Exhibit 2.1

ARRANGEMENT AGREEMENT

AMONG

MOLYCORP, INC.

0934634 B.C. LTD.

AND

NEO MATERIAL TECHNOLOGIES INC.

March 8, 2012

TABLE OF CONTENTS

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ARRANGEMENT AGREEMENT

THIS AGREEMENT is made as of March 8, 2012

AMONG

MOLYCORP, INC., a corporation incorporated under the laws of the State of Delaware (the “Parent”)

-  and  -

0934634 B.C. LTD., a corporation incorporated under the laws of the Province of British Columbia (the “Purchaser”)

-  and  -

NEO MATERIAL TECHNOLOGIES INC., a corporation continued under the laws of Canada (the “Company”).

WHEREAS the Parent, through the Purchaser, proposes to acquire all of the outstanding Common Shares of the Company pursuant to the Arrangement, as provided in this Agreement;

AND WHEREAS the Board of Directors of the Company has unanimously determined that the Arrangement is fair to the Shareholders and that it is in the best interests of the Company to enter into this Agreement and has unanimously resolved, subject to the terms of this Agreement, to recommend that the Shareholders vote in favour of the Arrangement Resolution;

NOW THEREFORE in consideration of the premises and the covenants and agreements herein contained, the Parties agree as follows:

ARTICLE 1
INTERPRETATION

1.1                               Definitions

In this Agreement and the Schedule C hereto, unless otherwise defined or expressly stated herein or something in the subject matter or the context is clearly inconsistent therewith:

“1933 Securities Act” means the United States Securities Act of 1933;

“1934 Exchange Act” means the United States Securities Exchange Act of 1934;

“Acquisition Agreement” has the meaning ascribed thereto in Section 6.1(a)(v);

“Acquisition Financing” has the meaning ascribed thereto in Section 5.6(a);

“Acquisition Proposal” means, at any time, whether or not in writing, any proposal (including any modification or proposed modification of any such proposal) with respect

to (a) any acquisition by any person or group of persons of Common Shares (or securities convertible into or exchangeable or exercisable for Common Shares) representing 20% or more of the Common Shares then outstanding (assuming, if applicable, the conversion, exchange or exercise of such securities convertible into or exchangeable or exercisable for Common Shares) or (b) any acquisition by any person or group of persons of any assets of the Company and/or one or more of the Company Entities (including shares or other equity interests of any Company Entity) individually or in the aggregate contributing 20% or more of the consolidated revenue or representing 20% or more of the assets of the Company and the Company Entities taken as a whole (in each case based on the consolidated financial statements of the Company most recently filed prior to such time as part of the Company Public Disclosure Record) (or any lease, license, royalty, long-term supply agreement or other arrangement having a similar economic effect), whether in a single transaction or a series of related transactions, in each case, whether by plan of arrangement, amalgamation, merger, consolidation, recapitalization, liquidation, dissolution or other business combination, sale of assets, joint venture, take-over bid, tender offer, share exchange, exchange offer or otherwise, including any single or multi-step transaction or series of transactions, directly or indirectly involving the Company or any Company Entity, and in each case excluding the Arrangement and the other transactions contemplated by this Agreement and any transaction between the Company and/or one or more of its wholly-owned subsidiaries;

“affiliate” and “associate” have the meanings respectively ascribed thereto under the Securities Act;

“Agreement” means this Arrangement Agreement (including the Schedules attached hereto) as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof;

“Alternative Financing” has the meaning ascribed thereto in Section 5.6(a);

“Arrangement” means an arrangement under section 192 of the CBCA on the terms and subject to the conditions set forth in the Plan of Arrangement as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with its terms;

“Arrangement Resolution” means the special resolution to be considered and, if thought fit, passed by the Shareholders at the Company Meeting to approve the Arrangement, to be substantially in the form and content of Schedule B hereto;

“Board of Directors” means the board of directors of the Company as constituted from time to time;

“Business Day” means a day other than a Saturday, a Sunday or any other day on which major commercial banking institutions in Toronto, Ontario or New York City, New York are closed for business;

“Callco” means 0934632 B.C. Ltd., a subsidiary of the Parent existing under the laws of the Province of British Columbia, or any other direct or indirect wholly-owned subsidiary of the Parent designated by the Parent from time to time in replacement thereof;

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“Canadian GAAP” means, in relation to any financial year beginning on or before December 31, 2010, accounting principles generally accepted in Canada as adopted by the Canadian Institute of Chartered Accountants, and, in relation to any financial year beginning after December 31, 2010, International Financial Reporting Standards;

“Canadian Plans” has the meaning ascribed thereto in Section 3.1(z)(ii);

“Canadian Securities Laws” means the Securities Act and all other applicable Canadian provincial securities Laws and the rules, regulations and published policies made thereunder;

“CBCA” means the Canada Business Corporations Act and all regulations made thereunder, as promulgated or amended from time to time;

“Change of Recommendation” has the meaning ascribed thereto in Section 7.1(c)(i);

“Circular” means the notice of meeting and accompanying information circular (including all schedules, appendices and exhibits thereto) to be sent to the Shareholders in connection with the Company Meeting, including any amendments or supplements thereto;

“Code” means the United States Internal Revenue Code of 1986;

“commercially reasonable efforts” means, with respect to any Party, the cooperation of such Party and the use by such Party of its reasonable efforts consistent with reasonable commercial practice without: (a) payment or incurrence of any monetary liability or obligation, other than filing fees incurred in connection with the transactions contemplated by this Agreement and other reasonable expenses; or (b) the requirement to initiate or commence litigation;

“Commitment Letter” has the meaning ascribed thereto in Section 3.2(v);

“Common Shares” means the common shares without par value in the capital of the Company;

“Company Annual Financial Statements” means the audited consolidated financial statements of the Company for the years ending December 31, 2010 and 2009, together with the notes thereto;

“Company Beneficiaries” has the meaning ascribed thereto in Section 9.9;

“Company Data Room” means the Company’s electronic data room posted on the RR Donnelley Venue website at www.rrdvenue.com;

“Company Disclosure Letter” means the disclosure letter dated the date hereof regarding this Agreement that has been executed by the Company and delivered to the Purchaser prior to the execution of this Agreement;

“Company Entity” means, with respect to the Company, any of its material subsidiaries or Joint Ventures, as set forth in Section 1.1 of the Company Disclosure Letter;

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“Company Financial Statements” means the Company Annual Financial Statements and the Company Interim Financial Statements;

“Company Interim Financial Statements” means the unaudited interim consolidated financial statements of the Company for the nine months ended September 30, 2011, together with the notes thereto;

“Company Meeting” means the special meeting of the Shareholders, including any adjournment or postponement thereof, to be called and held in accordance with the Interim Order for the purpose of considering and, if thought fit, approving the Arrangement;

“Company Plans” has the meaning ascribed thereto in Section 3.1(z)(i), and “Company Plans” excludes the Canadian Plans;

“Company Public Disclosure Record” means all documents filed by or on behalf of the Company on the System for Electronic Document Analysis Retrieval (SEDAR) since December 31, 2010;

“Company Senior Management” means Geoff Bedford, Alex Caldwell, Michael Doolan, Jeff Hogan, Constantine Karayannopoulos, Shannon Song, Martin Sun and Frank Timerman;

“Compliant” means, with respect to the Required Information, that (i) such Required Information does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make such Required Information necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (ii) such Required Information is, and remains throughout the Marketing Period, compliant in all material respects with all requirements of Regulation S-K and Regulation S-X under the 1933 Securities Act (excluding information required by Regulation S-X Rule 3-10 and Regulation S-X Rule 3-16) for offerings of debt securities on a registration statement on Form S-1, (iii) the Company’s auditors have not withdrawn any audit opinion with respect to any audited financial statements contained in the Required Information, (iv) with respect to any interim financial statements, such interim financial statements have been reviewed by the Company’s auditors as provided in the procedures specified by the Public Company Accounting Oversight Board in AU 722, (v) the Company’s auditors have delivered drafts of customary comfort letters, including as to customary negative assurances and change period, and such auditors have confirmed they are prepared to issue any such comfort letter throughout the Marketing Period and (vi) the financial statements and other financial information (excluding information required by Regulation S-X Rule 3-10 and Regulation S-X Rule 3-16) included in such Required Information are, and remain throughout the Marketing Period, sufficient to permit (A) a registration statement on Form S-1 using such financial statements and financial information to be declared effective by the SEC on the last day of the Marketing Period and (B) the Lenders (including underwriters, placement agents or initial purchasers) to receive customary comfort letters from the Company’s independent auditors on the financial statements and financial information contained in any offering memoranda, including as to customary negative assurances and change period, in order to consummate any offering of debt securities on the last day of the Marketing Period;

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“Confidential Data” has the meaning ascribed thereto in Section 5.2(b);

“Consideration Shares” means, collectively, the Exchangeable Shares to be issued to Shareholders pursuant to Section 3.1(c) of the Plan of Arrangement and the Molycorp Shares to be issued to Shareholders pursuant to Section 3.1(d) of the Plan of Arrangement;

“Contract” means any legally binding contract, agreement, indenture, note, instrument, license, franchise, lease, arrangement, commitment, understanding or other right or obligation (whether written or oral) to which the Company or any Company Entity is a party or by which the Company or any Company Entity is bound or affected or to which any of their respective properties or assets is subject;

