Exhibit 10.1

PRIVATE AND CONFIDENTIAL

May 15, 2012

Allied Nevada Gold Corp.

Suite 200, 9790 Gateway Drive

Reno, NV 89521

 

Attention: Scott Caldwell, Chief Executive Officer

Re:         High Yield Notes

Dear Sir:

Scotia Capital Inc. (“Scotia”) and GMP Securities L.P. (“GMP”, and together with
Scotia, the “Joint Bookrunners and Co-Lead Managers”), on their own behalf and
on behalf of a syndicate of investment dealers (together with Scotia and GMP,
the “Dealers”) to be named, are pleased to offer to purchase from Allied Nevada
Gold Corp. (the “Company”)the aggregate principal amount of the Company’s 8.75%
senior unsecured notes due 2019 (the “Notes”) (the “Offering”) equivalent to
U.S. $400 million based on the exchange rate determined in connection with the
Swap (as hereinafter defined). The terms of the Offering are summarized on
Exhibit 1 attached hereto and the specific terms, conditions and covenants of
the Notes shall be substantially as described in the draft description of notes
(the “Description of Notes”) attached hereto as Exhibit 2.

The Notes will be offered by way of a private placement that will be exempt from
the prospectus requirements under applicable securities laws in each Province of
Canada (the “Jurisdictions”) and in the United States pursuant to exemptions
from the registration requirements of the United States Securities Act of 1933,
as amended (the “U.S. Securities Act”), and no future registration shall be
required in the United States, such exemptions to be specified in the Agreement
(defined below), and in certain other jurisdictions as the Company and the Joint
Bookrunners and Co-Lead Managers may agree, provided that the Company shall not
become obligated to file a registration statement, prospectus or other similar
document. The completion of the Offering shall be subject to the conditions
listed herein. The Offering is subject to the following terms and conditions:

 

1. The offer is open for acceptance until 5:00 p.m. (Toronto time) on May 15,
2012 unless extended or withdrawn by the Joint Bookrunners and Co-Lead Managers.
This offer is conditional on the entry into of the full principal amount of the
Swap (as hereinafter defined), provided that if the Dealers terminate their
obligations under this letter agreement pursuant to paragraph 9 (b)(ii) hereof
then the Dealers shall nonetheless be obligated to purchase, in accordance with
the terms hereof including the other applicable conditions and termination
rights, an aggregate principal amount of Notes equal to the principal amount (on
a currency adjusted basis) of the Swap that has been entered into on behalf of
the Company as at the time of such termination and has not been unwound.

 

2. The offer is not subject to syndication, however a syndicate of Dealers shall
be agreed upon by the Company and the Joint Bookrunners and Co-Lead Managers. It
is agreed that each of GMP and Scotia will be entitled to not less than a 50%
syndicate position with respect to the Offering.

 

3. Immediately upon acceptance of this offer, the Company authorizes the Joint
Bookrunners and Co-Lead Managers to issue a press release in form satisfactory
to the Company.

 

4.

The Company and the Dealers will negotiate in good faith to enter into a
mutually acceptable underwriting agreement (including industry standard
representations and warranties and conditions

 

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  and termination provisions set out herein) (the “Agreement”), and other
customary documentation with respect thereto. The Notes will be issued pursuant
to an indenture to be negotiated in good faith between the Company and the
Dealers which will contain the terms set out in Exhibit 2 with only such changes
as are necessary to reflect the fact that the Notes and the indenture are to be
governed by Canadian law and will be held in book-entry only form in Canada.

 

5. The Company and its counsel will finalize, with our assistance, marketing
materials describing the Company, its subsidiaries, the Notes and/or the
Offering and the other documentation necessary to complete the Offering,
including the Offering Memorandum and any required U.S. offering materials
(collectively, the “Offering Documents”). Management of the Company will make
themselves available to assist the Dealers in marketing the Offering as
reasonably requested, including being physically present for at least three days
for marketing meetings and participation on a national conference call. The
Description of Notes may only be amended (for other than a typographical or
other non-material amendments) from the form attached hereto with the consent of
the Joint Bookrunners and Co-Lead Managers. On the Closing Date (as defined
below) the Company shall enter into an indenture with an indenture trustee
reflecting the Description of Notes in form and substance satisfactory to the
Joint Bookrunners and Co-Lead Managers, acting reasonably.

 

6. The closing of the Offering will occur at the offices of counsel to the
Company, on May 25, 2012 (the “Closing Date”) or on such other date as may be
agreed to by the Company and the Joint Bookrunners and Co-Lead Managers.

 

7. The Company agrees to allow the Dealers and the Dealers’ representatives to
conduct all due diligence investigations which they may reasonably require in
order to perform their services hereunder. The Company will make available to
the Dealers such financial, business and other information, in written or oral
form, concerning the Company and, subject to receiving adequate prior notice,
provide the Dealers with reasonable access to the officers, directors,
employees, auditors and other advisors of the Company and any of its
subsidiaries as the Dealers may reasonably request for the purpose of enabling
the Dealers to carry out their due diligence investigations. The Dealers agree
that any information provided by the Company shall remain confidential and shall
be used by the Dealers only for the purposes of the Offering except as required
by applicable law or regulatory authority.

 

8. The Company represents and warrants that, as of the date hereof, (i) there
are no material changes relating to the Company and no material facts (other
than non-adverse material facts that have been disclosed in writing to the
Dealers prior to the execution hereof) relating to the Company that have not
been publicly disclosed in Canada and the United States, (ii) it is (x) a
“reporting issuer” (as such term is defined in applicable Canadian securities
laws) not in default of any of the securities laws in any of the provinces and
territories of Canada, and (y) registered under the United States Securities
Exchange Act of 1934, as amended, and not in default of any U.S. securities
laws, (iii) it has not filed any confidential material change reports that have
not, as of the date hereof, been made publicly available through SEDAR and
EDGAR, and (iv) the Company has filed all documents required to be filed by it
under applicable Canadian and U.S. securities laws, and no such filed document
contains a misrepresentation (within the meaning of applicable Canadian and U.S.
securities laws). The Company agrees to advise the Dealers promptly of any
material change or new material fact in respect of the Company and its
subsidiaries that should arise or be discovered from the date hereof until the
date on or after the Closing Date that the Dealers have completed the
distribution of the Notes.

 

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9. The Dealers (or any one of them) may terminate their obligations under this
letter agreement by notice in writing to the Company at any time prior to or on
the Closing Date if:

 

  a. material change – there shall occur any material change (actual, imminent
or reasonably expected) with respect to the Company or its subsidiaries or there
should be discovered any previously undisclosed material fact (other than facts
relating solely to the Dealers) which, in either case, in the opinion of the
Dealers (or any of them), acting reasonably, has or would be expected to have a
significant adverse effect on the market price, value, marketability or
investment quality of the Notes or any other securities of the Company or makes
it impracticable or inadvisable to proceed with the offering, sale or delivery
of the Notes in the manner contemplated under the Offering Documents;

 

  b. disaster and regulatory out – (i) any order, inquiry, action, suit,
investigation or other proceeding is commenced, announced or threatened or is
made by any federal, provincial, state, municipal or other governmental
department, commission, board, bureau, agency, court or instrumentality
including, without limitation, the TSX the NYSE AMEX or any securities
regulatory authority against or involving the Company, its subsidiaries or any
of its officers or directors or any law or regulation is enacted or changed
(including the interpretation or administration thereof) which in the opinion of
the Dealers (or any of them) acting reasonably, operates or threatens to
prevent, cease or restrict the issuance or trading of any securities of the
Company (including the Notes) or materially and adversely affects or could
reasonably be expected to materially and adversely affect the market price or
value of the Notes or any other securities of the Company; or (ii) there should
develop, occur or come into effect or existence any event, action, state,
accident, condition, terrorist event or major financial occurrence of national
or international consequence or any government action, law or regulation or
other occurrence of any nature which in the opinion of the Dealers (or any of
them), acting reasonably, materially adversely affects the financial markets or
the business, operations or affairs of the Company or its subsidiaries, on a
consolidated basis, it being understood and agreed that changes in the price of
precious metals alone do not constitute an event, action, state, accident,
condition or major financial occurrence contemplated by this paragraph but that
the underlying causes of such change in price may be taken into account in
determining whether any such event, action, state, accident, condition or major
financial occurrence has occurred;

 

  c. breach of the Agreement – the Dealers (or any one of them), acting
reasonably, determine that the Company is in breach of a material term,
condition or covenant of the Agreement or this letter agreement, or any
representation or warranty given by the Company in this letter agreement or the
Agreement is or becomes false; or

 

  d. offering documents - any of the offering documents prepared in connection
with the Offering (including any document incorporated by reference therein)
contains or is alleged to contain a misrepresentation (within the meaning of
applicable Canadian and US securities laws).

 

10. On the Closing Date, among other things, and pursuant to the Agreement, the
Company shall deliver to the Dealers: (i) final rating letters relating to the
Notes of at least B3 (stable) by Moody’s and B (stable) by S&P (which ratings
and outlook shall remain in force and have not been adversely changed);
(ii) certificates of responsible officers of the Company as to certain customary
factual matters; (iii) favourable legal opinions of counsel to the Company which
cover the matters normally dealt with in legal opinions delievered in comparable
transactions, and (iv) a comfort letter from the Company’s auditors, in form
satisfactory to the Dealers, acting reasonably.

 

11. The Company shall have entered into a cross currency interest rate swap in
connection with the principal amount of the Notes on the terms set out in
Exhibit 3 (the “Swap”) and shall have received all necessary consents for the
issuance of the Notes and the entry into the Swap, in each case in form and
substance satisfactory to the Company, the Joint Bookrunners and Co-Lead
Managers, acting reasonably. Scotia will be mandated as “Lead Hedge Advisor” and
sole hedge arranger. The swap may be syndicated in a manner satisfactory to
Scotia.

 

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12. The Company will pay: (i) all expenses of or incidental to the issue, sale
and distribution of the Notes; and (ii) all costs incurred in connection with
the preparation of documents and certificates relating to the Offering. All fees
and expenses incurred by the Dealers or on their behalf (incluing the fees and
disbursements of their legal counsel) shall be payable by the Dealers, and shall
be payable whether or not the Offering is completed.

 

13. The Company covenants and agrees to indemnify the Dealers in accordance with
Schedule “A” to this letter agreement, which Schedule forms part of this
agreement and the consideration for which is the entering into of this letter
agreement. This indemnity (the “Indemnity”) will be in addition to, and not in
substitution for, any liability which the Company or any other person may have
to the Dealers or other persons indemnified under the Indemnity. The Indemnity
will survive the execution and delivery of the Agreement and the closing of the
Offering.

 

14. The Company shall pay to the Dealers a cash commission (the “Commission”)
equal to 2.75% of the gross proceeds from the sale of the Notes. The gross
proceeds of the sale of the Notes, less an amount equal to the Commission and
the Dealers’ costs and expenses (as provided for in paragraph 12), shall be paid
by the Dealers to the Company on the Closing Date. Furthermore, if there are
other Dealers, GMP and Scotia shall each be entitled to 6.25% of the Commission
(the “Step Up Fee”) prior to any disbursements to the Dealers (for greater
clarity the Step Up Fee is to be paid out of the total fees paid to the Dealers
and comes at no additional cost to the Company).

 

15. In consultation with the Company, the Joint Bookrunners and Co-Lead Managers
shall be entitled to invite other investment dealers to act as Dealers in
connection with the Offering; provided that the Company, GMP and Scotia agree
that GMP and Scotia shall each be granted so-called “joint bookrunner” and
“co-lead manager” status in connection with the Offering. Scotia shall be
identified as “top-left” on all applicable documentation and press releases
relating to or describing the Offering.

 

16. Any press releases relating to the Offering shall be in the form and content
agreed to by the Dealers, acting reasonably. An appropriate legend concerning
United States sales shall be included on the first page of any press release
released outside of the United States or to persons other than “U.S. persons”
(as defined in the U.S. Securities Act) as follows: “Not for distribution to
U.S. newswire services or for dissemination in the U.S.”

 

17. If the Offering is successfully completed, the Dealers shall be permitted to
publish, at their own expense, after giving the Company a reasonable opportunity
to comment on the form and content thereof, such advertisements or announcements
relating to the performance of services provided hereunder in such newspaper or
other publications as the Dealers consider appropriate, and shall further be
permitted to post such advertisements or announcements on their websites.

 

18. All dollar references herein are in Canadian dollars, unless otherwise
specified.

 

19. Without limiting section 9 hereof, the Joint Bookrunners and Co-Lead
Managers’ engagement pursuant to this letter agreement (the “Term”) shall run
until the earlier of (i) the date that is 30 days from the date of this letter
agrement; (ii) the completion of the Offering; and (iii) the termination of this
engagement by the Company upon prior written notice to the other parties. You
agree that, during the Term, no other entity or person will act as agent,
underwriter, book running manager, placement agent, initial purchaser or perform
a similar function in connection with a public or private offering of debt
securities of the Company without the prior written consent of the Joint
Bookrunners and Co-Lead Managers.

 

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20. Notwithstanding the termination of this letter agreement , the obligations
and rights in paragraphs 12, 13 and 18 to 27 and Schedule A shall survive and
continue in full force and effect.

 

21. You acknowledge that the Joint Bookrunners and Co-Lead Managers are
securities firms that are engaged in securities trading and brokerage
activities, as well as providing investment banking and financial advisory
services. In the ordinary course of trading and brokerage activities, the Joint
Bookrunners and Co-Lead Managers and their affiliates may at any time hold long
or short positions, and may trade or otherwise effect transactions, for its own
account or the accounts of customers, in debt or equity securities of entities
that may be involved in the transactions contemplated hereby. Each of Joint
Bookrunners and Co-Lead Managers recognizes its responsibility for compliance
with applicable securities laws in connection with such activities. In addition,
the Joint Bookrunners and Co-Lead Managers and their respective affiliates may
from time to time perform various investment banking, commercial banking and
financial advisory services for other clients and customers who may have
conflicting interests with respect to you or the Offering. Neither Joint
Bookrunner and Co-Lead Manager nor any of their respective affiliates will use
confidential information obtained from you pursuant to this engagement or their
other relationships with you in connection with the performance by the Joint
Bookrunners and Co-Lead Managers and their respective affiliates of services for
other companies. You also acknowledge that the Joint Bookrunners and Co-Lead
Managers and their respective affiliates have no obligation to use in connection
with this engagement, or to furnish to you, confidential information obtained
from other companies. You further acknowledge that affiliates of the Joint
Bookrunners and Co-Lead Managers may be lenders to the Company and may provide
services in connection with and/or have an interest in the Swap.

 

     The written or verbal advice or opinions of each of the Joint Bookrunners
and Co-Lead Managers, including any background or supporting materials or
analysis, will not, unless required by applicable law or regulatory authority,
be publicly disclosed or referred to or provided to any third party by the
Company or its affiliates or advisors without the prior written consent of the
Joint Bookrunners and Co-Lead Managers in each specific instance. Each of the
Joint Bookrunners and Co-Lead Managers expressly disclaims any liability or
responsibility by reason of any unauthorized use, publication, distribution of
or reference to any written or verbal advice or opinions or materials provided
by the Joint Bookrunners and Co-Lead Managers or any unauthorized reference to
the Joint Bookrunners and Co-Lead Managers or this letter agreement.

 

     You acknowledge and agree that the Joint Bookrunners and Co-Lead Managers
have been engaged solely as independent contractors to provide the services set
forth herein. In rendering such services, the Joint Bookrunners and Co-Lead
Managers will be acting solely pursuant to a contractual relationship on an
arm’s length basis with respect to the Offering (including in connection with
determining the terms of the Offering) and not as a financial advisor or
fiduciary to the Company or any other person. Additionally, you acknowledge that
the Joint Bookrunners and Co-Lead Managers are not advising the Company or any
other person as to any legal, tax, investment, accounting or regualtory matters
in any jurisdiction.

 

22. If one or more provisions contained in this letter agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this letter agreement, but this letter agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained in this letter agreement.

 

23. This letter agreement may be executed in counterparts, each of which shall
be deemed to be an original and both of which together shall constitute one and
the same instrument. To evidence its execution of an original counterpart of
this letter agreement, a party may send a copy of its original signature on the
execution page hereof to the other party by facsimile or electronic mail
transmission and such transmission shall constitute delivery of an executed copy
of this letter agreement to the receiving party as of the date of receipt
thereof by the receiving party. Time shall be of the essence with respect to the
agreements contained in this letter agreement.

 

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24. This letter constitutes the only agreement between the parties with respect
to the subject matter hereof and supersedes any and all prior negotiations,
understandings and agreements, whether oral or written, between the parties with
respect to the Offering.

 

25. The terms of this letter agreement and the Agreement shall be governed by
and be construed in accordance with the laws of the Province of Ontario and the
laws of Canada applicable therein and the parties hereto irrevocably and
unconditionally submit to the non-exclusive jurisdiction of the courts of the
Province of Ontario. The parties hereto hereby irrevocably agree to waive trial
by jury in any suit, action or proceeding arising in connection with the
Offering or the services to be provided hereunder.

 

26. The rights and obligations of the Dealers herein shall be several in all
respects.

 

27. This letter agreement and shall not be assignable by any party hereto
without the prior written consent of the other parties hereto, and any such
attempted assignment shall be void and to no effect. No amendment or waiver of
any provision herein shall be effective unless in writing and signed by the
parties hereto and then only in the specific instance and for the specific
purpose given.

[signature page follows]

 

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GMP Securities L.P. and Scotia Capital Inc. would welcome this opportunity to
act as Joint Bookrunner and Co-Lead Manager in connection with this issue on
behalf of the Company. If this letter agreement accurately reflects your
understanding of the terms of our agreement and you agree to be legally bound
thereby, please execute this letter where indicated below and return a copy
thereof (by original, facsimile or electronic mail) to GMP Securities L.P.
(Attention: Harris Fricker) and Scotia Capital Inc. (Attention: Greg Greer),
whereupon, this letter shall become a binding agreement between us, failing
which the terms of this Setter shall be null and void.

Yours very truly,

 

GMP SECURITIES L.P.

   

SCOTIA CAPITAL INC.

By:

 

/s/ Harris Fricker

      By:  

/s/ Greg Greer

  Harris Fricker         Greg Greer   Chief Executive Officer, GMP Capital      
  Managing Director

Accepted this 15th day of May, 2012

ALLIED NEVADA GOLD CORP.

 

By:

 

/s/ Scott Caldwell

  Scott Caldwell   Chief Executive Officer

 

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Exhibit 1

Term Sheet

 

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ALLIED NEVADA GOLD CORP.

TERMS OF BOUGHT DEAL OFFERING

 

Issuer:   Allied Nevada Gold Corp. (the “Company”). Issue:   Senior Unsecured
Notes (the “Notes”) offered by way of a private placement offering memorandum in
Canada together with a 144A wrap for sale into the United States. Principal
Amount:   The amount equivalent to USD400 million based on the exchange rate
determined in connection with the Swap. Pricing Date:   May 14, 2012 Settlement
Date:   May 25, 2012 Term and Maturity:   7 years (due June 1, 2019) Price:  
100.000% Coupon:   8.75% (Swapped equivalent USD Level of 8.375%) Interest
Payment Dates:   Semi-annually on June 1 and December 1 in each year (long 1st
coupon) Ratings:   B3 (Stable) from Moody’s and B (Stable) from S&P. Use of
Proceeds:   The net proceeds from the sale of the Notes will be used to fund the
expansion of the Hycroft mine. Rank:   The Notes will be senior unsecured
obligations of the Company and will rank equally and ratably with all other
senior unsecured indebtedness of the Company and senior in right of payment to
any subordinated indebtedness of the Company. Optional Redemption:   Redeemable
after 4 years at a fixed call schedule, plus accrued and unpaid interest.
Redeemable at any time, in whole or in part, prior to that time, at a price
equal to the higher of the Canada Yield Price (calculated through the first call
date, discounted at GoC +100bps), and 101%, together with accrued and unpaid
interest. Change of Control:   101% investor put on change of control triggering
event. Covenants:   See attached description of notes. Events of Default:  
Customary for transactions of this nature.

Joint Bookrunners

and Co-Lead Managers:

  Scotia Capital and GMP Securities

 

LOGO [g355932g13l36.jpg]    LOGO [g355932g79g91.jpg]

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Exhibit 2

Description of Notes

 

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Torys: May 15, 2012

Description of notes

The Company will issue the Notes under the Indenture (the “Indenture”) among
itself, the Guarantors and n, as trustee (the “Trustee”). The terms of the Notes
include those expressly set forth in the Indenture.

The issuance of Notes in this offering will be limited to C$400.0 million.
However, we may issue an unlimited principal amount of additional Notes under
the Indenture having terms and conditions identical to those of the Notes issued
on the Issue Date other than the issue date, the issue price and the first
interest payment date (the “Additional Notes”). We will be permitted to issue
such Additional Notes only if, at the time of such issuance, we are in
compliance with the covenants contained in the Indenture. Any Additional Notes
will be part of the same issue as the Notes issued on the Issue Date, but may be
represented by a different CUSIP or ISIN number, and will vote on all matters as
a single series with the Notes issued hereby.

This “Description of notes” is intended to be a useful overview of the material
provisions of the Notes and the Indenture. Since this “Description of notes” is
only a summary, it does not contain all of the details that will be found in the
full text of, and is qualified in its entirety by the provisions of, the Notes
and the Indenture. The Company will make a copy of the Indenture available to
the Holders and to prospective investors in the Notes upon request.

You will find the definitions of capitalized terms used in this description
under the heading “—Certain definitions.” For purposes of this description,
references to “the Company,” “we,” “our” and “us” refer only to Allied Nevada
Gold Corp. and not to its subsidiaries. Certain defined terms used in this
description but not defined herein have the meanings assigned to them in the
Indenture. References to “$” or “US$” are to U.S. dollars unless otherwise
stated. The Notes will be denominated in Canadian dollars (sometimes referenced
herein as “C$”) and all payments on the Notes will be made in Canadian dollars.

A Holder will be treated as a Note’s owner for all purposes. Only Holders will
have rights under the Indenture.

General

The Notes:

 

•  

initially will be limited to an aggregate principal amount of C$400.0 million,
subject to the Company’s ability to issue Additional Notes;

 

•  

will mature on June 1, 2019;

 

•  

will be unconditionally Guaranteed on a senior unsecured basis by each of the
Company’s Restricted Subsidiaries (other than a Foreign Subsidiary). See “—Note
guarantees;”

 

•  

will be issued in denominations of C$1,000 and integral multiples of C$1,000 in
excess thereof; and

 

•  

will be represented by a Global Certificate that will be registered in the name
of the CDS Nominee and deposited with CDS as a book-entry-only security. See
“Book-entry, settlement and clearance.”

Interest on the Notes will:

 

•  

accrue at the rate of 8.75% per annum;

 

•  

accrue from the date of original issuance or, if interest already has been paid,
from the most recent interest payment date;

 

•  

be payable in cash semi-annually in arrears on June 1 and December 1, commencing
on December 1, 2012;

 

•  

be payable to the Holders of record at the close of business on the 15th day
immediately preceding the related interest payment date; and

 

•  

be computed on the basis of a 365-day or 366-day year. In the case of any
interest period that is shorter than a full semi-annual interest period due to
redemption or repurchase, interest will be calculated on the basis of a 365-day
or 366-day year, as applicable, and the actual number of days elapsed in that
period.

 

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Ranking

The Notes

 

•  

will be senior unsecured obligations of the Company;

 

•  

will rank equally in right of payment with any existing and future senior
unsecured Indebtedness of the Company;

 

•  

will be senior in right of payment to any future Subordinated Obligations of the
Company;

 

•  

effectively will be subordinated to all Secured Indebtedness of the Company to
the extent of the value of the assets securing such Indebtedness; and

 

•  

will be structurally subordinated to all liabilities of non-guarantor
subsidiaries, including the liabilities of any Non-Guarantors.

Assuming that we had applied the net proceeds we receive from this offering in
the manner described under “Use of proceeds,” as of March 31, 2012:

 

•  

outstanding Indebtedness of the Company and the Guarantors would have consisted
of C$400.0 million of notes offered hereby and US$51.8 million of capital leases
secured by specific pieces of equipment, and the Company also would have had
commitments of US$30.0 million under its credit agreement available to it all of
which, if and when outstanding, would be secured; and

 

•  

the non-guarantor subsidiaries would have had no liabilities, excluding any
intercompany liabilities.

Each of the Note Guarantees:

 

•  

will be a senior unsecured obligation of each Guarantor;

 

•  

will rank equally in right of payment with any existing and future senior
unsecured Indebtedness of each Guarantor;

 

•  

will be senior in right of payment to any future Guarantor Subordinated
Obligations of each Guarantor; and

 

•  

effectively will be subordinated to all Secured Indebtedness of each Guarantor,
including Indebtedness under our Senior Credit Facility, to the extent of the
value of the assets of such Guarantor securing such Indebtedness.

The operations of the Company are conducted primarily through its Subsidiaries
and, as a consequence, the Company will be dependent upon the cash flow of these
Subsidiaries to meet its obligations, including its obligations under the Notes.
All of the existing domestic Restricted Subsidiaries of the Company, and all
future domestic Wholly Owned Subsidiaries of the Company, are expected to be
Guarantors. Claims of creditors of Subsidiaries that are not Guarantors
generally will have priority with respect to the assets and earnings of these
Subsidiaries over your claims.

As of the Issue Date, all of the Company’s Subsidiaries are expected to be
Restricted Subsidiaries other than Allied Nevada Delaware Holdings, Inc. and
Allied Nevada (Cayman) Corp. As of the date of this offering memorandum, neither
Allied Nevada Delaware Holdings, Inc. nor Allied Nevada (Cayman) Corp. had any
material assets or liabilities. Under specified circumstances, however, the
Company will be able to designate current or future Subsidiaries as Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants set forth in the Indenture. Unrestricted Subsidiaries will
not Guarantee the Notes.

In the event of bankruptcy, liquidation or reorganization of any of the
Company’s Subsidiaries that are not Guarantors, such Subsidiaries will pay their
creditors before they will be able to distribute any of their assets to the
Company. For the twelve months ended March 31, 2012, the Non-Guarantors had no
revenue or operating income. As of March 31, 2012, the Non-Guarantors
represented none of our consolidated total assets and, excluding intercompany
liabilities, had no liabilities.

