaction, such Person will, as at such time, become an
               Acquiring Person;

               (iii) for a period of 10 days after the Disqualification Date,
               any Person who becomes the Beneficial Owner of 20% or more of the
               outstanding Voting Shares as a result of such Person becoming
               disqualified from relying on Section 1.1(g)(vi) or Section
               1.1(g)(viii) solely because such Person makes or proposes to make
               a Take-over Bid in respect of securities of the Corporation alone
               or by acting jointly or in concert with any other Person;

               (iv) an underwriter or member of a banking or selling group which
               acquires Voting Shares from the Corporation in connection with a
               distribution to the public of securities of the Corporation; and

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                                      -3-

               (v) any employee benefits plan or other compensation arrangement
               of the Corporation.

        (d) "AFFILIATE", when used to indicate a relationship with a specified
        Person, means a Person that directly, or indirectly through one or more
        intermediaries, controls, or is controlled by, or is under common
        control with, such specified Person and a body corporate will be deemed
        to be an Affiliate of another body corporate if one of them is the
        Subsidiary of the other or if both are Subsidiaries of the same body
        corporate or if each of them is controlled by the same Person.

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

        (f) "ASSOCIATE", when used to indicate a relationship with a specified
        Person, means

               (i) a spouse of such specified Person,

               (ii) any Person of either sex with whom such specified Person is
               living in a conjugal relationship outside marriage, or

               (iii) any relative of such specified Person or of a Person
               mentioned in Section (i) or Section (ii) of this definition if
               that relative has the same residence as the specified Person.

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

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

               (ii) any securities as to which such Person or any of such
               Person's Affiliates or Associates has the right

                      (A) to become the owner at law or in equity (whether such
                      right is exercisable immediately or within a period of 60
                      days thereafter and whether or not on condition or the
                      happening of any contingency or the making of any payment)
                      pursuant to any agreement, arrangement, pledge or
                      understanding, whether or not in writing (other than
                      customary agreements with and between underwriters and
                      banking group or selling group members with respect to a
                      public offering of securities or pursuant to a bona fide
                      pledge of securities), or

                      (B) to vote such securities (whether such right is
                      exercisable immediately or after the passage of time or
                      upon the occurrence of a contingency or otherwise)
                      pursuant to any agreement, arrangement, pledge or
                      understanding (written or oral), or otherwise, other than
                      pledges of securities in the ordinary course of business;
                      and

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               (iii) any securities that are Beneficially Owned within the
               meaning of Section 1.1(g)(i) or (ii) by any other Person with
               whom such Person is acting jointly or in concert;

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

               (iv) such security having been deposited or tendered pursuant to
               a tender or exchange offer or Take-over Bid made by such Person
               or any of such Person's Affiliates or Associates or made by any
               other Person acting jointly or in concert with such Person,
               unless such deposited or tendered security has been accepted
               unconditionally for payment or exchange or has been taken up or
               paid for, whichever occurs first; or

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

               (vi) such Person or any Affiliate or Associate of such Person or
               any other Person acting jointly or in concert with such Person,
               holding or exercising voting or dispositive power over such
               security, in circumstances where

                      (A) the ordinary business of the Person (the "FUND
                      MANAGER") includes the management of investment funds for
                      others and such voting or dispositive power over such
                      security is held by the Fund Manager in the ordinary
                      course of such business in the performance of such Fund
                      Manager's duties for the account of any other Person (a
                      "CLIENT"), or

                      (B) such Person (the "TRUST COMPANY") is licensed to carry
                      on the business of a trust company under applicable law
                      and, as such, acts as trustee or administrator or in a
                      similar capacity in relation to the estates of deceased or
                      incompetent Persons or in relation to other accounts and
                      holds or exercises voting or dispositive power over such
                      security in the ordinary course of such duties for the
                      estate of any such deceased or incompetent Person (each an
                      "ESTATE ACCOUNT") or for such other accounts (each an
                      "OTHER ACCOUNT") and holds such voting or dispositive
                      power over such security and is acting in the ordinary
                      course of such duties for the Estate Account or for such
                      Other Account,

                      (C) the ordinary business or activity of such Person
                      includes acting as an agent of the Crown in the management
                      of public assets (the "CROWN AGENT"), or

                      (D) the Person is the administrator or the trustee of one
                      or more pension funds, plans or related trusts (each a
                      "PENSION FUND") registered or qualified under the laws of
                      Canada or any province thereof or the laws

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                                      -5-

                      of the United States or any state thereof (the
                      "INDEPENDENT PERSON"), or is a Pension Fund, and holds
                      such securities solely for the purposes of its activities
                      as an Independent Person or as a Pension Fund, or

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

               and provided that the Fund Manager, the Trust Company, the Crown
               Agent, the Independent Person, the Pension Fund or the Statutory
               Body, as the case may be, does not make or propose to make a
               Take-over Bid in respect of securities of the Corporation alone
               or by acting jointly or in concert with any other Person (other
               than 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); or

               (vii) such Person being a Client of the same Fund Manager as
               another Person on whose account the Fund Manager holds or
               exercises voting or dispositive power over such security, or such
               Person being an Estate Account or an Other Account of the same
               Trust Company as another Person on whose account the Trust
               Company holds or exercises voting or dispositive power over such
               security, or such Person being a Pension Fund with the same
               Independent Person as another Pension Fund;

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

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

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

        (i) "BUSINESS DAY" means any day other than a Saturday, Sunday or a day
        on which banking institutions in the Cities of Vancouver, British
        Columbia and Toronto, Ontario are authorized or obligated by law to
        close.

        (j) "COMPANY ACT" means the Company Act, R.S.B.C. 1996, c.62, as
        amended, and the regulations made thereunder, and any comparable or
        successor laws or regulations thereto.

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                                      -6-

        (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 reference to the Canadian-U.S. Exchange
        Rate on such date.

        (l) "CANADIAN-U.S. EXCHANGE RATE" means, on any date, the inverse of the
        U.S.-Canadian Exchange Rate.

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

        (n) "COMMON SHARES" means the common shares in the capital of the
        Corporation.

        (o) "COMPETING PERMITTED BID" means a Take-over Bid that is made while
        another Permitted Bid or Competing Permitted Bid is in existence and
        that satisfies all of the components of the definition of a Permitted
        Bid, except that the requirements set out in Section (ii) of the
        definition of a Permitted Bid will be satisfied if the Competing
        Permitted Bid contains, and the take up and payment for securities
        tendered or deposited thereunder will be subject to, an irrevocable and
        unqualified condition that no Voting Shares will be taken up or paid for
        pursuant to the Competing Permitted Bid prior to the close of business
        on the day that is no earlier than the later of 21 days after the date
        the Competing Permitted Bid is made and the earliest date on which
        Voting Shares may be taken up or paid for under any other Permitted Bid
        in existence at the date of such Competing Permitted Bid and only if at
        the time when Voting Shares are first taken up and paid for under the
        Competing Permitted Bid, more than 50% of the then outstanding Voting
        Shares held by Independent Shareholders have been deposited to the
        Competing Permitted Bid and not withdrawn.

        (p) "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 for the benefit of the
               other Person or Persons; and

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

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

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

                (i) any right (regardless of whether such right constitutes a
                security); or

                (ii) any security issued by the Corporation (other than the
                Rights);

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                                      -7-

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

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

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

        (t) "CORPORATE DISTRIBUTION" means:

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

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

        (u) "DISQUALIFICATION DATE" in respect of a Person means the first date
        that a public announcement is made indicating that the Person has or is
        making or has announced on intention to make, a Take-over Bid alone or
        by acting jointly or in concert with any other Person.

        (v) "ELECTION TO EXERCISE" has the meaning ascribed thereto in Section
        2.5(a).

        (w) "EXEMPT ACQUISITION" means an acquisition of Voting Shares

                (i) in respect of which the Board of Directors has waived the
                application of Section 3.1 pursuant to the provisions of Section
                5.1(b), Section 5.1(c) or Section 5.1(d), or

                (ii) pursuant to a dividend reinvestment plan of the
                Corporation, or

                (iii) pursuant to a distribution by the Corporation of Voting
                Shares or Convertible Securities made pursuant to a prospectus,
                or

                (iv) pursuant to a distribution by the Corporation of Voting
                Shares or Convertible Securities by way of a private placement
                by the Corporation or upon

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                                      -8-

               the exercise by an individual employee or director of stock
               options granted under a stock option plan of the Corporation or
               rights to purchase securities granted under a share purchase plan
               of the Corporation, provided that all necessary stock exchange
               approvals for such private placement, stock option plan or share
               purchase plan have been obtained and such private placement,
               stock option plan or share purchase plan complies with the terms
               and conditions of such approvals.

        (x) "EXERCISE PRICE" means, as of any date, the price at which a holder
        may purchase the securities isSuable upon exercise of one whole Right.
        Until adjustment or revision thereof in accordance with the terms
        hereof, the Exercise Price will be $100.00.

        (y) "EXPIRATION TIME" means the earlier of:

                (i) the Termination Time, and

                (ii) the close of business on the date of the Corporation's 2003
                Annual Meeting of Shareholders.

        (z) "FLIP-IN EVENT" means a transaction or event that results in a
        Person becoming an Acquiring Person.

        (aa) "INDEPENDENT SHAREHOLDERS" means all holders of Voting Shares
        except for

                (i) an Acquiring Person,

                (ii) an Offeror,

                (iii) an Affiliate or Associate of such Acquiring Person or such
                Offeror,

                (iv) a Person acting jointly or in concert with such Acquiring
                Person or such Offeror, and

                (v) an employee benefit plan, stock purchase plan, deferred
                profit sharing plan or any similar plan or trust for the benefit
                of employees of the Corporation or a Subsidiary of the
                Corporation, unless the beneficiaries of any such plan or trust
                direct the manner in which the Voting Shares are to be voted or
                withheld from voting or direct whether the Voting Shares are to
                be tendered to a Take-over Bid.

        (ab) "MARKET PRICE" per security of any securities on any date of
        determination means the average of the daily closing prices per security
        of such securities (determined as described below) on each of the 20
        consecutive Trading Days through and including the Trading Day
        immediately preceding such date; provided, however, that if an event of
        a type analogous to any of the events described in Section 2.9 has
        caused the closing prices used to determine the Market Price on any
        Trading Days not to be fully comparable with the closing price on such
        date of determination or, if the date of determination is not a Trading
        Day, on the immediately preceding Trading Day, each such closing price
        so used will be appropriately adjusted in a manner analogous to the
        applicable adjustment provided for in Section 2.9 in order to make it
        fully comparable with the closing price on such

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                                      -9-

        date of determination or, if the date of determination is not a Trading
        Day, on the immediately preceding Trading Day. The closing price per
        security of a security on a specified date will be

               (i) the closing board lot sale price on the date or, if such
               price is not available, the average of the closing bid and asked
               prices on the date, for the security as reported by The Toronto
               Stock Exchange, or

               (ii) if for any reason none of such prices is available on such
               day or the securities are not listed or admitted to trading on
               The Toronto Stock Exchange, the closing board lot sale price on
               the date, or if such price is not available, the average of the
               closing bid and asked prices on the date, for the security as
               reported by the NYSE, or

               (iii) if for any reason none of such prices is available on such
               day or the securities are not listed or admitted to trading on
               The Toronto Stock Exchange or the NYSE, the closing board lot
               sale price on the date, or if such price is not available, the
               average of the closing bid and asked prices on the date, for the
               security as reported by the principal stock exchange in Canada or
               the United States on which the security is primarily traded, or

               (iv) if not so listed, the last quoted price on the date, or if
               not so quoted, the average of the high bid and low asked prices
               on the date, for the security in the over-the-counter market, as
               reported by Nasdaq or, if the securities are not quoted on
               Nasdaq, as reported by such other system then in use, or

               (v) if on any such date the securities are not quoted by any such
               organization, the average of the closing bid and asked prices on
               the date as furnished by a professional market maker making a
               market in the security as selected by the Board of Directors;
               provided, however, that if on any such date the security is not
               traded in the over-the-counter market, the closing price per
               security on such date will mean the fair value per security on
               such date as determined by the Board of Directors, after
               consultation with a nationally or internationally recognized
               investment dealer or investment banker.