“Controlled Group” means any trade or business (whether or not incorporated) (i) under common control within the meaning of Section 4001(b)(1) of ERISA with the Company or (ii) which together with the Company is treated as a single employer under Section 414(t) of the Code;

“Convertible Debentures” means, at any time, convertible debentures of the Company issued pursuant to the Debenture Indenture which are, at such time, issued and outstanding;

“Court” means the Ontario Superior Court of Justice (Commercial List) or other court with jurisdiction to consider and issue the Interim Order and the Final Order;

“Debenture Indenture” means the debenture indenture dated as of June 2, 2011 between the Company and Computershare Trust Company of Canada, as trustee;

“Debentureholder” means a holder of Convertible Debentures;

“Debt Financing” has the meaning ascribed thereto in Section 3.2(v);

“Debt Financing Sources” means the entities that have committed to provide or arrange or otherwise entered into agreements in connection with the Debt Financing or other financings in connection with the transactions contemplated hereby, including the Lender, and the parties to any joinder agreements, indentures or credit agreements entered pursuant thereto or relating thereto, together with their respective affiliates, and their and their respective affiliates’ officers, directors, employees, agents and representatives and their respective successors and assigns;

“Depositary” means Computershare Trust Company of Canada;

“Director” means the Director appointed pursuant to section 260 of the CBCA;

“Dissent Rights” has the meaning ascribed thereto in Section 1.1 of the Plan of Arrangement;

“Dissenting Shareholder” has the meaning ascribed thereto in Section 1.1 of the Plan of Arrangement;

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“DSU Plan” means the Directors Share Unit Plan established by the Company on November 6, 2008, as thereafter amended and restated from time to time;

“DSUs” means, at any time, deferred share units granted pursuant to the DSU Plan which are, at such time, outstanding;

“Effective Date” means the date upon which all of the conditions to the completion of the Arrangement as set out in Article 8 have been satisfied or waived in accordance with the provisions of this Agreement and all documents agreed to be delivered thereunder have been delivered to the satisfaction of the recipient, acting reasonably, and the Arrangement becomes effective in accordance with the CBCA and the Final Order; provided that the Effective Date shall not occur if the Marketing Period has not commenced and been completed unless the Parent so agrees;

“Effective Time” has the meaning ascribed thereto in Section 1.1 of the Plan of Arrangement;

“Eligible Holder” has the meaning ascribed thereto in Section 1.1 of the Plan of Arrangement;

“Eligible Share” has the meaning ascribed thereto in Section 1.1 of the Plan of Arrangement;

“Environment” means the natural environment (including soil, land surface or subsurface strata, surface water, groundwater, sediment, ambient air (including all layers of the atmosphere), organic and inorganic matter and living organisms, and any other environmental medium or natural resource);

“Environmental Approvals” means all Permits or other authorizations issued or required by any Governmental Authority pursuant to any Environmental Law;

“Environmental Laws” means Laws aimed at or relating to reclamation or restoration of property; abatement of pollution; protection of the Environment; protection of wildlife, including endangered species; ensuring public safety from environmental hazards; protection of cultural or historic resources; management, treatment, storage, disposal or control of, or exposure to, Hazardous Substances; releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or Hazardous Substances, including to ambient air, surface water or groundwater; and all other Laws relating to the manufacturing, processing, distribution, use, treatment, storage, disposal, handling or transport of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes or otherwise protecting human health and safety or the Environment;

“ERISA” means the Employee Retirement Income Security Act of 1974;

“Exchangeable Share Provisions” means the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares, which rights, privileges, restrictions and conditions will be in substantially the form set out in Appendix I to the Plan of Arrangement;

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“Exchangeable Shares” means the exchangeable shares in the capital of the Purchaser, as more particularly described in Appendix I to the Plan of Arrangement;

“Exemptive Relief” has the meaning ascribed thereto in Section 5.5(a)(i);

“Export Approvals” has the meaning ascribed thereto in Section 3.1(ii)(i);

“Export Control Laws” has the meaning ascribed thereto in Section 3.1(ii);

“Fairness Opinion” means the opinion of the Financial Advisor to the effect that, as of the date of such opinion and based upon and subject to the assumptions, procedures, factors, limitations and qualifications set forth therein, the consideration to be received by the Shareholders under the Arrangement is fair, from a financial point of view, to such Shareholders;

“Final Order” means the order of the Court in a form acceptable to the Company and the Purchaser, each acting reasonably, approving the Arrangement under section 192(4) of the CBCA, as such order may be affirmed, amended, modified, supplemented or varied by the Court (with the consent of both the Company and the Purchaser, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn, abandoned or denied, as affirmed or amended (provided that any such amendment is acceptable to both the Company and the Purchaser, each acting reasonably) on appeal;

“Financial Advisor” means GMP Securities L.P.;

“Governmental Authority” means any international, multinational, federal, provincial, territorial, state, regional, municipal, local or other government or governmental body and any ministry, department, division, bureau, agent, official, agency, commission, board or authority of any government, governmental body, quasi-governmental or private body (including the TSX or any other stock exchange), domestic or foreign, exercising any statutory, regulatory, expropriation or taxing authority under the authority of any of the foregoing and any domestic, foreign or international judicial, quasi-judicial or administrative court, tribunal, commission, board, panel, arbitrator or arbitral body acting under the authority of any of the foregoing;

“Hazardous Substances” means any waste or other substance that is prohibited, listed, defined, designated or classified as dangerous, hazardous, radioactive, corrosive, explosive, infectious, carcinogenic, mutation or toxic or a pollutant or a contaminant under or pursuant to, or that could result in liability under, any applicable Environmental Laws including petroleum and all derivatives thereof or synthetic substitutes therefor, hydrogen sulphide, arsenic, cadmium, lead, mercury, polychlorinated biphenyls (“PCBs”), PCB-containing equipment and material, mould, asbestos, asbestos-containing material, urea-formaldehyde, urea-formaldehyde-containing material and any other material or substance that may impair the Environment, the health of any individual, property or plant or animal life;

“HSR Act” means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976;

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“HSR Approval” means any waiting period, and any extension thereof, under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired or have been early terminated;

“Indemnified Parties” has the meaning ascribed thereto in Section 5.9(a);

“Intellectual Property Rights” has the meaning ascribed thereto in Section 3.1(aa)(i);

“Interim Order” means the interim order of the Court in a form acceptable to the Company and the Purchaser, each acting reasonably, to be issued following the application therefor contemplated by Section 2.2(a) providing for, among other things, the calling and holding of the Company Meeting, as such order may be amended, modified, supplemented or varied by the Court with the consent of both the Company and the Purchaser, each acting reasonably;

“Internal Controls” has the meaning ascribed thereto in Section 3.1(i);

“Investment Canada Act” means the Investment Canada Act (Canada);

“Investment Canada Act Approval” means the Purchaser or the Parent shall have received notice from the responsible Minister under the Investment Canada Act that he or she is satisfied, or the Minister shall by expiry of the applicable review period under the Investment Canada Act be deemed to be satisfied, that the transactions contemplated by this Agreement are of net benefit to Canada on terms and conditions satisfactory to the Parent, acting reasonably;

“Joint Venture” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership, contractual or other legal form, in which the Company or any of its subsidiaries holds voting shares, equity interests or other rights of participation but which is not a subsidiary of the Company, and any subsidiary or downstream affiliate of any such entity;

“Laws” means any and all laws, statutes, codes, ordinances (including zoning), decrees, rules, regulations, by-laws, notices, judicial, arbitral, administrative, ministerial, departmental or regulatory judgments, injunctions, orders, decisions, rulings, determinations or awards, decrees or other requirements of any Governmental Authority having the force of law and any legal requirements arising under the common law or principles of law or equity and the term “applicable” with respect to such Laws and, in the context that refers to any person, means such Laws as are applicable at the relevant time or times to such person or its business, undertaking, property or securities and emanate from a Governmental Authority having jurisdiction over such person or its business, undertaking, property or securities;

“Lease” has the meaning ascribed thereto in Section 3.1(q);

“Leased Real Property” has the meaning ascribed thereto in Section 3.1(q);

“Lender” has the meaning ascribed thereto in Section 3.2(v);

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“Liens” means any pledge, claim, lien, charge, option, hypothec, mortgage, security interest, restriction, adverse right, prior assignment, lease, sublease, right to possession or any other encumbrance, right or restriction of any kind or nature whatsoever, whether contingent or absolute, or any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing;

“LTIP” means the long-term incentive plan of the Company effective as of September 21, 2006, as thereafter amended and restated from time to time;