In addition, to the extent that the Company or any Restricted Subsidiary is a
general partner in any Person, the Company is liable for its allocated
percentage of such Person’s liabilities, other than Non-Recourse Debt.

Although the Indenture will limit the amount of Indebtedness that the Company
and its Restricted Subsidiaries may incur, such Indebtedness may be substantial,
and a significant portion of such Indebtedness may be secured or structurally
senior to the Notes.

In the event of bankruptcy, insolvency, receivership, liquidation,
reorganization or other winding up of the Company or the Guarantors or upon a
default in payment with respect to, or the acceleration of, any senior Secured
Indebtedness, the assets of the Company and the Guarantors that secure such
senior Secured Indebtedness will be available to pay obligations on the Notes
and the Note Guarantees only after all senior Secured Indebtedness has been
repaid in full from such assets.

 

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Note guarantees

Each of the Company’s Restricted Subsidiaries (other than each Foreign
Subsidiary) will Guarantee the Notes on the Issue Date. In addition, each of the
Company’s newly created or acquired Restricted Subsidiaries (other than any
Foreign Subsidiaries) will be required to Guarantee the Notes on a senior
unsecured basis to the extent described under “— Certain covenants—Future
guarantors.” The Guarantors will, jointly and severally, irrevocably and
unconditionally Guarantee the Company’s obligations under the Notes and all
obligations under the Indenture.

Any Guarantor that makes a payment under its Note Guarantee will be entitled
upon payment in full of all Obligations that are Guaranteed under the Indenture
to a contribution from each other Guarantor in an amount equal to such other
Guarantor’s pro rata portion of such payment based on the respective net assets
of all the Guarantors at the time of such payment, determined in accordance with
GAAP.

The obligations of each Guarantor under its Note Guarantee will be limited as
necessary to prevent that Note Guarantee from constituting a fraudulent
conveyance or fraudulent transfer under applicable law. We cannot assure you
that this limitation will protect the Note Guarantees from fraudulent conveyance
or fraudulent transfer challenges or, if it does, that the remaining amount due
and collectible under a Note Guarantee would suffice, if necessary, to pay the
Notes in full when due. In a recent Florida bankruptcy case, this kind of
provision was found to be unenforceable and, as a result, the subsidiary
guarantees in that case were found to be fraudulent conveyances. The decision in
that case was overturned, in part, but we do not know whether that case will be
followed if there is litigation on this issue under the Indenture. If a Note
Guarantee were to be rendered voidable, it could be subordinated by a court to
all other Indebtedness (including Guarantees and other contingent liabilities)
of the Guarantor and, depending on the amount of such Indebtedness, a
Guarantor’s liability on its Note Guarantee could be reduced to zero. See “Risk
factors—Risks related to the Notes—U.S. Federal and state fraudulent transfer
laws may permit a court to void the Notes and/or the Note Guarantees and, if
that occurs, you may not receive any payments on the Notes.”

The Indenture will provide that each Note Guarantee by a Guarantor will be
released and discharged automatically and unconditionally upon:

 

(1) (a)

any sale, assignment, transfer, conveyance, exchange or other disposition (by
merger, consolidation, winding up or otherwise) of the Capital Stock of such
Guarantor after which the applicable Guarantor is no longer a Restricted
Subsidiary of the Company, which sale, assignment, transfer, conveyance,
exchange or other disposition is made in compliance with “—Repurchase at the
option of holders—Asset sales” and “—Certain covenants—Merger and consolidation”
(it being understood that only such portion of the Net Available Cash as is
required to be applied on or before the date of such release in accordance with
the terms of the Indenture needs to be applied in accordance therewith at such
time); provided that all the obligations of such Guarantor under all other
Indebtedness of the Company and its Restricted Subsidiaries terminate upon
consummation of such transaction;

 

  (b) the proper designation of any Guarantor as an Unrestricted Subsidiary; or

 

  (c) the Company’s exercise of its legal defeasance option or covenant
defeasance option as described under “— Defeasance” or the discharge of the
Company’s obligations under the Indenture in accordance with the terms of the
Indenture; and

 

(2) such Guarantor delivering to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for in
the Indenture relating to such transaction and/or release have been complied
with.

Payments on the notes; paying agent and registrar

We will pay, or cause to be paid, the principal, premium, if any, and interest
on the Notes in Canadian dollars at the office or agency designated by the
Company. Initially, we have designated the Trustee to act as our paying agent
(the “Paying Agent”) and registrar (the “Registrar”) at its corporate trust
office. We may, however, change the Paying Agent or Registrar without prior
notice to the Holders, and the Company or any of its Restricted Subsidiaries may
act as Paying Agent or Registrar.

We will pay principal of, premium, if any, and interest on, Notes represented by
the Global Certificate by wire transfer of immediately available funds to CDS or
its nominee, CDS & Co. as the case may be, as the registered Holder thereof.

Payments of additional amounts

All payments made by or on behalf of the Company under or with respect to the
Notes, or by or on behalf of any Guarantor under or with respect to the Note
Guarantees, are required to be made free and clear of and without

 

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withholding or deduction for or on account of any present or future tax, duty,
levy, impost, assessment or other governmental charge (including penalties,
interest and other liabilities related thereto) (hereinafter referred to as
“Taxes”) imposed or levied by or on behalf of the government of the United
States of America, any state or territory therein or any political subdivision
or any authority or agency therein or thereof having power to tax, or any
jurisdiction other than Canada where any such Guarantor is organized, or is
otherwise carrying on business in, or is otherwise resident for tax purposes or
any jurisdiction other than Canada from or through which payment is made (each,
a “Relevant Taxing Jurisdiction”), unless such Person is required to withhold or
deduct Taxes by law or by the interpretation or administration thereof. If the
Company or any Guarantor (each such person, a “Payor”) is so required to
withhold or deduct any amount for or on account of Taxes imposed by a Relevant
Taxing Jurisdiction from any payment made under or with respect to the Notes or
a Note Guarantee, such Payor will be required to pay such additional amounts
(“Additional Amounts”) as may be necessary so that the net amount received by a
Holder or beneficial owner of Notes (including Additional Amounts) after such
withholding or deduction will not be less than the amount such Holder or
beneficial owner of Notes would have received if such Taxes (including Taxes on
any Additional Amounts) had not been withheld or deducted; provided, however,
that the foregoing obligations to pay Additional Amounts do not apply to (1) any
Taxes that would not have been so imposed but for the existence of any present
or former connection between the relevant Holder or beneficial owner of Notes
and the Relevant Taxing Jurisdiction including, for greater certainty and
without limitation, being or having been a citizen, resident or national
thereof, or being or having been present or engaged in a trade or business
therein or maintaining a permanent establishment or other physical presence in
or otherwise having some connection with the Relevant Taxing Jurisdiction (other
than a connection from the mere acquisition, ownership or holding of such Note
or a beneficial interest therein or the enforcement of rights thereunder or the
receipt of any payment in respect thereof); (2) any estate, inheritance, gift,
sales, excise, transfer, personal property tax or similar tax, assessment or
governmental charge; (3) any deduction or withholding of Taxes on a payment if
the payment could have been made without such deduction or withholding if the
beneficiary of the payment had presented the Note for payment within 30 days
after the date on which such payment or such Note became due and payable or the
date on which payment thereof is duly provided for, whichever is later (except
to the extent that the Holder or beneficial owner would have been entitled to
Additional Amounts had the Note been presented on the last day of such 30-day
period); (4) any Taxes that are imposed by reason of the Holder’s or beneficial
owner’s failure, after a request by the Company or a Guarantor, to comply with
any certification, documentation, information or other evidentiary requirement
concerning such Holder’s or beneficial owner’s nationality, residence, identity
or connection with the Relevant Taxing Jurisdiction, including under Part 4 of
the Code, if (i) compliance is required by law, regulation, administrative
practice or an applicable treaty as a precondition to exemption from, or a
reduction in the rate of deduction or withholding of, such Taxes to which such
Holder or beneficial owner is entitled and (ii) in the case of Relevant Taxing
Jurisdictions other than the United States, such compliance is not materially
more onerous, in form, in procedure or in substance of information disclosed, to
such Holder or beneficial owner than the information or other reporting
requirements under United States federal tax law, regulation and administrative
practice (such as Internal Revenue Service Forms W-8 or W-9); (5) any Taxes
which would have been avoided by such Holder by timely presenting the relevant
Note (if presentation is required) to another paying agent (if there is one);
(6) any Taxes that are the result of any combination of any of the above
clauses; or (7) any Taxes that are imposed in the United States on a non-U.S.
holder by reason of such non-U.S. holder (A) owning, actually or constructively,
10% or more of the Company’s voting stock or (B) being, for U.S. federal income
tax purposes, a controlled foreign corporation related, directly or indirectly,
to the Company through stock ownership. The applicable Payor will make any
required withholding or deduction and remit the full amount deducted or withheld
to the Relevant Taxing Jurisdiction in accordance with applicable law. Upon
request, the Company will provide the Trustees with official receipts or other
documentation evidencing the payment of the Taxes with respect to which
Additional Amounts are paid.

If a Payor is or will become obligated to pay Additional Amounts under or with
respect to any payment made on the Notes or a Note Guarantee, at least 30 days
prior to the date of such payment, such Payor will deliver to the Trustees an
Officer’s Certificate stating the fact that Additional Amounts will be payable
and the amount so payable and such other information necessary to enable the
Paying Agent to pay Additional Amounts to Holders or beneficial owners of Notes
on the relevant payment date.

Whenever in the Indenture there is mentioned in any context:

 

(1) the payment of principal;

 

(2) redemption prices or purchase prices in connection with a redemption or
purchase of Notes;

 

(3) interest; or

 

(4) any other amount payable on or with respect to any of the Notes or any Note
Guarantee;

such reference shall be deemed to include payment of Additional Amounts as
described under this heading to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof.

 

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The Company and the Guarantors will indemnify and hold harmless a Holder or
beneficial owner of the Notes for the amount of any Indemnified Taxes levied or
imposed and paid by such Holder or beneficial owner as a result of payments made
under or with respect to the Notes or any Note Guarantee, and with respect to
any reimbursements under this clause.

The Company will pay any present or future stamp, court or documentary taxes or
any other excise, property or similar Taxes, charges or levies that arise in any
Relevant Taxing Jurisdiction from the execution, delivery, enforcement or
registration of the Notes, the Note Guarantees, the Indenture or any other
document or instrument in relation thereof, or the receipt of any payments with
respect to the Notes or any Note Guarantees and the Company will agree to
indemnify the Trustees, the Holders and beneficial owners of Notes for any such
amounts (including penalties, interest and other liabilities related thereto)
paid by such Holders or beneficial owners.

Transfer and exchange

A Holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents. No service charge will be
imposed by the Company, the Trustee or the Registrar for any registration of
transfer or exchange of Notes, but the Company may require a Holder to pay a sum
sufficient to cover any transfer tax or other governmental taxes and fees
required by law or permitted by the Indenture. The Company is not required to
transfer or exchange any Note selected for redemption. Also, the Company is not
required to transfer or exchange any Note for a period of 15 days before the day
of mailing of a notice of redemption of Notes to be redeemed.

The registered Holder of a Note will be treated as the owner of it for all
purposes.

Optional redemption

Except as described below and under “—Repurchase at the option of holders—Stub
redemption,” the Notes are not redeemable until June 1, 2016. On and after
June 1, 2016, the Company may redeem the Notes, in whole or in part, upon not
less than 30 nor more than 60 days’ notice mailed or otherwise delivered in
accordance with the applicable procedures of CDS to each Holder, at the
redemption prices (expressed as a percentage of principal amount of the Notes to
be redeemed) set forth below, plus accrued and unpaid interest on the Notes, if
any, to the applicable date of redemption (subject to the right of Holders of
record on the relevant record date to receive interest due on an interest
payment date falling on or prior to such redemption date), if redeemed during
the 12-month period beginning on of each of the years indicated below:

 

Year

   Percentage  

2016

     104.375 % 

2017

     102.188 % 

2018 and thereafter

     100.0 % 

Prior to June 1, 2015, the Company may on any one or more occasions redeem up to
35% of the original aggregate principal amount of the Notes (calculated after
giving effect to any issuance of Additional Notes) with the Net Cash Proceeds of
one or more Equity Offerings at a redemption price equal to 108.75% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any, to
the applicable redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on an interest payment date falling
on or prior to such redemption date); provided that

 

(1) at least 65% of the original aggregate principal amount of the Notes
(calculated after giving effect to any issuance of Additional Notes) remains
outstanding after each such redemption; and

 

(2) such redemption occurs within 120 days after the closing of such Equity
Offering.

In addition, at any time prior to June 1, 2016, the Company may redeem the
Notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior
notice mailed or otherwise delivered in accordance with the applicable
procedures of CDS to each Holder at a redemption price equal to the greater of
(i) Canada Yield Price and (ii) 101% of the aggregate principal amount of the
Notes, plus accrued and unpaid interest, if any, to the redemption date (subject
to the right of Holders of record on the relevant record date to receive
interest due on an interest payment date falling on or prior to such redemption
date).

If the optional redemption date is on or after an interest record date and on or
before the related interest payment date, the accrued and unpaid interest, if
any, will be paid to the Person in whose name the Note is registered at the
close of business on such record date, and no additional interest will be
payable to Holders whose Notes will be subject to redemption by the Company.

 

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In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not listed, then on a pro rata basis, by lot or by such other method
as the Trustee in its sole discretion will deem to be fair and appropriate, all
in accordance with the procedures of CDS, although no Note of C$1,000 in
original principal amount or less will be redeemed in part. If any Note is to be
redeemed in part only, the notice of redemption relating to such Note will state
the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note.

Any redemption notice may, at the Company’s discretion, be subject to one or
more conditions precedent, including completion of an Equity Offering or other
corporate transaction.

Tax redemption

The Company may, at its option, at any time redeem in whole but not in part the
outstanding Notes at a redemption price equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on an interest payment date falling on or prior to such
redemption date) if it has become obligated to pay any Additional Amounts (as
defined herein) in respect of the Notes as a result of: (a) any change in or
amendment to the applicable laws (or regulations promulgated thereunder) of any
jurisdiction other than Canada, or (b) any change in or amendment to any
official position regarding the application or interpretation of such laws or
regulations, which change or amendment is announced or is effective on or after
the Issue Date. See “— Payments of Additional Amounts.”

Notwithstanding the foregoing, no such notice of redemption will be given
(i) earlier than 90 days prior to the earliest date on which the Company would
be obliged to make such payment of Additional Amounts and (ii) unless at the
time such notice is given, such obligation to pay such Additional Amounts
remains in effect. Before the Company publishes or mails notice of redemption of
the Notes, the Company will deliver to the Trustee an Officer’s Certificate to
the effect that it cannot avoid its obligations to pay Additional Amounts by
taking reasonable measures available to it. The Company will also deliver an
opinion of independent legal counsel of recognized standing stating that the
Company would be obligated to pay Additional Amounts as a result of a change in
Tax law.

Mandatory redemption; open market purchases

The Company is not required to make any mandatory redemption or sinking fund
payments with respect to the Notes. However, under certain circumstances, the
Company may be required to offer to purchase the Notes as described under the
caption “—Repurchase at the option of holders.”

The Company may acquire Notes by means other than a redemption, whether by
tender offer, open market purchases, negotiated transactions or otherwise, in
accordance with applicable securities laws, so long as such acquisition does not
otherwise violate the terms of the Indenture.

Repurchase at the option of holders

Change of control

If a Change of Control occurs, unless the Company has given notice to redeem all
of the outstanding Notes as described under “—Optional redemption,” the Company
will, within 30 days following any Change of Control, make an offer to purchase
all of the outstanding Notes (a “Change of Control Offer”) at a purchase price
in cash equal to 101% of the principal amount of such outstanding Notes plus
accrued and unpaid interest, if any, to the date of purchase (the “Change of
Control Payment”) (subject to the right of Holders of record on the relevant
record date to receive interest due on an interest payment date falling on or
prior to the date of purchase).

The Company will mail a notice of such Change of Control Offer to each Holder or
otherwise deliver notice in accordance with the applicable procedures of CDS,
with a copy to the Trustee, stating:

 

(1) that a Change of Control Offer is being made and that all Notes properly
tendered pursuant to such Change of Control Offer will be accepted for purchase
by the Company at a purchase price in cash equal to 101% of the principal amount
of such Notes plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest on an interest payment date);

 

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(2) the purchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed or otherwise delivered) (the “Change of
Control Payment Date”); and

 

(3) the procedures determined by the Company, consistent with the Indenture,
that a Holder must follow in order to have its Notes repurchased.

On the Change of Control Payment Date, the Company will, to the extent lawful:

 

(1) accept for payment all Notes or portions of Notes (of C$1,000 or larger
integral multiples of C$1,000 in excess thereof) validly tendered and not
validly withdrawn pursuant to the Change of Control Offer;

 

(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Notes or portions of Notes so accepted for payment;
and

 

(3) deliver or cause to be delivered to the Trustee for cancellation the Notes
so accepted for payment together with an Officer’s Certificate stating the
aggregate principal amount of Notes or portions of Notes being purchased by the
Company in accordance with the terms of this covenant.

The Paying Agent will promptly mail to each Holder of Notes so accepted for
payment the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or otherwise deliver in accordance with the
applicable procedures of CDS) (or cause to be transferred by book-entry) to each
such Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of C$1,000 or integral multiples of C$1,000 in excess thereof.

If the Change of Control Payment Date is on or after an interest record date and
on or before the related interest payment date, the accrued and unpaid interest,
if any, will be paid on the relevant interest payment date to the Person in
whose name the Note is registered at the close of business on such record date,
and no additional interest will be payable to Holders whose Notes are tendered
pursuant to the Change of Control Offer.

The Change of Control provisions described above will be applicable whether or
not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture will not contain
provisions that permit the Holders to require that the Company repurchase or
redeem the Notes in the event of a takeover, recapitalization or similar
transaction.

Prior to making a Change of Control Payment, and as a condition to such payment
(1) the requisite holders of each issue of Indebtedness issued under an
indenture or other agreement that may be violated by such payment shall have
consented to such Change of Control Payment being made and waived the event of
default, if any, caused by the Change of Control or (2) the Company will repay
all outstanding Indebtedness issued under an indenture or other agreement that
may be violated by a Change of Control Payment or the Company will offer to
repay all such Indebtedness, make payment to the holders of such Indebtedness
that accept such offer and obtain waivers of any event of default arising under
the relevant indenture or other agreement from the remaining holders of such
Indebtedness. The Company covenants to effect such repayment or obtain such
consent prior to making a Change of Control Payment, it being a default of the
Change of Control provisions of the Indenture if the Company fails to comply
with such covenant.

The Company will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes an offer to purchase all of the outstanding
Notes in the manner, at the times and otherwise in compliance with the
requirements set forth in the Indenture applicable to a Change of Control Offer,
and such third party purchases all Notes validly tendered and not validly
withdrawn pursuant to such offer to purchase.

The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act, Canadian Securities Legislation and any other securities laws or
regulations thereunder to the extent those laws and regulations are applicable
in connection with the repurchase of Notes pursuant to a Change of Control
Offer. To the extent that the provisions of any applicable securities laws or
regulations conflict with provisions of the Indenture, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations described in the Indenture by virtue of the
conflict.

The definition of “Change of Control” includes a disposition of all or
substantially all of the property and assets of the Company and its Restricted
Subsidiaries, taken as a whole, to any Person. Although there is a limited body
of case law interpreting the phrase “substantially all,” there is no precise
established definition of the phrase under applicable law. Accordingly, in
certain circumstances there may be a degree of uncertainty as to whether a
particular transaction would involve a disposition of “all or substantially all”
of the property or assets of the Company. As a result, it may be unclear as to
whether a Change of Control has occurred and whether a Holder may require the
Company to make a Change of Control Offer.

Certain provisions under the Indenture relating to the Company’s obligation to
make a Change of Control Offer may be waived or modified with the written
consent of the Holders of a majority in principal amount of the Notes.

 

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Stub redemption

In the event that Holders of not less than 95% of the aggregate principal amount
of the outstanding Notes accept a Change of Control Offer and the Company
purchases all of the Notes held by such Holders tendered but not withdrawn,
within 90 days of such purchase, the Company will have the right, upon not less
than 30 days’ nor more than 60 days’ prior notice mailed or otherwise delivered
in accordance with the applicable procedures of CDS to each Holder, to redeem
all of the Notes that remain outstanding following such purchase at a redemption
price equal to the Change of Control Payment plus, to the extent not included in
the Change of Control Payment, accrued and unpaid interest on the Notes to the
date of redemption (subject to the right of Holders of record on the relevant
record date to receive interest due on an interest payment date that is on or
prior to the redemption date).

Asset sales

The Company will not, and will not permit any of its Restricted Subsidiaries to,
cause, make or suffer to exist any Asset Disposition unless:

 

(1) the Company or such Restricted Subsidiary, as the case may be, receives
consideration at least equal to the Fair Market Value (such Fair Market Value to
be determined on the date of contractually agreeing to such Asset Disposition)
of the shares and assets subject to such Asset Disposition; and

 

(2) at least 75% of the consideration from such Asset Disposition received by
the Company or such Restricted Subsidiary, as the case may be, is in the form of
cash or Cash Equivalents.

For the purposes of clause (2) above and for no other purpose, the following
will be deemed to be cash:

 

(a) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s
most recent balance sheet) of the Company or any of its Restricted Subsidiaries
(other than liabilities that are by their terms subordinated to the Notes or the
Note Guarantees) that are assumed by the transferee of any such assets and from
which the Company and all such Restricted Subsidiaries have been validly
released by all applicable creditors in writing;

 

(b) any Designated Non-cash Consideration received by the Company or any of its
Restricted Subsidiaries in such Asset Disposition having an aggregate Fair
Market Value, taken together with all other Designated Non-cash Consideration
received pursuant to this clause (2) that is at that time outstanding, not to
exceed the greater of (x) US$30.0 million and (y) 5.00% of Total Assets at the
time of the receipt of such Designated Non-cash Consideration (with the Fair
Market Value of each item of Designated Non-cash Consideration being measured at
the time received and without giving effect to subsequent changes in value); and

 

(c) any securities, notes or other obligations received by the Company or any of
its Restricted Subsidiaries from the transferee that are converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received) within 180 days following the closing of such Asset Disposition.

Within 365 days from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash, the Company or such Restricted Subsidiary,
as the case may be, may apply an amount equal to 100% of the Net Available Cash
from such Asset Disposition as follows:

 

(i) to reduce permanently (and reduce commitments permanently with respect
thereto) Secured Indebtedness of the Company (other than any Disqualified Stock
or Subordinated Obligations) or Secured Indebtedness of a Restricted Subsidiary
of the Company (other than any Disqualified Stock or Guarantor Subordinated
Obligations), in each case other than Indebtedness owed to the Company or an
Affiliate of the Company;

 

(ii) to reduce permanently obligations under other Indebtedness of the Company
(other than any Disqualified Stock or Subordinated Obligations) or other
Indebtedness of a Restricted Subsidiary of the Company (other than any
Disqualified Stock or Guarantor Subordinated Obligations), in each case other
than Indebtedness owed to the Company or an Affiliate of the Company; provided
that the Company shall equally and ratably reduce Obligations under the Notes as
provided under “—Optional redemption,” through open market purchases (to the
extent such purchases are at or above 100% of the principal amount thereof) or
by making an offer (in accordance with the procedures set forth below for an
Asset Disposition Offer) to all Holders to purchase their Notes at 100% of the
principal amount thereof, plus the amount of accrued but unpaid interest on the
amount of Notes that would otherwise be prepaid;

 

(iii) to invest in Additional Assets; or

 

(iv) a combination of reductions and investments permitted by the foregoing
clauses (i) through (iii);

provided that pending the final application of any such Net Available Cash in
accordance with clause (i), (ii), (iii) or (iv) above, the Company and its
Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest
such

 

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Net Available Cash in any manner not prohibited by the Indenture; provided,
further, that in the case of clause (iii), a binding commitment to invest in
Additional Assets shall be treated as a permitted application of the Net
Available Cash from the date of such commitment so long as the Company or such
other Restricted Subsidiary enters into such commitment with the good faith
expectation that such Net Available Cash will be applied to satisfy such
commitment within 180 days of such commitment (an “Acceptable Commitment”) and,
in the event any Acceptable Commitment is later cancelled or terminated for any
reason before the Net Available Cash is applied in connection therewith, the
Company or such Restricted Subsidiary enters into another Acceptable Commitment
(a “Second Commitment”) within 180 days of such cancellation or termination, it
being understood that if a Second Commitment is later cancelled or terminated
for any reason before such Net Available Cash is applied, then such Net
Available Cash shall constitute Excess Proceeds.

Any Net Available Cash from Asset Dispositions that is not applied or invested
as provided in the preceding paragraph will be deemed to constitute “Excess
Proceeds.” On the 366th day after an Asset Disposition, if the aggregate amount
of Excess Proceeds exceeds US$20.0 million, the Company will be required to make
an offer (“Asset Disposition Offer”) to all Holders and, to the extent required
by the terms of outstanding Pari Passu Indebtedness, to all holders of such Pari
Passu Indebtedness, to purchase the maximum aggregate principal amount of Notes
and any such Pari Passu Indebtedness that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on a record date to receive
interest due on the relevant interest payment date), in accordance with the
procedures set forth in the Indenture or the agreements governing the Pari Passu
Indebtedness, as applicable, in each case in integral multiples of C$1,000. The
Company shall commence an Asset Disposition Offer with respect to Excess
Proceeds by mailing (or otherwise communicating in accordance with the
applicable procedures of CDS) the notice required pursuant to the terms of the
Indenture, with a copy to the Trustee. To the extent that the aggregate amount
of Notes and Pari Passu Indebtedness validly tendered and not validly withdrawn
pursuant to an Asset Disposition Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes,
subject to other covenants contained in the Indenture. If the aggregate
principal amount of Notes surrendered by Holders thereof and other Pari Passu
Indebtedness surrendered by holders or lenders, collectively, exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes and Pari Passu
Indebtedness to be purchased on a pro rata basis on the basis of the aggregate
accreted value or principal amount of tendered Notes and Pari Passu
Indebtedness. Upon completion of such Asset Disposition Offer, regardless of the
amount of Excess Proceeds used to purchase Notes pursuant to such Asset
Disposition Offer, the amount of Excess Proceeds shall be reset at zero.