        The Market Price will be expressed in Canadian dollars. If the price for
        the security on any day forming part of the 20 consecutive Trading Day
        period is in United States dollars, such amount will be translated into
        Canadian dollars at the Canadian Dollar Equivalent thereof.
        Notwithstanding the foregoing, where the Board of Directors is satisfied
        that the Market Price of securities as determined herein was affected by
        an anticipated or actual Take-over Bid or by improper manipulation, the
        Board of Directors may determine the Market Price of securities based on
        a finding as to the price of which a holder of securities of that class
        could reasonably have expected to dispose of his securities immediately
        prior to the relevant date excluding any change in price reasonably
        attributable to the anticipated or actual Take-over Bid or to the
        improper manipulation.

        (ac) "NASDAQ" means The NASDAQ SmallCap Market.

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                                      -10-

        (ad) "NYSE" means the New York Stock Exchange.

        (ae) "OFFER TO ACQUIRE" means:

               (i) an offer to purchase, a public announcement of an intention
               to make an offer to purchase, or a solicitation of an offer to
               sell, Voting Shares; 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
        will be deemed to be making an Offer to Acquire to the Person that made
        the offer to sell.

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

        (ag) "OFFEROR'S SECURITIES" means the Voting Shares and Convertible
        Securities Beneficially Owned by an Offeror, any Affiliate or Associate
        of such Offeror, any Person acting jointly or in concert with the
        Offeror or with any Affiliate of the Offeror and any Affiliates or
        Associates of such Person so acting jointly or in concert.

        (ah) "OUTSTANDING VOTING SHARES" means that number of Common Shares, or
        other Voting Shares, which are issued and outstanding at the time of a
        Flip-in Event on a fully-diluted basis and, for more certainty, includes
        without limitation all outstanding options, warrants, rights or other
        securities (excluding the Rights) convertible into Common Shares or
        other Voting Shares to be issued from treasury at the time of a Flip-in
        Event.

        (ai) "PERMITTED BID" means a Take-over Bid made by an Offeror which is
        made by means of a Take-over Bid circular and which:

               (i) is made on identical terms (other than terms of a
               non-material nature that may be required by applicable law) to
               all holders of record of Voting Shares wherever resident as
               registered on the books of the Corporation and must be made for
               all of the outstanding Voting Shares;

               (ii) contains, and the take up and payment for securities
               tendered or deposited thereunder will be subject to, an
               irrevocable and unqualified condition that no Voting Shares will
               be taken up or paid for pursuant to the Take-over Bid prior to
               the close of business on the date which is not less than 45 days
               following the date the Take-over Bid circular is sent to
               shareholders of the Corporation and that no Voting Shares will be
               taken up or paid for pursuant to the Take-over Bid unless, at
               such date, more than 50% of the then outstanding Voting Shares
               held by Independent Shareholders have been deposited to the
               Take-over Bid and not withdrawn;

               (iii) contains an irrevocable and unqualified provision that,
               unless the Take-over Bid is withdrawn in accordance with
               applicable law, Voting Shares of the Corporation may be deposited
               pursuant to the Take-over Bid at any time during

<PAGE>   14
                                      -11-

               the period of time described in Section 1.1(ai)(ii) and that any
               Voting Shares deposited pursuant to the Take-over Bid may be
               withdrawn at any time until taken up and paid for; and

               (iv) contains an irrevocable and unqualified provision that
               provides upon the condition referred to in Section 1.1(ai)(ii)
               being satisfied, the Offeror will make a public announcement of
               that fact on the date the Take-over Bid would otherwise expire
               and the Take-over Bid will be extended for a period of not less
               than 10 Business Days from the date it would otherwise expire;

        provided always that a Permitted Bid will cease to be a Permitted Bid at
        any time when it ceases to meet any of the provisions of this definition
        and any acquisitions of Voting Shares made pursuant to such Permitted
        Bid, including any acquisition of Voting Shares theretofore made, will
        cease to be a Permitted Bid Acquisition.

        (aj) "PERMITTED BID ACQUISITION" means the acquisition of Voting Shares
        made pursuant to a Permitted Bid or a Competing Permitted Bid.

        (ak) "PERMITTED 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 or Convertible
        Securities 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 (the "Lock-up Bid"), but which permits the Locked-up Person
        to withdraw the Voting Shares or Convertible Securities from the
        agreement in order to tender or deposit them to another Take-over Bid
        that contains an offering price or value per Voting Share or Convertible
        Security, as the case may be, that is at least 5% in excess of the price
        or value per Voting Share or Convertible Security offered under the
        Lock-Up Bid.

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

        (am) "RECORD TIME" means 5:00 p.m. (Toronto time) on February 25, 2000.

        (an) "REDEMPTION PRICE" has the meaning ascribed thereto in Section
        5.1(a).

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

<PAGE>   15
                                      -12-

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

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

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

        (aq) "RIGHTS CERTIFICATE" has the meaning ascribed thereto in Section
        2.4(a).

        (ar) "RIGHTS REGISTER" has the meaning ascribed thereto in Section 2.14.

        (as) "SECURITIES ACT (BRITISH COLUMBIA)" means the Securities Act,
        R.S.B.C. 1996, c.418, as amended, and the regulations, rules, policies
        and notices thereunder, and any comparable or successor laws,
        regulations, rules, policies or notices thereto.

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

        (au) "SEPARATION TIME" means the close of business (Vancouver Time) on
        the 10th Trading Day after the earlier of

               (i) the Stock Acquisition Date,

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

               (iii) the date upon which a Permitted Bid or Competing Permitted
               Bid ceases to be such,

        or such later date as may be determined by the Board of Directors
        provided that, if any such Take-over Bid expires, is cancelled,
        terminated or otherwise withdrawn prior to the Separation Time, such
        Take-over Bid will be deemed, for the purposes of this definition, never
        to have been made and provided further that if the Board of Directors
        determines pursuant to Section 5.1(b), Section 5.1(c) or Section 5.1(d)
        to waive the application of Section 3.1 to a Flip-in Event, the
        Separation Time in respect of such Flip-in Event will be deemed never to
        have occurred.

        (av) "STOCK ACQUISITION DATE" means the first date of public
        announcement (which, for purposes of this definition, will include,
        without limitation, a report filed pursuant to Section 101 of the
        Securities Act (Ontario) or Section 111 of the Securities Act (British
        Columbia) or Section 13(d) under the 1934 Exchange Act) by the
        Corporation or an Offeror or Acquiring Person, that a Person has become
        an Acquiring Person.

<PAGE>   16
                                      -13-

        (aw) "SUBSIDIARY": a corporation will be deemed to 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.

        (ax) "TAKE-OVER BID" means an Offer to Acquire Voting Shares or
        Convertible Securities where the Voting Shares subject to the Offer to
        Acquire, together with the Voting Shares into which the Convertible
        Securities are convertible, exchangeable or exercisable, and the
        Offeror's Securities, constitute in the aggregate 20% or more of the
        outstanding Voting Shares at the date of the Offer to Acquire.

        (ay) "TERMINATION TIME" means the time at which the right to exercise
        Rights will terminate pursuant to Section 5.1(a) and Section 5.1(e).

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

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

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

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

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

CURRENCY

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

<PAGE>   17
                                      -14-

HEADINGS

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

NUMBER AND GENDER

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

ACTING JOINTLY OR IN CONCERT

1.5 For the purposes of this Agreement, a Person will be deemed to be acting
jointly or in concert with every Person who is a party to an agreement,
commitment or understanding, whether formal or informal, with the first Person
or any Associate or Affiliate of such Person for the purpose of acquiring or
making an Offer to Acquire Voting Shares of the Corporation (other than
customary agreements with and between underwriters or banking group members or
selling group members with respect to a distribution of securities or to a
pledge of securities in the ordinary course of business).

STATUTORY REFERENCES

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

HOLDER

1.7 As used in this Agreement, unless the context otherwise requires, the term
"holder" when used with reference to Rights, means the registered holder of such
Rights or, prior to the Separation Time, the associated Voting Shares.

CALCULATION OF VOTING SHARE PERCENTAGE

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

<PAGE>   18
                                      -15-

INTERPRETATION

1.9 For the purposes of this Agreement, except as otherwise expressly provided
herein:

        (a) the symbol Section followed by a number or some combination of
        numbers and letters refers to the section, paragraph, subparagraph,
        clause or subclause of this Agreement so designated,

        (b) the word "or" is not exclusive and the word "including" is not
        limiting (whether or not non-limiting language such as "without
        limitation" or "but not limited to" or other words of similar import is
        used with reference thereto); and

        (c) a reference to a corporate entity includes and is also a reference
        to any corporate entity that is a successor to such entity.

                             ARTICLE 2 - THE RIGHTS

LEGEND ON VOTING SHARE CERTIFICATES

2.1 Certificates:

        (a) issued for Voting Shares after the Record Time but prior to the
        close of business on the earlier of the Separation Time and the
        Expiration Time will evidence one Right for each Common Share
        represented thereby and will have impressed on, printed on, written on
        or otherwise affixed to them, a legend in substantially the following
        form:

               "Until the Separation Time (as defined in the Rights Plan
               referred to below), this certificate also evidences and entitles
               the holder hereof to certain Rights as set forth in a Shareholder
               Rights Plan Agreement, dated as of February 25, 2000 (the "RIGHTS
               PLAN"), between Glamis Gold Ltd. (the "CORPORATION") and The
               Montreal Trust Company of Canada, as rights agent (the "RIGHTS
               AGENT"), the terms of which are hereby incorporated herein by
               reference and a copy of which is on file at the principal
               executive office of the Corporation. Under certain circumstances,
               as set forth in the Rights Plan, such Rights may be amended or
               redeemed, may expire, may become null and void (if, in certain
               cases, they are issued to or "BENEFICIALLY OWNED" by any Person
               who is, was or becomes an "ACQUIRING PERSON", as such terms are
               defined in the Rights Plan, whether currently held by or on
               behalf of such Person or any subsequent holder) or may be
               evidenced by separate certificates and may no longer be evidenced
               by this certificate.

               The Corporation will mail or arrange for the mailing of a copy of
               the Rights Plan to the holder of this certificate without charge
               upon receipt of a written request therefor."

        and

<PAGE>   19
                                      -16-

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

INITIAL EXERCISE PRICE

2.2 Subject to adjustment as herein set forth and subject to Section 3.1, each
Right, save and except those held by the Corporation and any of its Subsidiaries
which will be void, will entitle the holder thereof, from and after the
Separation Time and prior to the Expiration Time, to purchase, for the Exercise
Price as at the Business Day immediately preceding the date of exercise of the
Right, one Common Share.

RIGHTS NOT EXERCISABLE UNTIL SEPARATION TIME

2.3 Until the Separation Time:

        (a) the Rights will not be exercisable, and

        (b) for administrative purposes each Right will be evidenced by the
        certificates for the associated Voting Shares registered in the names of
        the holders thereof (which certificates will also be deemed to be Rights
        Certificates) and will be transferable only together with, and will be
        transferred by a transfer of, such associated Voting Shares.