“Marketing Period” means a single consecutive 10 Business Day period commencing after all conditions set forth in Article 8 have been satisfied (other than (a) the conditions set forth in Sections 8.1(a) and 8.1(b) and (b) the conditions that, by their terms, are to be satisfied at closing, each of which is then capable of being satisfied) on the date of delivery of a final Offering Document (as defined in the Commitment Letter) which contains all Required Information that is Compliant (at no time during which period the financial information in the Offering Document shall be “stale” and the Offering Document shall continue to satisfy the requirements set forth in the Commitment Letter) and ending no later than the Outside Date; provided that such 10 Business Day period shall not include, and shall be extended by any of the following days that occur during such period:  (x) any days from and including June 29, 2012 to and including July 9, 2012, and (y) any days from and including August 17, 2012 to and including September 4, 2012.  Notwithstanding the foregoing, the “Marketing Period” shall not commence and shall be deemed not to have commenced if, on or prior to the completion of such consecutive 10 Business Day period, (x) the Company shall have announced any intention to restate any financial statements or financial information included in the Required Information or that any such restatement is under consideration or may be a possibility, in which case the Marketing Period shall be deemed not to commence unless and until such restatement has been completed and the applicable Required Information has been amended or the Company has announced that it has concluded that no restatement shall be required, and the requirements described in the immediately preceding sentence would be satisfied on the first day, throughout and on the last day of such new consecutive 10 Business Day period or (y) the Required Information would not be Compliant on the first day, throughout and on the last day of such consecutive 10 Business Day period, in which case a new 10 Business Day period shall commence upon Parent and its Lender receiving updated Required Information that would be Compliant, and the requirements in described in the immediately preceding sentence would be satisfied on the first day, throughout and on the last day of such new consecutive 10 Business Day period (for the avoidance of doubt, it being understood that if at any time during the Marketing Period the Required Information provided at the initiation of the Marketing Period ceases to be Compliant, then the Marketing Period shall be deemed not to have occurred);

“Material Adverse Effect” means, in respect of the Company or the Parent, as the case may be, any result, fact, change, effect, event, circumstance, occurrence or development that, taken together with all other results, facts, changes, effects, events, circumstances, occurrences or developments, has or would reasonably be expected to have a material and adverse effect on the business, operations, results of operations or condition (whether financial or otherwise) of such Party and its subsidiaries (or, with respect to the Company, the Company Entities), taken as a whole;  provided, however, that any result,

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fact, change, effect, event, circumstance, occurrence or development that arises out of, relates directly or indirectly to, results directly or indirectly from or is attributable to any of the following shall not be deemed to constitute, and shall not be taken into account in determining whether there has been, a Material Adverse Effect:

(a)                                  changes, developments or conditions in or relating to general international, political, economic or financial or capital market conditions, or political, economic or financial or capital market conditions in any jurisdiction in which the applicable Party or any of the subsidiaries (or, with respect to the Company, the Company Entities) operate or carry on business;

(b)                                 changes, developments or conditions resulting from any act of sabotage or terrorism or any outbreak of hostilities or declared or undeclared war, or any escalation or worsening of such acts of sabotage, terrorism, hostilities or war;

(c)                                  any earthquake, hurricane, tornado or other similar natural disaster;

(d)                                 changes or developments in or relating to currency exchange or interest rates or changes in the price of rare earth materials or products incorporating any such rare earth materials;

(e)                                  changes or developments generally affecting the rare earth mining industry in general or the supply or processing of rare earth materials or products incorporating any such rare earth materials;

(f)                                    any actual or proposed change in quotas of rare earth permitted to be exported from the People’s Republic of China;

(g)                                 any adoption, change or proposed change in any Laws or the interpretation, application or non-application of any Laws by any Governmental Authority;

(h)                                 any adoption, change or proposed change in Canadian GAAP or U.S. GAAP;

(i)                                     any change in the market price or trading volume of any securities of the Company or the Parent (it being understood that the causes underlying such change in market price may be taken into account in determining whether a Material Adverse Effect has occurred) or any suspension of trading in securities generally on any securities exchange on which any securities of the Company or the Parent trade;

(j)                                     (i) with respect to the Company, any actions taken (or omitted to be taken) by the Company upon the request of the Parent or the Purchaser and (ii) with respect to the Parent, any actions taken (or omitted to be taken) by the Parent upon the request of the Company;

(k)                                  any failure by such Party to meet any internal or publicly disclosed projections, forecasts or estimates of, or guidance relating to, revenue, earnings or cash flow

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of such Party, whether made by or attributed to such Party or any financial analyst or other person;

(l)                                     the announcement of the execution of this Agreement or the transactions contemplated hereby, the pendency of the completion of the transactions contemplated hereby, the performance of any obligation contemplated hereunder or the completion of any of the transactions contemplated hereby; or

(m)                               any legal proceeding commenced by or involving any current or former securityholders of the Parent or the Company arising out of or relating to this Agreement;

provided, however, that each of clause (a) through (e) above shall not apply to the extent that any of the changes, developments, conditions or occurrences referred to therein relate primarily to (or have the effect of relating primarily to) such Party or any of its subsidiaries (or, with respect to the Company, the Company Entities) or disproportionately adversely affect such Party and its subsidiaries (or, with respect to the Company, the Company Entities), taken as a whole, in comparison to other persons who operate in the same industry as such Party and its subsidiaries (or, with respect to the Company, the Company Entities); and provided, further, however, that references in certain sections of this Agreement to dollar amounts are not intended to be, and shall not be deemed to be, illustrative or interpretive for purposes of determining whether a Material Adverse Effect has occurred;

“Material Contract” has the meaning ascribed to that term in Section 3.1(u)(i);

“material fact” with respect to the Company and the Company Entities, has the meaning attributed to such term under the Securities Act, and with respect to the Parent and the Parent Material Subsidiaries, has the meaning attributed to such term under the 1933 Securities Act;

“Material Properties” means, collectively, each of the properties identified in Sections 3.1(p) and 3.1(q) of the Company Disclosure Letter;

“MI 61-101” means Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions;

“misrepresentation” with respect to the Company and the Company Entities, has the meaning attributed to such term under the Securities Act, and with respect to the Parent and the Parent Material Subsidiaries, has the meaning attributed to such term under the 1933 Securities Act;

“Molycorp Shares” means shares of common stock of the Parent, par value US$0.001 per share;

“Mountain Pass Mine” has the meaning ascribed thereto in Section 3.2(q);

“NI 52-109” means National Instrument 52-109 — Certification of Disclosure in Issuers’ Annual And Interim Filings;

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“Non-Disclosure Agreement” means the non-disclosure agreement dated as of March 24, 2010 between the Company and the Parent, as it may be amended, restated, supplemented or otherwise modified from time to time;

“NYSE” means the New York Stock Exchange;

“OFAC” has the meaning ascribed thereto in Section 3.1(ii);

“Optionholder” means a holder of one or more Options;

“Options” means, at any time, options to acquire Common Shares granted pursuant to the Stock Option Plan which are, at such time, outstanding and unexercised, whether or not vested;

“ordinary course of business”, or any similar reference, means, with respect to an action taken or to be taken by any person, that such action is consistent with the past practices of such person (including with respect to amount and frequency) and is taken in the ordinary course of the normal day-to-day business and operations of such person;

“Outside Date” means the date that is 180 days after the date of this Agreement or such later date as may be agreed to in writing by the Parties;

“Owned Real Property” has the meaning ascribed thereto in Section 3.1(p);

“Parent Data Room” means the Parent’s electronic data room posted on the Merrill Datasite at http://datasite.merrillcorp.com;

“Parent Disclosure Letter” means the disclosure letter dated the date hereof regarding this Agreement that has been executed by the Parent and delivered to the Company prior to the execution of this Agreement;

“Parent Financial Statements” means the audited consolidated financial statements of the Parent as at, and for the years ended December 31, 2011 and 2010, together with the notes thereto;

“Parent Material Subsidiaries” has the meaning ascribed thereto in Section 3.2(f);

“Parent Public Disclosure Record” means all documents filed by or on behalf of the Parent on the Electronic, Data-Gathering, Analysis and Retrieval (EDGAR) system since December 31, 2010;

“Parties” means the parties to this Agreement and “Party” means any one of them;

“Performance Units” means, at any time, performance awards and performance units granted pursuant to the LTIP which are, at such time, outstanding, whether or not earned or vested;

“Permit” means any lease, license, permit, certificate, consent, order, grant, approval, classification, registration or other authorization of or from any Governmental Authority;

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“Permitted Liens” means, for the Company or any Company Entity, or the Parent or any Parent Material Subsidiary, as the context requires:

(a)                                  Liens for current real estate taxes and assessments not yet due and payable or Liens for income and similar taxes that are being contested in good faith and for which the Company has made adequate provision in accordance with Canadian GAAP;

(b)                                 inchoate mechanics’ and materialmen’s and/or construction Liens for construction in progress and in respect of which payments are not past due;

(c)                                  to the extent such Liens would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company, (i) workmen’s, repairmen’s, warehousemen’s and carriers’ Liens arising in the ordinary course of business of the Company or such Company Entity consistent with past practice, (ii) all matters of record, whether or not registered, which do not individually or in the aggregate render title to any real estate asset invalid or unmarketable, and (iii) all Liens and other imperfections of title and encumbrances which would not reasonably be expected to interfere with the conduct of the business of the Company or such Company Entity;

(d)                                 rights reserved to or vested in any Governmental Entity by the terms of any lease, licence, franchise, grant or permit, or by any statutory provision, to terminate the same, to take action which results in an expropriation or condemnation, or to require annual or other payments as a condition to the continuance thereof;