The Asset Disposition Offer will remain open for a period of 20 Business Days
following its commencement, except to the extent that a longer period is
required by applicable law (the “Asset Disposition Offer Period”). No later than
five Business Days after the termination of the Asset Disposition Offer Period
(the “Asset Disposition Purchase Date”), the Company will apply all Excess
Proceeds to the purchase of the aggregate principal amount of Notes and, if
applicable, Pari Passu Indebtedness (on a pro rata basis, if applicable)
required to be purchased pursuant to this covenant (the “Asset Disposition Offer
Amount”) or, if less than the Asset Disposition Offer Amount of Notes (and, if
applicable, Pari Passu Indebtedness) has been so validly tendered and not
validly withdrawn, all Notes and Pari Passu Indebtedness validly tendered and
not validly withdrawn in response to the Asset Disposition Offer. Payment for
any Notes purchased will be made in the same manner as interest payments are
made.

If the Asset Disposition Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest to the Asset Disposition Purchase Date will be paid to the Person in
whose name a Note is registered at the close of business on such record date.

On or before the Asset Disposition Purchase Date, the Company will, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Asset Disposition Offer Amount of Notes and Pari Passu Indebtedness or
portions thereof validly tendered and not validly withdrawn pursuant to the
Asset Disposition Offer, or if less than the Asset Disposition Offer Amount has
been validly tendered and not validly withdrawn, all Notes and Pari Passu
Indebtedness so tendered and not withdrawn, in the case of the Notes in integral
multiples of C$1,000; provided that if, following repurchase of a portion of a
Note, the remaining principal amount of such Note outstanding immediately after
such repurchase would be less than C$1,000, then the portion of such Note so
repurchased shall be reduced so that the remaining principal amount of such Note
outstanding immediately after such repurchase is C$1,000. The Company will
deliver, or cause to be delivered, to the Trustee the Notes so accepted and an
Officer’s Certificate stating the aggregate principal amount of Notes or
portions thereof so accepted and that such Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this
covenant. In addition, the Company will deliver all certificates and notes
required, if any, by the agreements governing the Pari Passu Indebtedness. The
Paying Agent or the Company, as the case may be, will promptly, but in no event
later than five Business Days after termination of the Asset Disposition Offer
Period, mail or deliver to each tendering Holder or holder or lender of Pari
Passu Indebtedness, as the case may be, an amount equal to the purchase price of
the Notes or Pari Passu Indebtedness so validly tendered and not properly
withdrawn by such holder or lender, as the case may be, and accepted by the
Company for purchase, and, if less than all of the Notes tendered are purchased
pursuant to the Asset Disposition Offer, the Company will promptly

 

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issue a new Note, and the Trustee, upon delivery of an authentication order from
the Company, will authenticate and mail or deliver (or cause to be transferred
by book-entry) such new Note to such Holder (it being understood that,
notwithstanding anything in the Indenture to the contrary, no Opinion of Counsel
or Officer’s Certificate will be required for the Trustee to authenticate and
mail or deliver such new Note) in a principal amount equal to any unpurchased
portion of the Note surrendered; provided that each such new Note will be in a
principal amount of C$1,000 or an integral multiple of C$1,000 in excess
thereof. In addition, the Company will take any and all other actions required
by the agreements governing the Pari Passu Indebtedness. Any Note not so
accepted will be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce the results of the Asset Disposition
Offer on the Asset Disposition Purchase Date.

The Company will comply with Rule 14e-1 under the Exchange Act, Canadian
Securities Legislation and any other securities laws or regulations thereunder
to the extent those laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Disposition Offer. To the extent that
the provisions of any applicable securities laws or regulations conflict with
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Indenture by virtue of any conflict.

Certain covenants

Effectiveness of covenants

Following the first day:

 

(a) the Notes (or the Company’s senior unsecured obligations including the
Notes) have an Investment Grade Rating from both of the Rating Agencies; and

 

(b) no Default or Event of Default has occurred and is continuing under the
Indenture

the Company and its Restricted Subsidiaries will not be subject to the
provisions of the Indenture summarized under the headings below:

 

•  

“—Repurchase at the option of holders—Asset sales,”

 

•  

“—Limitation on indebtedness,”

 

•  

“—Limitation on restricted payments,”

 

•  

“—Limitation on restrictions on distributions from restricted subsidiaries,”

 

•  

“—Limitation on affiliate transactions,”

 

•  

clause (4) of the first paragraph of “—Merger and consolidation” and

 

•  

“—Future guarantors”

(collectively, the “Suspended Covenants”). If at any time the Notes’ (or the
Company’s senior unsecured obligations, including the Notes) credit rating is
downgraded from an Investment Grade Rating by any Rating Agency or if a Default
or Event of Default occurs and is continuing, then the Suspended Covenants
thereafter will be reinstated as if such covenants never had been suspended (the
“Reinstatement Date”) and be applicable pursuant to the terms of the Indenture
(including in connection with performing any calculation or assessment to
determine compliance with the terms of the Indenture), unless and until the
Notes subsequently attain an Investment Grade Rating and no Default or Event of
Default is in existence (in which event the Suspended Covenants no longer shall
be in effect for such time that the Notes maintain an Investment Grade Rating
and no Default or Event of Default is in existence); provided, however, that no
Default, Event of Default or breach of any kind shall be deemed to exist under
the Indenture, the Notes or the Note Guarantees with respect to the Suspended
Covenants based on, and none of the Company or any of its Subsidiaries shall
bear any liability for, any actions taken or events occurring during the
Suspension Period (as defined below), regardless of whether such actions or
events would have been permitted if the applicable Suspended Covenants remained
in effect during such period. The period of time between the date of suspension
of the covenants and the Reinstatement Date is referred to as the “Suspension
Period.”

On the Reinstatement Date, all Indebtedness Incurred during the Suspension
Period will be classified to have been Incurred pursuant to the first paragraph
of “—Limitation on indebtedness” or one of the clauses set forth in the second
paragraph of “—Limitation on indebtedness” (to the extent such Indebtedness
would be permitted to be Incurred thereunder as of the Reinstatement Date and
after giving effect to Indebtedness Incurred prior to the Suspension Period and
outstanding on the Reinstatement Date). To the extent such Indebtedness would
not be so permitted to be Incurred pursuant to the first or second paragraph of
“—Limitation on indebtedness,” such Indebtedness will be deemed to have been
outstanding on the Issue Date, so that it is classified under clause (3) of the
second paragraph of “—Limitation on indebtedness.” Calculations made after the
Reinstatement Date of the amount available to be made as Restricted

 

10

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Payments under “—Limitation on restricted payments” will be made as though the
covenant described under “—Limitation on restricted payments” had been in effect
since the Issue Date and throughout the Suspension Period. Accordingly,
Restricted Payments made during the Suspension Period will reduce the amount
available to be made as Restricted Payments under the first paragraph of
“—Limitation on restricted payments.”

During any Suspension Period, the Board of Directors of the Company may not
designate any of the Company’s Subsidiaries as Unrestricted Subsidiaries
pursuant to the Indenture.

There can be no assurance that the Notes ever will achieve or maintain an
Investment Grade Rating.

The Company will provide the Trustee and the Holders with prompt written notice
of any suspension of the Suspended Covenants or any subsequent reinstatement of
such Suspended Covenants.

Limitation on indebtedness

The Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, Incur any Indebtedness (including Acquired
Indebtedness); provided, however, that the Company and the Guarantors may Incur
Indebtedness if on the date thereof and after giving effect thereto on a pro
forma basis:

 

(1) the Consolidated Coverage Ratio for the Company and its Restricted
Subsidiaries is at least 2.00 to 1.00; and

 

(2) no Default or Event of Default will have occurred or be continuing or would
occur as a consequence of Incurring the Indebtedness or entering into the
transactions relating to such Incurrence.

The first paragraph of this covenant will not prohibit the Incurrence of the
following Indebtedness:

 

(1) Indebtedness of the Company or any Guarantor Incurred under a Debt Facility
and the issuance and creation of letters of credit, bankers’ acceptances,
performance or surety bonds and other similar instruments thereunder (with any
such undrawn instruments and reimbursement obligations relating to any payables
that are satisfied within 30 days being deemed not to be Indebtedness, and
bankers’ acceptances being deemed to have a principal amount equal to the face
amount thereof) in an aggregate amount not to exceed US$150.0 million, less the
aggregate principal amount of all principal repayments with the proceeds from
Asset Dispositions made pursuant to clause (i) of the third paragraph of
“—Repurchase at the option of holders—Asset sales” in satisfaction of the
requirements of such covenant; provided that in no event shall the aggregate
amount of Indebtedness outstanding at any time pursuant to this clause (1) and
clause (8) of this paragraph exceed a total of US$400.4 million;

 

(2) Indebtedness represented by the Notes (including any Note Guarantee) (other
than any Additional Notes);

 

(3) Indebtedness of the Company and any of its Restricted Subsidiaries in
existence on the Issue Date (other than Indebtedness described in clauses (1),
(2), (4), (5), (7), (9), (10) and (11) of this paragraph);

 

(4) Guarantees by (a) the Company or Guarantors of Indebtedness permitted to be
Incurred by the Company or a Guarantor in accordance with the provisions of the
Indenture; provided that in the event such Indebtedness that is being Guaranteed
is a Subordinated Obligation or a Guarantor Subordinated Obligation, then the
related Guarantee shall be subordinated in right of payment to the Notes or the
Note Guarantee, as the case may be, and (b) Non-Guarantors of Indebtedness
Incurred by Non-Guarantors in accordance with the provisions of the Indenture;

 

(5) Indebtedness of the Company owing to and held by any of its Restricted
Subsidiaries or Indebtedness of a Restricted Subsidiary of the Company owing to
and held by the Company or any other Restricted Subsidiary of the Company;
provided, however,

 

  (a) if the Company is the obligor on Indebtedness owing to a Non-Guarantor,
such Indebtedness is expressly subordinated in right of payment to all
Obligations with respect to the Notes;

 

  (b) if a Guarantor is the obligor on such Indebtedness and a Non-Guarantor is
the obligee, such Indebtedness is expressly subordinated in right of payment to
the Note Guarantee of such Guarantor; and

 

        (c)

(i)

any subsequent issuance or transfer of Capital Stock or any other event which
results in any such Indebtedness being beneficially held by a Person other than
the Company or any of its Restricted Subsidiaries; and

 

  (ii) any sale or other transfer of any such Indebtedness to a Person other
than the Company or any of its Restricted Subsidiaries,

shall be deemed, in each case under this clause (5)(c), to constitute an
Incurrence of such Indebtedness by the Company or such Subsidiary, as the case
may be;

 

11

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(6) Indebtedness of (x) any Person Incurred and outstanding on the date on which
such Person became a Restricted Subsidiary of the Company or was acquired by, or
merged into or amalgamated, arranged or consolidated with, the Company or any of
its Restricted Subsidiaries or (y) such Persons or the Company or any of its
Restricted Subsidiaries Incurred (A) to provide all or any portion of the funds
utilized to consummate the transaction or series of related transactions
pursuant to which such Person became a Restricted Subsidiary of the Company or
otherwise was acquired by, or merged into or consolidated with the Company or
(B) otherwise in connection with, or in contemplation of, such acquisition,
merger or consolidation; provided, however, in each case set forth in clause
(x) or (y), that at the time such Person is acquired or such Indebtedness was
Incurred, either:

 

  (a) the Company would have been able to Incur US$1.00 of additional
Indebtedness pursuant to the first paragraph of this covenant after giving
effect to the Incurrence of such Indebtedness pursuant to this clause (6); or

 

  (b) the Consolidated Coverage Ratio of the Company and its Restricted
Subsidiaries would have been higher than such ratio immediately prior to such
acquisition, merger or consolidation and such ratio would have been at least
1.50 to 1.00, in each case after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (6);

 

(7) Indebtedness under Hedging Obligations that are Incurred in the ordinary
course of business (and not for speculative purposes) (including the existing
Hedging Obligations to the lenders and their respective affiliates under the
Senior Credit Facility and the Currency Agreement entered into with respect to
the Notes);

 

(8) Indebtedness (including Capitalized Lease Obligations) of the Company or any
of its Restricted Subsidiaries Incurred to finance the purchase, design, lease,
construction, repair, replacement or improvement of any property (real or
personal), plant or equipment used or to be used in a Similar Business through
the direct purchase of such property, plant or equipment, and any Indebtedness
of the Company or any of its Restricted Subsidiaries that serves to refund or
refinance any Indebtedness Incurred pursuant to this clause (8), in an aggregate
outstanding principal amount which, when taken together with the principal
amount of all other Indebtedness Incurred pursuant to this clause (8) and then
outstanding, will not exceed US$350.0 million at any time outstanding; provided
that in no event shall the aggregate amount of Indebtedness outstanding at any
time pursuant to this clause (8) and clause (1) of this paragraph exceed a total
of US$400.4 million;

 

(9) Indebtedness Incurred by the Company or any of its Restricted Subsidiaries
in respect of (a) workers’ compensation claims, health, disability or other
employee benefits; (b) property, casualty or liability insurance self-insurance
obligations; and (c) statutory, appeal, completion, export, import, customs,
revenue, performance, bid, surety and similar bonds and completion Guarantees
(not for borrowed money) provided in the ordinary course of business and
reimbursement obligations relating to same;

 

(10) Indebtedness arising from agreements of the Company or any of its
Restricted Subsidiaries providing for indemnification, adjustment of purchase
price, earn-out or similar obligations, in each case, Incurred or assumed in
connection with the disposition or acquisition of any business or assets of the
Company or any business, assets or Capital Stock of any of its Restricted
Subsidiaries, other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or a Subsidiary for the
purpose of financing such acquisition; provided that:

 

  (a) the maximum aggregate liability in respect of all such Indebtedness shall
at no time exceed the gross proceeds, including non-cash proceeds (the Fair
Market Value of such non-cash proceeds being measured at the time received and
without giving effect to subsequent changes in value) actually received by the
Company and its Restricted Subsidiaries in connection with such disposition; and

 

  (b) such Indebtedness is not reflected on the balance sheet of the Company or
any of its Restricted Subsidiaries (contingent obligations referred to in a
footnote to financial statements and not otherwise reflected on the balance
sheet will not be deemed to be reflected on such balance sheet for purposes of
this clause (10));

 

(11) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary course of
business; provided, however, that such Indebtedness is extinguished within five
Business Days of Incurrence;

 

(12) Indebtedness in the form of letters of credit and reimbursement obligations
relating to letters of credit that are satisfied within 30 days of being drawn;

 

(13)

the Incurrence or issuance by the Company or any of its Restricted Subsidiaries
of Refinancing Indebtedness that serves (or will serve) to refund or refinance
any Indebtedness Incurred as permitted under the first paragraph of this
covenant and clauses (2), (3), (6) and this clause (13) of this second paragraph
of this covenant, or any

 

12

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  Indebtedness issued to so refund or refinance such Indebtedness, including
additional Indebtedness Incurred to pay premiums (including reasonable, as
determined in good faith by Senior Management, tender premiums), defeasance
costs, accrued interest and fees and expenses in connection therewith;

 

(14) Indebtedness of the Company or any of its Restricted Subsidiaries
consisting of the financing of insurance premiums incurred in the ordinary
course of business;

 

(15) Indebtedness of the Company or any of its Restricted Subsidiaries
consisting of take-or-pay obligations contained in supply arrangements incurred
in the ordinary course of business;

 

(16) Indebtedness of the Company or any of its Restricted Subsidiaries with
respect to Guarantees of Indebtedness of joint ventures, in an aggregate amount
under this clause (16) not to exceed the greater of (x) US$30.0 million and
(y) 4.5% of Total Assets, at any time outstanding;

 

(17) Non-Recourse Debt;

 

(18) Indebtedness of the Company, to the extent the net proceeds thereof are
promptly (a) used to purchase the Notes tendered in connection with a Change of
Control Offer or (b) deposited to defease the Notes as described under
“Defeasance” or “Satisfaction and discharge;” and

 

(19) in addition to the items referred to in clauses (1) through (18) above,
Indebtedness of the Company and its Restricted Subsidiaries in an aggregate
outstanding principal amount which, when taken together with the principal
amount of all other Indebtedness Incurred pursuant to this clause (19) and then
outstanding, will not exceed the greater of (x) US$50.0 million and (y) 7.5% of
Total Assets, at any time outstanding.

The Company will not Incur any Indebtedness under the preceding paragraph if the
proceeds thereof are used, directly or indirectly, to refinance any Subordinated
Obligations of the Company unless such Indebtedness will be subordinated to the
Notes to at least the same extent as such Subordinated Obligations. No Guarantor
will Incur any Indebtedness under the preceding paragraph if the proceeds
thereof are used, directly or indirectly, to refinance any Guarantor
Subordinated Obligations of such Guarantor unless such Indebtedness will be
subordinated to the obligations of such Guarantor under its Note Guarantee to at
least the same extent as such Guarantor Subordinated Obligations. No Restricted
Subsidiary of the Company (other than a Guarantor) may Incur any Indebtedness if
the proceeds are used to refinance Indebtedness of the Company or a Guarantor.

For purposes of determining compliance with, and the outstanding principal
amount of any particular Indebtedness Incurred pursuant to and in compliance
with, this covenant:

 

(1) in the event that Indebtedness meets the criteria of more than one of the
types of Indebtedness described in the second paragraph of this covenant, the
Company, in its sole discretion, will classify such item of Indebtedness on the
date of Incurrence and may later classify such item of Indebtedness in any
manner that complies with the second paragraph of this covenant and only be
required to include the amount and type of such Indebtedness in one of such
clauses under the second paragraph of this covenant;

 

(2) Guarantees of, or obligations in respect of letters of credit relating to,
Indebtedness that is otherwise included in the determination of a particular
amount of Indebtedness shall not be included;

 

(3) if obligations in respect of letters of credit are Incurred pursuant to a
Debt Facility and are being treated as Incurred pursuant to clause (1) of the
second paragraph above and the letters of credit relate to other Indebtedness,
then such other Indebtedness shall not be included;

 

(4) the principal amount associated with any Disqualified Stock of the Company
or any of its Restricted Subsidiaries, or Preferred Stock of a Non-Guarantor,
will be equal to the greater of the maximum mandatory redemption or repurchase
price (not including, in either case, any redemption or repurchase premium) or
the liquidation preference thereof;

 

(5) Indebtedness permitted by this covenant need not be permitted solely by
reference to one provision permitting such Indebtedness but may be permitted in
part by one such provision and in part by one or more other provisions of this
covenant permitting such Indebtedness;

 

(6) the principal amount of any Indebtedness outstanding in connection with a
securitization transaction or series of securitization transactions is the
amount of obligations outstanding under the legal documents entered into as part
of such transaction that would be characterized as principal if such transaction
were structured as a secured lending transaction rather than as a purchase
relating to such transaction; and

 

(7) the amount of Indebtedness issued at a price that is less than the principal
amount thereof will be equal to the amount of the liability in respect thereof
determined in accordance with GAAP.

 

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Accrual of interest, accrual of dividends, the accretion of accreted value, the
amortization of debt discount, the payment of interest in the form of additional
Indebtedness and the payment of dividends in the form of additional shares of
Preferred Stock or Disqualified Stock will not be deemed to be an Incurrence of
Indebtedness for purposes of this covenant. The amount of any Indebtedness
outstanding as of any date shall be (i) the accreted value thereof in the case
of any Indebtedness issued with original issue discount or the aggregate
principal amount outstanding in the case of Indebtedness issued with interest
payable in kind and (ii) the principal amount or liquidation preference thereof,
together with any interest thereon that is more than 30 days past due, in the
case of any other Indebtedness.

In addition, the Company will not permit any of its Unrestricted Subsidiaries to
Incur any Indebtedness or issue any shares of Disqualified Stock, other than
Non-Recourse Debt. If at any time an Unrestricted Subsidiary becomes a
Restricted Subsidiary of the Company, any Indebtedness of such Subsidiary shall
be deemed to be Incurred by a Restricted Subsidiary of the Company as of such
date (and, if such Indebtedness is not permitted to be Incurred as of such date
under this “—Limitation on indebtedness” covenant, the Company shall be in
Default of this covenant).

For purposes of determining compliance with any U.S. dollar-denominated
restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in effect on the date
such Indebtedness was Incurred, in the case of term Indebtedness, or first
committed, in the case of revolving credit Indebtedness; provided that if such
Indebtedness is Incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable U.S.
dollar-denominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of such refinancing, such U.S.
dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such Refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced. Notwithstanding any
other provision of this covenant, the maximum amount of Indebtedness that the
Company may Incur pursuant to this covenant shall not be deemed to be exceeded
solely as a result of fluctuations in the exchange rate of currencies. The
principal amount of any Indebtedness Incurred to refinance other Indebtedness,
if Incurred in a different currency from the Indebtedness being refinanced,
shall be calculated based on the currency exchange rate applicable to the
currencies in which such Refinancing Indebtedness is denominated that is in
effect on the date of such refinancing.

Limitation on restricted payments

The Company will not, and will not permit any of its Restricted Subsidiaries,
directly or indirectly, to:

 

(1) declare or pay any dividend or make any distribution (whether made in cash,
securities or other property) on or in respect of its or any of its Restricted
Subsidiaries’ Capital Stock (including any payment in connection with any merger
or consolidation involving the Company or any of its Restricted Subsidiaries)
other than:

 

  (a) dividends or distributions payable solely in Capital Stock of the Company
(other than Disqualified Stock); and

 

  (b) dividends or distributions by a Restricted Subsidiary of the Company, so
long as, in the case of any dividend or distribution payable on or in respect of
any Capital Stock issued by a Restricted Subsidiary of the Company that is not a
Wholly Owned Subsidiary, the Company or any of its Restricted Subsidiaries
holding such Capital Stock receives at least its pro rata share of such dividend
or distribution;

 

(2) purchase, redeem, retire or otherwise acquire for value, including in
connection with any merger or consolidation, any Capital Stock of the Company
held by Persons other than the Company or any of its Restricted Subsidiaries
(other than in exchange for Capital Stock of the Company (other than
Disqualified Stock));

 

(3) make any principal payment on, or purchase, repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled repayment,
scheduled sinking fund payment or scheduled maturity, any Subordinated
Obligations or Guarantor Subordinated Obligations, other than:

 

  (a) Indebtedness of the Company owing to and held by any Restricted Subsidiary
that is a Wholly Owned Restricted Subsidiary or Indebtedness of a Restricted
Subsidiary owing to and held by the Company or any Restricted Subsidiary that is
a Wholly Owned Restricted Subsidiary permitted under clause (5) of the second
paragraph of the covenant “—Limitation on indebtedness;” or

 

  (b) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement of Subordinated Obligations or Guarantor Subordinated Obligations of
any Guarantor purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the
date of purchase, repurchase, redemption, defeasance or other acquisition or
retirement; or

 

(4) make any Restricted Investment (all such payments and other actions referred
to in clauses (1) through (4) (other than any exception thereto) shall be
referred to as a “Restricted Payment”),

 

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unless, at the time of and after giving effect to such Restricted Payment:

 

  (a) no Default shall have occurred and be continuing (or would result
therefrom);

 

  (b) immediately after giving effect to such transaction on a pro forma basis,
the Company could Incur US$1.00 of additional Indebtedness under the provisions
of the first paragraph of the “—Limitation on indebtedness” covenant; and

 

  (c) the aggregate amount of such Restricted Payment and all other Restricted
Payments declared or made subsequent to the Issue Date (without duplication and
excluding Restricted Payments made pursuant to clauses (1), (2), (3), (4), (5),
(7), (8), (9), (12), (14) and (16) of the next succeeding paragraph) would not
exceed the sum of (without duplication):

 

  (i) 50% of Consolidated Net Income for the period (treated as one accounting
period) from April 1, 2012 to the end of the most recent fiscal quarter ending
prior to the date of such Restricted Payment for which financial statements are
available (or, in case such Consolidated Net Income is a deficit, minus 100% of
such deficit); plus

 

  (ii) 100% of the aggregate Net Cash Proceeds, or Fair Market Value of assets
received by the Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) or other capital contributions subsequent to the Issue Date,
other than:

 

  (x) Net Cash Proceeds, or Fair Market Value of assets received, by the Company
from the issue or sale of such Capital Stock to a Subsidiary of the Company or
to an employee stock ownership plan, option plan or similar trust to the extent
such sale to an employee stock ownership plan or similar trust is financed by
loans from or Guaranteed by the Company or any of its Restricted Subsidiaries
unless such loans have been repaid with cash on or prior to the date of
determination; and

 

  (y) Net Cash Proceeds received by the Company from the issue and sale of its
Capital Stock or capital contributions to the extent applied to redeem Notes in
compliance with the provisions set forth under the second paragraph of
“—Optional redemption;” plus

 

  (iii) the amount by which Indebtedness of the Company or any of its Restricted
Subsidiaries is reduced on the Company’s consolidated balance sheet upon the
conversion or exchange (other than debt held by a Subsidiary of the Company)
subsequent to the Issue Date of any Indebtedness of the Company or any of its
Restricted Subsidiaries convertible or exchangeable for Capital Stock (other
than Disqualified Stock) of the Company (less the amount of any cash, or the
Fair Market Value of any other property, distributed by the Company upon such
conversion or exchange); plus

 

  (iv) the amount equal to the net reduction in Restricted Investments made by
the Company or any of its Restricted Subsidiaries in any Person resulting from:

 

  (x) repurchases or redemptions of such Restricted Investments by such Person,
proceeds realized upon the sale of such Restricted Investment to an unaffiliated
purchaser, repayments of loans or advances or other transfers of assets
(including by way of dividend or distribution) by such Person to the Company or
any of its Restricted Subsidiaries (other than for reimbursement of tax
payments); or

 

  (y) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
of the Company or the merger or consolidation of an Unrestricted Subsidiary with
and into the Company or any of its Restricted Subsidiaries (valued in each case
as provided in the definition of “Investment”) not to exceed the amount of
Investments previously made by the Company or any of its Restricted Subsidiaries
in such Unrestricted Subsidiary, which amount in each case under this clause
(iv) was included in the calculation of the amount of Restricted Payments;
provided, however, that no amount will be included under this clause (iv) to the
extent it is already included in Consolidated Net Income; less

 

  (v) any Investment that is a Similar Business Investment (other than a Similar
Business Investment in the Company or a Restricted Subsidiary).