MAILING OF RIGHTS CERTIFICATES AND DISCLOSURE STATEMENT

2.4 From and after the Separation Time and prior to the Expiration Time, the
Rights may be exercised, and will be registered and transferable independently
of Voting Shares. Promptly following the Separation Time, the Corporation will
prepare and the Rights Agent will mail to each holder of record of Rights as of
the Separation Time (other than an Acquiring Person, any other Person whose
Rights are or become void pursuant to the provisions of Section 3.2 and, in
respect of any Rights Beneficially Owned by such Acquiring Person which are not
held of record by such Acquiring Person, the holder of record of such Rights) at
such holder's address as shown by the records of the Corporation (the
Corporation hereby agreeing to furnish copies of such records to the Rights
Agent for this purpose),

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

        (b) a disclosure statement describing the Rights,

<PAGE>   20
                                      -17-

provided that a nominee will be sent the materials provided for in this Section
2.4 in respect of all Voting Shares held of record by it which are not
Beneficially Owned by an Acquiring Person. In order for the Corporation to
determine whether any Person is holding Voting Shares which are Beneficially
Owned by another Person, the Corporation may require such first mentioned Person
to furnish it with such information and documentation as the Corporation
considers advisable.

EXERCISE OF RIGHTS

2.5 Rights may be exercised in whole at any time or in part from time to time on
any Business Day (or other day that is not a bank holiday at the place of
exercise) after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent, at its office in the City of Vancouver, British
Columbia, Canada or at any other office of the Rights Agent or any Co-Rights
Agent in the cities specified in the Rights Certificate or designated from time
to time for that purpose by the Corporation after consultation with the Rights
Agent:

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

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

DUTIES OF RIGHTS AGENT UPON RECEIPT OF ELECTION TO EXERCISE

2.6 Upon receipt of a Rights Certificate, which is accompanied by a completed
Election to Exercise that does not indicate that such Right is null and void as
provided by Section 3.2, and payment as set forth in Section 2.5(b), the Rights
Agent (unless otherwise instructed by the Corporation) will thereupon promptly:

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

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

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

<PAGE>   21
                                      -18-

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

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

PARTIAL EXERCISE OF RIGHTS

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

DUTIES OF THE CORPORATION

2.8 The Corporation covenants and agrees that it will:

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

        (b) take all reasonable action as may be necessary on its part and
        within its power to comply with any applicable requirements of the
        Company Act, the Securities Act (British Columbia), the Securities Act
        (Ontario), and any applicable comparable securities legislation of each
        of the other provinces of Canada, the 1933 Securities Act, the 1934
        Exchange Act and any other applicable law, rule or regulation, in
        connection with the issuance and delivery of the Rights Certificates and
        the issuance of any Common Shares or other securities upon exercise of
        Rights. The Corporation may temporarily suspend, for a period of time
        not to exceed 90 days, the exercisability of the Rights in order to
        prepare and file any securities disclosure documents required by
        securities legislation in respect of the issuance and delivery of the
        Rights Certificates and the issuance of any Common Shares or other
        securities upon exercise of Rights. Upon such suspension, the
        Corporation will issue a public announcement stating that the
        exercisability of the Rights has been temporarily suspended, as well as
        a public announcement at such time as the suspension is no longer in
        effect, in each case with prompt written notice to the Rights Agent.
        Notwithstanding any such provision of this Agreement to the contrary,
        the Rights will not be exercisable in any jurisdiction unless the
        requisite qualification in such jurisdiction has been obtained;

        (c) use its reasonable efforts to cause, from and after such time as the
        Rights become exercisable, all Common Shares which may be issued upon
        the exercise thereof, to be listed on the principal stock exchanges on
        which the Common Shares are traded;

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

<PAGE>   22
                                      -19-

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

ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS

2.9 The Exercise Price, the number and kind of Common Shares or other securities
subject to purchase upon exercise of each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 2.9:

        (a)    if the Corporation at any time after the Record Time,

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

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

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

               (iv) issues any Common Shares (or other securities exchangeable
               for or convertible into or giving a right to acquire Common
               Shares or other securities) in respect of, in lieu of or in
               exchange for existing Common Shares in a reclassification or
               redesignation of Common Shares, an amalgamation or statutory
               arrangement,

        the Exercise Price and the number of Rights outstanding, or, if the
        payment or effective date therefor will occur after the Separation Time,
        the securities purchasable upon exercise of Rights will be adjusted in
        the manner set forth below. If an event occurs which would require an
        adjustment under both this Section 2.9 and Section 3.1, the adjustment
        provided for in this Section 2.9 will be in addition to, and will be
        made prior to, any adjustment required under Section 3.1.

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

                      (A) the Exercise Price in effect after such adjustment
                      will be equal to the Exercise Price in effect immediately
                      prior to such adjustment divided

<PAGE>   23
                                      -20-

                      by the number of Common Shares (or other capital stock of
                      the Corporation) (the "Expansion Factor") that a holder of
                      one Common Share immediately prior to such dividend,
                      subdivision, change, consolidation or issuance would hold
                      immediately thereafter as a result thereof (assuming the
                      exercise of all such exchange or conversion rights, if
                      any), and

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

        If the securities purchasable upon exercise of Rights are to be
        adjusted, the securities purchasable upon exercise of each Right after
        such adjustment will be the securities that a holder of the securities
        purchasable upon exercise of one Right immediately prior to such
        dividend, subdivision, change, consolidation or issuance would hold
        immediately thereafter as a result thereof. To the extent that any such
        rights of exchange, conversion or acquisition are not exercised prior to
        the expiration thereof, the Exercise Price will be readjusted to the
        Exercise Price which would then be in effect based upon the number of
        Common Shares (or securities convertible into or exchangeable for Common
        Shares) actually issued upon the exercise of such rights. If after the
        Record Time and prior to the Expiration Time the Corporation issues any
        shares of its authorized capital other than Common Shares in a
        transaction of a type described in Section 2.9(a)(i) and Section
        2.9(a)(iv), such shares will 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 agree to amend
        this Agreement in order to effect such treatment.

        If the Corporation, at any time after the Record Time and prior to the
        Separation Time, issues any Common Shares otherwise than in a
        transaction referred to in this Section 2.9(a), each Common Share so
        issued will automatically have one new Right associated with it, which
        Right will be evidenced by the certificate representing such share;

        (b) if at any time after the Record Time and prior to the Separation
        Time the Corporation fixes a record date for the issuance of rights,
        options or warrants to all holders of Common Shares entitling them (for
        a period expiring within 45 calendar days after such record date) to
        subscribe for or purchase Common Shares (or shares having the same
        rights, privileges and preferences as Common Shares ("EQUIVALENT COMMON
        shares")) or securities convertible into or exchangeable for or carrying
        a right to purchase Common Shares or equivalent common shares, at a
        price per Common Share or per equivalent common share (or having a
        conversion price or exchange price or exercise price per share, if a
        security convertible into or exchangeable for or carrying a right to
        purchase Common Shares or equivalent common shares) less than 90% of the
        Market Price per Common Share on such record date, the Exercise Price
        will be adjusted as follows:

<PAGE>   24
                                      -21-

               (i) the Exercise Price to be in effect after such record date
               will equal the Exercise Price in effect immediately prior to such
               record date multiplied by a fraction, the numerator of which will
               be the number of Common Shares outstanding on such record date,
               plus the number of Common Shares that the aggregate offering
               price of the total number of Common Shares and/or equivalent
               common shares so to be offered (and/or the aggregate initial
               conversion, exchange or exercise price of the convertible or
               exchangeable securities or rights so to be offered, including the
               price required to be paid to purchase such convertible or
               exchangeable securities or rights so to be offered) would
               purchase at such Market Price per Common Share, and the
               denominator of which will be the number of Common Shares
               outstanding on such record date, plus the number of additional
               Common Shares and/or equivalent common shares to be offered for
               subscription or purchase (or into which the convertible or
               exchangeable securities are initially convertible, exchangeable
               or exercisable);

               (ii) if the Exercise Price may be paid by delivery of
               consideration, part or all of which is in a form other than cash,
               the value of such non-cash consideration will be as determined by
               the Board of Directors, whose determination will be described in
               a certificate filed with the Rights Agent and will be binding on
               the Rights Agent and the holders of the Rights; and

               (iii) such adjustment will be made successively whenever such a
               record date is fixed, and in the event that such rights or
               warrants are not so issued, the Exercise Price will be adjusted
               to be the Exercise Price which would then be in effect if such
               record date had not been fixed.

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

        (c) if after the Record Time and prior to the Separation Time the
        Corporation fixes a record date for a distribution to all holders of
        Common Shares (including any such distribution made in connection with a
        merger, amalgamation, arrangement, plan, compromise or reorganization in
        which the Corporation is the continuing or successor corporation) of
        evidences of indebtedness, cash (other than a regular periodic cash
        dividend or a regular periodic cash dividend paid in Common Shares, but
        including any dividend payable in securities other than Common Shares),
        assets or subscription rights,

<PAGE>   25
                                      -22-

        options or warrants (excluding those referred to in Section 2.9(b)), the
        Exercise Price will be adjusted as follows:

               (i) the Exercise Price to be in effect after such record date
               will be determined by multiplying the Exercise Price in effect
               immediately prior to such record date by a fraction, the
               numerator of which will be the Market Price per Common Share on
               such record date, less the fair market value (as determined by
               the Board of Directors, whose determination will be described in
               a statement filed with the Rights Agent) of the portion of the
               cash, assets or evidences of indebtedness so to be distributed or
               of such subscription rights, options or warrants applicable to a
               Common Share and the denominator of which will be such Market
               Price per Common Share; and

               (ii) such adjustments will be made successively whenever such a
               record date is fixed, and in the event that such distribution is
               not so made, the Exercise Price will be adjusted to be the
               Exercise Price which would have been in effect if such record
               date had not been fixed;

        (d) notwithstanding anything herein to the contrary, no adjustment in
        the Exercise Price will be required unless such adjustment would require
        an increase or decrease of at least 1% in the Exercise Price; provided,
        however, that any adjustments which by reason of this Section 2.9(d) are
        not required to be made will be carried forward and taken into account
        in any subsequent adjustment. All calculations under this Section 2.9
        will be made to the nearest cent or to the nearest one-hundredth of a
        Common Share or other share, as the case may be. Notwithstanding the
        first sentence of this Section 2.9(d), any adjustment required by this
        Section 2.9 will be made no later than the earlier of (A) 3 years from
        the date of the transaction which mandates such adjustment or (B) the
        Expiration Time;

        (e) each adjustment made pursuant to this Section 2.9 will be made as
        of:

               (i) the payment or effective date for the applicable dividend,
               subdivision, change, consolidation or issuance in the case of an
               adjustment made pursuant to Section 2.9(a), and

               (ii) the record date for the applicable dividend or distribution,
               in the case of an adjustment made pursuant to Section 2.9(b) or
               Section 2.9(c);

        (f) if the Corporation, at any time after the Record Time and prior to
        the Expiration Time, issues any shares of capital stock (other than
        Common Shares), or rights or warrants to subscribe for or purchase any
        such capital stock, or securities convertible into or exchangeable for
        any such capital stock, in a transaction referred to in Section
        2.9(a)(i) or Section 2.9(a)(iv) and, if the Board of Directors
        determines that the adjustments contemplated by Section 2.9(a), Section
        2.9(b) and Section 2.9(c) in connection with such transaction will not
        appropriately protect the interests of the holders of Rights, the Board
        of Directors may determine what other adjustments to the Exercise Price,
        number of Rights and/or securities purchasable upon exercise of Rights
        would be appropriate and, notwithstanding Section 2.9(a), Section 2.9(b)
        and Section 2.9(c), such adjustments, rather than the adjustments
        contemplated by Section 2.9(a), Section 2.9(b)

<PAGE>   26
                                      -23-

        and Section 2.9(c), will be made. The Corporation and the Rights Agent
        will amend this Agreement as appropriate to provide for such
        adjustments;

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

        (h) unless the Corporation has exercised its election as provided in
        Section 2.9(i), upon each adjustment of the Exercise Price as a result
        of the calculations made in Section 2.9(b) and Section 2.9(c), each
        Right outstanding immediately prior to the making of such adjustment
        will thereafter evidence the right to purchase, at the adjusted Exercise
        Price, that number of Common Shares (calculated to the nearest one
        ten-thousandth) obtained by (A) multiplying (x) the number of shares
        purchasable upon exercise of a Right immediately prior to this
        adjustment by (y) the Exercise Price in effect immediately prior to such
        adjustment of the Exercise Price, and (B) dividing the product so
        obtained by the Exercise Price in effect immediately after such
        adjustment of the Exercise Price;