(e)                                  deposits of cash or securities in connection with any appeal, review or contestation of any Lien or any matter giving rise to an Lien described in (a) or (c) above and for which adequate reserves have been provided for in the books of such person in accordance with Canadian GAAP;

(f)                                    the provisions of applicable Laws including zoning, land use and building restrictions, by laws, regulations and ordinances of federal, state, provincial, municipal or other Governmental Authorities, including municipal by-laws and regulations, airport zoning regulations, restrictive covenants and other land use limitations, public or private, by-laws and regulations and other similar Liens or privileges in respect of real property which in the aggregate do not materially impair the use of such property by the Company or such Company Entity in the operation of its business, and which are not violated in any material respect by existing or proposed structures or land use;

(g)                                 Permits, reservations, water course, right of access or user licenses, easements, rights of way, restrictions, building schemes, licenses, restrictive covenants and servitudes, rights of access or user, airport zoning regulations and other similar rights in land (including licenses, easements, rights of way, servitudes and rights in the nature of easements for walkways, sidewalks, public ways, sewers, drains, gas, soil, steam and water mains or pipelines, electrical lights and power, telephone, television and cable conduits, poles, wires or cables) granted to, reserved or taken by any person which would not materially impair the use of the

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real property to which they relate and any rights reserved or vested in any Governmental Authority or public or private utility or railway company by the terms of any lease, licence, franchise, grant, agreement or permit, subdivision, development, servicing, encroachment, site plan or other similar agreement with any Governmental Authority or public or private utility or railway company that would not materially impair the use of the real property to which they relate;

(h)                                 purchase money security interests securing indebtedness in the ordinary course of business;

(i)                                     security given by the Company or such Company Entity to a public utility or any Governmental Authority, when required by such utility or Governmental Authority in connection with the operations of such person, in the ordinary course of its business; and

(j)                                     any other Lien identified as a “Permitted Lien” in Section 3.1(p) of the Company Disclosure Letter or in Section 3.2(l) of the Parent Company Disclosure Letter, as the context requires;

“person” includes an individual, sole proprietorship, corporation, body corporate, incorporated or unincorporated association, syndicate or organization, partnership, limited partnership, limited liability company, unlimited liability company, joint venture,  joint stock company, trust, natural person in his or her capacity as trustee, executor, administrator or other legal representative, a government or Governmental Authority or other entity, whether or not having legal status;

“Plan of Arrangement” means the plan of arrangement substantially in the form and content set out in Schedule A hereto, as the same may be amended, supplemented or varied from time to time in accordance with Article 6 of the Plan of Arrangement or at the direction of the Court in the Final Order with the prior written consent of the Company and the Purchaser, each acting reasonably;

“Pre-Acquisition Reorganization” has the meaning ascribed thereto in Section 5.1(a);

“Proceedings” has the meaning ascribed thereto in Section 3.1(n);

“Registration Statement” has meaning ascribed thereto in Section 5.5(a)(v);

“Release” means any sudden, intermittent or gradual release, spill, leak, pumping, addition, pouring, emission, emptying, discharge, migration, injection, escape, leaching, disposal, dumping, deposit, spraying, burial, abandonment, seepage, placement or introduction of a Hazardous Substance, whether accidental or intentional, into the Environment;

“Representatives” means, collectively, with respect to a person, any officers, directors, employees, consultants, advisors, agents or other representatives (including, solicitors, accountants, investment bankers and financial advisors) of that person or any subsidiary of that person;

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“Required Information” means such financial and other pertinent information regarding the Company and the Company Entities as may be reasonably requested, including, without limitation, information to be used in the preparation of an information package regarding the business, operations, financial projections and prospects of the Parent, the Company and their respective subsidiaries customary for or reasonably necessary for the completion of the Debt Financing by the Debt Financing Sources, and such financial and other pertinent information regarding the Company and its subsidiaries as may be reasonably requested by the Parent to consummate the Acquisition Financing;

“Required Regulatory Approvals” means those sanctions, rulings, consents, orders, exemptions, permits, waivers, early termination authorizations, clearances, written confirmations of no intention to initiate legal proceedings and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Authorities as set forth in Schedule C hereto;

“Returns” means all reports, forms, elections, designations, schedules, statements, estimates, declarations of estimated tax, information statements and returns relating to, or required to be filed with any Governmental Authority in connection with, any Taxes and including any other filings relating to Taxes, including all returns in respect of Taxes and other material reports and information under the Tax Act, the income tax or corporation capital tax legislation of any province of Canada or any foreign country or political subdivision thereof in which the relevant person carries on business or to a jurisdiction of which it is otherwise subject, any sales or excise tax legislation of a province of Canada or any foreign country, or political subdivision thereof or legislation affecting any other Taxes, applicable to such person pursuant to which it is liable or required to pay or remit Taxes;

“Right to Match Period” has the meaning ascribed thereto in Section 6.2(b)(iv);

“RSUs” means, at any time, restricted share units granted pursuant to the LTIP which are, at such time, outstanding;

“SARs” means stock appreciation rights, granted pursuant to the LTIP, whether or not in tandem with Options under the Stock Option Plan;

“Securities Act” means the Securities Act (Ontario) and the rules, regulations and policies made thereunder;

“Securities Regulatory Authorities” means the securities regulatory authorities in each of the Provinces of Canada;

“Shareholder” means a holder of one or more Common Shares;

“Shareholder Rights Plan” means the Shareholder Rights Plan Agreement dated as of February 5, 2004 between the Company and Computershare Trust Company of Canada, as rights agent;

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“Special Committee” means the Special Committee established by the Board of Directors in connection with the transactions contemplated by this Agreement;

“Stock Option Plan” means the Amended and Restated Stock Option Plan of the Company effective November 11, 2010, as amended;

“subsidiary” means, with respect to a specified entity, any:

(a)                                  corporation of which issued and outstanding voting securities of such corporation to which are attached more than 50% of the votes that may be cast to elect directors of the corporation (whether or not shares of any other class or classes will or might be entitled to vote upon the happening of any event or contingency) are at all times owned by such specified entity;

(b)                                 partnership, unlimited liability company, joint venture or other similar entity in which such specified entity has more than 50% of the equity interests and the power to direct the policies, management and affairs thereof; and

(c)                                  a subsidiary (as defined in clauses (a) and (b) above) of any subsidiary (as so defined) of such specified entity;

“Superior Proposal” means a bona fide written Acquisition Proposal (provided, however, that, for the purposes of this definition, all references to “20%” in the definition of “Acquisition Proposal” shall be changed to “100%”) made by a third party or third parties acting jointly (other than the Purchaser and its affiliates) and which or in respect of which:

(a)                                  the Board of Directors has determined in good faith, after consultation with its financial advisors and outside legal counsel:

(i)                                     would, taking into account all of the terms and conditions of such Acquisition Proposal, and if consummated in accordance with its terms (but not assuming away any risk of non-completion), result in a transaction which is more favourable to the Shareholders from a financial point of view than the Arrangement; and

(ii)                                  is reasonably capable of being completed in accordance with its terms, without undue delay, taking into account all legal, financial, regulatory and other aspects of such Acquisition Proposal and the person or persons making such Acquisition Proposal;

(b)                                 is not subject to any due diligence condition or due diligence termination right in favour of the acquirer; or

(c)                                  is made available to all of the Shareholders on the same terms and conditions;

“Superior Proposal Notice” has the meaning ascribed thereto in Section 6.2(b)(iii);

“Support Agreement” means the support agreement to be entered into among the Parent, the Purchaser and Callco in substantially the form of Schedule D hereto;

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“Surviving Corporation” means any corporation or other entity continuing following the amalgamation, merger, consolidation or winding up of the Company with or into one or more other entities (pursuant to a statutory procedure or otherwise);

“Tax” or “Taxes” means all taxes, dues, duties, rates, imposts, fees, levies, other assessments, tariffs, charges or obligations of the same or similar nature, however denominated, imposed, assessed or collected by any Governmental Authority, including (i) all income taxes, including any tax on or based on net income, gross income, income as specifically defined, earnings, gross receipts, capital, capital gains, profits, business royalty or selected items of income, earnings or profits, and specifically including any federal, provincial, state, territorial, county, municipal, local or foreign taxes, state profit share taxes, windfall or excess profit taxes, capital taxes, royalty taxes, production taxes, payroll taxes, health taxes, employment taxes, withholding taxes (including all withholdings on amounts paid to or by the relevant person), sales taxes, use taxes, goods and services taxes, custom duties, value added taxes, ad valorem taxes, excise taxes, alternative or add-on minimum taxes, franchise taxes, gross receipts taxes, licence taxes, occupation taxes, real and personal property taxes, land transfer taxes, severance taxes, capital stock taxes, stamp taxes, anti-dumping taxes, countervailing taxes, occupation taxes, environment taxes, transfer taxes, and employment or unemployment insurance premiums, social insurance premiums and worker’s compensation premiums and pension (including Canada Pension Plan) payments, and other taxes, fees, imposts, assessments or charges of any kind whatsoever together with any interest, penalties, additional taxes, fines and other charges and additions that may become payable in respect thereof, (ii) any tax imposed, assessed, collected or payable pursuant to any tax-sharing agreement or any other contract relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency or fee, and (iii) any liability for any of the foregoing of a transferee, successor, guarantor or by contract or by operation of law;