The provisions of the preceding paragraph will not prohibit:

 

(1)

any purchase, repurchase, redemption, defeasance or other acquisition or
retirement of Capital Stock, Disqualified Stock or Subordinated Obligations of
the Company or Guarantor Subordinated Obligations of any Guarantor made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other

 

15

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  than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan or similar trust to the extent
such sale to an employee stock ownership plan or similar trust is financed by
loans from or Guaranteed by the Company or any of its Restricted Subsidiaries
unless such loans have been repaid with cash on or prior to the date of
determination); provided, however, that the Net Cash Proceeds from such sale of
Capital Stock will be excluded from clause (c)(ii) of the preceding paragraph;

 

(2) any purchase, repurchase, redemption, defeasance or other acquisition or
retirement of Subordinated Obligations of the Company or Guarantor Subordinated
Obligations of any Guarantor made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Subordinated Obligations of the Company or any
purchase, repurchase, redemption, defeasance or other acquisition or retirement
of Guarantor Subordinated Obligations of any Guarantor made by exchange for or
out of the proceeds of the substantially concurrent sale of Guarantor
Subordinated Obligations of a Guarantor, so long as such refinancing
Subordinated Obligations or Guarantor Subordinated Obligations are permitted to
be Incurred pursuant to the covenant described under “—Limitation on
indebtedness” and constitute Refinancing Indebtedness;

 

(3) any purchase, repurchase, redemption, defeasance or other acquisition or
retirement of Disqualified Stock of the Company or any of its Restricted
Subsidiaries made by exchange for or out of the proceeds of the substantially
concurrent sale of Disqualified Stock of the Company or such Restricted
Subsidiary, as the case may be, so long as such refinancing Disqualified Stock
is permitted to be Incurred pursuant to the covenant described under “—
Limitation on indebtedness” and constitutes Refinancing Indebtedness;

 

(4) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Obligation (a) at a purchase price not
greater than 101% of the principal amount of such Subordinated Obligation in the
event of a Change of Control in accordance with provisions similar to the
“—Repurchase at the option of holders—Change of control” covenant or (b) at a
purchase price not greater than 100% of the principal amount thereof in
accordance with provisions similar to the “—Repurchase at the option of holders—
Asset sales” covenant; provided that, prior to or simultaneously with such
purchase, repurchase, redemption, defeasance or other acquisition or retirement,
the Company has made the Change of Control Offer or Asset Disposition Offer, as
applicable, as provided in such covenant with respect to the Notes and has
completed the repurchase or redemption of all Notes validly tendered and not
withdrawn for payment in connection with such Change of Control Offer or Asset
Disposition Offer;

 

(5) any purchase or redemption of Subordinated Obligations or Guarantor
Subordinated Obligations from Net Available Cash to the extent permitted under
“—Repurchase at the option of holders—Asset sales;”

 

(6) (a) dividends paid within 60 days after the date of declaration if at such
date of declaration such dividend would have complied with this covenant and
(b) the redemption of Subordinated Obligations or Guarantor Subordinated
Obligations within 60 days after the date on which notice of such redemption was
given, if on the date of the giving of such notice of redemption, such
redemption would have complied with this covenant;

 

(7) the purchase, redemption or other acquisition, cancellation or retirement
for value of Capital Stock or equity appreciation rights of the Company held by
any existing or former employees, management or directors of the Company or any
Subsidiary of the Company or their assigns, estates or heirs, in each case upon
death, disability, retirement, severance or termination of employment or in
connection with the repurchase provisions under employee stock option or stock
purchase agreements or other agreements to compensate management employees
approved by the Board of Directors; provided that such Capital Stock or equity
appreciation rights were received for services related to, or for the benefit
of, the Company and its Restricted Subsidiaries; and provided, further, that
such redemptions or repurchases pursuant to this clause (7) will not exceed
US$10.0 million in the aggregate during any calendar year (with any unused
amounts in any calendar year being carried over to the immediately succeeding
calendar year, not to exceed US$20.0 million in any calendar year), although
such amount in any calendar year may be increased by an amount not to exceed:

 

  (a) the Net Cash Proceeds from the sale of Capital Stock (other than
Disqualified Stock) of the Company to existing or former employees or members of
management of the Company or any of its Subsidiaries that occurs after the Issue
Date, to the extent the Net Cash Proceeds from the sale of such Capital Stock
have not otherwise been applied to the payment of Restricted Payments (provided
that the Net Cash Proceeds from such sales or contributions will be excluded
from clause (c)(ii) of the preceding paragraph); plus

 

  (b) the cash proceeds of key man life insurance policies received by the
Company or its Restricted Subsidiaries after the Issue Date; less

 

  (c) the amount of any Restricted Payments previously made with the Net Cash
Proceeds described in clauses (a) and (b) of this clause (7);

 

16

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(8) the declaration and payment of dividends to holders of any class or series
of Disqualified Stock of the Company issued in accordance with the terms of the
Indenture to the extent such dividends are included in the definition of
“Consolidated Interest Expense;”

 

(9) repurchases of Capital Stock deemed to occur upon the exercise of stock
options, warrants, other rights to purchase Capital Stock or other convertible
securities or similar securities if such Capital Stock represents a portion of
the exercise price thereof (or withholding of Capital Stock to pay related
withholding taxes with regard to the exercise of such stock options or the
vesting of any such restricted stock, restricted stock units, deferred stock
units or any similar securities);

 

(10) payments in lieu of the issuance of fractional shares of Capital Stock in
connection with any transaction otherwise permitted under this covenant;

 

(11) payments or distributions to holders of the Capital Stock of the Company or
any of its Restricted Subsidiaries pursuant to appraisal or dissenter rights
required under applicable law or pursuant to a court order in connection with
any merger, consolidation or sale, assignment, conveyance, transfer, lease or
other disposition of assets;

 

(12) the payment of any dividend by a Restricted Subsidiary of the Company that
is not a Wholly Owned Subsidiary to the holders of Capital Stock on a pro rata
basis;

 

(13) distributions of Capital Stock or assets of an Unrestricted Subsidiary;

 

(14) in the event that, and for so long as, the Company is a member of a group
filing a consolidated or combined income tax return with a Parent that is
taxable as a U.S. corporation for federal income tax purposes, payments to such
Parent in respect of an allocable portion of the tax liabilities of such group
that is attributable to the Company and its Subsidiaries (“Tax Payments”);
provided that the Tax Payments shall not exceed the lesser of (i) the amount of
the relevant tax (including any penalties and interest) that the Company would
owe if the Company were filing (and had always filed) a separate tax return (or
a separate consolidated or combined return with its Subsidiaries that are
members of the consolidated or combined group), taking into account any
carryovers and carrybacks of tax attributes (such as net operating losses) of
the Company and such Subsidiaries from other taxable years; provided, further,
that tax liabilities allocable to an Unrestricted Subsidiary shall only be taken
into account in calculating tax payments to the extent such Unrestricted
Subsidiary distributed cash to the Company or its Restricted Subsidiaries in
respect of such taxes and (ii) the proportionate share of the Company and its
Restricted Subsidiaries of the net amount of the relevant tax that such Parent
actually owes to the appropriate taxing authority or in the event that, and for
so long as, the Company is organized as a limited liability company or
partnership, the payment of Permitted Tax Distributions;

 

(15) the repurchase, redemption or other acquisition for value of Capital Stock
of the Company or any direct or indirect parent of the Company representing
fractional shares of such Capital Stock in connection with a merger,
consolidation or other combination involving the Company or any direct or
indirect parent of the Company; and

 

(16) other Restricted Payments in an aggregate amount, when taken together with
all other Restricted Payments made pursuant to this clause (16) (as reduced by
the Fair Market Value returned from any such Restricted Payments that
constituted Restricted Investments) not to exceed US$20.0 million;

provided, however, that at the time of and after giving effect to, any
Restricted Payment permitted under clauses (5), (7), (8) and (16), no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof.

The amount of all Restricted Payments (other than cash) will be the Fair Market
Value on the date of such Restricted Payment of the assets or securities
proposed to be transferred or issued by the Company or any of its Restricted
Subsidiaries, as the case may be, pursuant to such Restricted Payment.

The amount of all Restricted Payments paid in cash shall be its face amount. For
purposes of determining compliance with any U.S. dollar-denominated restriction
on Restricted Payments, the U.S. dollar-equivalent of a Restricted Payment
denominated in a foreign currency shall be calculated based on the relevant
currency exchange rate in effect on the date the Company or the Restricted
Subsidiary, as the case may be, first commits to such Restricted Payment.

For purposes of designating any Restricted Subsidiary of the Company as an
Unrestricted Subsidiary, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so
designated will be deemed to be Restricted Payments in an amount determined as
set forth in the definition of “Investment.” Such designation will be permitted
only if a Restricted Payment in such amount would be permitted at such time and
if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Unrestricted Subsidiaries will not be subject to any of the restrictive
covenants set forth in the Indenture.

 

17

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Limitation on liens

The Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, Incur, assume or suffer to exist any Lien (other
than Permitted Liens) upon any of its property or assets (including Capital
Stock of Subsidiaries), whether owned on the Issue Date or acquired after that
date, which Lien is securing any Indebtedness, unless contemporaneously with the
Incurrence of such Liens:

 

(1) in the case of Liens securing Subordinated Obligations or Guarantor
Subordinated Obligations, the Notes and related Note Guarantees are secured by a
Lien on such property or assets that is senior in priority to such Liens; or

 

(2) in all other cases, the Notes and related Note Guarantees are equally and
ratably secured or are secured by a Lien on such property or assets that is
senior in priority to such Liens.

Any Lien created for the benefit of Holders pursuant to this covenant shall be
automatically and unconditionally released and discharged upon the release and
discharge of each of the Liens described in clauses (1) and (2) above.

Limitation on sale/leaseback transactions

The Company will not, and will not permit any of its Restricted Subsidiaries to,
enter into any Sale/Leaseback Transaction unless:

 

(1) the Company or such Restricted Subsidiary could have Incurred Indebtedness
in an amount equal to the Attributable Indebtedness in respect of such
Sale/Leaseback Transaction pursuant to the covenant described under “—
Limitation on indebtedness;”

 

(2) the Company or such Restricted Subsidiary would be permitted to create a
Lien on the property subject to such Sale/Leaseback Transaction under the
covenant described under “—Limitation on liens;” and

 

(3) the Sale/Leaseback Transaction is treated as an Asset Disposition and all of
the conditions of the Indenture described under “—Repurchase at the option of
holders—Asset sales” (including the provisions concerning the application of Net
Available Cash) are satisfied with respect to such Sale/Leaseback Transaction,
treating all of the consideration received in such Sale/Leaseback Transaction as
Net Available Cash for purposes of such covenant.

Limitation on restrictions on distributions from restricted subsidiaries

The Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary of the Company to:

 

(1) pay dividends or make any other distributions on its Capital Stock to the
Company or any of its Restricted Subsidiaries, or with respect to any other
interest or participation in, or measured by, its profits, or pay any
Indebtedness or other obligations owed to the Company or any of its Restricted
Subsidiaries (it being understood that the priority of any Preferred Stock in
receiving dividends or liquidating distributions prior to dividends or
liquidating distributions being paid on Common Stock shall not be deemed a
restriction on the ability to make distributions on Capital Stock);

 

(2) make any loans or advances to the Company or any of its Restricted
Subsidiaries (it being understood that the subordination of loans or advances
made to the Company or any of its Restricted Subsidiaries to other Indebtedness
Incurred by the Company or any of its Restricted Subsidiaries shall not be
deemed a restriction on the ability to make loans or advances); or

 

(3) sell, lease or transfer any of its property or assets to the Company or any
of its Restricted Subsidiaries (it being understood that such transfers shall
not include any type of transfer described in clause (1) or (2) above).

The preceding provisions will not prohibit encumbrances or restrictions existing
under or by reason of:

 

(a) the Indenture, the Notes and the Note Guarantees;

 

(b) any agreement or instrument existing on the Issue Date (except for the
Indenture, the Notes or the Note Guarantees);

 

(c) (x) any agreement or other instrument of a Person acquired by the Company or
any of its Restricted Subsidiaries in existence at the time of such acquisition
(but not created in contemplation thereof) or (y) any agreement or other
instrument with respect to a Restricted Subsidiary of the Company that was
previously an Unrestricted Subsidiary pursuant to or by reason of an agreement
that such Subsidiary is a party to or entered into before the date on which such
Subsidiary became a Restricted Subsidiary of the Company (but not created in
contemplation thereof), in the case of (x) and (y) above, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person and its Subsidiaries, or the property or assets of
the Person and its Subsidiaries, so acquired or so designated or deemed, as
applicable (including after-acquired property);

 

18

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(d) any amendment, restatement, modification, renewal, supplement, refunding,
replacement or refinancing of an agreement or instrument referred to in clauses
(b), (c) or (e) of this paragraph; provided, however, that such amendments,
restatements, modifications, renewals, supplements, refundings, replacements or
refinancings are, in the good faith judgment of Senior Management, not
materially more restrictive, when taken as a whole, than the encumbrances and
restrictions contained in the agreements referred to in clauses (b), (c) or
(e) of this paragraph on the Issue Date or the date such Restricted Subsidiary
became a Restricted Subsidiary of the Company or was merged into a Restricted
Subsidiary of the Company, whichever is applicable;

 

(e) (x) customary non-assignment or subletting provisions in leases governing
leasehold interests to the extent such provisions restrict the transfer of the
lease or the property leased thereunder and (y) security agreements or mortgages
securing Indebtedness of a Restricted Subsidiary of the Company to the extent
such encumbrance or restriction restricts the transfer of the property subject
to such security agreements or mortgages;

 

(f) in the case of clause (3) of the first paragraph of this covenant, Liens
permitted to be Incurred under the provisions of the covenant described under
“—Limitation on liens” that limit the right of the debtor to dispose of the
assets securing such Indebtedness;

 

(g) purchase money obligations for property acquired in the ordinary course of
business and Capitalized Lease Obligations permitted under the Indenture, in
each case that impose encumbrances or restrictions of the nature described in
clause (3) of the first paragraph of this covenant on the property so acquired;

 

(h) contracts for the sale of assets, including customary restrictions with
respect to a Subsidiary of the Company pursuant to an agreement that has been
entered into for the sale or disposition of all or a portion of the Capital
Stock or assets of such Subsidiary;

 

(i) restrictions on cash or other deposits or net worth imposed by customers,
suppliers or landlords under contracts entered into in the ordinary course of
business;

 

(j) any customary provisions in joint venture, partnership and limited liability
company agreements relating to joint ventures that are not Restricted
Subsidiaries of the Company and other similar agreements entered into in the
ordinary course of business;

 

(k) any customary provisions in leases, subleases or licenses and other
agreements entered into by the Company or any of its Restricted Subsidiaries in
the ordinary course of business;

 

(l) encumbrances or restrictions arising or existing by reason of applicable law
or any applicable rule, regulation or order;

 

(m) (x) other Indebtedness Incurred or Preferred Stock issued by a Guarantor in
accordance with “—Limitation on indebtedness” that, in the good faith judgment
of Senior Management, is not materially more restrictive, taken as a whole, than
those applicable to the Company in the Indenture on the Issue Date (which
results in encumbrances or restrictions at a Restricted Subsidiary of the
Company level comparable to those applicable to the Company) or (y) other
Indebtedness Incurred or Preferred Stock issued by a Non-Guarantor, in each case
permitted to be Incurred subsequent to the Issue Date pursuant to the provisions
of the covenant described under “—Limitation on indebtedness;” provided that
with respect to clause (y), such encumbrances or restrictions will not
materially affect the Company’s ability to make anticipated principal and
interest payments on the Notes (in the good faith judgment of Senior
Management);

 

(n) any agreement with a governmental entity providing for developmental
financing; and

 

(o) customary non-assignment and non-transfer provisions of any contract,
license or lease entered into in the ordinary course of business.

Limitation on affiliate transactions

The Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into or conduct any transaction (including the
purchase, sale, lease or exchange of any property or asset or the rendering of
any service) with any Affiliate of the Company (an “Affiliate Transaction”)
involving aggregate consideration in excess of US$5.0 million, unless:

 

(1) the terms of such Affiliate Transaction are no less favorable to the Company
or such Restricted Subsidiary, as the case may be, than those that could have
been obtained by the Company or such Restricted Subsidiary in a comparable
transaction at the time of such transaction in arms’ length dealings with a
Person that is not an Affiliate;

 

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(2) in the event such Affiliate Transaction involves an aggregate consideration
in excess of US$10.0 million, the terms of such transaction have been approved
by a majority of the members of the Board of Directors of the Company and by a
majority of the members of such Board of Directors having no personal stake in
such transaction, if any (and such majority or majorities, as the case may be,
determines that such Affiliate Transaction satisfies the criteria in clause
(1) above); and

 

(3) in the event such Affiliate Transaction involves an aggregate consideration
in excess of US$35.0 million, the Company has received a written opinion from an
Independent Financial Advisor that such Affiliate Transaction is not materially
less favorable than those that might reasonably have been obtained in a
comparable transaction at the time of such transaction in arms’ length dealings
with a Person that is not an Affiliate.

The preceding paragraph will not apply to:

 

(1) any transaction between the Company and any of its Restricted Subsidiaries
or between any Restricted Subsidiaries of the Company and any Guarantees issued
by the Company or a Restricted Subsidiary of the Company for the benefit of the
Company or any of its Restricted Subsidiaries, as the case may be, in accordance
with “—Limitation on indebtedness;”

 

(2) any Restricted Payment permitted to be made pursuant to the covenant
described under “—Limitation on restricted payments” and any Permitted
Investments;

 

(3) any issuance of securities or other payments, awards or grants in cash,
securities or otherwise pursuant to, or as the funding of, employment agreements
and severance and other compensation arrangements, options to purchase Capital
Stock of the Company, restricted stock plans, long-term incentive plans, stock
appreciation rights plans, participation plans or similar employee benefits
plans and/or indemnity provided on behalf of Officers, directors and employees
approved by the Board of Directors of the Company;

 

(4) the payment of reasonable and customary fees and reimbursements or employee
benefits paid to, and indemnity provided on behalf of, directors, Officers,
employees or consultants of the Company or any of its Restricted Subsidiaries;

 

(5) loans or advances (or cancellations of loans or advances) to employees,
Officers or directors of the Company or any of its Restricted Subsidiaries in
the ordinary course of business, in an aggregate amount not in excess of US$2.0
million (without giving effect to the forgiveness of any such loan);

 

(6) any agreement as in effect as of the Issue Date, as these agreements may be
amended, modified, supplemented, extended or renewed from time to time, so long
as any such amendment, modification, supplement, extension or renewal is not
more disadvantageous to the Holders in any material respect in the good faith
judgment of the Board of Directors of the Company, when taken as a whole, than
the terms of the agreements in effect on the Issue Date;

 

(7) any agreement between any Person and an Affiliate of such Person existing at
the time such Person is acquired by, merged into or consolidated with the
Company or any of its Restricted Subsidiaries; provided that such agreement was
not entered into in contemplation of such acquisition, merger or consolidation
and any amendment thereto (so long as any such amendment is not disadvantageous
to the Holders in the good faith judgment of the Board of Directors of the
Company, when taken as a whole, as compared to the applicable agreement as in
effect on the date of such acquisition, merger or consolidation);

 

(8) transactions with customers, clients, suppliers, joint venture partners or
purchasers or sellers of goods or services or any management services or support
agreements, in each case in the ordinary course of the business of the Company
and its Restricted Subsidiaries and otherwise in compliance with the terms of
the Indenture; provided that in the reasonable determination of the members of
the Board of Directors or Senior Management of the Company, such transactions or
agreements are on terms that are not materially less favorable, when taken as a
whole, to the Company or the relevant Restricted Subsidiary than those that
could have been obtained at the time of such transactions or agreements in a
comparable transaction or agreement by the Company or such Restricted Subsidiary
with an unrelated Person;

 

(9) any issuance or sale of Capital Stock (other than Disqualified Stock) to
Affiliates of the Company and any agreement that grants registration and other
customary rights in connection therewith or otherwise to the direct or indirect
securityholders of the Company (and the performance of such agreements);

 

(10) any transaction with a Restricted Subsidiary of the Company, joint venture
or similar entity which would constitute an Affiliate Transaction solely because
the Company or any of its Restricted Subsidiaries owns any equity interest in or
otherwise controls such Restricted Subsidiary, joint venture or similar entity;
provided that no Affiliate of the Company, other than the Company or any of its
Restricted Subsidiaries, shall have a beneficial interest or otherwise
participate in such Restricted Subsidiary, joint venture or similar entity other
than through such Affiliate’s ownership of the Company;

 

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(11) transactions between the Company or any of its Restricted Subsidiaries and
any Person that is an Affiliate solely because one or more of its directors is
also a director of the Company or any of its Restricted Subsidiaries; provided
that such director abstains from voting as a director of the Company or such
Restricted Subsidiary, as the case may be, on any matter involving such other
Person;

 

(12) any merger, consolidation or other reorganization of the Company with an
Affiliate solely for the purpose and with the sole effect of forming a holding
company or reincorporating the Company in a new jurisdiction;

 

(13) the entering into of a tax sharing agreement, or payments pursuant thereto,
between the Company and one or more Subsidiaries, on the one hand, and any other
Person with which the Company and such Subsidiaries are required or permitted to
file a consolidated tax return or with which the Company and such Subsidiaries
are part of a consolidated group for tax purposes, on the other hand;

 

(14) any employment, deferred compensation, consulting, non-competition,
confidentiality or similar agreement entered into by the Company or any of its
Restricted Subsidiaries with its employees or directors in the ordinary course
of business and payments and other benefits (including bonus, retirement,
severance, health, stock option and other benefit plans) pursuant thereto;

 

(15) pledges of Capital Stock or Indebtedness of Unrestricted Subsidiaries; and

 

(16) transactions in which the Company or any of its Restricted Subsidiaries
delivers to the Trustee a letter from an Independent Financial Advisor stating
that such transaction is fair to the Company or such Restricted Subsidiary from
a financial point of view or stating that the terms are not materially less
favorable, when taken as a whole, than those that might reasonably have been
obtained by the Company or such Restricted Subsidiary in a comparable
transaction at such time on an arms’ length basis from a Person that is not an
Affiliate.

Reports

Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on
an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to the rules and regulations promulgated by the SEC, the
Company will file with Canadian securities regulators on SEDAR within the time
periods specified in the SEC’s rules and regulations that are then applicable to
the Company (or if the Company is not then subject to the reporting requirements
of the Exchange Act, then the time periods for filing applicable to a filer that
is not an “accelerated filer” as defined in such rules and regulations):

 

(1) all financial information that would be required to be contained in an
annual report on Form 10-K, or any successor or comparable form, filed with the
SEC, including a “Management’s discussion and analysis of financial condition
and results of operations” section and a report on the annual financial
statements by the Company’s independent registered public accounting firm;

 

(2) all financial information that would be required to be contained in a
quarterly report on Form 10-Q, or any successor or comparable form, filed with
the SEC, including a “Management’s discussion and analysis of financial
condition and results of operations” section;

 

(3) all current reports that would be required to be filed with the SEC on Form
8-K, or any successor or comparable form, if the Company were required to file
such reports; and

 

(4) any other information, documents and other reports that the Company would be
required to file with the SEC if it were subject to Section 13 or 15(d) of the
Exchange Act,

in each case in a manner that complies in all material respects with the
requirements specified in such form.

Notwithstanding the foregoing, the Company will not be obligated to file such
reports on SEDAR if Canadian securities regulators or SEDAR does not permit such
filing, so long as the Company files such reports with the SEC on EDGAR;
provided, further, that the Company will not be obligated to file such reports
with the SEC on EDGAR if the SEC does not permit such filing, so long as the
Company provides such information to the Trustee and the Holders and makes
available such information to prospective purchasers of the Notes, in each case
at the Company’s expense and by the applicable date the Company would be
required to file such information pursuant to the preceding paragraph. In
addition, to the extent not satisfied by the foregoing, for so long as any Notes
are outstanding, the Company will furnish to Holders and to

 

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securities analysts and prospective purchasers of the Notes, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. The requirements set forth in this paragraph and the preceding
paragraph may be satisfied by delivering such information to the Trustee and
posting copies of such information on a website to which access will be given to
Holders and prospective purchasers of the Notes.

In addition, no later than five Business Days after the date the annual and
quarterly financial information for the prior fiscal period have been furnished
pursuant to clauses (1) or (2) above, the Company shall also hold live quarterly
conference calls with the opportunity to ask questions of management. No fewer
than three Business Days prior to the date such conference call is to be held,
the Company shall issue a press release (which release shall be immediately
filed on SEDAR or, if the applicable Canadian securities regulators do not
permit such filing, immediately provided to the Trustee and the Holders) to the
appropriate U.S. wire services announcing such quarterly conference call for the
benefit of the Trustee, the Holders, beneficial owners of the Notes, prospective
purchasers of the Notes, securities analysts and market making financial
institutions, which press release shall contain the time and the date of such
conference call and direct the recipients thereof to contact an individual at
the Company (for whom contact information shall be provided in such notice) to
obtain information on how to access such quarterly conference call.

If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries and such Unrestricted Subsidiaries, either individually or
collectively, otherwise would have been a Significant Subsidiary, then the
annual and quarterly financial information required by the preceding paragraphs
shall include a reasonably detailed presentation, as determined in good faith by
Senior Management of the Company, either on the face of the financial statements
or in the footnotes to the financial statements and in the “Management’s
discussion and analysis of financial condition and results of operations”
section, of the financial condition and results of operations of the Company and
its Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries.

In the event that any Parent of the Company is or becomes a Guarantor of the
Notes, the Indenture will permit the Company to satisfy its obligations under
this covenant with respect to financial information relating to the Company by
furnishing financial information relating to such Parent; provided that the same
is accompanied by consolidating information that explains in reasonable detail
the differences between the information relating to such Parent and any of its
Subsidiaries other than the Company and its Subsidiaries, on the one hand, and
the information relating to the Company, the Guarantors and the other
Subsidiaries of the Company on a stand-alone basis, on the other hand.

Notwithstanding anything herein to the contrary, the Company will not be deemed
to have failed to comply with any of its obligations hereunder for purposes of
clause (4) under “Events of default” until 90 days after the date any report
hereunder is due.