        (i) the Corporation may elect on or after the date of any adjustment of
        the Exercise Price to adjust the number of Rights, in lieu of any
        adjustment in the number of Common Shares purchasable upon the exercise
        of a Right. Each of the Rights outstanding after the adjustment in the
        number of Rights will be exercisable for the number of Common Shares for
        which a Right was exercisable immediately prior to such adjustment. Each
        Right held of record prior to such adjustment of the number of Rights
        will become that number of Rights (calculated to the nearest one
        ten-thousandth) obtained by multiplying it by a fraction, the numerator
        of which is the Exercise Price in effect immediately prior to adjustment
        of the Exercise Price and the denominator of which is the Exercise Price
        in effect immediately after adjustment of the Exercise Price. The
        Corporation will make a public announcement of its election to adjust
        the number of Rights, indicating the record date for the adjustment,
        and, if known at the time, the amount of the adjustment to be made. This
        record date may be the date on which the Exercise Price is adjusted or
        any day thereafter, but, if Rights Certificates have been issued, will
        be at least 10 days later than the date of the public announcement. If
        Rights Certificates have been issued, upon each adjustment of the number
        of Rights pursuant to this Section 2.9(i), the Corporation will, as
        promptly as practicable, cause to be distributed to holders of record of
        Rights Certificates on such record date Rights Certificates evidencing,
        subject to Section 5.8, the additional Rights to which such holders will
        be entitled as a result of such adjustment, or, at the option of the
        Corporation, will cause to be distributed to such holders of record in
        substitution and replacement for the Rights Certificates held by such
        holders prior to the date of adjustment, and upon surrender thereof, new
        Rights Certificates evidencing all the Rights to which such holders will
        be entitled after such adjustment. Rights Certificates so to be
        distributed will be issued, executed and countersigned in the manner
        provided for herein and may bear, at the option of the Corporation, the
        adjusted Exercise Price and will be registered in the names of the
        holders of record of Rights Certificates on the record date for the
        adjustment specified in the public announcement;

<PAGE>   27
                                      -24-

        (j) irrespective of any adjustment or change in the Exercise Price or
        the securities purchasable upon the exercise of the Rights, the Rights
        Certificates theretofore and thereafter issued may continue to express
        the Exercise Price per share and the number of Common Shares or other
        securities which were expressed in the initial Rights Certificates
        issued hereunder;

        (k) in any case in which this Section 2.9 requires that an adjustment in
        the Exercise Price be made effective as of a record date for a specified
        event, the Corporation may elect to defer until the occurrence of such
        event the issuance, to the holder of any Right exercised after such
        record date, of the number of Common Shares and other securities of the
        Corporation, if any, issuable upon such exercise over and above the
        number of Common Shares and other securities of the Corporation, if any,
        issuable upon such exercise on the basis of the Exercise Price in effect
        prior to such adjustment; provided, however, that the Corporation will
        deliver to such holder an appropriate instrument evidencing such
        holder's right to receive such additional shares (fractional or
        otherwise) or securities upon the occurrence of the event requiring such
        adjustment.

        (l) notwithstanding anything in this Section 2.9 to the contrary, the
        Corporation will be entitled to make such reductions in the Exercise
        Price, in addition to those adjustments expressly required by this
        Section 2.9, as and to the extent that the Board of Directors determines
        to be advisable in order that any

               (i)    consolidation or subdivision of the Common Shares,

               (ii) issuance of any Common Shares at less than the Market Price,

               (iii) issuance of securities convertible into or exchangeable for
               Common Shares,

               (iv)   stock dividends or

               (v)    issuance of rights, options or warrants,

        referred to in this Section 2.9 hereafter made by the Corporation to
        holders of its Common Shares, will not be taxable to such shareholders;

        (m) whenever an adjustment to the Exercise Price or a change in the
        securities purchasable upon the exercise of Rights is made pursuant to
        this Section 2.9, the Corporation will promptly:

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

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

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

<PAGE>   28
                                      -25-

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

DATE ON WHICH EXERCISE IS EFFECTIVE

2.10 Each Person in whose name any certificate for Common Shares is issued upon
the exercise of Rights, will for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate will be dated, the date upon which the Rights Certificate evidencing
such Rights was duly surrendered (together with a duly completed Election to
Exercise) and payment of the Exercise Price for such Rights (and any applicable
transfer taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Common Share transfer books of the Corporation
are closed, such Person will be deemed to have become the record holder of such
shares on, and such certificate will be dated, the next succeeding Business Day
on which the Common Share transfer books of the Corporation are open or on which
such suspension is no longer effective.

EXECUTION OF RIGHTS CERTIFICATES

2.11 The Rights Certificates will be executed on behalf of the Corporation by
its President or any of its senior officers, together with its Secretary or
Assistant Secretary. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing the manual
or facsimile signatures of individuals who were at any time the proper officers
of the Corporation will 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.

AUTHENTICATION OF RIGHTS CERTIFICATES

2.12 Promptly after the Corporation learns of the Separation Time, the
Corporation will notify the Rights Agent of such Separation Time and will
deliver Rights Certificates executed by the Corporation to the Rights Agent for
countersignature, and the Rights Agent will countersign (manually or by
facsimile signature in a manner satisfactory to the Corporation) and send such
Rights Certificates to the holders of the Rights pursuant to Section 2.4. No
Rights Certificate will be valid for any purpose until countersigned by the
Rights Agent as aforesaid.

DATING OF RIGHTS CERTIFICATES

2.13 Each Rights Certificate will be dated the date of countersignature thereof.

REGISTER OF RIGHTS

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

<PAGE>   29
                                      -26-

Rights Registrar, the Rights Agent will have the right to examine the Rights
Register at all reasonable times.

TRANSFERS AND EXCHANGES

2.15 After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate and subject
to the provisions of Section 2.15(c) and the other provisions of this Agreement:

        (a) the Corporation will execute and the Rights Agent will countersign
        and deliver, in the name of the holder or the designated transferee or
        transferees as required pursuant to the holder's instructions, one or
        more new Rights Certificates evidencing the same aggregate number of
        Rights as did the Rights Certificates so surrendered;

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

        (c) every Rights Certificate surrendered for registration of transfer or
        exchange will be duly endorsed, or be accompanied by a written
        instrument of transfer in form satisfactory to the Corporation or the
        Rights Agent, as the case may be, duly executed by the holder thereof or
        such holder's attorney duly authorized in writing. As a condition to the
        issuance of any new Rights Certificate under this Section 2.15, the
        Corporation or the Rights Agent may require the payment of a sum
        sufficient to cover any tax or other governmental charge that may be
        imposed in relation thereto and the Corporation may require payment of a
        sum sufficient to cover any other expenses (including the fees and
        expenses of the Rights Agent) in connection therewith.

MUTILATED RIGHTS CERTIFICATES

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

DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES

2.17 If the Corporation and the Rights Agent receive, prior to the Expiration
Time:

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

        (b) such indemnity or other security as may be required by them to save
        each of them and any of their agents harmless, then, in the absence of
        notice to the Corporation or the Rights Agent that such Rights
        Certificate has been acquired by a bona fide purchaser, the Corporation
        will execute and upon its request the Rights Agent will countersign and
        deliver, in lieu of any such destroyed, lost or stolen Rights
        Certificate, a new Rights

<PAGE>   30
                                      -27-

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

REPLACEMENT FEE

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

VALIDITY OF REPLACEMENT RIGHTS CERTIFICATES

2.19 Every new Rights Certificate issued pursuant to Section 2.17 in lieu of any
destroyed, lost or stolen Rights Certificate will evidence an original
additional contractual obligation of the Corporation, whether or not the
destroyed lost or stolen Rights Certificate will be at any time enforceable by
anyone, and the holder thereof will be entitled to all the benefits of this
Agreement equally and proportionately with any and all other holders of Rights
duly issued by the Corporation.

PERSONS DEEMED OWNERS

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

DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES

2.21 All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange will, if surrendered to any person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, will
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 will be promptly
cancelled by the Rights Agent. No Rights Certificate will be countersigned in
lieu of or in exchange for any Rights Certificates cancelled as provided in this
Section 2.21 except as expressly permitted by this Agreement. The Rights Agent
will destroy all cancelled Rights Certificates and deliver a certificate of
destruction to the Corporation.

AGREEMENT OF RIGHTS HOLDERS

2.22 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:

<PAGE>   31
                                      -28-

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

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

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

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

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

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

RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER

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

<PAGE>   32
                                      -29-

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

FLIP-IN EVENT

3.1 Subject to adjustment pursuant to Article 2 and the redemption and waiver
provisions of Section 5.1 and except as provided below, if prior to the
Expiration Time a Flip-in Event occurs, each Right will thereafter constitute,
effective at the Close of Business on the 10th Business Day after the relevant
Stock Acquisition Date, the right to purchase from the Corporation, upon
exercise thereof in accordance with the terms hereof, that number of Common
Shares of the Corporation having an aggregate Market Price on the date of
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 2.9 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 2.9 occurs with respect to such Common Shares).

CANCELLATION OF RIGHTS HELD BY AN ACQUIRING PARTY

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

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

        (b) a direct or indirect transferee of, or other successor in title to,
        such Rights (a "Transferee"), who becomes a Transferee concurrently with
        or subsequent to the Acquiring Person becoming an Acquiring Person, in a
        transfer, whether or not for consideration, that the Board of Directors
        has determined is part of a plan, understanding or scheme of an
        Acquiring Person (or an Affiliate or Associate of an Acquiring Person or
        any Person acting jointly or in concert with an Acquiring Person or an
        Affiliate or Associate of an Acquiring Person) that has the purpose or
        effect of avoiding the provisions of this Section 3.2;

will thereupon become and be void and any holder of such Rights (including any
Transferee) will thereafter have no rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The holder
of any Rights represented by a Rights Certificate which is submitted to the
Rights Agent, or any Co-Rights Agent, upon exercise or for registration of
transfer or exchange which does not contain the necessary certifications set
forth in the Rights Certificate establishing that such Rights are not void under
this Section 3.2 will be deemed to be an Acquiring Person for the purposes of
this Section 3.2 and such rights will be null and void.

LEGEND ON RIGHTS CERTIFICATES TRANSFERRED BY AN ACQUIRING PARTY

3.3 Any Rights Certificate that represents Rights Beneficially Owned by a Person
described in either clauses Section (a) or (b) of Section 3.2 or transferred to
any nominee of any such Person,

<PAGE>   33
                                      -30-

and any Rights Certificate issued upon the transfer, exchange or replacement of
any other Rights Certificate referred to in this sentence will contain the
following legend:

        "The Rights represented by this Rights Certificate were issued to a
        Person who was an Acquiring Person or an Affiliate or an Associate of an
        Acquiring Person (as such terms are defined in the Rights Agreement) or
        was acting jointly or in concert with any of them. This Rights
        Certificate and the Rights represented hereby will become void in the
        circumstances specified in Section 3.2 of the Rights Agreement."

provided, however, that the Rights Agent will not be under any responsibility to
ascertain the existence of facts that would require the imposition of such
legend but will be required to impose such legend only if instructed to do so by
the Corporation or if a holder fails to certify upon transfer or exchange in the
space provided on the Rights Certificate that such holder is not an Acquiring
Person or an Affiliate or Associate thereof or acting jointly or in concert with
any of them.