“Tax Act” means the Income Tax Act (Canada);

“Technology” has the meaning ascribed thereto in Section 3.1(aa)(xv);

“Termination Fee” has the meaning ascribed thereto in Section 7.2(a);

“Termination Fee Event” has the meaning ascribed thereto in Section 7.2(b);

“Transaction Expenses” means all costs and expenses incurred by the Company in connection with the transactions contemplated by this Agreement, including all legal, accounting, financial advisory, printing and other administrative or professional fees, costs and expenses of third parties incurred by the Company, including in connection with the consideration of any alternative transactions in relation to the Company prior to or after the execution of this Agreement, the negotiation and settlement of this Agreement, the preparation and mailing of the Circular, the convening of the Company Meeting, applications for the Interim Order and the Final Order, the solicitation of proxies in respect of the Company Meeting and structuring and completion of the transactions contemplated by this Agreement;

“TSX” means the Toronto Stock Exchange;

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“U.S. GAAP” means accounting principles generally accepted in the United States;

“U.S. Securities Laws” means the 1933 Securities Act, the 1934 Exchange Act and all other state and federal securities Laws and the rules, regulations and published policies made thereunder; and

“Voting and Exchange Trust Agreement” means the voting and exchange trust agreement to be entered into among the Parent, Callco, the Purchaser and the Trustee (as defined in the Exchangeable Share Provisions) in substantially the form of Schedule E hereto.

1.2                               Currency

Except where otherwise specified, all references to currency herein are to lawful money of Canada and “$” refers to Canadian dollars.

1.3                               Interpretation Not Affected by Headings

The division of this Agreement into Articles, sections, paragraphs and subparagraphs and the insertion of a table of contents and headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement.  The terms “this Agreement”, “hereof”, “herein”, “hereunder” and similar expressions refer to this Agreement, including the Schedules hereto, and not to any particular Article, section or other portion hereof.  Unless something in the subject matter or context is clearly inconsistent therewith, references herein to an Article, section, subsection, paragraph, clause, subclause or schedule by number or letter or both are to that Article, section, subsection, paragraph, clause, subclause or schedule in this Agreement.

1.4                               Knowledge and Disclosure

Any reference in this Agreement to the “knowledge” or the “awareness” of the Company means to the best of the actual knowledge, information and belief of Constantine Karayannopoulos, Michael Doolan and Geoff Bedford, in their capacities as officers of the Company and not in their personal capacities or in any other capacity, as of the date of this Agreement after making reasonable inquiry regarding the relevant matter, and does not include any knowledge or awareness of any other individual or any constructive, implied or imputed knowledge or awareness.  Any reference in this Agreement to the “knowledge” or the “awareness” of the Purchaser or the Parent means to the best of the actual knowledge, information and belief of Mark Smith, James Allen, Dr. John Burba and John Ashburn, in their capacities as officers of the Parent and not in their personal capacities or in any other capacity, as of the date of this Agreement after making reasonable inquiry regarding the relevant matter, and does not include any knowledge or awareness of any other individual or any constructive, implied or imputed knowledge or awareness.

1.5                               Extended Meanings, Etc.

Unless the context otherwise requires, words importing only the singular number also include the plural and vice versa; words importing any gender include all genders.  The terms “including” or “includes” and similar terms of inclusion, unless expressly modified by the words

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“only” or “solely”, mean “including without limiting the generality of the foregoing” and “includes without limiting the generality of the foregoing”.  Any Contract, instrument or Law defined or referred to herein means such Contract, instrument or Law as from time to time amended, restated, supplemented or otherwise modified, including, in the case of Contracts or instruments, by waiver or consent and, in the case of Laws, by succession of comparable successor Laws, and all attachments thereto and instruments incorporated therein and, in the case of statutory Laws, all rules and regulations made thereunder.

1.6                               Date of any Action

If the date on which any action is required to be taken hereunder by any of the Parties is not a Business Day, then such action will be required to be taken on the next succeeding day which is a Business Day.

1.7                               Performance of the Purchaser’s Obligations

The Parent unconditionally guarantees the due and punctual performance of each and every obligation of the Purchaser arising under this Agreement and the Arrangement.

1.8                               Schedules

The following are the Schedules to this Agreement:

ARTICLE 2
THE ARRANGEMENT

2.1                               The Arrangement

The Company and the Purchaser agree that the Arrangement will be implemented in accordance with and subject to the terms and conditions contained in this Agreement and the Plan of Arrangement.  The closing of the transactions contemplated hereby and by the Plan of Arrangement will take place at 8:30 a.m. (Toronto time) on the Effective Date at the offices in Toronto, Ontario of Fogler, Rubinoff LLP, or at such other time on the Effective Date or such other place as may be agreed to by the Parties.

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2.2                               Implementation Steps by the Company

The Company covenants in favour of the Purchaser and the Parent that, subject to the terms of this Agreement, the Company will:

(a)                                 subject to the Purchaser and the Parent complying with Section 2.5(d), as soon as reasonably practicable after the execution of this Agreement and, in any event, in sufficient time to hold the Company Meeting in accordance with Section 2.2(b), apply to the Court for the Interim Order in a manner and form acceptable to the Purchaser, acting reasonably, and thereafter proceed with such application and diligently pursue obtaining the Interim Order;

(b)                                 subject to the Purchaser and the Parent complying with Section 2.5(d), lawfully convene and hold the Company Meeting in accordance with the Interim Order, the Company’s articles and by-laws and applicable Laws, as soon as reasonably practicable after the Interim Order is issued and, in any event, not later than 90 days from the date of this Agreement, and will not, and will not propose to adjourn, postpone or cancel the Company Meeting except with the written consent of the Purchaser or as otherwise permitted by this Agreement;

(c)                                  subject to the terms of this Agreement, including compliance by the Board of Directors with its fiduciary duties, the Company will use its commercially reasonable efforts to solicit from the Shareholders proxies in favour of the approval of the Arrangement Resolution including, if so requested by the Purchaser, acting reasonably, and at the Purchaser’s expense, using the services of investment dealers and proxy solicitation agents, and cooperating with any persons engaged by the Purchaser, to solicit proxies in favour of the approval of the Arrangement Resolution and take all other action reasonably requested by the Purchaser that are reasonably necessary or desirable to obtain the approval of the Arrangement by the Shareholders and permit the Purchaser to assist, and consult with the Purchaser and keep the Purchaser apprised, with respect to such solicitation and other actions;

(d)                                 subject to obtaining such approvals as are required by the Interim Order, as soon as reasonably practicable after the Company Meeting and, in any event, not later than two Business Days thereafter, apply to the Court pursuant to section 192(4) of the CBCA for the Final Order in a manner and form acceptable to the Purchaser, acting reasonably, and thereafter proceed with such application and diligently pursue obtaining the Final Order; and

(e)                                  subject to obtaining the Final Order and to the satisfaction or waiver (subject to applicable Laws) of each of the conditions set forth in Article 8 (excluding conditions that by their terms cannot be satisfied until the Effective Date, but subject to the satisfaction or, when permitted, waiver of those conditions as of the Effective Date), as soon as reasonably practicable thereafter, take all steps and actions including, if applicable, making all filings with Governmental Authorities (including the TSX) necessary to give effect to the Arrangement and carry out the terms of the Plan of Arrangement applicable to it prior to the Outside Date.

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2.3                               Implementation Steps by the Purchaser and the Parent

Subject to the terms of this Agreement, the Purchaser and the Parent will cooperate with, assist and consent to the Company seeking the Interim Order and the Final Order and, subject to the Company obtaining the Final Order and to the satisfaction or waiver (subject to applicable Laws) of each of the conditions set forth in Article 8 (excluding conditions that by their terms cannot be satisfied until the Effective Date, but subject to the satisfaction or, when permitted, waiver of those conditions as of the Effective Date), as soon as reasonably practicable thereafter, take all steps and actions including, if applicable, making all filings with Governmental Authorities (including the NYSE) necessary to give effect to the Arrangement and carry out the terms of the Plan of Arrangement applicable to each of them prior to the Outside Date.

2.4                               Interim Order

The application referred to in Section 2.2(a) shall, unless the Company and the Purchaser otherwise agree, include a request that the Interim Order provide, among other things:

(a)                                 for the class of persons to whom notice is to be provided in respect of the Arrangement and the Company Meeting and for the manner in which such notice is to be provided;

(b)                                 for the record date for the purposes of determining the Shareholders entitled to receive notice of and to vote at the Company Meeting;

(c)                                  that the Company Meeting may be adjourned or postponed from time to time by the Company without the need for any additional approval by the Court;

(d)                                 that the record date for the Shareholders entitled to receive notice of and to vote at the Company Meeting will not change in respect of or as a consequence of any adjournment or postponement of the Company Meeting;

(e)                                  that the requisite and sole approval of the Arrangement Resolution will be:

(i)                                     662/3% of the votes cast on the Arrangement Resolution by the Shareholders present in person or by proxy at the Company Meeting (with each Shareholder being entitled to one vote for each Common Share held by such Shareholder); and

(ii)                                  if required by MI 61-101, minority approval in accordance with MI 61-101;

(f)                                   for the grant of Dissent Rights to Shareholders who are registered holders of Common Shares;

(g)                                  for the notice requirements with respect to the presentation of the application to the Court for the Final Order; and

(h)                                 that, in all other respects, the terms, restrictions and conditions of the constating documents of the Company, including quorum requirements and all other matters, shall apply in respect of the Company Meeting;

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and, subject to the consent of the Company (such consent not to be unreasonably withheld or delayed), shall also include a request that the Interim Order provide for such other matters as the Purchaser may reasonably require.