To the extent any information is not provided as specified in this section
“Reports” and such information is subsequently provided, the Company will be
deemed to have satisfied its obligations with respect thereto at such time and
any Default with respect thereto shall be deemed to have been cured.

Merger and consolidation

The Company will not merge with or into or consolidate with, or wind up into
(whether or not the Company is the surviving corporation), or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of its
properties and assets, in one or more related transactions, to any Person
unless:

 

(1) the continuing, resulting, surviving or transferee Person (the “Successor
Company”) is a Person (other than an individual) organized and existing under
the laws of the United States, any state or territory thereof or the District of
Columbia;

 

(2) the Successor Company (if other than the Company) expressly assumes all of
the obligations of the Company under the Notes and the Indenture pursuant to a
supplemental indenture or other documents or instruments in form reasonably
satisfactory to the Trustee;

 

(3) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing;

 

(4) immediately after giving pro forma effect to such transaction and any
related financing transactions, as if such transactions had occurred at the
beginning of the applicable four-quarter period,

 

  (a) the Successor Company would be able to Incur at least US$1.00 of
additional Indebtedness pursuant to the first paragraph of the “—Limitation on
indebtedness” covenant; or

 

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  (b) the Consolidated Coverage Ratio for the Successor Company and its
Restricted Subsidiaries would be greater than such ratio for the Company and its
Restricted Subsidiaries immediately prior to such transaction and would be at
least 1.50 to 1.00;

 

(5) if the Company is not the surviving corporation, each Guarantor (unless it
is the other party to the transactions above, in which case clause (1) of the
following paragraph shall apply) shall have by supplemental indenture confirmed
that its Note Guarantee shall apply to such Successor Company’s obligations
under the Indenture and the Notes; and

 

(6) the Company shall have delivered to the Trustee an Officer’s Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, winding up
or disposition, and such supplemental indenture, if any, comply with the
Indenture.

Subject to certain limitations, the Successor Company will succeed to, and be
substituted for, the Company under the Indenture and the Notes. Notwithstanding
clauses (3) and (4) of the preceding paragraph,

 

(1) any Restricted Subsidiary of the Company may consolidate or merge with or
into or transfer all or part of its properties and assets to the Company so long
as no Capital Stock of the Restricted Subsidiary of the Company is distributed
to any Person other than the Company; and

 

(2) the Company may merge with an Affiliate of the Company solely for the
purpose of reincorporating the Company in another state or territory of the
United States or the District of Columbia.

In addition, the Company will not and will not permit any Guarantor to merge
with or into or consolidate with, or wind up into (whether or not such Guarantor
is the surviving corporation), or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets, in
one or more related transactions, to any Person (other than to the Company or
another Guarantor) unless:

 

(1) (a)

if such entity remains a Guarantor, the resulting, surviving or transferee
Person (the “Successor Guarantor”) is a Person (other than an individual)
organized and existing under the same laws as the Guarantor was organized
immediately prior to such transaction, the laws of the United States, any state
or territory thereof or the District of Columbia;

 

  (b) if such entity remains a Guarantor, the Successor Guarantor, if other than
such Guarantor, expressly assumes all the obligations of such Guarantor under
the Indenture, the Notes and its Note Guarantee pursuant to a supplemental
indenture or other documents or instruments in form reasonably satisfactory to
the Trustee;

 

  (c) immediately after giving effect to such transaction, no Default or Event
of Default shall have occurred and be continuing; and

 

  (d) the Company will have delivered to the Trustee an Officer’s Certificate
and an Opinion of Counsel, each stating that such consolidation, merger, winding
up or disposition and such supplemental indenture (if any) comply with the
Indenture; and

 

(2) the transaction is made in compliance with the covenant described under
“—Repurchase at the option of holders— Asset sales” (it being understood that
only such portion of the Net Available Cash as is required to be applied on the
date of such transaction in accordance with the terms of the Indenture needs to
be applied in accordance therewith at such time).

Subject to certain limitations described in the Indenture, the Successor
Guarantor will succeed to, and be substituted for, such Guarantor under the
Indenture and the Note Guarantee of such Guarantor.

Notwithstanding the foregoing, any Guarantor may (i) merge with or into or
transfer all or part of its properties and assets to any other Guarantor or the
Company or (ii) merge with a Restricted Subsidiary of the Company for the
purpose of reincorporating the Guarantor in another province state or territory
of the United States or the District of Columbia, so long as the amount of
Indebtedness of such Guarantor and its Subsidiaries is not increased thereby.

For purposes of this covenant, the sale, assignment, conveyance, transfer, lease
or other disposition of all or substantially all of the properties and assets of
one or more Subsidiaries of the Company, which properties and assets, if held by
the Company instead of such Subsidiaries, would constitute all or substantially
all of the properties and assets of the Company on a consolidated basis, will be
deemed to be the disposition of all or substantially all of the properties and
assets of the Company.

Although there is a limited body of case law interpreting the phrase
“substantially all,” there is no precise established definition of the phrase
under applicable law. Accordingly, in certain circumstances there may be a
degree of uncertainty as to whether a particular transaction would involve “all
or substantially all” of the property or assets of a Person.

 

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The Company and the applicable Guarantors will be released from their
obligations under the Indenture, the Notes and the Note Guarantees, as
applicable, and the Successor Company and the Successor Guarantors, as the case
may be, will succeed to, and be substituted for, and may exercise every right
and power of, the Company or the applicable Guarantors, as applicable, under the
Indenture, the Notes and the Note Guarantees; provided that, in the case of a
lease of all or substantially all its assets, the Company will not be released
from the obligation to pay the principal of and interest on the Notes, and a
Guarantor will not be released from its obligations under its Note Guarantee.

Future guarantors

After the Issue Date, the Company will cause each Restricted Subsidiary (other
than each Foreign Subsidiary) created or acquired by the Company or one or more
of its Restricted Subsidiaries to execute and deliver to the Trustee a
supplemental indenture to the Indenture pursuant to which such Restricted
Subsidiary will irrevocably and unconditionally Guarantee, on a joint and
several basis, the full and prompt payment of the principal, premium, if any,
and interest on the Notes on a senior basis and all other obligations under the
Indenture; provided, however, that a Restricted Subsidiary shall not be required
to Guarantee the Notes if such Restricted Subsidiary is prohibited from
guaranteeing any Indebtedness pursuant to the terms of any Acquired Indebtedness
for so long as such Acquired Indebtedness remains outstanding and such
Restricted Subsidiary does not Incur any Indebtedness other than such Acquired
Indebtedness (provided that such Acquired Indebtedness was not Incurred in
anticipation or contemplation of such entity becoming a Restricted Subsidiary
and such Restricted Subsidiary does not guarantee any Indebtedness of any other
Person).

The obligations of each Guarantor will be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor (including, without limitation, any Guarantees under the Senior Credit
Facility) and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the Obligations of such other
Guarantor under its Note Guarantee or pursuant to its contribution Obligations
under the Indenture, result in the Obligations of such Guarantor under its Note
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law.

Each Note Guarantee shall be released in accordance with the provisions of the
Indenture described under “—Note guarantees.”

Payments for consent

The Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, pay or cause to be paid any consideration to or for the benefit
of any Holder for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of the Indenture or the Notes unless such
consideration is offered to be paid and is paid to all Holders that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or amendment; provided that this
covenant shall not be breached if consents, waivers or amendments are sought in
connection with an exchange offer for all of the Notes where (A) participation
in such exchange offer is limited to holders who are “qualified institutional
buyers,” within the meaning of Rule 144A, or non-U.S. persons, within the
meaning of Regulation S and (B) such offer complies with applicable Canadian
Securities Legislation.

Events of default

Each of the following is an “Event of Default”:

 

(1) default in any payment of interest on any Note when due, continued for 30
days;

 

(2) default in the payment of principal of or premium, if any, on any Note when
due at its Stated Maturity, upon optional redemption, upon required repurchase,
upon declaration or otherwise;

 

(3) failure by the Company or any Guarantor to comply with its obligations under
“—Certain covenants—Merger and consolidation;”

 

(4) failure by the Company or any Guarantor to comply for 45 days after notice
as provided below with any of their obligations under the covenants described
under “—Repurchase at the option of holders” or “—Certain covenants” (in each
case, other than (a) a failure to purchase Notes, which constitutes an Event of
Default under clause (2) above, (b) a failure to comply with “—Certain
covenants—Merger and consolidation,” which constitutes an Event of Default under
clause (3) above or (c) a failure to comply with “—Certain covenants—Reports” or
“—Certain covenants—Payments for consent,” which constitute Events of Default
under clause (5) below);

 

(5) failure by the Company or any Guarantor to comply for 90 days after notice
as provided below with its other agreements contained in the Indenture or the
Notes;

 

(6)

default under any mortgage, indenture or instrument under which there is issued
or by which there is secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the

 

24

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  payment of which is Guaranteed by the Company or any of its Restricted
Subsidiaries), other than Indebtedness owed to the Company or its Restricted
Subsidiary, whether such Indebtedness or Guarantee now exists, or is created
after the Issue Date, which default:

 

  (a) is caused by a failure to pay principal, interest or premium, if any, on
such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness; or

 

  (b) results in the acceleration of such Indebtedness prior to its maturity;

and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
payment default or the maturity of which has been so accelerated, aggregates
US$25.0 million or more (or its foreign currency equivalent);

 

(7) failure by the Company or any Significant Subsidiary or any group of
Restricted Subsidiaries of the Company that, taken together, would constitute a
Significant Subsidiary to pay final judgments aggregating in excess of US$25.0
million (or its foreign currency equivalent) (net of any amounts that a
reputable and creditworthy insurance company has acknowledged liability for in
writing), which judgments are not paid, discharged or stayed for a period of 60
days or more after such judgments become final and non-appealable;

 

(8) certain events of bankruptcy, insolvency or reorganization of the Company or
a Significant Subsidiary or any group of Restricted Subsidiaries of the Company
that, taken together, would constitute a Significant Subsidiary; or

 

(9) any Note Guarantee of a Significant Subsidiary or any group of Guarantors
that, taken together, would constitute a Significant Subsidiary, ceases to be in
full force and effect (except as contemplated by the terms of the Indenture) or
is declared null and void in a judicial proceeding or any Guarantor that is a
Significant Subsidiary or any group of Guarantors that, taken together, would
constitute a Significant Subsidiary, denies or disaffirms its obligations under
the Indenture or its Note Guarantee.

However, a default under clauses (4) and (5) of this paragraph will not
constitute an Event of Default until the Trustee or the Holders of 25% in
principal amount of the then outstanding Notes notify the Company of the default
and the Company does not cure such default within the time specified in clauses
(4) and (5) of this paragraph after receipt of such notice.

If an Event of Default (other than an Event of Default described in clause
(8) above) occurs and is continuing, the Trustee by written notice to the
Company, specifying the Event of Default, or the Holders of at least 25% in
principal amount of the then outstanding Notes by notice to the Company and the
Trustee, may, and the Trustee at the request of such Holders shall, declare the
principal of, premium, if any, and accrued and unpaid interest, if any, on all
the Notes to be due and payable. Upon such a declaration, such principal,
premium, if any, and accrued and unpaid interest, if any, will be due and
payable immediately. In the event of a declaration of acceleration of the Notes
because an Event of Default described in clause (6) under “—Events of default”
has occurred and is continuing, the declaration of acceleration of the Notes
shall be automatically annulled if the default triggering such Event of Default
pursuant to clause (6) shall be remedied or cured by the Company or any of its
Restricted Subsidiaries or waived by the holders of the relevant Indebtedness
within 20 days after the declaration of acceleration with respect thereto and if
(1) the annulment of the acceleration of the Notes would not conflict with any
judgment or decree of a court of competent jurisdiction and (2) all existing
Events of Default, except nonpayment of principal, premium, if any, or interest
on the Notes that became due solely because of the acceleration of the Notes,
have been cured or waived. If an Event of Default described in clause (8) above
occurs and is continuing, the principal of, premium, if any, and accrued and
unpaid interest, if any, on all the Notes will become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holders. The Holders of a majority in principal amount of the outstanding Notes
may waive all past defaults (except with respect to nonpayment of principal,
premium or interest) and rescind any such acceleration with respect to the Notes
and its consequences if (1) rescission would not conflict with any judgment or
decree of a court of competent jurisdiction and (2) all existing Events of
Default, other than the nonpayment of the principal of, premium, if any, and
interest on the Notes that have become due solely by such declaration of
acceleration, have been cured or waived.

Except to enforce the right to receive payment of principal, premium, if any, or
interest when due, no Holder may pursue any remedy with respect to the Indenture
or the Notes unless:

 

(1) such Holder has previously given the Trustee written notice that an Event of
Default is continuing;

 

(2) Holders of at least 25% in principal amount of the then outstanding Notes
have requested the Trustee to pursue the remedy;

 

(3) such Holders have offered the Trustee security or indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense;

 

(4) the Trustee has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity; and

 

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(5) the Holders of a majority in principal amount of the then outstanding Notes
have not given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 60-day period.

Subject to certain restrictions, the Holders of a majority in principal amount
of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Indenture provides
that in the event an Event of Default has occurred and is continuing, the
Trustee will be required in the exercise of its powers to use the degree of care
that a prudent person would use under the circumstances in the conduct of its
own affairs. The Trustee, however, may refuse to follow any direction that
conflicts with law or the Indenture, the Notes or any Note Guarantee, or that
the Trustee determines in good faith is unduly prejudicial to the rights of any
other Holder or that would involve the Trustee in personal liability.

Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture,
the Notes and the Note Guarantees at the request or direction of any of the
Holders unless such Holders have offered to the Trustee indemnity or security
reasonably satisfactory to it against any loss, liability or expense.

The Indenture will provide that if a Default occurs and is continuing and is
known to the Trustee, the Trustee will mail to each Holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of, premium, if any, or interest on any Note, the Trustee may
withhold from the Holders notice of any continuing Default if the Trustee
determines in good faith that withholding the notice is in the interests of the
Holders. In addition, the Company is required to deliver to the Trustee, within
90 days after the end of each fiscal year ending after the Issue Date, a
certificate indicating whether the signers thereof know of any Default that
occurred during the previous year. The Company also is required to deliver to
the Trustee, within 30 Business Days after the occurrence thereof, written
notice of any events which would constitute a Default, their status and what
action the Company is taking or proposing to take in respect thereof.

If a Default is deemed to occur solely because a Default (the “Initial Default”)
already existed, and such Initial Default is subsequently cured and is not
continuing, the Default or Event of Default resulting solely because the Initial
Default existed shall be deemed cured, and will be deemed annulled, waived and
rescinded without any further action required.

Amendments and waivers

Except as provided in the next two succeeding paragraphs, the Indenture, the
Notes and the Note Guarantees may be amended or supplemented with the consent of
the Holders of a majority in principal amount of the Notes then outstanding
(including without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes) and, subject to certain
exceptions, any past default or compliance with any provisions may be waived
with the consent of the Holders of a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Notes). However,
without the consent of each Holder of an outstanding Note affected, no
amendment, supplement or waiver may, among other things:

 

(1) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;

 

(2) reduce the stated rate of interest or extend the stated time for payment of
interest on any Note;

 

(3) reduce the principal of or extend the Stated Maturity of any Note;

 

(4) waive a Default or Event of Default in the payment of principal of, premium,
if any, or interest on the Notes (except a rescission of acceleration of the
Notes by the Holders of at least a majority in aggregate principal amount of the
then outstanding Notes with respect to a nonpayment default and a waiver of the
payment default that resulted from such acceleration);

 

(5) reduce the premium payable upon the redemption or repurchase of any Note or
change the time at which any Note may be redeemed or repurchased as described
above under “—Optional redemption,” “—Repurchase at the option of holders—Change
of control” or “—Repurchase at the option of holders—Asset sales” whether
through an amendment or waiver of provisions in the covenants, definitions or
otherwise (except amendments to the definitions of “Change of Control” or
changes to any notice provisions, which may be amended with the consent of the
Holders of a majority in principal amount of the Notes then outstanding);

 

(6) make any Note payable in money other than that stated in the Note;

 

(7) impair the right of any Holder to receive payment of principal of, premium,
if any, or interest on such Holder’s Notes on or after the due dates therefor or
to institute suit for the enforcement of any payment on or with respect to such
Holder’s Notes;

 

(8) make any change in the amendment or waiver provisions which require each
Holder’s consent; or

 

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(9) modify the Note Guarantees in any manner materially adverse to the Holders.

Notwithstanding the foregoing, without the consent of any Holder, the Company,
the Guarantors and the Trustee may amend the Indenture, the Notes and the Note
Guarantees to:

 

(1) cure any ambiguity, omission, defect or inconsistency;

 

(2) issue Additional Notes in compliance with “—Certain covenants—Limitations on
indebtedness;” provided that no such amendments shall affect the terms of the
Notes already issued and outstanding or the transferability of such Notes;

 

(3) provide for the assumption by a successor of the obligations of the Company
or any Guarantor under the Indenture, the Notes or the Note Guarantees in
accordance with “—Certain covenants—Merger and consolidation;”

 

(4) provide for or facilitate the issuance of uncertificated Notes in addition
to or in place of certificated Notes; provided that the uncertificated Notes are
issued in registered form for purposes of Section 163(f) of the Code or in a
manner such that the uncertificated Notes are described in Section 163(f)(2)(B)
of the Code;

 

(5) to comply with the rules of any applicable depositary;

 

(6) (i) add Guarantors with respect to the Notes or (ii) release a Guarantor
from its obligations under its Note Guarantee or the Indenture in accordance
with the applicable provisions of the Indenture;

 

(7) secure the Notes and the Note Guarantees;

 

(8) add covenants of the Company or its Restricted Subsidiaries or Events of
Default for the benefit of Holders or to make changes that would provide
additional rights to the Holders or to surrender any right or power conferred
upon the Company or any Guarantor;

 

(9) make any change that does not materially adversely affect the legal rights
under the Indenture of any Holder;

 

(10) evidence and provide for the acceptance of an appointment under the
Indenture of a successor trustee; provided that the successor trustee is
otherwise qualified and eligible to act as such under the terms of the
Indenture;

 

(11) conform the text of the Indenture, the Notes or the Note Guarantees to any
provision of this “Description of notes” to the extent that such provision in
this “Description of notes” was intended to be a verbatim recitation of a
provision of the Indenture, the Notes or the Note Guarantees, as set forth in an
Officer’s Certificate; or

 

(12) make any amendment to the provisions of the Indenture relating to the
transfer and legending of Notes as permitted by the Indenture, including,
without limitation, to facilitate the issuance and administration of the Notes
or, if Incurred in compliance with the Indenture, Additional Notes; provided,
however, that (A) compliance with the Indenture as so amended would not result
in Notes being transferred in violation of the Securities Act, Canadian
Securities Legislation or any applicable other securities laws and regulations
and (B) such amendment does not materially and adversely affect the rights of
Holders to transfer Notes.

The consent of the Holders will not be necessary under the Indenture to approve
the particular form of any proposed amendment, supplement or waiver. It is
sufficient if such consent approves the substance of the proposed amendment or
supplement. A consent to any amendment, supplement or waiver under the Indenture
by any Holder given in connection with a tender of such Holder’s Notes will not
be rendered invalid by such tender. After an amendment, supplement or waiver
under the Indenture becomes effective, the Company is required to give to the
Holders a written notice briefly describing such amendment, supplement or
waiver. However, the failure to give such notice to the Holders, or any defect
in such notice will not impair or affect the validity of the amendment,
supplement or waiver.

Defeasance

The Company may, at its option and at any time, elect to have all of its
obligations and all of the obligations of the Guarantors discharged with respect
to the outstanding Notes issued under the Indenture (“legal defeasance”) except
for:

 

(1) the rights of Holders to receive payments in respect of the principal of,
premium, if any, or interest on such Notes when such payments are due, solely
out of the trust referred to below;

 

(2) the Company’s obligations with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen
Notes and the maintenance of an office or agency for payment and money for Note
payments held in trust;

 

(3) the rights, powers, trusts, duties and immunities of the Trustee and the
Company’s obligations in connection therewith; and

 

(4) the legal defeasance provisions of the Indenture.

 

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If the Company exercises the legal defeasance option, the Note Guarantees in
effect at such time will terminate.

The Company at any time may terminate its obligations described under
“—Repurchase at the option of holders” and under the covenants described under
“—Certain covenants” (other than “—Merger and consolidation”), the operation of
the cross-default upon a payment default, cross acceleration provisions, the
bankruptcy provisions with respect to Significant Subsidiaries, the judgment
default provision described under “—Events of default” above and the limitations
contained in clause (4) under “—Certain covenants—Merger and consolidation”
above (“covenant defeasance”).

If the Company exercises the covenant defeasance option, the Note Guarantees in
effect at such time will terminate.

The Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If the Company exercises its legal
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default with respect to the Notes. If the Company exercises its
covenant defeasance option, payment of the Notes may not be accelerated because
of an Event of Default specified in clause (3) that resulted solely from the
failure of the Company to comply with clause (4) under “—Certain
covenants—Merger and consolidation” above, (4) (solely with respect to covenants
that are released as a result of such covenant defeasance), (5) (solely with
respect to covenants that are released as a result of such covenant defeasance),
(6), (7), (8) (solely with respect to Significant Subsidiaries or any group of
Restricted Subsidiaries of the Company that, taken together would constitute a
Significant Subsidiary) or (9) under “—Events of default” above.

In order to exercise either legal defeasance or covenant defeasance under the
Indenture:

 

(1) the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders, cash in Canadian dollars, Canadian dollar-denominated
Government Securities, or a combination thereof, in amounts as will be
sufficient, as confirmed, certified or attested by an Independent Financial
Advisor without consideration of any reinvestment of interest, to pay the
principal of, and premium, if any, and interest due on the outstanding Notes on
the Stated Maturity or on the applicable redemption date, as the case may be,
and the Company must specify whether the Notes are being defeased to maturity or
to a particular redemption date;

 

(2) in the case of legal defeasance or covenant defeasance, the Company has
delivered to the Trustee an Opinion of Counsel acceptable to the Trustee in its
reasonable judgment or an advance tax ruling from the Canada Revenue Agency (or
successor agency) to the effect that the holders of outstanding Notes will not
recognize income, gain, or loss for Canadian federal income tax purposes as a
result of such legal defeasance or covenant defeasance, as the case may be and
will be subject to Canadian federal income tax on the same amounts, in the same
manner, and at the same times as would have been the case if such legal
defeasance or covenant defeasance, as the case may be, had not occurred;

 

(3) in the case of legal defeasance, the Company has delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or (b) since the Issue Date, there has been a change in the
applicable U.S. federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel will confirm that the Holders will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such legal defeasance and will be subject to U.S. federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such legal defeasance had not occurred;

 

(4) in the case of covenant defeasance, the Company has delivered to the Trustee
an Opinion of Counsel reasonably acceptable to the Trustee confirming that,
subject to customary assumptions and exclusions, the Holders will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of such
covenant defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred;

 

(5) no Default or Event of Default has occurred and is continuing on the date of
such deposit or will occur as a result of such deposit (other than a Default or
an Event of Default resulting from the borrowing of funds to be applied to make
such deposit and any similar and simultaneous deposit relating to other
Indebtedness and, in each case, the granting of Liens in connection therewith)
and the deposit will not result in a breach or violation of, or constitute a
default under, any material agreement or material instrument (other than the
Indenture) to which the Company or any Guarantor is a party or by which the
Company or any Guarantor is bound;

 

(6) the Company has delivered to the Trustee an Opinion of Counsel to the effect
that as of the date of such opinion and subject to customary assumptions and
exclusions, including, without limitation, where applicable, that no intervening
bankruptcy of the Company between the date of deposit and the 91st day following
the deposit and, assuming that no Holder is an “insider” of the Company under
applicable bankruptcy law, after the 91st day following the deposit, the trust
funds will not be a preference under any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally;

 

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(7) the Company has delivered to the Trustee an Officer’s Certificate stating
that the deposit was not made by the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company, any Guarantor or
others;

 

(8) the Company has delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel (which Opinion of Counsel may be subject to customary
assumptions and exclusions), each stating that all conditions precedent relating
to the legal defeasance or the covenant defeasance, as the case may be, have
been complied with;

 

(9) the Company has delivered irrevocable instructions to the Trustee to apply
the deposited money toward the payment of the Notes at maturity or the
redemption date, as the case may be (which instructions may be contained in the
Officer’s Certificate referred to in clause (8) above); and

 

(9) the Company must satisfy the Trustee that it has deposited funds or made due
provision for the payment of the expenses of the Trustee.

Satisfaction and discharge

The Indenture will be discharged and will cease to be of further effect as to
all Notes issued thereunder, when either:

 

(1) all Notes that have been authenticated, except lost, stolen or destroyed
Notes that have been replaced or paid and Notes for payment of which money has
been deposited in trust and thereafter repaid to the Company, have been
delivered to the Trustee for cancellation; or

 

(2) (a)

all Notes not theretofore delivered to the Trustee for cancellation have become
due and payable by reason of the giving of a notice of redemption or otherwise,
will become due and payable within one year or may be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Company, and the Company or any Guarantor has irrevocably deposited or caused to
be deposited with the Trustee, as trust funds in trust solely for the benefit of
the Holders, cash in Canadian dollars, non-callable Canadian dollar-denominated
Government Securities, or a combination thereof, in such amounts as will be
sufficient, as confirmed, certified or attested to by an Independent Financial
Advisor, without consideration of any reinvestment of interest, to pay and
discharge the entire Indebtedness on the Notes not theretofore delivered to the
Trustee for cancellation for principal, premium, if any, and accrued interest to
the date of maturity or redemption;

 

  (b) no Default or Event of Default has occurred and is continuing on the date
of the deposit or will occur as a result of the deposit (other than a Default or
an Event of Default resulting from borrowing of funds to be applied to such
deposit and the grant of any Lien securing such borrowing), and the deposit will
not result in a breach or violation of, or constitute a default under, any
material agreement or material instrument (other than the Indenture) to which
the Company or any Guarantor is a party or by which the Company or any Guarantor
is bound;

 

  (c) the Company has paid or caused to be paid all sums payable by it under the
Indenture; and

 

  (d) the Company has delivered written irrevocable instructions to the Trustee
to apply the deposited money toward the payment of the Notes at maturity or the
redemption date, as the case may be.