                          ARTICLE 4 - THE RIGHTS AGENT

APPOINTMENT OF RIGHTS AGENT

4.1 The Corporation hereby appoints the Rights Agent to act as agent for the
Corporation in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Corporation may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable. If the
Corporation appoints one or more co-Rights Agents, the respective duties of the
Rights Agents and co-Rights Agents will be as the Corporation may determine. The
Corporation agrees to pay the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and 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 for, and to hold it harmless against, any loss, liability, or expense
incurred that is not the result of negligence, bad faith or wilful misconduct on
the part of any one or all of the Rights Agent, its officers, employees or other
representatives, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability, which right to
indemnification will survive the termination of this Agreement or the
resignation or removal of the Rights Agent.

PROTECTION OF RIGHTS AGENT

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

<PAGE>   34
                                      -31-

RIGHTS AGENT TO BE KEPT INFORMED

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

MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT

4.4 Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or amalgamated or with which it may be consolidated, or any
corporation resulting from any merger, amalgamation, statutory arrangement or
consolidation to which the Rights Agent or any successor Rights Agent is a
party, or any corporation succeeding to the shareholder or stockholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.7. In case at the time such
successor Rights Agent succeeds to the agency created by this Agreement any of
the Rights Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates have not been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.

COUNTERSIGING OF RIGHTS CERTIFICATES

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

DUTIES OF RIGHTS AGENT

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

        (a) the Rights Agent may consult with legal counsel (who may be legal
        counsel for the Corporation) and the opinion of such counsel will be
        full and complete authorization and protection to the Rights Agent as to
        any action taken or omitted to be taken by it in good faith and in
        accordance with such opinion;

<PAGE>   35
                                      -32-

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

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

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

        (e) the Rights Agent will not be under any responsibility in respect of
        the validity of this Agreement or the execution and delivery hereof
        (except the due authorization, execution and delivery hereof by the
        Rights Agent) or in respect of the validity or execution of any Common
        Share certificate or Rights Certificate (except its countersignature
        thereof); nor will it be responsible for any breach by the Corporation
        of any covenant or condition contained in this Agreement or in any
        Rights Certificate; nor will it be responsible for any change in the
        exercisability of the Rights (including the Rights becoming void
        pursuant to Section 3.2) or any adjustment required under the provisions
        of Section 2.9 or responsible for the manner, method or amount of any
        such adjustment or the ascertaining of the existence of facts that would
        require any such adjustment (except with respect to the exercise of
        Rights after receipt of the certificate contemplated by Section 2.9
        describing any such adjustment); nor will it by any act hereunder be
        deemed to make any representation or warranty as to the authorization of
        any Common Shares to be issued pursuant to this Agreement or any Rights
        or as to whether any Common Shares will, when issued, be duly and
        validly authorized, executed, issued and delivered or fully paid and
        non-assessable;

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

        (g) the Rights Agent is hereby authorized and directed to accept
        instructions with respect to the performance of its duties hereunder
        from any person believed by the Rights Agent to be the Chairman of the
        Board, President, any Vice-President, Treasurer or any Assistant
        Treasurer or the Secretary or any Assistant Secretary of the Corporation
        and to

<PAGE>   36
                                      -33-

        apply to such persons for advice or instructions in connection with its
        duties, and it will not be liable for any action taken or suffered by it
        in good faith in accordance with instructions of any such person;

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

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

CHANGE OF RIGHTS AGENT

4.7 The Rights Agent may resign and be discharged from its duties under this
Agreement upon 90 days' notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to each transfer agent of
Voting Shares of the Corporation by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.11. The Corporation may
remove the Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent and to each transfer agent of the Voting Shares of the Corporation by
registered or certified mail and to the holders of the Rights in accordance with
Section 5.11. If the Rights Agent resigns or is removed or otherwise becomes
incapable of acting, the Corporation will appoint a successor to the Rights
Agent. If the Corporation fails to make such appointment within a period of 90
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 will, with such notice, submit such
holder's Rights Certificate for inspection by the Corporation), 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, will be a corporation incorporated under the
laws of Canada or a province thereof authorized to carry on the business of a
trust company in Canada. After appointment, the successor Rights Agent will be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent, upon receiving from the Corporation payment in full of
all amounts outstanding under this Agreement, will deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Corporation will file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Voting Shares of the Corporation, and mail
a notice thereof in writing to the holders of the Rights. The cost of giving any
notice required under this Section 4.7 will be borne solely by the Corporation.
Failure to give any notice provided for in this Section 4.7

<PAGE>   37
                                      -34-

however, or any defect therein, will not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.

                            ARTICLE 5 - MISCELLANEOUS

REDEMPTION AND WAIVER

5.1 The:

        (a) Board of Directors may, at any time prior to the occurrence of a
        Flip-in Event, elect to redeem all but not less than all of the then
        outstanding Rights at a redemption price of $0.00001 per Right
        appropriately adjusted in a manner analogous to the applicable
        adjustment provided for in Section 2.9 if an event of the type described
        in Section 2.9 has occurred (such redemption price being herein referred
        to as the "Redemption Price");

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

        (c) Board of Directors may, prior to the occurrence of a Flip-in Event,
        and upon prior written notice delivered to the Rights Agent, determine
        to waive the application of Section 3.1 to a Flip-in Event which may
        occur by reason of a Take-over Bid made by means of a take-over bid
        circular to all holders of record of Voting Shares; provided that if the
        Board of Directors waives the application of Section 3.1 to a particular
        Flip-in Event pursuant to this Section 5.1(c), the Board of Directors
        will be deemed to have waived the application of Section 3.1 to any
        other Flip-in Event occurring by reason of any Take-over Bid made by
        means of a take-over bid circular to all holders of record of Voting
        Shares prior to the expiry of any Take-over Bid (as the same may be
        extended from time to time) in respect of which a waiver is, or is
        deemed to have been, granted pursuant to this Section 5.1(c).

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

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

               (ii) such Acquiring Person has reduced its Beneficial Ownership
               of Voting Shares (or has entered into a contractual arrangement
               with the Corporation,

<PAGE>   38
                                      -35-

               acceptable to the Board of Directors, to do so within 30 days of
               the date on which such contractual arrangement is entered into)
               such that at the time the waiver becomes effective pursuant to
               this Section 5.1(d) it is no longer an Acquiring Person;

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

        (e) Board of Directors will, if a Person acquires, pursuant to a
        Permitted Bid or a Competing Permitted Bid or pursuant to an Exempt
        Acquisition occurring under Section 5.1(c), more than 50% of the
        Outstanding Voting Shares other than Voting Shares Beneficially Owned at
        the date of such Permitted Bid, Competing Permitted Bid or Exempt
        Acquisition by such Person, and, notwithstanding the provisions of
        Section 5.1(a), immediately upon such acquisition and without further
        formality be deemed to have elected to redeem the Rights at the
        Redemption Price;

        (f) right to exercise the Rights will, if the Corporation is obligated
        under Section 5.1(e) to redeem the Rights, or if the Board of Directors
        elects under Section 5.1(a) or Section 5.1(h) to redeem the Rights,
        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 will be issued thereafter;

        (g) Corporation will, within 10 days after the Corporation is obligated
        under Section 5.1(e) to redeem the Rights, or if Section 5.1(a) is
        applicable within 10 Business Days after the Board of Directors
        determines to redeem the Rights, as applicable, give notice of
        redemption to the holders of the then outstanding Rights by mailing such
        notice to all such holders at their last address as they appear upon the
        Rights Register or, prior to the Separation Time, on the registry books
        of the Transfer Agent for the Voting 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 Corporation may not redeem, acquire or purchase for value any Rights
        at any time in any manner other than that specifically set forth in this
        Section 5.1 and other than in connection with the purchase of Voting
        Shares prior to the Separation Time; and

        (h) Board of Directors may, where a Take-over Bid that is not a
        Permitted Bid Acquisition is withdrawn or is otherwise terminated after
        the Separation Time has occurred and prior to the occurrence of a
        Flip-in Event, elect to redeem all the outstanding Rights at the
        Redemption Price and upon such redemption, all the provisions of this
        Agreement will 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 Voting Shares as of the Separation Time had
        not been mailed to each such holder and for all purposes of this
        Agreement the Separation Time will be deemed not to have occurred.

<PAGE>   39
                                      -36-

EXPIRATION

5.2 No person will have any rights whatsoever pursuant to or arising out of this
Agreement or in respect of any Right after the Expiration Time, except the
Rights Agent as specified in Section 4.2.

ISSUANCE OF NEW RIGHT CERTIFICATES

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

SUPPLEMENTS AND AMENDMENTS

5.4 The Corporation may:

        (a) Subject to Section 5.5, prior to the Annual Meeting of Shareholders
        of the Corporation to be held in the year 2000, supplement or amend this
        Agreement without the approval of any holder of Rights or Voting Shares
        in order to make any changes which the Board of Directors may deem
        necessary or desirable. Thereafter, the Corporation may from time to
        time supplement or amend this Agreement without the approval of any
        holders of Rights or Voting Shares to correct any clerical or
        typographical error or to maintain the validity of the Agreement as a
        result of a change in any applicable legislation or regulations
        thereunder, or to cure any ambiguity or to correct or supplement any
        provision contained herein which may be inconsistent with the intent of
        this Agreement or as otherwise specifically provided herein;

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

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

<PAGE>   40
                                      -37-

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

TIMING OF CERTAIN APPROVALS OF THE SHAREHOLDERS

5.5 Any supplements or amendments made by the Corporation to this Agreement
pursuant to Section 5.4(a) which are required to maintain the validity of this
Agreement as a result of any change in any applicable legislation or regulations
thereunder or to correct or supplement any provision contained herein which may
be inconsistent with the intent of this Agreement will:

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

        (b) if made after the Separation Time, be submitted to the holders of
        Rights at a meeting to be called and held in accordance with the
        provisions of Section 5.4(c).

EFFECTIVE TIME OF SUPPLEMENTS AND AMENDMENTS

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

APPROVALS OF AMENDMENTS BY RIGHTS AGENT

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

FRACTIONAL RIGHTS AND FRACTIONAL SHARES

5.8 The Corporation will not be required to issue fractions of:

<PAGE>   41
                                      -38-

        (a) Rights or to distribute Rights Certificates which evidence
        fractional Rights. Any such fractional Right will be null and void and
        the Corporation will not have any obligation or liability in respect
        thereof; and

        (b) Common Shares or other securities upon exercise of the Rights or to
        distribute certificates which evidence fractional Common Shares or other
        securities. In lieu of issuing fractional Common Shares or other
        securities, the Corporation will pay to the registered holders of Rights
        Certificates at the time such Rights are exercised as herein provided,
        an amount in cash equal to the same fraction of the Market Price of one
        Common Share.

RIGHTS OF ACTION

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

NOTICE OF PROPOSED ACTIONS

5.10 If the Corporation proposes after the Separation Time and prior to the
Expiration Time to effect the liquidation, dissolution or winding- up of the
Corporation or the sale of all or substantially all of the Corporation's assets,
the Corporation, in each such case, will give to each holder of a Right, in
accordance with Section 5.11, a notice of such proposed action, which will
specify the date on which such liquidation, dissolution, winding-up, or sale is
to take place, and such notice will be so given at least 20 Business Days prior
to the date of such proposed action.