2.5                               Circular and Preparation of Filings

(a)                                 Subject to the Purchaser and the Parent complying with Section 2.5(d), the Company will, in consultation with the Purchaser:

(i)                                     as promptly as reasonably practicable after the execution of this Agreement, prepare the Circular together with any other documents required by the CBCA or applicable Laws in connection with the Company Meeting; and

(ii)                                  as promptly as reasonably practicable after the issuance of the Interim Order and, in any event, within five Business Days, cause the Circular to be sent to the Shareholders and filed as required by the Interim Order and applicable Laws.

(b)                                 Subject to the Purchaser and the Parent complying with Section 2.5(d), the Company shall ensure that the Circular complies in all material respects with applicable Laws, and, without limiting the generality of the foregoing, that the Circular (including with respect to any information incorporated therein by reference) will not, at the time of mailing, contain any misrepresentation (other than in each case with respect to any information furnished by the Purchaser and the Parent) and will provide the Shareholders with information in sufficient detail to permit them to form a reasoned judgement concerning the matters to be placed before them at the Company Meeting.

(c)                                  The Company and the Purchaser will cooperate in the preparation, filing and mailing of the Circular.  The Company will provide legal counsel to the Purchaser with a reasonable opportunity to review and comment on drafts of the Circular and other documents related thereto prior to filing the Circular with applicable Governmental Authorities and mailing the Circular to the Shareholders and will give reasonable consideration to such comments.  The Purchaser acknowledges that whether or not any revisions will be made to the Circular as a result of such comments will be determined solely by the Company acting reasonably, provided, however, that all information relating to the Purchaser and the Parent included in the Circular shall be in form and content satisfactory to the Purchaser, acting reasonably, and the Circular shall include a copy of the Fairness Opinion and a statement that the Board of Directors has unanimously determined that the Arrangement is fair to the Shareholders and is in the best interests of the Company and the unanimous recommendation of the Board of Directors that the Shareholders vote in favour of the Arrangement Resolution and the rationale for that recommendation and a statement that, to the knowledge of the Company, each director and executive officer of the Company intends to vote all Common Shares held by him or her in favour of the Arrangement Resolution (unless such recommendation of the Board of Directors has been withdrawn, modified or amended in accordance with the terms of this Agreement).

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(d)                                 The Purchaser will furnish the Company with all such information regarding the Parent and its subsidiaries as may be required to be included by the Company in the Circular pursuant to applicable Laws and/or which is reasonably requested by the Company and any other documents related thereto.  Such information furnished by the Purchaser, as it relates to the Parent or its subsidiaries, will not, at the time of mailing, contain any misrepresentation.  In particular but without limitation, the Purchaser shall provide the Company with (i) all information required in order for the Company to prepare the pro forma financial statements required to be included in the Circular and all consents from its auditors required in connection with the financial information of the Purchaser required to be included in the Circular and (ii) all technical information regarding its material properties and all consents from the authors of such information required in connection with the disclosure contained in the Circular.

(e)                                  The Purchaser hereby indemnifies and saves harmless the Company, the Company Entities and their respective Representatives from and against any and all liabilities, claims, demands, losses, costs, damages and expenses to which the Company, any Company Entity or any of their respective Representatives may be subject or may suffer as a result of, or arising from, any misrepresentation contained in any information included in the Circular that was provided by the Purchaser, including as a result of any order made, or any inquiry, investigation or proceeding instituted by any Governmental Authority based on such a misrepresentation.

(f)                                   The Company and the Purchaser will each promptly notify the other if at any time before the Effective Date it becomes aware (in the case of the Company only with respect to the Company and the Company Entities and in the case of the Purchaser only with respect to the Parent and its subsidiaries) that the Circular or any other document referred to in Section 2.5(d) contains any misrepresentation or otherwise requires any amendment or supplement and promptly deliver written notice to the other Party setting out full particulars thereof. In any such event, the Company and the Purchaser will cooperate with each other in the preparation, filing and dissemination of any required supplement or amendment to the Circular or such other document, as the case may be, and any related news release or other document necessary or desirable in connection therewith.

(g)                                  The Company will advise the Purchaser as the Purchaser may reasonably request, and on a daily basis commencing five Business Days prior to the Company Meeting, as to the aggregate tally of the proxies and votes received in respect of the Company Meeting.

(h)                                 The Company will promptly provide the Purchaser with any notice relating to the Company Meeting and allow Representatives of the Purchaser and the Parent to attend the Company Meeting.

2.6                               Court Proceedings

The Company will provide legal counsel to the Purchaser with a reasonable opportunity to review and comment upon drafts of all materials to be filed with the Court in connection with

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the Arrangement prior to the service and filing of such materials and will give reasonable consideration to such comments.  The Company will ensure that all materials filed with the Court in connection with the Arrangement are consistent in all material respects with the terms of this Agreement and the Plan of Arrangement.  Subject to applicable Laws, the Company will not file any material with the Court in connection with the Arrangement or serve any such material, and will not agree to modify or amend materials so filed or served, except as contemplated by this Section 2.6 or with the Purchaser’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed, provided, however, that nothing herein shall require the Purchaser to agree or consent to any increase in the consideration payable under the terms of the Plan of Arrangement or any modification or amendment to such filed or served materials that expands or increases the obligations of the Purchaser or the Parent set forth in any such filed or served materials or under this Agreement or the Arrangement.  In addition, the Company will not object to legal counsel to the Purchaser making such submissions on the hearing of the application for the Interim Order and the application for the Final Order as such counsel considers appropriate, acting reasonably, provided that the Company or its legal counsel is advised of the nature of any submissions prior to the hearing and such submissions are consistent with this Agreement and the Plan of Arrangement.  The Company will also provide legal counsel to the Purchaser on a timely basis with copies of any notice of appearance and evidence or other documents served on the Company or its legal counsel in respect of the application for the Interim Order or the Final Order or any appeal therefrom and of any notice, whether or not in writing, received by the Company or its legal counsel indicating any intention to oppose the granting of the Interim Order or the Final Order or to appeal the Interim Order or the Final Order.

2.7                               Articles of Arrangement

The Articles of Arrangement shall, with such other matters as are necessary to effect the Arrangement and subject to the provisions of the Plan of Arrangement, consummate the Plan of Arrangement.  On the Effective Date, the Articles of Arrangement shall be filed with the Director.  The Articles of Arrangement shall be in form satisfactory to the Purchaser and the Company, each acting reasonably.

2.8                               List of Securityholders

Upon the reasonable request from time to time of the Purchaser, the Company will provide the Purchaser with lists (in both written and electronic form) of the registered Shareholders and Debentureholders, together with their addresses and respective holdings of Common Shares and Convertible Debentures, as applicable, lists of the names and addresses and holdings of all persons having rights (other than the Convertible Debentures) issued or granted by the Company to acquire or otherwise related to Common Shares (including Optionholders and holders of DSUs and SARs) and lists of non-objecting beneficial owners of Common Shares and Convertible Debentures and participants in book-based nominee registers (such as CDS & Co. and CEDE and Co.), together with their addresses and respective holdings of Common Shares and Convertible Debentures.  The Company will from time to time require that its registrar and transfer agent furnish the Purchaser with such additional information, including updated or additional lists of Shareholders and Debentureholders, information regarding beneficial ownership of Common Shares and Convertible Debentures and lists of holdings and other assistance as the Purchaser may reasonably request.

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2.9                               Options, RSUs, Performance Units, SARs and DSUs

(a)                                 The Parties acknowledge that the completion of the Arrangement will result in a “change of control” for purposes of the Stock Option Plan and the agreements thereunder and that all awards pursuant to the Stock Option Plan will be accelerated thereunder and, in that regard, the Parties acknowledge and agree that:

(i)                                     upon approval of the Arrangement by the Shareholders, all outstanding Options granted pursuant to the Stock Option Plan shall be vested;

(ii)                                  an Optionholder may, prior to the Effective Time, elect to exercise all of the Options held by the Optionholder, whether previously vested or unvested, upon payment to the Company of the exercise price therefore in cash and receive Common Shares in respect of the number of Common Shares so exercised pursuant to the terms of the Stock Option Plan; and

(iii)                               all Options that are outstanding immediately prior to the Effective Time shall be dealt with in accordance with the terms of the Plan of Arrangement;

(b)                                 The LTIP and all RSUs, Performance Units and SARs issued thereunder that are outstanding immediately prior to the Effective Time shall be dealt with in accordance with the terms of the Plan of Arrangement.

(c)                                  The DSU Plan and all DSUs issued thereunder that are outstanding immediately prior to the Effective Time shall be dealt with in accordance with the terms of the Plan of Arrangement.

(d)                                 The Company acknowledges that, prior to giving effect to any of the foregoing matters provided for in this Section 2.9, it shall cooperate and consult with the Purchaser in respect thereof.