In addition, the Company must deliver an Officer’s Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

No personal liability of directors, officers, employees and shareholders

No past, present or future director, officer, employee, incorporator, member,
partner or shareholder of the Company or any Guarantor shall have any liability
for any obligations of the Company or any Guarantor under the Notes, the Note
Guarantees or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. This waiver and release are part of the
consideration for issuance of the Notes. This waiver may not be effective to
waive liabilities under the U.S. federal securities law or Canadian Securities
Legislation.

 

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Notices

Notice or communication mailed to a Holder shall be mailed to such Holder at
such Holder’s address as it appears on the registration books of the Registrar
and shall be sufficiently given if so mailed within the time prescribed. Any
written notice or communication that is delivered in person or mailed by
first-class mail to the designated address will be deemed duly given, regardless
of whether the addressee receives such notice.

Notwithstanding any other provision of the Indenture or any Note, where the
Indenture or any Note provides for notice of any event (including any notice of
redemption) to any Holder of an interest in a Global Certificate (whether by
mail or otherwise), such notice shall be sufficiently given if given to CDS or
any other applicable depositary for such Note (or its designee) according to the
applicable procedures of CDS or such depositary.

Concerning the trustee

n is the Trustee under the Indenture and has been appointed by the Company as
Registrar and Paying Agent with regard to the Notes.

Except during the continuance of an Event of Default, the Trustee will perform
only such duties as are specifically set forth in the Indenture and no implied
covenants or obligations will be read into the Indenture against the Trustee.
During the existence of an Event of Default, the Trustee will exercise such of
the rights and powers vested in it under the Indenture and use the same degree
of care and skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person’s own affairs. No provision of the
Indenture will require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of its duties thereunder, or in
the exercise of its rights or powers, unless it receives indemnity satisfactory
to it against any loss, liability, or expense.

Enforceability of judgments

Since all of our consolidated operating assets are situated outside Canada, any
judgment obtained in Canada against the Company or any Guarantor, including
judgments with respect to the payment of principal, interest, Additional
Amounts, redemption price and any purchase price with respect to the Notes or
the Note Guarantees may not be collectible within Canada.

Consent to jurisdiction and service

The Indenture will provide that the Company and any Note Guarantor not organized
in Canada will appoint n as its agent for service of process in any suit, action
or proceeding with respect to the Indenture, the Notes and the Note Guarantees
and for actions brought under Canadian Securities Legislation brought in any
Canadian court. In relation to any legal action or proceedings arising out of or
in connection with the Indenture, the Notes and the Note Guarantees, the Company
and each Guarantor will in the Indenture irrevocably submit to the non-exclusive
jurisdiction of the courts of the Province of Ontario located in Toronto,
Ontario.

Governing law

The Indenture will provide that it, the Notes and any Note Guarantee will be
governed by, and construed in accordance with, the laws of the Province of
Ontario.

Certain definitions

Set forth below are certain defined terms used in the Indenture.

“Acquired Indebtedness” means, with respect to any specified Person,
(1) Indebtedness of any Person or any of its Subsidiaries existing at the time
such Person becomes a Restricted Subsidiary of the Company or (2) Indebtedness
assumed in connection with the acquisition of assets from such Person, in each
case whether or not Incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
of the Company or such acquisition, and Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person. Acquired Indebtedness
shall be deemed to have been Incurred, with respect to clause (1) of the
preceding sentence, on the date such Person becomes a Restricted Subsidiary of
the Company and, with respect to clause (2) of the preceding sentence, on the
date of consummation of such acquisition of assets.

 

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“Additional Assets” means:

 

(1) any property, plant, equipment or other asset (excluding working capital or
current assets for the avoidance of doubt) to be used by the Company or any of
its Restricted Subsidiaries in a Similar Business;

 

(2) the Capital Stock of a Person that becomes a Restricted Subsidiary of the
Company as a result of the acquisition of such Capital Stock by the Company or
its Restricted Subsidiary; or

 

(3) Capital Stock constituting a minority interest in any Person that at such
time is a Restricted Subsidiary of the Company;

provided, however, that, in the case of clauses (2) and (3), such Restricted
Subsidiary is primarily engaged in a Similar Business.

“Affiliate” of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
“control” (including, with correlative meanings, the terms “controlling,”
“controlled by” and “under common control with”) when used with respect to any
Person means possession, directly or indirectly, of the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing;
provided that exclusively for purposes of “— Repurchase at the option of
holders—Assets sales” and “—Certain covenants—Limitation on affiliate
transactions,” beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.

“Asset Disposition” means any direct or indirect sale, lease (other than an
operating lease entered into in the ordinary course of business), transfer,
issuance or other disposition, or a series of related sales, leases, transfers,
issuances or dispositions that are part of a common plan, of shares of Capital
Stock of a Subsidiary (other than directors’ qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
“disposition”) by the Company or any of its Restricted Subsidiaries, including
any disposition by means of a merger, consolidation or similar transaction.

Notwithstanding the preceding, the following items shall not be deemed to be
Asset Dispositions:

 

(1) a disposition of assets by a Restricted Subsidiary to the Company or by the
Company or any of its Restricted Subsidiaries to a Restricted Subsidiary of the
Company;

 

(2) a disposition of Cash Equivalents in the ordinary course of business;

 

(3) a disposition of inventory in the ordinary course of business;

 

(4) a disposition of obsolete, damaged or worn out property or equipment, or
property or equipment that are no longer used or useful in the conduct of the
business of the Company and its Restricted Subsidiaries and that is disposed of
in each case in the ordinary course of business;

 

(5) the disposition of all or substantially all of the assets of the Company in
a manner permitted pursuant to “—Certain covenants—Merger and consolidation” or
any disposition that constitutes a Change of Control pursuant to the Indenture;

 

(6) an issuance, sale or transfer of Capital Stock by a Restricted Subsidiary to
the Company or to a Wholly Owned Subsidiary;

 

(7) any Permitted Investment or Restricted Payment in compliance with “—Certain
covenants— Limitation on restricted payments;”

 

(8) dispositions of assets in a single transaction or a series of related
transactions with an aggregate Fair Market Value of less than US$7.5 million;

 

(9) the creation of a Permitted Lien and dispositions in connection with
Permitted Liens;

 

(10) the issuance by a Restricted Subsidiary of the Company of Preferred Stock
that is permitted by the covenant described under “—Certain covenants—Limitation
on indebtedness;”

 

(11) the licensing or sublicensing of intellectual property or other general
intangibles and licenses, leases or subleases of other property in the ordinary
course of business which do not materially interfere with the business of the
Company and its Restricted Subsidiaries;

 

(12) foreclosure on assets;

 

(13) any sale of Capital Stock in, or Indebtedness or other securities of, an
Unrestricted Subsidiary;

 

(14) the unwinding of any Hedging Obligations;

 

(15) the surrender of contract rights or the settlement or surrender of
contract, tort or other claims;

 

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(16) any exchange of assets for assets (including a combination of assets (which
assets may include Capital Stock or any securities convertible into, or
exercisable or exchangeable for, Capital Stock, but which assets may not include
any Indebtedness) and Cash Equivalents) related to a Similar Business of
comparable or greater market value or usefulness to the business of the Company
and its Restricted Subsidiaries, taken as a whole, which in the event of an
exchange of assets with a Fair Market Value in excess of (a) US$10.0 million
shall be evidenced by an Officer’s Certificate and (b) US$25.0 million shall be
set forth in a resolution approved by at least a majority of the members of the
Board of Directors of the Company; provided that the Company shall apply any
cash or Cash Equivalents received in any such exchange of assets as described in
the third paragraph under “Repurchase at the option of holders—Asset sales;”

 

(17) dispositions to the extent required by, or made pursuant to customary
buy/sell arrangements between the joint venture parties set forth in joint
venture arrangements and similar binding agreements;

 

(18) the lease, assignment, sub-lease, license or sub-license of any real or
personal property in the ordinary course of business; and

 

(19) any financing transaction with respect to the gyratory crusher described on
page [10] of the Offering Memorandum, including a Sale and Lease-Back of such
asset.

“Attributable Indebtedness” in respect of a Sale/Leaseback Transaction means, as
at the time of determination, the present value (discounted at the interest rate
implicit in the transaction) of the total obligations of the lessee for rental
payments during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended),
determined in accordance with GAAP; provided, however, that if such
Sale/Leaseback Transaction results in a Capitalized Lease Obligation, the amount
of Indebtedness represented thereby will be determined in accordance with the
definition of “Capitalized Lease Obligations.”

“Average Life” means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (2) the sum of all such payments.

“Board of Directors” means:

 

(1) with respect to a corporation, the Board of Directors of the corporation or
(other than for purposes of determining Change of Control) the executive
committee of the Board of Directors;

 

(2) with respect to a partnership, the Board of Directors of the general partner
of the partnership; and

 

(3) with respect to any other Person, the board or committee of such Person
serving a similar function.

“Business Day” means each day that is not a Saturday, Sunday or other day on
which banking institutions in New York, New York or Toronto, Ontario are
authorized or required by law to close.

“C$” means Canadian dollars.

“Canada Bond Yield” means, on any date, the bid yield to maturity on such date
compounded semi-annually which a non-callable non-amortizing Government of
Canada nominal bond would be expected to carry if issued, in Canadian dollars in
Canada, at 100% of its principal amount on such date with a term to maturity
which most closely approximates the remaining term of the Notes to June 1, 2016
on such date, as determined by the Company based on a linear interpolation of
the yields represented by the arithmetic average of bids observed in the market
place at or about 11:00 a.m. (Toronto time), on the relevant date for each of
the two (2) outstanding non-callable non-amortizing Government of Canada nominal
bonds which have the terms to maturity which most closely span the remaining
term of the Notes to June 1, 2016 on such date, where such arithmetic average is
based in each case on the bids quoted to an independent investment dealer acting
as agent of the Company by two (2) independent registered members of the
Investment Industry Regulatory Organization of Canada selected by the Company
(such independent registered members to be acceptable to the Trustee, acting
reasonably), calculated in accordance with standard practice in the industry.

“Canada Yield Price” means the price for the Notes, as determined by an
independent investment dealer selected by the Company (such independent
investment dealer to be acceptable to the Trustee, acting reasonably), as of the
Business Day immediately preceding the day on which the notice of redemption for
prepayment is given, equal to the sum of the present values of (i) the
redemption price of the Notes on June 1, 2016 (such redemption being described
under “Optional redemption”) plus (ii) all scheduled interest payments due on
the Notes through June 1, 2016 (not including any portion of the scheduled
payments of interest accrued as of the relevant redemption date) discounted to
the relevant redemption date on a semi-annual basis (assuming a 365-day year) at
the discount rate equal to the sum of the Canada Bond Yield for such Notes and
the Canada Yield Spread.

 

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“Canada Yield Spread” means 1.00% (or 100 basis points) per annum.

“Canadian Securities Legislation” means all applicable securities laws in each
of the provinces and territories of Canada, including, without limitation, the
Province of Ontario, and the respective regulations and rules under such laws
together with applicable published rules, policy statements, blanket orders,
instruments, rulings and notices of the regulatory authorities in such provinces
or territories.

“Capital Stock” of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock and
limited liability or partnership interests (whether general or limited), but
excluding any debt securities convertible or exchangeable into such equity.

“Capitalized Lease Obligations” means an obligation that would have been
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP as of the Issue Date. The amount of
Indebtedness represented by such obligation will be the capitalized amount of
such obligation at the time any determination thereof is to be made as
determined in accordance with GAAP, and the Stated Maturity thereof will be the
date of the last payment of rent or any other amount due under such lease prior
to the first date such lease may be terminated without penalty.

“Cash Equivalents” means:

 

(1) Canadian dollars, U.S. dollars or, in the case of any foreign Subsidiary,
such other local currencies held by it from time to time in the ordinary course
of business;

 

(2) securities issued or directly and fully Guaranteed or insured by the
Canadian or U.S. government or any agency or instrumentality of Canada or the
United States (provided that the full faith and credit of Canada or the United
States, as applicable, is pledged in support thereof), having maturities of not
more than one year from the date of acquisition;

 

(3) marketable general obligations issued by any state of the United States or
province of Canada or any political subdivision of any such province or state or
any public instrumentality thereof maturing within one year from the date of
acquisition and, at the time of acquisition, having a credit rating of “A” or
better from either Standard & Poor’s Ratings Group, Inc. or Moody’s Investors
Service, Inc., or carrying an equivalent rating by a nationally recognized
Rating Agency, if both of the two named Rating Agencies cease publishing ratings
of investments;

 

(4) certificates of deposit, time deposits, eurodollar time deposits, overnight
bank deposits or bankers’ acceptances having maturities of not more than one
year from the date of acquisition thereof issued by any commercial bank the
long-term debt of which is rated at the time of acquisition thereof at least “A”
or the equivalent thereof by Standard & Poor’s Ratings Group, Inc., or “A” or
the equivalent thereof by Moody’s Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized Rating Agency, if both of the two
named Rating Agencies cease publishing ratings of investments, and having
combined capital and surplus in excess of US$500.0 million;

 

(5) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2), (3) and (4) entered
into with any bank meeting the qualifications specified in clause (4) above;

 

(6) commercial paper rated at the time of acquisition thereof at least “A-2” or
the equivalent thereof by Standard & Poor’s Ratings Group, Inc. or “P-2” or the
equivalent thereof by Moody’s Investors Service, Inc., or carrying an equivalent
rating by a nationally recognized Rating Agency, if both of the two named Rating
Agencies cease publishing ratings of investments, and in any case maturing
within one year after the date of acquisition thereof; and

 

(7) interests in any investment company or money market fund which invests 95%
or more of its assets in instruments of the type specified in clauses
(1) through (6) above.

“CDS” means CDS Clearing and Depository Services Inc.

“CDS Nominee” means the nominee of CDS in whose name Global Certificates are
registered.

“Change of Control” means:

 

(1) any “person” or “group” of related persons (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person
or group shall be deemed to have “beneficial ownership” of all shares that any
such person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total voting power of the Voting Stock of the Company (or its
successor by merger, consolidation or purchase of all or substantially all of
its assets); or

 

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(2) the merger or consolidation of the Company with or into another Person or
the merger or consolidation of another Person with or into the Company or the
merger or consolidation of any Person with or into a Subsidiary of the Company,
unless the holders of a majority of the aggregate voting power of the Voting
Stock of the Company, immediately prior to such transaction, hold securities of
the surviving or transferee Person that represent, immediately after such
transaction, at least a majority of the aggregate voting power of the Voting
Stock of the surviving or transferee Person; or

 

(3) the first day on which a majority of the members of the Board of Directors
of the Company are not Continuing Directors; or

 

(4) the sale, assignment, conveyance, transfer, lease or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole to any “person” (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act); or

 

(5) the adoption by the shareholders of the Company of a plan or proposal for
the liquidation or dissolution of the Company.

“Code” means the Internal Revenue Code of 1986, as amended

“Commodity Agreement” means any commodity futures contract, commodity swap,
commodity option or other similar agreement or arrangement entered into by the
Company or any of its Restricted Subsidiaries designed to protect the Company or
any of its Restricted Subsidiaries against fluctuations in the price of
commodities actually used in the ordinary course of business of the Company and
its Restricted Subsidiaries.

“Common Stock” means with respect to any Person, any and all shares, interest or
other participations in, and other equivalents (however designated and whether
voting or nonvoting) of such Person’s common stock, whether or not outstanding
on the Issue Date, and includes, without limitation, all series and classes of
such common stock.

“Consolidated Coverage Ratio” means as of any date of determination, with
respect to any Person, the ratio of (x) the aggregate amount of Consolidated
EBITDA of such Person for the period of the most recent four consecutive fiscal
quarters ending prior to the date of such determination for which financial
statements are internally available to (y) Consolidated Interest Expense for
such four fiscal quarters; provided, however, that:

 

(1) if the Company or any of its Restricted Subsidiaries:

 

  (a) has Incurred any Indebtedness (other than Indebtedness that constitutes
ordinary working capital borrowings) since the beginning of such period that
remains outstanding on such date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio includes an
Incurrence of Indebtedness (other than Indebtedness that constitutes ordinary
working capital borrowings), Consolidated EBITDA and Consolidated Interest
Expense for such period will be calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness had been Incurred on the
first day of such period (except that in making such computation, the amount of
Indebtedness under any revolving Debt Facility outstanding on the date of such
calculation will be deemed to be:

 

  (i) the average daily balance of such Indebtedness during such four fiscal
quarters or such shorter period for which such facility was outstanding; or

 

  (ii) if such facility was created after the end of such four fiscal quarters,
the average daily balance of such Indebtedness during the period from the date
of creation of such facility to the date of such calculation),

and the discharge of any other Indebtedness repaid, repurchased, redeemed,
retired, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such period;
or

 

  (b) has repaid, repurchased, redeemed, retired, defeased or otherwise
discharged any Indebtedness since the beginning of the period that is no longer
outstanding on such date of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio includes a discharge of
Indebtedness (in each case, other than Indebtedness Incurred under any revolving
Debt Facility unless such Indebtedness has been permanently repaid and the
related commitment terminated and not replaced), Consolidated EBITDA and
Consolidated Interest Expense for such period will be calculated after giving
effect on a pro forma basis to such discharge of such Indebtedness, including
with the proceeds of such new Indebtedness, as if such discharge had occurred on
the first day of such period;

 

(2)

if since the beginning of such period, the Company or any of its Restricted
Subsidiaries will have made any Asset Disposition or disposed of or discontinued
(as defined under GAAP) any company, division, operating unit, segment,

 

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  business, group of related assets or line of business or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is such an
Asset Disposition:

 

  (a) the Consolidated EBITDA for such period will be reduced by an amount equal
to the Consolidated EBITDA (if positive) directly attributable to the assets
that are the subject of such disposition or discontinuation for such period or
increased by an amount equal to the Consolidated EBITDA (if negative) directly
attributable thereto for such period; and

 

  (b) Consolidated Interest Expense for such period will be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any of its Restricted Subsidiaries repaid,
repurchased, redeemed, retired, defeased or otherwise discharged (to the extent
the related commitment is permanently reduced) with respect to the Company and
its continuing Restricted Subsidiaries in connection with such transaction for
such period (or, if the Capital Stock of any Restricted Subsidiary of the
Company is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale);

 

(3) if since the beginning of such period the Company or any of its Restricted
Subsidiaries (by merger, consolidation or otherwise) will have made an
Investment in any Restricted Subsidiary of the Company (or any Person that
becomes a Restricted Subsidiary of the Company or is merged with or into the
Company or any of its Restricted Subsidiaries) or an acquisition of assets,
including any acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder, which constitutes all or
substantially all of a company, division, operating unit, segment, business,
group of related assets or line of business, Consolidated EBITDA and
Consolidated Interest Expense for such period will be calculated after giving
pro forma effect thereto (including the Incurrence of any Indebtedness and any
applicable Pro Forma Cost Savings) as if such Investment or acquisition occurred
on the first day of such period; and

 

(4) if since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary of the Company or was merged with or into the Company or
any of its Restricted Subsidiaries since the beginning of such period) will have
Incurred any Indebtedness or discharged any Indebtedness, made any disposition
or any Investment or acquisition of assets that would have required an
adjustment pursuant to clause (1), (2) or (3) above if made by the Company or
its Restricted Subsidiary during such period, Consolidated EBITDA and
Consolidated Interest Expense for such period will be calculated after giving
pro forma effect thereto (including any applicable Pro Forma Cost Savings) as if
such transaction occurred on the first day of such period.

For purposes of this definition, whenever pro forma effect is to be given to any
calculation under this definition, the pro forma calculations will be determined
in good faith by a responsible financial or accounting officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness will be calculated as if
the rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months). If any Indebtedness that is being given pro forma effect bears an
interest rate at the option of the Company, the interest rate shall be
calculated by applying such optional rate chosen by the Company.

“Consolidated EBITDA” for any period means, with respect to any Person, the
Consolidated Net Income of such Person for such period:

 

(1) increased (without duplication) by the following items to the extent
deducted in calculating such Consolidated Net Income:

 

  (a) Consolidated Interest Expense; plus

 

  (b) Consolidated Income Taxes; plus

 

  (c) consolidated amortization, depletion and depreciation expense; plus

 

  (d) other non-cash charges reducing Consolidated Net Income (other than
depreciation, amortization or depletion expense), including any write-offs or
write-downs (excluding any such non-cash charge to the extent it represents an
accrual of or reserve for cash charges in any future period or amortization of a
prepaid cash expense that was capitalized at the time of payment); plus

 

  (e) any expenses or charges (other than depreciation, amortization or
depletion expense) related to any Equity Offering, Permitted Investment, merger,
consolidation, acquisition, disposition, recapitalization or the Incurrence of
Indebtedness permitted to be Incurred by the Indenture (including a refinancing
thereof) (whether or not successful), including any amendment or other
modification of the Notes; plus

 

  (f)

any restructuring charges, integration costs or costs associated with
establishing new facilities (which, for the avoidance of doubt, shall include
retention, severance, relocation, workforce reduction, contract termination,
systems establishment costs and facilities consolidation costs) certified by the
chief financial officer of the

 

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  Company and deducted (and not added back) in computing Consolidated Net
Income; provided that the aggregate amount of all charges, expenses and costs
added back under this clause (f) together with any applicable Pro Forma Cost
Savings shall not exceed US$15.0 million in the aggregate in any consecutive
four-quarter period; plus

 

  (g) accretion of asset retirement obligations, net of cash payments for such
asset retirement obligations;

 

(2) decreased (without duplication) by non-cash items increasing Consolidated
Net Income of such Person for such period (excluding any items which represent
the reversal of any accrual of, or reserve for, anticipated cash charges that
reduced Consolidated EBITDA in any prior period), and

 

(3) increased or decreased (without duplication) to eliminate the following
items to the extent reflected in Consolidated Net Income:

 

  (a) any net gain or loss resulting in such period from currency translation
gains or losses; and

 

  (b) effects of adjustments (including the effects of such adjustments pushed
down to the Company and its Restricted Subsidiaries) in any line item in such
Person’s consolidated financial statements resulting from the application of
purchase accounting in relation to any completed acquisition.

Notwithstanding the foregoing, clauses (1)(b) through (g) above relating to
amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net
Income to compute Consolidated EBITDA of such Person only to the extent (and in
the same proportion) that the net income (loss) of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person and, to
the extent the amounts set forth in clauses (1)(b) through (g) above are in
excess of those necessary to offset a net loss of such Restricted Subsidiary or
if such Restricted Subsidiary has net income for such period included in
Consolidated Net Income, only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its shareholders.

“Consolidated Income Taxes” means, with respect to any Person for any period,
taxes imposed upon such Person or other payments required to be made by such
Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits or capital of such Person or
such Person and its Restricted Subsidiaries (to the extent such income or
profits were included in computing Consolidated Net Income for such period),
including, without limitation, federal, provincial, state, franchise and similar
taxes and foreign withholding taxes regardless of whether such taxes or payments
are required to be remitted to any governmental authority.

“Consolidated Interest Expense” means, with respect to any Person, for any
period, the total interest expense of such Person and its consolidated
Restricted Subsidiaries, net of any interest income received by such Person and
its consolidated Restricted Subsidiaries, whether paid or accrued, plus, to the
extent not included in such interest expense:

 

(1) interest expense attributable to Capitalized Lease Obligations and the
interest portion of rent expense associated with Attributable Indebtedness in
respect of the relevant lease giving rise thereto;

 

(2) amortization of debt discount (including the amortization of original issue
discount resulting from the issuance of Indebtedness at less than par) and debt
issuance cost; provided, however, that any amortization of bond premium will be
credited to reduce Consolidated Interest Expense unless such amortization of
bond premium has otherwise reduced Consolidated Interest Expense;

 

(3) non-cash interest expense, but any non-cash interest income or expense
attributable to the movement in the mark-to-market valuation of Hedging
Obligations or other derivative instruments shall be excluded from the
calculation of Consolidated Interest Expense;

 

(4) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers’ acceptance financing;

 

(5) the interest expense on Indebtedness of another Person that is Guaranteed by
such Person or one of its Restricted Subsidiaries or secured by a Lien on assets
of such Person or one of its Restricted Subsidiaries;

 

(6) costs associated with entering into Hedging Obligations (including
amortization of fees) related to Indebtedness;

 

(7) interest expense of such Person and its Restricted Subsidiaries that was
capitalized during such period;

 

(8) the product of (a) all dividends paid or payable, in cash, Cash Equivalents
or Indebtedness or accrued during such period on any series of Disqualified
Stock of such Person or on Preferred Stock of its Non-Guarantors payable to a
party other than the Company or a Wholly Owned Subsidiary, times (b) a fraction,
the numerator of which is one and the denominator of which is one minus the then
current combined federal, state, municipal and local statutory tax rate of such
Person, expressed as a decimal, in each case on a consolidated basis and in
accordance with GAAP;

 

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(9) Receivables Fees; and

 

(10) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are intended to be used by such plan or
trust to pay interest or fees to any Person (other than the Company and its
Restricted Subsidiaries) in connection with Indebtedness Incurred by such plan
or trust.

For the purpose of calculating the Consolidated Coverage Ratio, the calculation
of Consolidated Interest Expense shall include all interest expense (including
any amounts described in clauses (1) through (10) above) relating to any
Indebtedness of such Person or any of its Restricted Subsidiaries described in
the final paragraph of the definition of “Indebtedness.”

For purposes of the foregoing, total interest expense will be determined
(i) after giving effect to any net payments made or received by such Person and
its Subsidiaries with respect to Interest Rate Agreements and (ii) exclusive of
amounts classified as other comprehensive income in the balance sheet of such
Person. Notwithstanding anything to the contrary contained herein, without
duplication of clause (9) above, commissions, discounts, yield and other fees
and charges Incurred in connection with any transaction pursuant to which such
Person or its Restricted Subsidiaries may sell, convey or otherwise transfer or
grant a security interest in any accounts receivable or related assets shall be
included in Consolidated Interest Expense.