NOTICES

5.11 Notices or demands authorized or required by this Agreement to be given or
made:

        (a) by the Rights Agent or by the holder of any Rights to or on the
        Corporation will be sufficiently given or made if delivered or sent by
        first-class mail, postage prepaid, addressed (until another address is
        filed in writing with the Rights Agent) as follows:

               Glamis Gold Ltd.
               5190 Neil Road, Suite 310
               Reno, Nevada
               U.S.A.  89502

<PAGE>   42
                                      -39-

               Attention: Senior Vice-President Administration;

        (b) by the Corporation or by the holder of any Rights to or on the
        Rights Agent will be sufficiently given or made if delivered or sent by
        first-class mail, postage prepaid, addressed (until another address is
        filed in writing with the Corporation) as follows:

               The Montreal Trust Company of Canada
               510 Burrard Street
               Vancouver, British Columbia
               V6C 3B9

               Attention: Assistant Vice-President, Client Services; and

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

SUCCESSORS

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

BENEFITS OF THIS AGREEMENT

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

GOVERNING LAW

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

SEVERABILITY

5.15 If any Section, Subsection, Clause, Subclause, term or provision hereof or
the application thereof to any circumstances or any right hereunder will, in any
jurisdiction and to any extent, be invalid or unenforceable, such Section,
Subsection, Clause, Subclause, term or provision or such right will be
ineffective only in such jurisdiction and to the extent of such invalidity or
unenforceability in such jurisdiction without invalidating or rendering
unenforceable or ineffective the remaining Sections, Subsections, Clauses,
Subclauses, terms and provisions hereof or rights hereunder in such jurisdiction
or the application of such Section,

<PAGE>   43
                                      -40-

Subsection, Clause, Subclause, term or provision or rights hereunder in any
other jurisdiction or to circumstances other than those as to which it is
specifically held invalid or unenforceable.

EFFECTIVE DATE

5.16 This Agreement is effective and in full force and effect in accordance with
its terms as of and from the Record Time. If this Agreement is not confirmed by
a majority of the votes cast by the holders of Common Shares of the Corporation
represented in person or by proxy at the Annual Meeting of Shareholders of the
Corporation to be held in the year 2000 who vote in respect of confirmation of
this Agreement at such meeting, then this Agreement and any then outstanding
Rights will be of no further force and effect from the date of such Annual
Meeting of Shareholders of the Corporation.

DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS

5.17 The Board of Directors will have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Corporation as may be necessary or
advisable in the administration of this Agreement. All actions, calculations and
determinations (including all omissions with respect to the foregoing) which are
done or made by the Board of Directors, will not subject the Board of Directors
or any director of the Corporation to any liability to the holders of the
Rights.

RIGHTS OF BOARD, CORPORATION AND OFFEROR

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

REGULATORY APPROVALS

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

DECLARATION AS TO NON-CANADIAN HOLDERS

5.20 If in the opinion of the Board of Directors (who may rely upon the advice
of counsel) any action or event contemplated by this Agreement would require
compliance with the securities laws or comparable legislation of a jurisdiction
outside Canada, the Board of Directors may take such actions as it may deem
appropriate to ensure such compliance. In no event will the Corporation or the
Rights Agent be required to issue or deliver Rights or securities issuable on
exercise of Rights to Persons who are citizens, residents or nationals of any
jurisdiction other

<PAGE>   44
                                      -41-

than Canada or the United States in which such issue or delivery would be
unlawful without registration of the relevant Persons or securities for such
purposes.

TIME OF THE ESSENCE

5.21 Time will be of the essence in this Agreement.

EXECUTION IN COUNTERPARTS

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

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

GLAMIS GOLD LTD.

Per:    Signed:  "C. Kevin McArthur"
        ----------------------------------
        Authorized Signatory

THE MONTREAL TRUST COMPANY OF CANADA

Per:    Signed:  "June P. Glover"
        ----------------------------------
        Authorized Signatory

Per:    Signed:  "Anne Boisey"
        ----------------------------------
        Authorized Signatory

<PAGE>   45

                                                                       EXHIBIT A

                          [FORM OF RIGHTS CERTIFICATE]

Certificate No. ____________                                  ___________ Rights

             THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
             CORPORATION, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
             CERTAIN CIRCUMSTANCES (SPECIFIED IN Section 3.2 OF THE RIGHTS
             AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON, ANY
             PERSON ACTING JOINTLY OR IN CONCERT WITH AN ACQUIRING PERSON OR
             THEIR RESPECTIVE ASSOCIATES AND AFFILIATES (AS SUCH TERMS ARE
             DEFINED IN THE RIGHTS AGREEMENT) AND THEIR RESPECTIVE TRANSFEREES
             WILL BECOME VOID WITHOUT ANY FURTHER ACTION.

RIGHTS CERTIFICATE

This certifies that _______________ or registered assigns, is the registered
holder of the number of Rights set forth above, each of which entitles the
registered holder thereof, subject to the terms, provisions and conditions of
the Shareholder Rights Plan Agreement dated as of the 25th day of February, 2000
(the "RIGHTS AGREEMENT") between Glamis Gold Ltd., a corporation formed under
the Company Act (British Columbia) (the "CORPORATION"), and The Montreal Trust
Company of Canada, a trust company incorporated under the laws of Canada, as
rights agent (the "RIGHTS AGENT", which term will 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 the date of the Corporation's Annual Meeting
of Shareholders to be held in the year 2003 (or such earlier expiration time as
is provided in the Rights Agreement) one fully paid and non-assessable Common
Share of the Corporation (a "COMMON SHARE") (subject to adjustment as provided
in the Rights Agreement) at the Exercise Price, upon presentation and surrender
of this Rights Certificate together with the Form of Election to Exercise duly
executed and submitted to the Rights Agent at its principal office in Vancouver.
The Exercise Price will initially be $100.00 (Canadian) per Right and will be
subject to adjustment or revision in certain events as provided in the Rights
Agreement.

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

This Rights Certificate is subject to all 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. Copies of the
Rights Agreement are on file at the registered head office of the Corporation
and are available upon written request.

<PAGE>   46
                                      -2-

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

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

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

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

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

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

Date _______________________________

GLAMIS GOLD LTD.

By _________________________________         By ____________________________

Countersigned

THE MONTREAL TRUST COMPANY OF CANADA
Transfer Agent and Registrar

By      ________________________________
        Authorized Signature

By      ________________________________
        Authorized Signature

<PAGE>   47

                   (To be attached to each Rights Certificate)

                          FORM OF ELECTION TO EXERCISE

TO:  GLAMIS GOLD LTD.

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

                         -------------------------------
                                     (NAME)

                         -------------------------------
                                    (ADDRESS)

                         -------------------------------
                          (CITY AND STATE OR PROVINCE)

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

                         -------------------------------
                                     (NAME)

                         -------------------------------
                                    (ADDRESS)

                         -------------------------------
                          (CITY AND STATE OR PROVINCE)

      --------------------------------------------------------------------
           SOCIAL INSURANCE, SOCIAL SECURITY OR OTHER TAXPAYER NUMBER

Dated
     ----------------------
Signature Guaranteed
                             ---------------------------------------------------
                             Signature

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

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

                  [THE FOLLOWING IS TO BE COMPLETED, IF TRUE:]

<PAGE>   48

                                      -2-

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

                                   ---------------------------------------------
                                    Signature

                                     NOTICE

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

<PAGE>   49

                               FORM OF ASSIGNMENT

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

FOR VALUE RECEIVED  ____________________________________________________________

hereby sells, assigns and transfers unto _______________________________________

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

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

Dated _____________________

Signature Guaranteed         ___________________________________________________
                             Signature

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

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

                    [THE FOLLOWING TO BE COMPLETED, IF TRUE:]

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

                                    --------------------------------------------
                                    Signature

                                     NOTICE

In the event the certification set forth in the Form of Assignment is not
completed, the Corporation will deem the Beneficial Owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and accordingly such
Rights will be null and void.<PAGE>   1
                                                                     EXHIBIT 4.2

                              SKYSTREAM CORPORATION

                           SECOND AMENDED AND RESTATED
                                RIGHTS AGREEMENT

                                February 5, 1999

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
SECTION 1  Restrictions on Transferability; Registration Rights...............1

        1.1    Certain Definitions............................................1
        1.2    Restrictions...................................................3
        1.3    Restrictive Legend.............................................3
        1.4    Notice of Proposed Transfers...................................4
        1.5    Requested Registration.........................................4
        1.6    Company Registration...........................................6
        1.7    Registration on Form S-3.......................................7
        1.8    Limitations on Subsequent Registration Rights..................8
        1.9    Expenses of Registration.......................................8
        1.10   Registration Procedures........................................8
        1.11   Indemnification................................................9
        1.12   Information by Holder.........................................11
        1.13   Rule 144 Reporting............................................11
        1.14   Transfer of Registration Rights...............................11
        1.15   Standoff Agreement............................................12
        1.16   Termination of Rights.........................................12

SECTION 2  Right of Participation............................................12

        2.1    Purchasers' Right of Participation............................12
        2.2    Termination of Participation Right............................14

SECTION 3  Miscellaneous.....................................................14

        3.1    Assignment....................................................14
        3.2    Third Parties.................................................14
        3.3    Governing Law.................................................15
        3.4    Counterparts..................................................15
        3.5    Notices.......................................................15
        3.6    Severability..................................................15
        3.7    Amendment and Waiver..........................................15
        3.8    Effect of Amendment or Waiver.................................15
        3.9    Rights of Holders.............................................15
        3.10   Delays or Omissions...........................................16
        3.11   Restatement of Former Agreement...............................16
</TABLE>

                                      -1-
<PAGE>   3

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT

        THIS SECOND AMENDED AND RESTATED RIGHTS AGREEMENT (the "Agreement") is
entered into as of the 5th day of February, 1999 by and among SkyStream
Corporation, a California corporation (the "Company"), the persons and
institutions listed on Exhibit A (the "Existing Shareholders") and the investors
listed on Exhibit B hereto (the "Purchasers").

                                    RECITALS

        WHEREAS, the Company and the Existing Shareholders are parties to an
Amended and Restated Rights Agreement dated March 25, 1998 (the "Former
Agreement").

        WHEREAS, the parties to the Former Agreement desire to amend and restate
the agreement to read as set forth below and to include the Purchasers as set
forth on Exhibit B hereto.

        WHEREAS, the Company and the Purchasers are entering into a Series C
Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement"), pursuant to which the Company shall sell, and the Purchasers shall
acquire, shares of the Company's Series C Preferred Stock (the "Preferred
Shares").

        WHEREAS, in order to induce the Company to enter into the Purchase
Agreement and to induce the Purchasers to invest funds in the Company, the
parties desire that the Purchasers be granted registration rights and rights of
participation with respect to the Preferred Shares.

        WHEREAS, the parties understand the Purchasers on Exhibit B represent
the participants in the first closing under the Purchase Agreement and that
additional participants may invest in one or more second closings to be held no
later than 60 days thereafter; provided, however, that the aggregate number of
shares of Series C Preferred sold to the Purchasers shall not exceed 2,000,000
shares. The Existing Shareholders agree that such additional Purchasers shall be
treated as Purchasers hereunder upon such party's execution of a supplemental
signature page to this Agreement and the addition of such person's name to
Exhibit B hereto. Thereafter, the participants in closings after the first
closing, but not later than 60 days thereafter, shall be Purchasers for purposes
of this Agreement.

        NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:

                                    SECTION 1

                        Restrictions on Transferability;
                               Registration Rights

        1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:

<PAGE>   4

            "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

            "Conversion Shares" means the Common Stock issued or issuable upon
conversion of the Preferred Shares as defined herein.

            "Holder" shall mean any Purchaser holding Registrable Securities and
any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof.

            "Initiating Holders" shall mean Holders in the aggregate of not less
than forty percent (40%) of the Registrable Securities.

            "Preferred Shares" shall mean the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock of the Company.

            The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

            "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 1.5, 1.6 and 1.7 of this Agreement,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).

            "Registrable Securities" means (i) the Conversion Shares; and (ii)
any Common Stock of the Company issued or issuable in respect of the Conversion
Shares or other securities issued or issuable with respect to the Conversion
Shares upon any stock split, stock dividend, recapitalization, or similar event,
or any Common Stock otherwise issued or issuable with respect to the Conversion
Shares: provided, however, that shares of Common Stock or other securities shall
only be treated as Registrable Securities if and so long as they have not been
(A) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(l) thereof so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the consummation of
such sale.

            "Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 of this Agreement.

                                      -2-
<PAGE>   5

            "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

            "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of counsel for the Holders (except as
provided by Section 1.9).