2.10                        Dissenting Shareholders and Other Proceedings

Registered Shareholders may exercise Dissent Rights with respect to their Common Shares in connection with the Arrangement pursuant to and in the manner set forth in the Plan of Arrangement.  The Company will give the Purchaser (a) prompt notice of (i) any written notice of any Dissent Rights exercised or purported to have been exercised by any Shareholder received by the Company in relation to the Company Meeting and Arrangement Resolution and any withdrawal of Dissent Rights received by the Company and, subject to applicable Laws, any written communications sent by or on behalf of the Company to any Shareholder exercising or purporting to exercise Dissent Rights in relation to the Arrangement Resolution and (ii) any claim or other Proceeding commenced (or, to the knowledge of the Company, threatened) by any present, former or purported holder of any securities of the Company in connection with the transactions contemplated hereby and (b) the opportunity to participate in all negotiations and proceedings with respect to any such dissent, notice or instrument or claim or other Proceeding.  Other than as required by applicable Law, the Company shall not make any payment or settlement offer, or agree to any settlement, prior to the Effective Time with respect to any such dissent, notice or instrument or claim or other Proceeding unless the Purchaser, acting

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reasonably, shall have given its written consent to such payment, settlement offer or agreement, as applicable.

2.11                        Securityholder Communications

The Company and the Purchaser agree to cooperate in the preparation of presentations, if any, to Shareholders or other securityholders regarding the Arrangement, and the Company agrees to consult with the Purchaser in connection with any communication or meeting with Shareholders or other securityholders that it may have, provided, however, that the foregoing shall be subject to the Company’s overriding obligations to make any disclosure or filing required by applicable Laws or stock exchange rules and, if the Company is required to make any such disclosure, it shall use its commercially reasonable efforts to give the Purchaser a reasonable opportunity to review and comment thereon prior to its dissemination.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

3.1                               Representations and Warranties of the Company

Except as specifically disclosed in the correspondingly numbered subsection of the Company Disclosure Letter or the Company Public Disclosure Record (other than any disclosure contained under the captions “Risk Factors” or “Forward Looking Statements” or similar captions and any other disclosure contained therein that is predictive, cautionary or forward-looking in nature), the Company represents and warrants to and in favour of the Purchaser and the Parent as follows and acknowledges that each of the Purchaser and the Parent is relying upon such representations and warranties in entering into this Agreement:

(a)                                 Organization and Qualification.  The Company has been duly continued and validly exists and is in good standing under the CBCA and has the requisite corporate and legal power and capacity to own its assets as now owned and to carry on its business as it is now being carried on.  Each of the Company Entities is a corporation or other entity duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, organization or formation and has the requisite corporate, legal or other power and authority to own its assets as now owned and to carry on its business as it is now being carried on.  Each of the Company and the Company Entities is duly qualified to carry on business in each jurisdiction in which the nature or character of the respective properties and assets, owned, leased or operated by it, or the nature of its business or activities, makes such qualification necessary except where the failure to be so qualified has not had and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.  The Company Data Room contains true, complete and correct copies of the constating documents of each of the Company and the Company Entities, in each case as amended.  Except as disclosed in Section 3.1(a) of the Company Disclosure Letter, the Company Data Room contains true, complete and correct copies of the minutes (or, in the case of draft minutes, the most recent drafts thereof) of all meetings of the Shareholders, the Board of Directors and each committee of the Board of Directors held since January 1, 2007 and of the shareholder, board of directors and each committee of the board of directors of

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each of the Company Entities held since January 1, 2009, excluding any minutes (or portion thereof) of the Board of Directors in relation to this Agreement and any prior Acquisition Proposals and of the Special Committee.

(b)                                 Authority Relative to this Agreement.  The Company has the requisite corporate power, authority and capacity to enter into this Agreement and (subject to obtaining the approval of the Shareholders of the Arrangement Resolution and the Final Order as contemplated in Section 2.2 and the approvals in Schedule C) to perform its obligations hereunder and to complete the transactions contemplated by this Agreement.  The execution and delivery of this Agreement and the completion by the Company of the transactions contemplated by this Agreement have been duly authorized by the Board of Directors and no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery by it of this Agreement or, subject to obtaining the approval of the Shareholders of the Arrangement Resolution and the Final Order as contemplated in Section 2.2, the completion by the Company of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other Laws relating to limitations of actions or affecting the availability of equitable remedies and the enforcement of creditors’ rights generally and general principles of equity and public policy and to the qualification that equitable remedies such as specific performance and injunction may be granted only in the discretion of a court of competent jurisdiction.

(c)                                  Required Approvals.  No authorization, license, Permit, certificate, registration, consent or approval of, or filing with, or notification to, any Governmental Authority is required to be obtained or made by or with respect to the Company or any of the Company Entities for the execution and delivery of this Agreement, the performance by the Company of its obligations hereunder, the completion by the Company of the Arrangement or the ability of the Purchaser to conduct operations after the Effective Time, other than:

(i)                                     the Interim Order and any filings required in order to obtain, and approvals required under, the Interim Order;

(ii)                                  the Final Order, and any filings required in order to obtain the Final Order;

(iii)                               such filings and other actions required under applicable Securities Laws and the rules and policies of the TSX as are contemplated by this Agreement;

(iv)                              the Required Regulatory Approvals relating to the Company; and

(v)                                 any other authorizations, licenses, Permits, certificates, registrations, consents, approvals and filings and notifications with respect to which the failure to obtain or make same could not have or reasonably be expected

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to have a Material Adverse Effect on the Company or could not reasonably be expected to prevent or significantly impede or materially delay the completion of the Arrangement.

(d)                                 No Violation.  Subject to obtaining the authorizations, consents and approvals and making the filings referred to in Section 3.1(c) and complying with applicable Laws, the execution and delivery by the Company of this Agreement, the performance by the Company of its obligations hereunder and the completion of the Arrangement do not and will not (nor will they with the giving of notice or the lapse of time or both):

(i)                                     result in a contravention, breach, violation or default under any Law applicable to it or any of the Company Entities or any of its or their respective properties or assets;

(ii)                                  result in a contravention, conflict, violation, breach or default under the constating documents of it or any of the Company Entities;

(iii)                               result in a contravention, breach or default under or termination of, or acceleration or permit the acceleration of the performance required by, or loss of any benefit under, any Material Contract or material Permit to which it or any of the Company Entities is a party or by which it or any of the Company Entities is bound or to which any of its or the Company Entities’ properties or assets is subject or give to any person any interest, benefit or right, including any right of purchase or sale, termination, payment, modification, reimbursement, penalty, cancellation or acceleration, under any such Contract or Permit; or

(iv)                              result in the suspension or alteration in the terms of any material Permit held by it or any of the Company Entities or in the creation of any Lien upon any of their properties or assets;

except, in the case of each of clauses (i), (iii) and (iv) above, as could not have or reasonably be expected to have a Material Adverse Effect on the Company or would not reasonably be expected to prevent or significantly impede or materially delay the completion of the Arrangement.

(e)                                  Authorized Capital and Outstanding Convertible Debentures, Options, RSUs, Performance Units, SARs and DSUs.  The authorized capital of the Company consists of an unlimited number of Common Shares and an unlimited number of preferred shares issuable in series.  As at the date of this Agreement, there are (i) 115,135,582 Common Shares issued and outstanding all of which have been duly authorized and validly issued and are fully paid and non-assessable and no preferred shares outstanding, (ii) $230,000,000 principal amount of Convertible Debentures issued and outstanding providing for the issuance of 72.4637 Common Shares per $1,000 principal amount of Convertible Debentures upon the exercise thereof, subject to adjustment in accordance with the terms of the Debenture Indenture, (iii) 2,333,551 Options outstanding under the Stock Option Plan providing for the issuance of 2,333,551 Common

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Shares upon the exercise thereof, (iv) 428,179.948 DSUs outstanding, (v) 1,113,888 SARs outstanding, all of which are Tandem SARs (as such term is defined in the LTIP), (vi) zero RSUs outstanding and (vii) 407,325 Performance Units outstanding.  None of such Common Shares, Convertible Debentures, Options, DSUs, SARs, RSUs or Performance Units is owned by any Company Entity.  There is no outstanding contractual obligation of the Company or any of the Company Entities to repurchase, redeem or otherwise acquire any Common Shares.  Except for such Convertible Debentures, Options, DSUs, SARs, RSUs or Performance Units or as contemplated under the Shareholder Rights Plan (a true, complete and correct copy of which is contained in the Company Data Room), the Company has no outstanding agreement, subscription, warrant, option, conversion or exchange privilege right, arrangement or commitment (nor has it granted any right or privilege (contingent or otherwise) capable of becoming an agreement, subscription, warrant, option, conversion or exchange privilege, right, arrangement or commitment) obligating it to issue or sell any Common Shares or other securities of the Company, including any security or obligation of any kind convertible into or exchangeable or exercisable for any Common Shares or other security of the Company.  Except for the DSU Plan, the LTIP and the Stock Option Plan, neither the Company nor any of the Company Entities has outstanding any stock appreciation rights, phantom equity, restricted share unit, deferred share unit or similar right, agreement, arrangement or commitment based on the book value, Common Share price, income or any other attribute of or related to the Company or any of the Company Entities.  The Common Shares and the Convertible Debentures are listed on the TSX and, except for such listings, no securities of the Company or any of the Company Entities are listed on any other stock or securities exchange or market or registered under any securities Laws.  Except for the Convertible Debentures, there are no outstanding bonds, debentures or other evidences of indebtedness of the Company or any of the Company Entities having the right to vote (or that are convertible into or exchangeable or exercisable for securities having the right to vote) with the holders of Common Shares on any matter.  Section 3.1(e) of the Company Disclosure Letter sets out a true, complete and correct list of all Options, DSUs, Tandem SARs, and Performance Units, the names of the holders of Options, DSUs, Tandem SARs, and Performance Units, whether each such holder is a current director of the Company or current employee of the Company or any of the Company Entities and the grant date of such Options, DSUs, Tandem SARs, and Performance Units, and, with respect to each Option and Tandem SAR, the exercise price, vesting schedule and expiration date for such Option and Tandem SAR.  True, correct and complete copies of the DSU Plan, the LTIP, the Stock Option Plan and the Debenture Indenture are contained in the Company Data Room.