“Consolidated Net Income” means, for any period, the net income (loss) of the
Company and its consolidated Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP; provided, however, that there will
not be included in such Consolidated Net Income:

 

(1) any net income (loss) of any Person if such Person is not a Restricted
Subsidiary of the Company or that is accounted for by the equity method of
accounting, except that:

 

  (a) subject to the limitations contained in clauses (3) through (8) below, the
Company’s equity in the net income of any such Person for such period will be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company or any of
its Restricted Subsidiaries as a dividend or other distribution (subject, in the
case of a dividend or other distribution to a Restricted Subsidiary of the
Company, to the limitations contained in clause (2) below); and

 

  (b) the Company’s equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period will be included in determining such
Consolidated Net Income to the extent such loss has been funded with cash from
the Company or any of its Restricted Subsidiaries;

 

(2) solely for the purpose of determining the amount available for Restricted
Payments under clause (c)(i) of the first paragraph of “—Certain
covenants—Limitation on restricted payments,” any net income (but not loss) of
any Restricted Subsidiary of the Company (other than a Guarantor) if such
Restricted Subsidiary is subject to prior government approval or other
restrictions due to the operation of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or government regulation (which have not
been waived), directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that:

 

  (a) subject to the limitations contained in clauses (3) through (8) below, the
Company’s equity in the net income of any such Restricted Subsidiary for such
period will be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary of the
Company as a dividend (subject, in the case of a dividend to another Restricted
Subsidiary of the Company, to the limitation contained in this clause); and

 

  (b) the Company’s equity in a net loss of any such Restricted Subsidiary for
such period will be included in determining such Consolidated Net Income;

 

(3) any gain or loss (less all fees and expenses relating thereto) realized upon
sales or other dispositions of any assets of the Company or such Restricted
Subsidiary, other than in the ordinary course of business, as determined in good
faith by Senior Management;

 

(4) any income or loss from the early extinguishment of Indebtedness or Hedging
Obligations or other derivative instruments;

 

(5) any extraordinary or non-recurring gain or loss;

 

(6) any unrealized net gain or loss resulting in such period from Hedging
Obligations or other derivative instruments;

 

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(7) any net income or loss included in the consolidated statement of operations
with respect to noncontrolling interests;

 

(8) the cumulative effect of a change in accounting principles;

 

(9) consolidated impairment charges;

 

(10) any non-cash compensation charges, including any such charges arising from
stock options, restricted stock grants or other equity-incentive programs; and

 

(11) any fees, expenses and debt issuance costs paid in connection with issuance
of the Notes.

“Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of the Company who: (1) was a member of such Board of
Directors on the Issue Date or (2) was nominated for election or elected to such
Board of Directors with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election.

“Currency Agreement” means, in respect of a Person, any foreign exchange
contract, currency swap agreement, futures contract, option contract or other
similar agreement as to which such Person is a party or a beneficiary.

“Debt Facility” means one or more debt facilities (including, without
limitation, the Senior Credit Facility) or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans, term
loans, receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit or issuances of debt securities
evidenced by notes, debentures, bonds, indentures or similar instruments, in
each case as amended, restated, modified, renewed, refunded, replaced or
refinanced (including by means of sales of debt securities to institutional
investors) in whole or in part from time to time (and whether or not with the
original administrative agent, lenders or trustee or another administrative
agent or agents, other lenders or trustee and whether provided under any credit
or other agreement or indenture).

“Default” means any event that is, or after notice or passage of time or both
would be, an Event of Default.

“Designated Non-cash Consideration” means the Fair Market Value of non-cash
consideration received by the Company or any of its Restricted Subsidiaries in
connection with an Asset Disposition that is designated as “Designated Non-cash
Consideration” pursuant to an Officer’s Certificate, setting forth the basis of
such valuation, less the amount of cash or Cash Equivalents received in
connection with a subsequent sale, redemption or payment of, on or with respect
to such Designated Non-cash Consideration.

“Disqualified Stock” means, with respect to any Person, any Capital Stock of
such Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event:

 

(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise;

 

(2) is convertible into or exchangeable for Indebtedness or Disqualified Stock
(excluding Capital Stock which is convertible or exchangeable solely at the
option of the Company or its Restricted Subsidiaries (it being understood that
upon such conversion or exchange it shall be an Incurrence of such Indebtedness
or Disqualified Stock)); or

 

(3) is redeemable at the option of the holder of the Capital Stock in whole or
in part,

in each case on or prior to the date 91 days after the earlier of the final
maturity date of the Notes or the date the Notes are no longer outstanding;
provided, however, that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable at
the option of the holder thereof prior to such date will be deemed to be
Disqualified Stock; provided, further, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company or its Restricted Subsidiaries to repurchase such Capital
Stock upon the occurrence of a Change of Control or Asset Disposition (each
defined in a substantially identical manner to the corresponding definitions in
the Indenture) shall not constitute Disqualified Stock if the terms of such
Capital Stock (and all such securities into which it is convertible or
exchangeable or for which it is redeemable) provide that the Company or its
Restricted Subsidiaries, as applicable, are not required to repurchase or redeem
any such Capital Stock (and all such securities into which it is convertible or
exchangeable or for which it is redeemable) pursuant to such provision prior to
compliance by the Company with the provisions of the Indenture described under
the captions “—Repurchase at the option of holders—Change of control” and
“—Repurchase at the option of holders—Asset sales” and such repurchase or
redemption complies with “—Certain covenants—Limitation on restricted payments.”

“Equity Offering” means a public offering or private placement for cash by the
Company of its Common Stock, or options, warrants or rights with respect to its
Common Stock, other than (1) any issuances pursuant to employee benefit plans or
otherwise in compensation to officers, directors or employees, (2) an issuance
to any Subsidiary or (3) any offering of Common Stock issued in connection with
a transaction that constitutes a Change of Control.

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.

“Fair Market Value” means, with respect to any asset or liability, the fair
market value of such asset or liability as determined by Senior Management of
the Company in good faith; provided that if the fair market value exceeds
US$25.0 million, such determination shall be made by the Board of Directors of
the Company or an authorized committee thereof in good faith (including as to
the value of all non-cash assets and liabilities).

“Foreign Subsidiary” means any Restricted Subsidiary that is not organized under
the laws of the United States of America or any state thereof or the District of
Columbia.

“GAAP” means generally accepted accounting principles in the United States of
America as in effect as of the Issue Date, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
All ratios and computations based on GAAP contained in the Indenture will be
computed in conformity with GAAP, except that in the event the Company is
acquired in a transaction that is accounted for using purchase accounting, the
effects of the application of purchase accounting shall be disregarded in the
calculation of such ratios and other computations contained in the Indenture.

“Global Certificate” means the global note certificate registered in the name of
the CDS Nominees representing the Notes.

“Government Securities” means securities that are (a) direct obligations of
Canada for the timely payment of which its full faith and credit is pledged or
(b) obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of Canada the timely payment of which is unconditionally
Guaranteed as a full faith and credit obligation of Canada, which, in either
case, are not callable or redeemable at the option of the issuer thereof;

“Guarantee” means any obligation, contingent or otherwise, of any Person
directly or indirectly Guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:

 

(1) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise); or

 

(2) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
“Guarantee” will not include endorsements for collection or deposit in the
ordinary course of business.

“Guarantor” means each Restricted Subsidiary of the Company in existence on the
Issue Date that provides a Note Guarantee on the Issue Date and any other
Restricted Subsidiary of the Company that provides a Note Guarantee after the
Issue Date in accordance with the Indenture; provided that upon release or
discharge of any Restricted Subsidiary of the Company from its Note Guarantee in
accordance with the Indenture, such Restricted Subsidiary shall cease to be a
Guarantor.

“Guarantor Subordinated Obligation” means, with respect to a Guarantor, any
Indebtedness of such Guarantor (whether outstanding on the Issue Date or
thereafter Incurred) that is expressly subordinated in right of payment to the
obligations of such Guarantor under its Note Guarantee pursuant to a written
agreement.

“Hedging Obligations” of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement, Currency Agreement or Commodity
Agreement.

“Holder” means a Person in whose name a Note is registered on the Registrar’s
books.

“Incur” means issue, create, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Restricted Subsidiary of the Company
(whether by merger, consolidation, acquisition or otherwise) will be deemed to
be Incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary of the Company; and the terms “Incurred” and “Incurrence” have
meanings correlative to the foregoing.

“Indebtedness” means, with respect to any Person on any date of determination
(without duplication):

 

(1) the principal of and premium (if any) in respect of indebtedness of such
Person for borrowed money;

 

(2) the principal of and premium (if any) in respect of obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments;

 

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(3) the principal component of all obligations of such Person in respect of
letters of credit, bankers’ acceptances or other similar instruments (including
reimbursement obligations with respect thereto except to the extent such
reimbursement obligation relates to a payable and such obligation is satisfied
within 30 days of Incurrence);

 

(4) the principal component of all obligations of such Person to pay the
deferred and unpaid purchase price of property (including earn-out obligations)
that are recorded as liabilities under GAAP, and which purchase price is due
after the date of placing such property in service or taking delivery and title
thereto, except (a) any such balance that constitutes a trade payable or similar
obligation to a trade creditor, in each case accrued in the ordinary course of
business and (b) any earn-out obligation until the amount of such obligation
becomes a liability on the balance sheet of such Person in accordance with GAAP;

 

(5) Capitalized Lease Obligations and all Attributable Indebtedness of such
Person (whether or not such items would appear on the balance sheet of the
guarantor or obligor);

 

(6) the principal component or liquidation preference of all obligations of such
Person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Non-Guarantor, any Preferred Stock
(but excluding, in each case, any accrued dividends);

 

(7) the principal component of all Indebtedness of other Persons secured by a
Lien on any asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided, however, that the amount of such Indebtedness will be the
lesser of (a) the Fair Market Value of such asset at such date of determination
and (b) the amount of such Indebtedness of such other Persons;

 

(8) the principal component of Indebtedness of other Persons to the extent
Guaranteed by such Person (whether or not such items would appear on the balance
sheet of the guarantor or obligor);

 

(9) to the extent not otherwise included in this definition, net obligations of
such Person under Hedging Obligations (the amount of any such obligations to be
equal at any time to the termination value of such agreement or arrangement
giving rise to such Obligation that would be payable by such Person at such
time); and

 

(10) to the extent not otherwise included in this definition, the amount of
obligations outstanding under the legal documents entered into as part of a
securitization transaction or series of securitization transactions that would
be characterized as principal if such transaction were structured as a secured
lending transaction rather than as a purchase outstanding relating to a
securitization transaction or series of securitization transactions.

Notwithstanding the foregoing: (i) money borrowed and set aside at the time of
the Incurrence of any Indebtedness in order to pre-fund the payment of interest
on such Indebtedness shall not be deemed to be “Indebtedness;” provided that
such money is held to secure the payment of such interest; (ii) in connection
with the purchase by the Company or any of its Restricted Subsidiaries of any
business, the term “Indebtedness” will exclude post-closing payment adjustments
or earn-out or similar obligations to which the seller may become entitled to
the extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; provided,
however, that at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 30 days thereafter; and
(iii) “Indebtedness” shall be calculated without giving effect to any increase
or decrease in Indebtedness for any purpose under the Indenture as a result of
accounting for any embedded derivatives created by the terms of such
Indebtedness. For the avoidance of doubt, Reclamation Obligations are not and
will not be deemed to be Indebtedness.

In addition, “Indebtedness” of the Company and its Restricted Subsidiaries shall
include (without duplication) Indebtedness described in the preceding paragraph
that would not appear as a liability on the balance sheet of the Company and its
Restricted Subsidiaries if:

 

(1) such Indebtedness is the obligation of a partnership or joint venture that
is not a Subsidiary of the Company (a “Joint Venture”);

 

(2) the Company or any of its Restricted Subsidiaries is a general partner of
the Joint Venture (a “General Partner”); and

 

(3) there is recourse, by contract or operation of law, with respect to the
payment of such Indebtedness to property or assets of the Company or any of its
Restricted Subsidiaries;

and then such Indebtedness shall be included in an amount not to exceed:

 

  (a) the lesser of (i) the net assets of the General Partner and (ii) the
amount of such obligations to the extent that there is recourse, by contract or
operation of law, to the property or assets of the Company or any of its
Restricted Subsidiaries; or

 

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  (b) if less than the amount determined pursuant to clause (a) immediately
above, the actual amount of such Indebtedness that is recourse to the Company or
any of its Restricted Subsidiaries, if the Indebtedness is evidenced by a
writing and is for a determinable amount.

“Independent Financial Advisor” means an accounting, appraisal, investment
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the good faith judgment of the
Company, qualified to perform the task for which it has been engaged.

“Interest Rate Agreement” means, with respect to any Person, any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.

“Investment ” means, with respect to any Person, all investments by such Person
in other Persons (including Affiliates) in the form of any direct or indirect
advance, loan (other than advances or extensions of credit to customers,
suppliers or vendors in the ordinary course of business) or other extensions of
credit (including by way of Guarantee or similar arrangement, but excluding any
debt or extension of credit represented by a bank deposit (other than a time
deposit)) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition of Capital Stock, Indebtedness or
other similar instruments issued by, such Person and all other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP; provided that none of the following will be deemed to be an
Investment:

 

(1) Hedging Obligations entered into in the ordinary course of business and in
compliance with the Indenture;

 

(2) endorsements of negotiable instruments and documents in the ordinary course
of business; and

 

(3) an acquisition of assets, Capital Stock or other securities by the Company
or a Subsidiary for consideration to the extent such consideration consists of
Common Stock of the Company.

For purposes of “—Certain covenants—Limitation on restricted payments,”

 

(1) “Investment” will include the portion (proportionate to the Company’s equity
interest in a Restricted Subsidiary of the Company that is to be designated an
Unrestricted Subsidiary) of the Fair Market Value of the net assets of such
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary of the Company, the Company will be deemed
to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an
amount (if positive) equal to (a) the Company’s aggregate “Investment” in such
Subsidiary as of the time of such redesignation less (b) the portion
(proportionate to the Company’s equity interest in such Subsidiary) of the Fair
Market Value of the net assets of such Subsidiary at the time that such
Subsidiary is so redesignated a Restricted Subsidiary of the Company;

 

(2) any property transferred to or from an Unrestricted Subsidiary will be
valued at its Fair Market Value at the time of such transfer; and

 

(3) if the Company or any of its Restricted Subsidiaries sells or otherwise
disposes of any Voting Stock of any Restricted Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such entity is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the Fair Market
Value of the Capital Stock of such Subsidiary not sold or disposed of.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the
equivalent) by Moody’s Investors Service, Inc. and BBB- (or the equivalent) by
Standard & Poor’s Ratings Group, Inc., or any equivalent rating by any Rating
Agency, in each case, with a stable or better outlook.

“Issue Date” means ,              2012.

“Lien” means, with respect to any asset, any mortgage, lien (statutory or
otherwise), pledge, hypothecation, deed of trust, deemed trust, charge, security
interest, preference, priority or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction or the Personal Property Security Act (Ontario) or any similar
statute under any other jurisdiction; provided that in no event shall an
operating lease be deemed to constitute a Lien.

“Net Available Cash” from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and net proceeds from
the

 

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sale or other disposition of any securities or other assets received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to the properties or assets that are
the subject of such Asset Disposition or received in any other non-cash form)
therefrom, in each case net of:

 

(1) all legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses Incurred, and all federal, state,
municipal and local taxes, and all foreign taxes, required to be paid or accrued
as a liability under GAAP (after taking into account any available tax credits
or deductions and any tax sharing agreements), as a consequence of such Asset
Disposition;

 

(2) all payments made on any Indebtedness that is secured by any assets subject
to such Asset Disposition, in accordance with the terms of any Lien upon such
assets, or which must by its terms, or in order to obtain a necessary consent to
such Asset Disposition, or by applicable law be repaid out of the proceeds from
such Asset Disposition;

 

(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition; and

 

(4) the deduction of appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
assets disposed of in such Asset Disposition and retained by the Company or any
of its Restricted Subsidiaries after such Asset Disposition.

“Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale, net of attorneys’ fees,
accountants’ fees, underwriters’ or placement agents’ fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale (after taking into account any
available tax credit or deductions and any tax sharing arrangements).

“Non-Guarantor” means any Subsidiary of the Company that is not a Guarantor.

“Non-Recourse Debt” means Indebtedness of a Person:

 

(1) as to which neither the Company nor any of its Restricted Subsidiaries
(a) provides any Guarantee or credit support of any kind (including any
undertaking, Guarantee, indemnity, agreement or instrument that would constitute
Indebtedness, but excluding any off-take agreement), other than Indebtedness
secured by Liens permitted by clause (25) of the definition of Permitted Liens
or (b) is directly or indirectly liable (as a guarantor or otherwise), other
than as a result of Indebtedness secured by Liens permitted by clause (25) of
the definition of Permitted Liens;

 

(2) no default with respect to which would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness of the Company or any of its
Restricted Subsidiaries, other than Indebtedness secured by Liens permitted by
clause (25) of the definition of Permitted Liens, to declare a default under
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity; and

 

(3) the explicit terms of which provide there is no recourse against any of the
assets of the Company or its Restricted Subsidiaries, other than in respect of
Liens permitted by clause (25) of the definition of Permitted Liens.

“Note Guarantee” means, individually, any Guarantee of payment of the Notes and
the Company’s other Obligations under the Indenture by a Guarantor pursuant to
the terms of the Indenture and any supplemental indenture thereto, and,
collectively, all such Guarantees.

“Obligations” means any principal, interest (including any interest accruing
subsequent to the filing of a petition in bankruptcy, reorganization or similar
proceeding at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable federal or
state law or under any foreign law), other monetary obligations, penalties,
fees, indemnifications, reimbursements (including reimbursement obligations with
respect to letters of credit and banker’s acceptances), damages and other
liabilities, and Guarantees of payment of such principal, interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities, payable
under the documentation governing any Indebtedness.

“Offering Memorandum” means the offering memorandum dated ,              2012
related to the offer and sale of the Notes.

“Officer” means the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the T reasurer or
the Secretary of the Company or, in the event that the Company is a partnership
or a limited liability company that has no such officers, a person duly
authorized under applicable law by the general partner, managers, members or a
similar body to act on behalf of the Company. Officer of any Guarantor has a
correlative meaning.

 

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“Officer’s Certificate” means a certificate signed by an Officer of the Company.

“Opinion of Counsel” means a written opinion from legal counsel. The counsel may
be an employee of, or counsel to, the Company or the Trustee.

“Parent” means, with respect to any Person, any other Person of which such
Person is a direct or indirect Subsidiary.

“Pari Passu Indebtedness” means Indebtedness that ranks equally in right of
payment to the Notes, in the case of the Company, or the Note Guarantees, in the
case of any Guarantor (without giving effect to collateral arrangements).

“Permitted Investment’ means an Investment by the Company or any of its
Restricted Subsidiaries in:

 

(1) a Restricted Subsidiary of the Company;

 

(2) any Investment by the Company or any of its Restricted Subsidiaries in a
Person that is engaged in a Similar Business if as a result of such Investment:

 

  (a) such Person becomes a Restricted Subsidiary of the Company; or

 

  (b) such Person, in one transaction or a series of related transactions, is
merged or consolidated with or into, or transfers or conveys substantially all
of its assets to, or is liquidated into, the Company or any of its Restricted
Subsidiaries,

and, in each case, any Investment held by such Person; provided, that such
Investment was not acquired by such Person in contemplation of such acquisition,
merger, consolidation or transfer;

 

(3) cash and Cash Equivalents;

 

(4) (a) endorsements for collection or deposit in the ordinary course of
business and (b) receivables owing to the Company or any of its Restricted
Subsidiaries created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the Company
or any such Restricted Subsidiary deems reasonable under the circumstances;

 

(5) payroll, travel, commission, entertainment, relocation and similar advances
to cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business;

 

(6) loans or advances to employees, Officers or directors of the Company or any
of its Restricted Subsidiaries in the ordinary course of business in an
aggregate amount outstanding at any time not in excess of US$2.0 million with
respect to all loans or advances made since the Issue Date (giving effect to the
repayment of any such loan, but without giving effect to the forgiveness of any
such loan);

 

(7) any Investment acquired by the Company or any of any of its Restricted
Subsidiaries:

 

  (a) in exchange for any other Investment or accounts receivable held by the
Company or any such Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer of such
other Investment or accounts receivable or in satisfaction of judgments or
otherwise in resolution or compromise of litigation, arbitration or disputes; or

 

  (b) as a result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured Investment or other transfer of title
with respect to any secured Investment in default;

 

(8) Investments made as a result of the receipt of non-cash consideration from
an Asset Disposition that was made pursuant to and in compliance with
“—Repurchase at the option of holders—Asset sales” or any other disposition of
assets not constituting an Asset Disposition;

 

(9) Investments in existence on the Issue Date, or an Investment consisting of
any extension, modification or renewal of any such Investment existing on the
Issue Date; provided that the amount of any such Investment may be increased in
such extension, modification or renewal only (a) as required by the terms of
such Investment or (b) as otherwise permitted under the Indenture;

 

(10) Currency Agreements, Interest Rate Agreements, Commodity Agreements and
related Hedging Obligations, which transactions or obligations are Incurred in
compliance with “—Certain covenants—Limitation on indebtedness;”

 

(11) Guarantees issued in accordance with “—Certain covenants—Limitations on
indebtedness;”

 

(12) Investments made in connection with the funding of contributions under any
non-qualified retirement plan or similar employee compensation plan in an amount
not to exceed the amount of compensation expense recognized by the Company and
its Restricted Subsidiaries in connection with such plans;

 

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(13) Investments consisting of the licensing or contribution of intellectual
property pursuant to joint marketing arrangements with other Persons;

 

(14) Similar Business Investments;

 

(15) any purchases of Notes; and

 

(16) Investments by the Company or any of its Restricted Subsidiaries, together
with all other Investments pursuant to this clause (16), in an aggregate amount
at the time of such Investment not to exceed the greater of (x) US$25.0 million
and (y) 3.75% of Total Assets, at any one time outstanding (in each case, with
the Fair Market Value of such Investment being measured at the time made and
without giving effect to subsequent changes in value).

“Permitted Liens” means, with respect to any Person:

 

(1) Liens securing Indebtedness and other obligations permitted to be Incurred
under the provisions described in clause (1) of the second paragraph under
“—Certain covenants— Limitation on indebtedness,” including interest, fees and
other obligations relating thereto or for related banking services or cash
management obligations and Liens on assets of Restricted Subsidiaries of the
Company securing Guarantees of such Indebtedness and such other obligations of
the Company;

 

(2) pledges or deposits by such Person under workers’ compensation laws,
unemployment insurance laws, pension laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the payment
of Indebtedness) or leases to which such Person is a party, or deposits to
secure public or statutory obligations, including Reclamation Obligations, of
such Person or deposits of cash or United States government bonds to secure
surety or appeal bonds to which such Person is a party, or deposits as security
for contested taxes or import or customs duties or for the payment of rent, in
each case Incurred in the ordinary course of business;

 

(3) Liens imposed by law, including carriers’, warehousemen’s, mechanics’,
materialmen’s and repairmen’s Liens, Incurred in the ordinary course of
business;

 

(4) Liens for taxes, assessments or other governmental charges not yet subject
to penalties for non-payment or that are being contested in good faith by
appropriate proceedings provided appropriate reserves required pursuant to GAAP
have been made in respect thereof;

 

(5) Liens in favor of issuers of surety or performance bonds or letters of
credit or bankers’ acceptances or similar obligations issued pursuant to the
request of and for the account of such Person in the ordinary course of its
business;

 

(6) minor survey exceptions, encumbrances, ground leases, easements or
reservations of, or rights of others for, licenses, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning, building codes or other restrictions (including, without limitation,
minor defects or irregularities in title and similar encumbrances) as to the use
of real properties or Liens incidental to the conduct of the business of such
Person or to the ownership of its properties that do not in the aggregate
materially adversely affect the value of said properties or materially impair
their use in the operation of the business of such Person;

 

(7) Liens securing Hedging Obligations that are Incurred in the ordinary course
of business (and not for speculative purposes);

 

(8) leases, licenses, subleases and sublicenses of assets (including, without
limitation, real property and intellectual property rights) that do not
materially interfere with the ordinary conduct of the business of the Company or
any of its Restricted Subsidiaries;

 

(9) judgment Liens not giving rise to an Event of Default so long as such Lien
is adequately bonded and any appropriate legal proceedings which may have been
duly initiated for the review of such judgment have not been finally terminated
or the period within which such proceedings may be initiated has not expired;

 

(10) Liens for the purpose of securing the payment of all or a part of the
purchase price of, or Capitalized Lease Obligations, mortgage financings,
purchase money obligations or other payments Incurred to finance, assets or
property (other than Capital Stock or other Investments) acquired, constructed,
improved or leased in the ordinary course of business; provided that:

 

  (a) the aggregate principal amount of Indebtedness secured by such Liens is
otherwise permitted to be Incurred under the Indenture and does not exceed the
cost of the assets or property so acquired, constructed or improved; and

 

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  (b) such Liens are created within 365 days of completion of construction,
acquisition or improvement of such assets or property and do not encumber any
other assets or property of the Company or any of its Restricted Subsidiaries
other than such assets or property and assets affixed or appurtenant thereto;

 

(11) Liens arising solely by virtue of any statutory or common law provisions
relating to Liens in favor of trustee and escrow agents, banker’s Liens, margin
Liens, rights of set-off or similar rights and remedies as to deposit accounts
or other funds maintained with a depository institution; provided that:

 

  (a) such deposit account is not a dedicated cash collateral account and is not
subject to restrictions against access by the Company in excess of those set
forth by regulations promulgated by the U.S. Federal Reserve Board; and

 

  (b) such deposit account is not intended by the Company or any of its
Restricted Subsidiaries to provide collateral to the depository institution;

 

(12) Liens arising from Uniform Commercial Code or Personal Property Security
Act financing statement filings regarding operating leases entered into by the
Company and any of its Restricted Subsidiaries in the ordinary course of
business;

 

(13) Liens existing on the Issue Date (other than Liens permitted under clause
(1));

 

(14) Liens on property or shares of stock of a Person at the time such Person
becomes a Restricted Subsidiary of the Company; provided, however, that such
Liens are not created, Incurred or assumed in connection with, or in
contemplation of, such other Person becoming a Restricted Subsidiary of the
Company; provided, further, however, that any such Lien may not extend to any
other property owned by the Company or any of its Restricted Subsidiaries;

 

(15) Liens on property at the time the Company or a Restricted Subsidiary of the
Company acquired the property, including any acquisition by means of a merger or
consolidation with or into the Company or any of its Restricted Subsidiaries;
provided, however, that such Liens are not created, Incurred or assumed in
connection with, or in contemplation of, such acquisition; provided, further,
however, that such Liens may not extend to any other property owned by the
Company or any of its Restricted Subsidiaries;

 

(16) Liens securing Indebtedness or other obligations of a Restricted Subsidiary
of the Company owing to the Company or another Restricted Subsidiary of the
Company;

 

(17) Liens securing the Notes and the Note Guarantees;

 

(18) Liens securing Refinancing Indebtedness Incurred to refinance, refund,
replace, amend, extend or modify, as a whole or in part, Indebtedness that was
previously so secured pursuant to clauses (10), (13), (14), (15), (17) and this
clause (18) of this definition; provided that any such Lien is limited to all or
part of the same property or assets (plus improvements, accessions, proceeds or
dividends or distributions in respect thereof) that secured (or, under the
written arrangements under which the original Lien arose, could secure) the
Indebtedness being refinanced or is in respect of property that is the security
for a Permitted Lien hereunder;

 

(19) any interest or title of a lessor under any Capitalized Lease Obligation or
operating lease;

 

(20) Liens in favor of the Company or any of its Restricted Subsidiaries;

 

(21) Liens under industrial revenue, municipal or similar bonds;

 

(22) (a) Liens incurred in the ordinary course of business not securing
Indebtedness and not in the aggregate materially detracting from the value of
the properties of the Company and its Restricted Subsidiaries or the use of such
properties in the operation of their business and (b) Liens arising out of
conditional sale, title retention, consignment or similar arrangements for the
sale of goods entered into in the ordinary course of business;

 

(23) Liens on specific items of inventory or other goods and proceeds of any
Person securing such Person’s obligations in respect of bankers’ acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;

 

(24) deposits made in the ordinary course of business to secure liability to
insurance carriers;

 

(25) Liens on the Capital Stock or Indebtedness of an Unrestricted Subsidiary
(or any other right, title or interest relating thereto, including any right to
receive interest on such Indebtedness or dividends or other distributions on
Capital Stock, or any right, title or interest in or to any agreements or
instruments relating thereto, including under any related shareholder, limited
partnership, loan or security agreements) or on any assets of an Unrestricted
Subsidiary;

 

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(26) Liens on assets pursuant to merger agreements, stock or asset purchase
agreements and similar agreements in respect of the disposition of such assets;

 

(27) Liens securing Indebtedness (other than Subordinated Obligations and
Guarantor Subordinated Obligations) in an aggregate principal amount outstanding
at any one time not to exceed the greater of (x) US$30.0 million and (y) 4.5% of
Total Assets; and

 

(28) Liens arising by operation of law or by contract in each case encumbering
insurance policies and proceeds thereof to secure the financing of premiums of
such insurance policies.