            1.2 Restrictions. The Preferred Shares and the Conversion Shares
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Agreement, which conditions are intended to ensure compliance
with the provisions of the Securities Act. The Purchasers will cause any
proposed purchaser, assignee, transferee or pledgee of the Preferred Shares, or
the Conversion Shares to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.

            1.3 Restrictive Legend. Each certificate representing (i) the
Preferred Shares, (ii) the Conversion Shares, and (iii) any other securities
issued in respect of the securities referenced in clauses (i) and (ii) upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event, shall (unless otherwise permitted by the provisions of Section 1.4 below)
be stamped or otherwise imprinted with legends in the following form (in
addition to any legend required under applicable state securities laws):

        "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
        INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
        1933. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE
        OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
        COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO
        IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
        AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT."

        "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
        ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
        SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
        COMPANY."

        Each Purchaser and Holder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
this Section 1.

                                      -3-
<PAGE>   6

        1.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall be, and whose legal opinion shall be,
reasonably satisfactory to the Company, addressed to the Company, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. The Company will not require such a legal opinion or "no action" letter
(a) in any transaction in compliance with Rule 144, (b) in any transaction in
which a Purchaser which is a corporation distributes Restricted Securities after
six (6) months after the purchase thereof solely to its majority-owned
subsidiaries or affiliates for no consideration, or (c) in any transaction in
which a Purchaser which is a partnership distributes Restricted Securities after
six (6) months after the purchase thereof solely to partners thereof for no
consideration, provided that each transferee agrees in writing to be subject to
the terms of this Section 1.4. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear, except if such transfer is
made pursuant to Rule 144, the appropriate restrictive legend set forth in
Section 1.3 above, except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for such holder and the Company, such
legend is not required in order to establish compliance with any provisions of
the Securities Act.

        1.5 Requested Registration.

            (a) Request for Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any qualification,
compliance or registration (which, in connection with the Company's initial
public offering, must be for at least 20% of their Registrable Securities or
such lesser percentage which would reasonably anticipate an aggregate price to
the public net of underwriting discounts and commissions, exceeding $5,000,000):

                (i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and

                (ii) as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would

                                      -4-
<PAGE>   7

permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within twenty (20) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 1.5:

                    (1) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;

                    (2) Prior to the earlier of (i) six (6) months following the
Company's initial public offering or (ii) February 7, 2001.

                    (3) During the period ending on the date three (3) months
immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan);

                    (4) After the Company has effected two (2) such
registrations pursuant to this subparagraph 1.5(a), such registrations have been
declared or ordered effective and the securities offered pursuant to such
registrations have been sold; or

                    (5) If the Company shall furnish to such Holders a
certificate, signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.5 shall be deferred for a single period
not to exceed ninety (90) days from the date of receipt of written request from
the Initiating Holders.

        Subject to the foregoing clauses (1) through (5), the Company shall file
a registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.

            (b) Underwriting. In the event that a registration pursuant to
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). The right of any Holder to registration pursuant to Section
1.5 shall be conditioned upon such Holder's participation in the underwriting
arrangements required by this Section 1.5 and the inclusion of such Holder's
Registrable Securities in the underwriting, to the extent requested, to the
extent provided in this Agreement.

        The Company shall (together with all Holders proposing to distribute
their securities through

                                      -5-
<PAGE>   8

such underwriting) enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting by a majority in
interest of the Initiating Holders (which managing underwriter shall be
reasonably acceptable to the Company). Notwithstanding any other provision of
this Section 1.5, if the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders of Registrable
Securities and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing the
registration statement; provided, that the number of shares of Registrable
Securities to be included in such underwriting shall not be reduced unless all
other securities are first entirely excluded from the underwriting. No
Registrable Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. To
facilitate the allocation of shares in accordance with the above provisions, the
Company or the underwriters may round the number of shares allocated to any
Holder to the nearest 100 shares.

        If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to one hundred eighty (180) days
after the effective date of such registration.

        1.6 Company Registration.

            (a) Notice of Registration. If at any time or from time to time, the
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:

                (i) promptly give to each Holder written notice thereof; and

                (ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved in
such registration, all the Registrable Securities specified in a written request
or requests made within twenty (20) days after receipt of such written notice
from the Company by any Holder, but only to the extent that such inclusion will
not diminish the number of securities included by the Company or by holders of
the Company's securities who have demanded such registration.

            (b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided

                                      -6-
<PAGE>   9

herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company (or by the holders who have demanded such registration).
Notwithstanding any other provision of this Section 1.6, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities to be included in such registration or exclude them entirely. The
Company shall so advise all Holders and the other holders distributing their
securities through such underwriting pursuant to piggyback registration rights
similar to this Section 1.6, and the number of shares of Registrable Securities
and other securities that may be included in the registration and underwriting
shall be first allocated among all Purchasers in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Purchasers at the time of filing the registration statement, and after
satisfaction of the requirements of the Purchasers, the remaining shares that
may be included in the registration and underwriting shall be allocated among
the officers, directors and other shareholders of the Company in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such officers and directors of the Company at the time of filing of the
registration statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company or the underwriters may round the number
of shares allocated to any Holder or other holder to the nearest 100 shares.

            (c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.

        1.7 Registration on Form S-3.

            (a) If the Initiating Holder requests that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities, the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form; provided,
however, that the Company shall not be required to effect more than two
registrations pursuant to this Section 1.7 in any twelve (12) month period. The
Company will (i) promptly give written notice of the proposed registration to
all other Holders, and (ii) as soon as practicable, use its best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within twenty (20) days after receipt of such written notice from the

                                      -7-
<PAGE>   10

Company. The substantive provisions of Section 1.5(b) shall be applicable to
each registration initiated under this Section 1.7.

            (b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act, (ii) during the period
ending on a date three (3) months following the effective date of, a
registration statement (other than with respect to a registration statement
relating to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities), or (iii) if the Company shall furnish to such Holder a certificate
signed by the President of the Company stating that, in the good faith judgment
of the Board of Directors, it would be seriously detrimental to the Company or
its shareholders for registration statements to be filed in the near future,
then the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a single period not to exceed ninety (90) days
from the receipt of the request to file such registration by such Holder or
Holders.

        1.8 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not enter into any agreement granting
any holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless such holder derives its rights as
an additional Holder hereunder, or such shares or securities are entitled to be
included in registrations only to the extent that the inclusion of such
securities will not diminish the amount of Registrable Securities that are
included.

        1.9 Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Section 1.5, 1.6 or 1.7 and the
reasonable fees and expenses (up to $30,000) of one special legal counsel to
represent all of the Holders together in any such registration shall be borne by
the Company, provided that the Company shall not be required to pay the
Registration Expenses of any registration proceeding begun pursuant to Section
1.5, the request of which has been subsequently withdrawn by the Initiating
Holders. In such case, the Holders of Registrable Securities to have been
registered shall bear all such Registration Expenses pro rata on the basis of
the number of shares to have been registered unless the Holders of a majority of
the Registrable Securities agree to forfeit their right to one demand
registration pursuant to Section 1.5. Notwithstanding the foregoing, however, if
at the time of the withdrawal, the Holders have learned of a material adverse
change in the condition, business or prospects of the Company from that known to
the Holders at the time of their request, and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any of said
Registration Expenses or to forfeit the right to one demand registration.

        1.10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in

                                      -8-
<PAGE>   11

writing as to the initiation of each registration, qualification and compliance
and as to the completion thereof. At its expense the Company will:

            (a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed; and

            (b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities.

        1.11 Indemnification.

            (a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or (ii)
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or (iii) any violation by
the Company of the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities
law applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use therein.

            (b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the

                                      -9-
<PAGE>   12

Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, and will reimburse the Company, such
Holders, such directors, officers, persons, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the liability of a Holder
for indemnification under this Section 1.11(b) shall not exceed the net proceeds
from the offering received by such Holder.

            (c) Each party entitled to indemnification under this Section 1.11
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 1 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.

            (d) If the indemnification provided for in this Section 1.11 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result such loss, liability, claim, damage or expense in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations;

                                      -10-
<PAGE>   13

provided, that, in no event shall any contribution by a Holder under this
Subsection 1.11(d) exceed the net proceeds from the offering received by such
Holder. The relative fault of the indemnifying party and of the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.

        1.12 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.

        1.13 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:

            (a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;

            (b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and

            (c) So long as a Purchaser owns any Restricted Securities, to
furnish to the Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as a Purchaser may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Purchaser
to sell any such securities without registration.

        1.14 Transfer of Registration Rights. The rights to cause the Company to
register Registrable Securities granted under this Section 1 may be assigned by
a Holder to a transferee or assignee who acquires (i) at least 500,000 of the
Registrable Securities held by such Holder or, if less, (ii) all of the
Registrable Securities then held by such Holder, provided in either case, the
Company is, within a reasonable time prior to such transfer, furnished with
written notice of the

                                      -11-
<PAGE>   14

name and address of such proposed transferee or assignee and the securities with
respect to which such registration rights are being assigned; provided further
that such assignment shall be effective only if the transferee enters into a
written agreement providing that such transferee shall be bound by the
provisions of Section 1 of this Agreement. Notwithstanding the foregoing or any
other provision contained herein to the contrary, the right to cause the Company
to register Registerable Securities may be assigned by a Holder to any
constituent partner of a partnership Holder and any subsidiary or parent of a
corporate Holder provided that such transferee agrees in writing to be bound by
the terms and conditions of this Agreement.

        1.15 Standoff Agreement. Each Holder agrees in connection with the
initial registration of the Company's securities that, upon request of the
Company or the underwriters managing any underwritten initial public offering of
the Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
(other than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed one hundred eighty (180) days from the effective date of
such registration, or such longer period as may be agreed to by the holders of a
majority of the outstanding Registrable Securities) as may be requested by the
Company or such managing underwriters; provided, however, that all officers and
directors of the Company, all one-percent securityholders, and all other persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements with respect to securities of the Company held by them.

        1.16 Termination of Rights. No Holder shall be entitled to exercise any
right provided for in this Section 1:

            (a) after five (5) years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the initial firm commitment underwritten offering of its
securities to the general public, or

            (b) on or after the closing of a public offering of the Common Stock
of the Company, initiated by the Company, when all shares of the Holder's
Registrable Securities may be sold under Rule 144 during any 90-day period.

                                    SECTION 2

                             Right of Participation

        2.1 Purchasers' Right of Participation.

            (a) Right of Participation. Subject to the terms and conditions
contained in this Section 2.1, the Company hereby grants to each Purchaser who
is the Holder of not less than 1,500,000 shares of Registrable Securities, the
right of participation to purchase its Pro Rata Portion

                                      -12-
<PAGE>   15

of any New Securities (as defined in subsection 2.1(b)) which the Company may,
from time to time, propose to sell and issue. A Holder's "Pro Rata Portion" for
purposes of this Section 2.1 is the ratio that (x) the sum of the number of
shares of the Company's Common Stock then held by such Purchaser and the number
of shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock then held by such Holder, bears to (y) the sum of the total
number of shares of the Company's Common Stock then outstanding and the number
of shares of the Company's Common Stock issuable upon conversion of the then
outstanding Preferred Stock.

            (b) Definition of New Securities. Except as set forth below, "New
Securities" shall mean any shares of capital stock of the Company, including
Common Stock and Preferred Stock, whether authorized or not, and rights, options
or warrants to purchase said shares of Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into said
shares of Common Stock or Preferred Stock. Notwithstanding the foregoing, "New
Securities" does not include (i) the Preferred Shares or the Conversion Shares,
(ii) securities offered to the public generally pursuant to a registration
statement under the Securities Act, (iii) securities issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets or shares or other reorganization whereby the
Company or its shareholders own not less than a majority of the voting power of
the surviving or successor corporation, (iv) shares of the Company's Common
Stock or related options or warrants convertible into or exercisable for such
Common Stock issued to employees, officers and directors of, and consultants to,
the Company, pursuant to any arrangement approved by the Board of Directors of
the Company, (v) shares of the Company's Common Stock or related options
convertible into or exercisable for such Common Stock issued to banks,
commercial lenders, lessors and other financial institutions in connection with
the borrowing of money or the leasing of equipment by the Company approved by
the Board of Directors of the Company, (vi) stock issued pursuant to any rights
or agreements, including, without limitation, convertible securities, options
and warrants, provided that the Company shall have complied with the rights of
participation established by this Section 2.1 with respect to the initial sale
or grant by the Company of such rights or agreements, or (vii) stock issued in
connection with any stock split, stock dividend or recapitalization by the
Company.