“Permitted Tax Distributions” means the payment of any distributions to permit
direct or indirect beneficial owners of shares of Capital Stock of the Company
to pay federal, state or local income tax liabilities arising from income of the
Company and attributable to them solely as a result of the Company and any
intermediate entity through which the holder owns such shares being a
partnership or similar flow-through entity for federal income tax purposes;
provided that such distributions for a tax period shall not exceed the federal,
state and local tax liabilities that would have been payable by the Company had
the Company been a corporation for federal income tax purposes for such period.

“Person” means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

“Preferred Stock,” as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends upon liquidation, dissolution or winding up.

“Pro Forma Cost Savings” means, with respect to any period, the reduction in
costs that were (1) directly attributable to any merger, consolidation,
acquisition or Investment and calculated on a basis that is consistent with
Regulation S-X under the Securities Act in effect and as applied as of the Issue
Date, or (2) actually implemented by the business that was the subject of any
such merger, consolidation, acquisition or Investment within six months of the
date of the asset acquisition and that are supportable and quantifiable by the
underlying accounting records of such business, in the case of each of (1) and
(2), as if such reductions in cost had been effected as of the beginning of the
applicable period and as such reductions in cost are described in the Officer’s
Certificate described in the following sentence; provided that the amount of Pro
Forma Cost Savings together with any amounts added back pursuant to clause
(f) of the definition of Consolidated EBITDA shall not exceed US$15.0 million in
the aggregate for such period. Pro Forma Cost Savings shall be described in a
certificate that is prepared by the Company’s chief financial officer and
delivered to the Trustee promptly after filing or delivery of the applicable
financial statements referred to under “—Certain Covenants—Reports” that
outlines the specific actions taken or to be taken and the net cost savings
achieved or to be achieved from each such action.

“Rating Agency” means each of Standard & Poor’s Ratings Group, Inc. and Moody’s
Investors Service, Inc. or, if Standard & Poor’s Ratings Group, Inc. or Moody’s
Investors Service, Inc. or both shall not make a rating on the Notes publicly
available, a nationally recognized statistical rating agency or agencies, as the
case may be, selected by the Company (as certified by a resolution of the Board
of Directors) which shall be substituted for Standard & Poor’s Ratings Group,
Inc. or Moody’s Investors Service, Inc. or both, as the case may be.

“Receivable” means a right to receive payment arising from a sale or lease of
goods or the performance of services by a Person pursuant to an arrangement with
another Person pursuant to which such other Person is obligated to pay for goods
or services under terms that permit the purchase of such goods and services on
credit and shall include, in any event, any items of property that would be
classified as an “account,” “chattel paper,” “payment intangible” or
“instrument” under the Uniform Commercial Code as in effect in the State of New
York and any “supporting obligations” as so defined.

“Receivables Fees” means any fees or interest paid to purchasers or lenders
providing the financing in connection with a securitization transaction,
factoring agreement or other similar agreement, including any such amounts paid
by discounting the face amount of Receivables or participations therein
transferred in connection with a securitization transaction, factoring agreement
or other similar arrangement, regardless of whether any such transaction is
structured as on-balance sheet or off-balance sheet or through a Restricted
Subsidiary of the Company or an Unrestricted Subsidiary.

“Reclamation Obligations” means statutory, contractual, constructive or legal
obligations, including the principal component of any obligations in respect of
letters of credit, bank guarantees, performance or surety bonds or other similar
instruments, associated with decommissioning of mining operations and
reclamation and rehabilitation costs, including the cost of complying with
applicable environmental regulation.

“Refinancing Indebtedness” means Indebtedness that is Incurred to refund,
refinance, replace, exchange, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, “refinance,” “refinances” and
“refinanced” shall each have a correlative meaning) any Indebtedness existing on
the Issue Date or Incurred in compliance with the Indenture (including
Indebtedness of the Company that refinances Indebtedness of any of its
Restricted Subsidiaries and Indebtedness of any of its Restricted Subsidiaries
that refinances Indebtedness of another

 

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Restricted Subsidiary of the Company) including Indebtedness that refinances
Refinancing Indebtedness; provided, however, that:

 

(1) (a) if the Stated Maturity of the Indebtedness being refinanced is earlier
than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated
Maturity no earlier than the Stated Maturity of the Indebtedness being
refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is
later than the Stated Maturity of the Notes, the Refinancing Indebtedness has a
Stated Maturity at least 91 days later than the Stated Maturity of the Notes;

 

(2) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being refinanced;

 

(3) such Refinancing Indebtedness is Incurred in an aggregate principal amount
(or if issued with original issue discount, an aggregate issue price) that is
equal to or less than the sum of the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value) then outstanding of
the Indebtedness being refinanced (plus, without duplication, any additional
Indebtedness Incurred to pay interest or premiums required by the instruments
governing such existing Indebtedness and fees Incurred in connection therewith);

 

(4) if the Indebtedness being refinanced is subordinated in right of payment to
the Notes or the Note Guarantees, such Refinancing Indebtedness is subordinated
in right of payment to the Notes or the Note Guarantees on terms at least as
favorable to the Holders as those contained in the documentation governing the
Indebtedness being refinanced; and

 

(5) Refinancing Indebtedness shall not include Indebtedness of a Non-Guarantor
that refinances Indebtedness of the Company or a Guarantor.

“Restricted Investment” means any Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person
(or if no such Person is specified, the Company) that is not an Unrestricted
Subsidiary.

“Sale/Leaseback Transaction” means an arrangement relating to property now owned
or hereafter acquired whereby the Company or any of its Restricted Subsidiaries
transfers such property to a Person (other than the Company or any of its
Subsidiaries) and the Company or any of its Restricted Subsidiaries leases it
from such Person.

“SEC” means the U.S. Securities and Exchange Commission.

“Secured Indebtedness” means any Indebtedness of the Company or any of its
Restricted Subsidiaries secured by a Lien on assets of the Company or such
Restricted Subsidiary, excluding Capital Stock or Indebtedness of an
Unrestricted Subsidiary or any right, title or interests relating thereto,
including any rights under any relevant shareholder, voting trust, joint venture
or other agreement or instrument.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

“Senior Credit Facility” means the Credit Agreement, dated as of May 17, 2011,
among the Company, as borrower, The Bank of Nova Scotia, as Lead Arranger and
Administrative Agent, and the several lenders from time to time parties thereto,
as the same may be amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time (including replacing the
borrowers or increasing the amount loaned thereunder; provided that such
additional Indebtedness is Incurred in accordance with the covenant described
under “—Certain covenants—Limitation on indebtedness”).

“Senior Management” means the chief executive officer and the chief financial
officer of the Company.

“Significant Subsidiary” means any Restricted Subsidiary of the Company that
would be a “Significant Subsidiary” of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC, determined as of the date of
the latest audited consolidated financial statements of the Company and its
Restricted Subsidiaries.

“Similar Business” means any business conducted or proposed to be conducted by
the Company and its Restricted Subsidiaries on the Issue Date or any other
business that is similar, reasonably related, incidental or ancillary thereto.

“Similar Business Investments” means Investments made in (1) the ordinary course
of, or of a nature that is customary in, the mining business as a means of
exploiting, exploring for, acquiring, developing, processing, refining,
gathering, producing, transporting or marketing gold, silver or other precious
or base metals used, useful or created in the mining business, including through
agreements, acquisitions, transactions, interests or arrangements (whether on a
royalty or non-royalty basis) which permit one to share (or have the effect of
sharing) risks or costs, comply with regulatory requirements regarding ownership
or satisfy other customary objectives in the mining business, and in any event

 

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including, without limitation, Investments made in connection with or in the
form of (a) direct or indirect ownership interests in mining properties,
gathering or upgrading systems or facilities and (b) operating agreements,
development agreements, area of mutual interest agreements, pooling agreements,
service contracts, joint venture agreements, partnership or limited liability
company agreements (whether general or limited), or other similar or customary
agreements, transactions, properties, interests or arrangements, and Investments
and expenditures in connection therewith or pursuant thereto; and (2) Persons
engaged in a Similar Business.

“Stated Maturity” means, with respect to any security, the date specified in the
agreement governing or certificate relating to such Indebtedness as the fixed
date on which the final payment of principal of such security is due and
payable, including pursuant to any mandatory redemption provision, but not
including any contingent obligations to repay, redeem or repurchase any such
principal prior to the date originally scheduled for the payment thereof.

“Subordinated Obligation” means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) that is subordinated or
junior in right of payment to the Notes pursuant to a written agreement.

“Subsidiary” of any Person means (a) any corporation, association or other
business entity (other than a partnership, joint venture, limited liability
company or similar entity) of which more than 50% of the total ordinary voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof (or Persons performing similar functions) or (b) any partnership, joint
venture limited liability company or similar entity of which more than 50% of
the capital accounts, distribution rights, total equity and voting interests or
general or limited partnership interests, as applicable, is, in the case of
clauses (a) and (b), at the time owned or controlled, directly or indirectly, by
(1) such Person, (2) such Person and one or more Subsidiaries of such Person or
(3) one or more Subsidiaries of such Person. Unless otherwise specified herein,
each reference to a Subsidiary will refer to a Subsidiary of the Company.

“Total Assets” means the total consolidated assets of the Company and its
Restricted Subsidiaries on a consolidated basis determined in accordance with
GAAP, as shown on the most recent consolidated balance sheet of the Company;
provided that, for purposes of calculating “Total Assets” for purposes of
testing the covenants under the Indenture in connection with any transaction,
the total consolidated assets of the Company and its Restricted Subsidiaries
shall be adjusted to reflect any acquisitions and dispositions of assets that
have occurred during the period from the date of the applicable balance sheet
through the applicable date of determination.

“Unrestricted Subsidiary” means:

 

(1) any Subsidiary of the Company which at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of Directors of the Company
in the manner provided below;

 

(2) any Subsidiary of an Unrestricted Subsidiary; and

 

(3) as of the date of the Indenture, Allied Nevada Delaware Holdings, Inc. and
Allied Nevada Cayman Corp.

The Board of Directors of the Company may designate any Subsidiary of the
Company (including any newly acquired or newly formed Subsidiary or a Person
becoming a Subsidiary through merger, consolidation or Investment therein) to be
an Unrestricted Subsidiary only if:

 

(1) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or
Indebtedness of or have any Investment in, or own or hold any Lien on any
property of, any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;

 

(2) such Subsidiary has no Indebtedness other than Non-Recourse Debt;

 

(3) such designation and the Investment of the Company in such Subsidiary
complies with “—Certain Covenants— Limitation on restricted payments;”

 

(4) such Subsidiary, either alone or in the aggregate with all other
Unrestricted Subsidiaries, does not operate, directly or indirectly, all or
substantially all of the business of the Company and its Subsidiaries;

 

(5) such Subsidiary is a Person with respect to which neither the Company nor
any of its Restricted Subsidiaries has any direct or indirect obligation:

 

  (a) to subscribe for additional Capital Stock of such Person; or

 

  (b) to maintain or preserve such Person’s financial condition or to cause such
Person to achieve any specified levels of operating results; and

 

(6) on the date such Subsidiary is designated an Unrestricted Subsidiary, such
Subsidiary is not a party to any agreement, contract, arrangement or
understanding with the Company or any of its Restricted Subsidiaries with terms
substantially less favorable to the Company than those that might have been
obtained from Persons who are not Affiliates of the Company.

 

48

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Any such designation by the Board of Directors of the Company shall be evidenced
to the Trustee by filing with the Trustee a resolution of the Board of Directors
of the Company giving effect to such designation and an Officer’s Certificate
certifying that such designation complies with the foregoing conditions. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture, and any Indebtedness of
such Subsidiary shall be deemed to be Incurred as of such date.

The Board of Directors of the Company may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary of the Company; provided that immediately after
giving effect to such designation, no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof and the
Company could Incur at least US$1.00 of additional Indebtedness pursuant to the
first paragraph of the “—Certain covenants—Limitation on indebtedness” covenant
on a pro forma basis taking into account such designation.

“Voting Stock” of a Person means all classes of Capital Stock of such Person
then outstanding and normally entitled to vote in the election of directors,
managers or trustees, as applicable, of such Person.

“Wholly Owned Subsidiary” means a Restricted Subsidiary of the Company, all of
the Capital Stock of which (other than directors’ qualifying shares) is owned by
the Company or another Wholly Owned Subsidiary.

 

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Exhibit 3

Terms of the Swap

 

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LOGO [g355932g50c61.jpg]   LOGO [g355932g36e25.jpg]

Exhibit 2

Allied Nevada Gold Corporation

Cross Currency Interest Rate Swap – INDICATIVE TERM SHEET

The following term sheet describes a cross currency interest rate swap
transacted between The Bank of Nova Scotia and Allied Nevada Gold Corporation
(“Allied Nevada”) with Scotiabank acting as Lead Hedge Advisor and Sole Hedge
Arranger for the swap. This trade will be syndicated at the sole discretion of
Scotiabank.

 

Party A    The Bank of Nova Scotia Party B    Allied Nevada Gold Corporation
Start Date    May 25th, 2012 Maturity Date    June 1st, 2019 Notional CAD
Principal    CAD 400,000,000.00 Notional USD Principal    USD 400,400,400.40
USD/CAD Exchange Rate    0.999 Notional Amortization    None (Constant Notional)
Mutual Put Date:    June 1st, 2016 [In-line with the first Call date] Initial
Exchange Date    May 25, 2012 Final Exchange Date    June 1, 2019

Party A Pays

Initial Exchange Amount

   USD 400,400,400.40

Party B Pays

Initial Exchange Amount

   CAD 400,000,000.00

Party A Pays

Final Exchange Amount

   CAD 400,000,000.00

Party B Pays

Final Exchange Amount

   USD 400,400,400.40

CAD Fixed Rate Details

   CAD Fixed Rate Payer    Party A CAD Fixed Rate    8.75% Daycount Basis   
Semi-annual, 30/360, Unadjusted Payment Dates    Semi-annually every June 1st &
December 1st, beginning December 1st, 2012 up to and including the Maturity
Date, subject to Modified Following Business Day Convention. Payment Dates for
the Initial Calculation Period    Initial calculation period will be based on
the number of days, using the 30/360 day count fraction, between May 25th, 2012
and December 1st, 2012. Business Days    New York & Toronto

USD Fixed Rate Details

   USD Fixed Rate Payer    Party B USD Fixed Rate    8.375% Daycount Basis   
Semi-annual, 30/360, Unadjusted Payment Dates    Semi-annually every June 1st &
December 1st, beginning December 1st, 2012 up to and including the Maturity
Date, subject to Modified Following Business Day Convention. Payment Dates for
the Initial Calculation Period    Initial calculation period will be based on
the number of days, using the 30/360 day count fraction, between May 25th, 2012
and December 1st, 2012. Business Days    New York & Toronto Documentation   
ISDA and Confirmation

PROPRIETARY AND CONFIDENTIAL

Page 1 of 1

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Schedule “A”

Indemnity

Allied Nevada Gold Corp. (the “Company”) shall indemnify and save GMP Securities
L.P., Scotia Capital Inc. and the other Dealers in the offering (the “Offering”)
of senior unsecured notes (the “Notes”) of the Company, as defined and as
contemplated in the letter agreement to which this indemnity is attached and/or
any of their respective affiliates (hereinafter referred to collectively as the
“Dealers”) and the directors, officers, shareholders, partners, employees and
agents of the Dealers (hereinafter referred to as the “Personnel”) harmless from
and against any and all expenses, losses (other than loss of profits), claims,
actions, damages or liabilities, whether joint or several (including the
aggregate amount paid in settlement of any actions, suits, proceedings or
claims), and the reasonable fees and expenses of counsel that may be incurred in
advising with respect to and/or defending any claim that may be made against the
Dealers and/or their Personnel, to which the Dealers and/or their Personnel may
become subject or otherwise involved in any capacity under any statute or common
law or otherwise insofar as such expenses, losses, claims, damages, liabilities
or actions arise out of or are based, directly or indirectly, upon the
performance of services rendered to the Company by the Dealers and/or their
Personnel or otherwise in connection with the matters referred to in the letter
to which this indemnity is attached, including, without limitation, expenses,
losses, claims, damages, actions or liabilities in any way caused by, or arising
directly or indirectly from, or in consequence of:

 

(i) any breach of or default under any of the Company’s representations,
warranties. covenants or agreements contained in the letter agreement to which
this indemnity is attached or the underwriting agreement entered into in
connection with the Offering or any document to be delivered pursuant thereto or
the failure of the Company to comply with its obligations thereunder;

 

(ii) any offering document, or any amendment thereto, in respect of the
Offering, or any information or statement (except any information or statement
relating solely to the Dealers) contained or incorporated by reference therein,
being or being alleged to contain or be a misrepresentation (as defined in the
Securities Act (Ontario)) or being or alleged to be untrue or any omission to
state or alleged omission to state in those documents any material fact (except
facts relating solely to the Dealers) required to be stated in those documents
or necessary to make any of the statements therein not misleading in light of
the circumstances in which they were made;

 

(iii) any order made or any inquiry, investigation or proceeding instituted,
threatened or announced by any governmental entity or by any other competent
authority, based on any actual or alleged untrue statement, omission or
misrepresentation (except such that is solely related to the Dealers) contained
in any offering document or amendment thereto in respect of the Offering; or

 

(iv) the non-compliance or alleged non-compliance by the Company with any
requirements of the Securities Act (Ontario) or other applicable securities laws
and regulations.

Notwithstanding anything to the contrary contained herein, this indemnity shall
not apply to the extent that a court of competent jurisdiction in a final
judgment that has become non-appealable shall determine that:

 

(i) the Dealers or their Personnel have been grossly negligent or have committed
any fraudulent or illegal act or an act of willful misconduct in the course of
the performance of services rendered to the Company by the Dealers and/or their
Personnel or otherwise in connection with the matters referred to in the letter
to which this indemnity is attached; and

 

(ii) the expenses, losses, claims, damages or liabilities, as to which
indemnification is claimed, were directly and primarily caused by the gross
negligence, illegality, willful misconduct or fraud referred to in (i).

 

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The Company hereby agrees that no Dealer or its Personnel shall have any
liability (either direct or indirect, in contract, tort or otherwise) to the
Company or any person asserting claims on the Company’s behalf for or in
connection with any expenses, losses, claims, damages, liabilities or actions,
except to the extent that any expenses, losses, claims, damages liabilities or
actions incurred by the Company are determined by a court of competent
jurisdiction in a final judgment that has become non-appealable to have been
primarily caused by gross negligence, illegality or fraud of such Dealer or its
Personnel.

If for any reason (other than the occurrence of any of the events itemized in
(i) and (ii) above), the foregoing indemnification is unavailable to the Dealers
or their Personnel or insufficient to hold them harmless, then the Company shall
contribute to the amount paid or payable by the Dealers or their Personnel as a
result of such expense, loss, claim, damage or liability in such proportion as
is appropriate to reflect not only the relative benefits received by the Company
on the one hand and the Dealers on the other hand but also the relative fault of
the Company and the Dealers, as well as any relevant equitable considerations;
provided that the Company shall, in any event, contribute to the amount paid or
payable by the Dealers or their Personnel as a result of such expense, loss,
claim, damage or liability, any excess of such amount over the amount of the
fees received by the Dealers hereunder pursuant to the letter agreement to which
this indemnity is attached.

GMP Securities L.P. and Scotia Capital Inc. are hereby constituted as trustees
for their Personnel and each of the other Dealers and their Personnel of the
Company’s covenants under this indemnity with respect to such persons and GMP
Securities L.P. and Scotia Capital LP agree to accept such trust and hold and
enforce such covenants on behalf of such persons.

The Company agrees that in case any legal proceeding shall be brought against
the Company and/or the Dealers or their Personnel by any governmental commission
or regulatory authority or any stock exchange or other entity having regulatory
authority, either domestic or foreign, shall investigate the Company and/or the
Dealers and any Personnel of the Dealers shall be required to testify in
connection therewith or shall be required to respond to procedures designed to
discover information regarding, in connection with, or by reason of the
performance of services rendered to the Company by the Dealers (in each case in
respect of a proceeding or investigation which is in respect of a matter for
which indemnification may be sought from the Company), the Dealers shall have
the right to employ their own counsel in connection therewith, and the
reasonable fees and expenses of such counsel as well as the reasonable costs
(including an amount to reimburse the Dealers for time spent by their Personnel
in connection therewith) and out-of-pocket expenses incurred by their Personnel
in connection therewith shall be paid by the Company as they occur.

Promptly after receipt of notice of the commencement of any legal proceeding
against the Dealers or any of their Personnel or after receipt of notice of the
commencement of any investigation, which is based, directly or indirectly, upon
any matter in respect of which indemnification may be sought from the Company,
the Dealers will notify the Company in writing of the commencement thereof and,
throughout the course thereof, will provide copies of all relevant documentation
to the Company, will keep the Company advised of the progress thereof and will
discuss with the Company all significant actions proposed. The omission so to
notify the Company shall not relieve the Company of any liability which the
Company may have to the Dealers except only to the extent that any such delay in
giving or failure to give notice as herein required materially prejudices the
defence of such action, suit, proceeding, claim or investigation or results in
any material increase in the liability which the Company would otherwise have
under this indemnity had the Dealers not so delayed in giving or failed to give
the notice required hereunder.

The Company shall be entitled, at its own expense, to participate in and, to the
extent it may wish to do so, assume the defence thereof, provided such defence
is conducted by experienced and competent counsel. Upon the Company notifying
the Dealers in writing of its election to assume the defence and retaining
counsel, the Company shall not be liable to the Dealers for any legal expenses
subsequently incurred by them in connection with such defence. If such defence
is assumed by the Company, the Company throughout the course thereof will
provide copies of all relevant documentation to the Dealers, will keep the
Dealers advised of the progress thereof and will discuss with the Dealers all
significant actions proposed.

 

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Notwithstanding the foregoing paragraph, any Dealer shall have the right, at the
Company’s expense, to employ counsel of such Dealer’s choice, in respect of the
defence of any action, suit, proceeding, claim or investigation if: (i) the
employment of such counsel has been authorized by the Company; or (ii) the
Company has not assumed the defence and employed counsel therefor within a
reasonable time after receiving notice of such action, suit, proceeding, claim
or investigation; or (iii) counsel retained by the Company or the Dealer(s) has
advised the Underwriter(s) that representation of both parties by the same
counsel would be inappropriate for any reason, including without limitation
because there may be legal defences available to the Dealers which are different
from or in addition to those available to the Company (in which event and to
that extent, the Company shall not have the right to assume or direct the
defence on the Dealer’s behalf) or that there is a conflict of interest between
the Company and the Dealers or the subject matter of the action, suit,
proceeding, claim or investigation may not fall within the indemnity set forth
herein (in either of which events the Company shall not have the right to assume
or direct the defence on the Dealers’ behalf).

No admission of liability and no settlement of any action, suit, proceeding,
claim or investigation shall be made without the consent of the Dealers
affected.

The indemnity and contribution obligations of the Company shall be in addition
to any liability which the Company may otherwise have, shall extend upon the
same terms and conditions to the Personnel of the Dealers and shall be binding
upon and ensure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Dealers and any of the Personnel of the
Dealers. The foregoing provisions shall survive the completion of services
rendered under the letter to which this is attached or any termination of such
services.

This indemnity agreement (i) shall not be assignable by any party hereto without
the prior written consent of each other party hereto; and (ii) shall be governed
by and construed in accordance with the laws of the Province of Ontario and the
federal law of Canada applicable therein and the parties hereto hereby
irrevocably attorn to the non- exclusive jurisdiction of the courts of the
Province of Ontario. No waiver, amendment or other modification of this
indemnity agreement shall be effective unless in writing and signed by each of
the parties hereto.

 

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