            (c) Notice of Right. In the event the Company proposes to undertake
an issuance of New Securities, it shall give each Purchaser written notice of
its intention, describing the type of New Securities and the price and terms
upon which the Company proposes to issue the same. Each Purchaser shall have
twenty (20) days from the date of receipt of any such notice to agree to
purchase shares of such New Securities (up to the amount referred to in
subsection 2.1(a)), for the price and upon the terms specified in the notice, by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased.

            (d) Exercise of Right. If any Purchaser exercises its right of
participation under this Agreement, the closing of the purchase of the New
Securities with respect to which such right has been exercised shall take place
within ninety (90) calendar days after the Purchaser gives notice of such
exercise, which period of time shall be extended in order to comply with
applicable laws and regulations. Upon exercise of such right of participation,
the Company and the Purchaser shall be

                                      -13-
<PAGE>   16

legally obligated to consummate the purchase contemplated thereby and shall use
their best efforts to secure any approvals required in connection therewith.

            (e) Lapse and Reinstatement of Right. In the event a Purchaser fails
to exercise the right of participation provided in this Section 2.1 within said
twenty (20) day period, the Company shall have ninety (90) days thereafter to
sell or enter into an agreement (pursuant to which the sale of New Securities
covered thereby shall be closed, if at all, within sixty (60) days from the date
of said agreement) to sell the New Securities not elected to be purchased by
such Purchaser at the price and upon the terms no more favorable to the
purchasers of such securities than specified in the Company's notice. In the
event the Company has not sold the New Securities or entered into an agreement
to sell the New Securities within said ninety (90) day period (or sold and
issued New Securities in accordance with the foregoing within sixty (60) days
from the date of said agreement), the Company shall not thereafter issue or sell
any New Securities without first offering such securities to the Purchasers in
the manner provided above.

            (f) Assignment. The right of the Purchasers to purchase any part of
the New Securities may be assigned in whole or in part to any partner,
subsidiary, affiliate or shareholder of a Purchaser, or other persons or
organizations who acquire the lesser of (i) 20% or more shares of Registrable
Securities (as adjusted for stock splits and the like) or (ii) all of the
Restricted Securities then owned by such Purchaser.

        2.2 Termination of Participation Right. The rights of participation
granted under Section 2.1 of this Agreement shall terminate on and be of no
further force or effect upon the earlier of (i) the consummation of the
Company's sale of its Common Stock in an underwritten public offering pursuant
to an effective registration statement filed under the Securities Act
immediately subsequent to which the Company shall be obligated to file annual
and quarterly reports with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act or (ii) the registration by the Company of a class of its equity
securities under Section 12(b) or 12(g) of the Exchange Act.

                                    SECTION 3

                                  Miscellaneous

        3.1 Assignment. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties to this
Agreement.

        3.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties to this Agreement, and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

                                      -14-
<PAGE>   17

        3.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California in the United States of America
without giving effect to the conflicts of laws principles thereof.

        3.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

        3.5 Notices. Any notice required or permitted by this Agreement shall be
in writing and shall be sent by prepaid registered or certified mail return
receipt requested, or otherwise delivered by hand or by messenger addressed to
the other party at the address shown below or at such other address for which
such party gives notice under this Agreement. Such notice shall be deemed to
have been given when delivered if delivered personally, or, if sent by mail, at
the earlier of its receipt or three (3) days after deposit in the mail.

        3.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.

        3.7 Amendment and Waiver. Any provision of this Agreement may be amended
or waived with the written consent of the Company and the Holders of at least a
majority of the outstanding shares of the Registrable Securities, so long as the
effect is to treat all Holders equally. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities and the Company. In addition, the Company may waive performance of
any obligation owing to it, as to some or all of the Holders of Registrable
Securities, or agree to accept alternatives to such performance, without
obtaining the consent of any Holder of Registrable Securities. In the event that
an underwriting agreement is entered into between the Company and any Holder,
and such underwriting agreement contains terms differing from this Agreement, as
to any such Holder the terms of such underwriting agreement shall govern.

        3.8 Effect of Amendment or Waiver. The Purchasers and their successors
and assigns acknowledge that by the operation of Section 3.7 of this Agreement
the holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement.

        3.9 Rights of Holders. Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.

                                      -15-
<PAGE>   18

        3.10 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.

        3.11 Restatement of Former Agreement. Through their execution of this
Agreement, the Company and all of the Existing Shareholders agree to terminate
the Former Agreement and restate the terms thereof through this Agreement, with
the result that this Agreement shall constitute the sole agreement among the
parties hereto with respect to the registration of Registrable Securities.

                                      -16-
<PAGE>   19

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

COMPANY:                                  EXISTING SHAREHOLDERS:

SKYSTREAM CORPORATION                     MAYFIELD VIII,
a California corporation                  A CALIFORNIA LIMITED
                                          PARTNERSHIP
                                   By:    MAYFIELD VIII MANAGEMENT, L.L.C.
                                          A DELAWARE LIMITED LIABILITY
                                              COMPANY, its General Partner

By: /s/ JAMES D. OLSON                       By: /s/ W. VAN AUKEN
    ------------------------------           -----------------------------------
       James D. Olson, President                     Wendell Van Auken,
                                                      Managing Member

                                          MAYFIELD ASSOCIATES FUND III,
                                          A CALIFORNIA LIMITED
                                          PARTNERSHIP
                                   By:    MAYFIELD VIII MANAGEMENT, L.L.C.
                                          A DELAWARE LIMITED LIABILITY
                                              COMPANY, its General Partner

                                          By: /s/ W. G. VAN AUKEN
                                              ----------------------------------
                                                      Wendell Van Auken,
                                                       Managing Member

                                          INSTITUTIONAL VENTURE PARTNERS
                                          VII
                                          By Its General Partner
                                          Institutional Venture Management VII

                                          By: /s/ GEOFFREY Y. YANG
                                              ----------------------------------
                                                        Geoffrey Y. Yang
                                                        General Partner

                 [Second Amended and Restated Rights Agreement]

<PAGE>   20

                                          INSTITUTIONAL VENTURE
                                          MANAGEMENT VII

                                          By: /s/ GEOFFREY Y. YANG
                                              ----------------------------------
                                                        Geoffrey Y. Yang
                                                        General Partner

                                          IVP FOUNDERS FUND I, L.P.
                                          By Its General Partner
                                          Institutional Venture Management
                                          VI, L.P.

                                          By: /s/ GEOFFREY Y. YANG
                                              ----------------------------------
                                                        Geoffrey Y. Yang
                                                        General Partner

                                          WS INVESTMENTS 97A
                                          WS INVESTMENTS 98A

                                          By: /s/ ROBERT P. LATTA
                                              ----------------------------------

                                          LATTA FAMILY TRUST

                                          By: /s/ ROBERT P. LATTA
                                              ----------------------------------

                                          /s/ MARIANNE S. BRADLEY
                                          --------------------------------------
                                          Marianne S. Bradley

                 [Second Amended and Restated Rights Agreement]

<PAGE>   21
                                          /s/ WILLIAM KIRSCH
                                          --------------------------------------
                                          William Kirsch

                                          /s/ DAVID CAMPBELL
                                          --------------------------------------
                                          David Campbell

                                          /s/ HELEN E. M.L O'ROURKE
                                          --------------------------------------
                                          Helen E. McLaughlin O'Rourke

                                          --------------------------------------
                                          Glen Wallace McLaughlin

                                          PURCHASERS:

                                          BROADCAST TRUST

                                          By: /s/ [SIGNATURE ILLEGIBLE]
                                              ----------------------------------

                                         Wendell G. & Ethel S. Van Auken, TTEEs,
                                         The Wendell G. & Ethel S. Van Auken
                                         Trust U/D/T 09/17/75

                                          By: /s/ W. G. VAN AUKEN
                                              ----------------------------------

                 [Second Amended and Restated Rights Agreement]

<PAGE>   22

PURCHASERS (continued):
                                          MAYFIELD VIII,
                                          A CALIFORNIA LIMITED PARTNERSHIP
                                   By:    MAYFIELD VIII MANAGEMENT, L.L.C.
                                          A DELAWARE LIMITED LIABILITY
                                          COMPANY, its General Partner

                                          By: /s/ W. G. Van Auken
                                              ----------------------------------
                                              Wendell Van Auken, Managing Member

                                          MAYFIELD ASSOCIATES FUND III,
                                          A CALIFORNIA LIMITED PARTNERSHIP
                                   By:    MAYFIELD VIII MANAGEMENT, L.L.C.
                                          A DELAWARE LIMITED LIABILITY
                                          COMPANY, its General Partner

                                          By: /s/ W. G. Van Auken
                                              ----------------------------------
                                              Wendell Van Auken, Managing Member

                                          INSTITUTIONAL VENTURE PARTNERS VII
                                          By Its General Partner
                                          Institutional Venture Management VII

                                          By: /s/ GEOFFREY Y. YANG
                                              ----------------------------------
                                              Geoffrey Y. Yang, General Partner

                                          INSTITUTIONAL VENTURE
                                          MANAGEMENT VII

                                          By: /s/ GEOFFREY Y. YANG
                                              ----------------------------------
                                              Geoffrey Y. Yang, General Partner

                 [Second Amended and Restated Rights Agreement]

<PAGE>   23

PURCHASERS (continued):

                                          IVP BROADBAND FUND I, L.P.
                                          By Its General Partner
                                          IVP Broadband Management, LLC
                                          By Its Managing Director
                                          Institutional Venture Management
                                          VIII, LLC

                                          By: /s/ Geoffrey Y. Yang
                                             ----------------------------------
                                             Geoffrey Y. Yang, Managing Director

                                          NORWEST VENTURE PARTNERS VII, LP
                                          By:    Itasca VC Partners VII, LLP
                                                 Its General Partner

                                          By: /s/ Promod Haque
                                              ----------------------------------
                                                 Promod Haque, General Partner

                                          LATTA FAMILY TRUST

                                          By: /s/ Robert P. Latta
                                              ----------------------------------
                                                   Robert P. Latta, Trustee

                                               /s/ T. S. Hollifield
                                              ----------------------------------
                                                   Ted S. Hollifield

                 [Second Amended and Restated Rights Agreement]

<PAGE>   24

                                   EXHIBIT A

                              EXISTING SHAREHOLDERS

Mayfield VIII, a California Limited Partnership
Mayfield Associates Fund III, A California Limited Partnership
Institutional Venture Partners VII
Institutional Venture Management VII
IVP Founders Fund I, L.P.
WS Investments 97A
WS Investments 98A
Latta Family Trust
Marianne S. Bradley
David Campbell*
William Kirsch*
Helen E. McLaughlin O'Rourke*
Glen Wallace McLaughlin*

----------------------------------------------------
* Holders of Warrants to purchase Series B Preferred.

<PAGE>   25

                                    EXHIBIT B

                                   PURCHASERS

Broadcast Trust

Wendell G. & Ethel S. Van Auken, TTEEs,
  The Wendell G. & Ethel S. Van Auken Trust U/D/T 09/17/75

Mayfield VIII

Mayfield Associates Fund III

Institutional Venture Partners VII

Institutional Venture Management VIII

IVP Broadband Fund I, L.P.

Norwest Venture Partners VII, LP

Latta Family Trust

Ted S. Hollifield

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