(f)                                    Company Entities.  Section 3.1(f) of the Company Disclosure Letter sets forth a true, complete and correct list of each Company Entity, its status and its jurisdiction and form of organization.  All of the outstanding shares in the capital of or outstanding shares of capital stock or other ownership, equity or voting interests of the Company Entities held by the Company, directly or

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indirectly, are validly issued, fully paid and non-assessable (to the extent such concepts are recognized in the applicable jurisdiction), free and clear of any Liens (other than Permitted Liens and those set forth in Section 3.1(f) of the Company Disclosure Letter), and, except as disclosed in Section 3.1(f) of the Company Disclosure Letter, there is no outstanding option, right, entitlement, understanding or commitment (contingent or otherwise) regarding the right to acquire any such share or interest in any such Company Entity and no outstanding option, warrant, conversion or exchange privilege or other right, agreement, arrangement or commitment obligating any such entity to issue or sell any share or ownership, equity or voting interest of such entity or security or obligation of any kind convertible into or exchangeable or exercisable for any shares or ownership, equity or voting interests of any such entity.  Neither the Company nor any of the Company Entities own any interest or investment (whether equity or debt) in any other person, other than a Company Entity, which interest or investment is material to the Company and the Company Entities, taken as a whole.

(g)                                 Reporting Issuer Status and Securities Laws Matters.  The Company is a “reporting issuer” within the meaning of applicable Canadian Securities Laws and not on the list of reporting issuers in default under applicable Canadian Securities Laws, and no securities commission or similar regulatory authority has issued any order preventing or suspending trading of any securities of the Company, and the Company is in compliance in all material respects with applicable Canadian Securities Laws.  Trading in the Common Shares on the TSX is not currently halted or suspended.  No delisting, suspension of trading or cease trading order with respect to any securities of the Company is pending or, to the knowledge of the Company, threatened.  To the knowledge of the Company, no inquiry, review or investigation (formal or informal) of the Company by any securities commission or similar regulatory authority under applicable Canadian Securities Laws or the TSX is in effect or ongoing or expected to be implemented or undertaken.  Except as set forth above in this Section 3.1(g), neither the Company nor any Company Entity is subject to continuous disclosure or other public reporting requirements under any securities Laws.  The documents and information comprising the Company Public Disclosure Record, as at the respective dates they were filed, were in compliance in all material respects with applicable Canadian Securities Laws and, where applicable, the rules and policies of the TSX and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  The Company has timely filed all forms, reports, statements and documents, including financial statements and management’s discussion and analysis, required to be filed by the Company under applicable Canadian Securities Laws and the rules and policies of the TSX.  The Company has not filed any confidential material change report that at the date hereof remains confidential.

(h)                                 Financial Statements.  The Company Financial Statements have been prepared in accordance with Canadian GAAP applied on a basis consistent with those of

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previous periods and in accordance with applicable Laws except (i) as otherwise stated in the notes to such statements or, in the case of the Company Annual Financial Statements, in the auditor’s report thereon and (ii) except that the Company Interim Financial Statements are subject to normal period-end adjustments and may omit notes which are not required by applicable Canadian Securities Laws or Canadian GAAP.  The Company Financial Statements, together with the related management’s discussion and analysis, present fairly, in all material respects, the assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of the Company and the Company Entities on a consolidated basis as at the respective dates thereof and the revenues, earnings, results of operations, changes in shareholders’ equity and cash flows of the Company and the Company Entities on a consolidated basis for the periods covered thereby (subject, in the case of the Company Interim Financial Statements, to normal period-end adjustments).  Except as disclosed in Section 3.1(h) of the Company Disclosure Letter, there are no outstanding loans made by the Company or any of the Company Entities to any director or officer of the Company.

(i)                                     Internal Controls; Disclosure Controls.  Management of the Company has designed and maintains a process of internal control over financial reporting (as such term is defined in NI 52-109) (“Internal Controls”) for the Company providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP and has otherwise complied with NI 52-109.  To the knowledge of the Company, as of the date of this Agreement, (i) there are no significant deficiencies or material weaknesses in the design and implementation or maintenance of the Internal Controls that are reasonably likely to adversely affect the ability of the Company to record, process, summarize and report financial information and (ii) there is no fraud, whether or not material, that involves management or other employees who have a significant role in the Internal Controls.  Since January 1, 2010, neither the Company nor any of the Company Entities nor, to the knowledge of the Company, any director, officer, employee, auditor, accountant or other representative of the Company or any of the Company Entities has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of the Company Entities or their respective internal accounting controls, including any complaint, allegation, assertion or claim that the Company or any of the Company Entities has engaged in questionable accounting or auditing practices, which has not been resolved to the satisfaction of the audit committee of the Board of Directors.

(j)                                     No Undisclosed Liabilities.  The Company and the Company Entities have no liability or obligation of any nature (whether accrued, absolute, contingent or otherwise) other than (i) liabilities and obligations disclosed in the Company Interim Financial Statements, (ii) liabilities and obligations incurred in the ordinary course of business since September 30, 2011 that have not had and

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could not reasonably be expected to have, individually or in aggregate with all other liabilities and obligations of the Company and the Company Entities (other than those disclosed in the Company Interim Financial Statements), a Material Adverse Effect on the Company and (iii) liabilities and obligations incurred as expressly permitted or specifically contemplated by this Agreement (including those related to Transaction Expenses). Without limiting the foregoing, the Company Interim Financial Statements reflect reasonable reserves in accordance with Canadian GAAP for contingent liabilities relating to pending litigation and other contingent obligations of the Company and the Company Entities.

(k)                                  Absence of Certain Changes.  Since September 30, 2011, except as set out in Section 3.1(k) of the Company Disclosure Letter:

(i)                                     each of the Company and the Company Entities has conducted its business only in the ordinary course consistent with past practice;

(ii)                                  there has not been any event, occurrence, development or state of circumstances or facts that has had or could reasonably be expected to have a Material Adverse Effect on the Company;

(iii)          there has not been any material write-down by the Company or any of the Company Entities of any of the assets of the Company or any of the Company Entities;

(iv)                              there has not been any expenditure or commitment to expend by the Company or any of the Company Entities with respect to capital expenses where any such expenditures and commitments exceed $10,000,000 in the aggregate;

(v)                                 other than in the ordinary course of business, there has not been any material change in the levels of accounts receivable or payable, inventories or employees of the Company and the Company Entities, taken as a whole;

(vi)                              there has not been any, direct or indirect, acquisition or sale, lease, license or other disposition by the Company of any interest in any of the Company Entities, any of the Material Properties or any other material assets;

(vii)                           there has not been any incurrence, assumption or guarantee by the Company or of any of the Company Entities of any indebtedness for borrowed money (other than the incurrence of inter-company indebtedness between the Company and any of its subsidiaries or among any of its subsidiaries), any creation or assumption by the Company or any of the Company Entities of any Lien (other than Permitted Liens), or any making by the Company or any of the Company Entities of any loan, advance or capital contribution to or investment in any other person (other than

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between the Company and any of its subsidiaries or among any of its subsidiaries), except, in each case, in the ordinary course of business;

(viii)        there has not been any satisfaction, settlement or compromise of any material claim, liability or obligation that was not reflected in the Company Interim Financial Statements;

(ix)                                the Company has not effected any material change in its accounting policies, principles, methods, practices or procedures;

(x)                                   neither the Company nor any of the Company Entities has suffered any casualty, damage, destruction or loss to any of its properties in excess of $1,000,000 in the aggregate;

(xi)                                the Company has not declared, set aside or paid any dividends or made any distribution or payment or return of capital in respect of the Common Shares;

(xii)          the Company has not effected or passed any resolution to approve a split, division, consolidation, combination or reclassification of the Common Shares or any other securities of the Company;

(xiii)         other than in the ordinary course of business, there has not been any material increase in or modification of the compensation payable or to become payable by the Company or any of the Company Entities to any of their respective directors, officers, employees, former employees or consultants (or any of their respective dependents or beneficiaries) or any grant or award to any such director, officer, employee or consultant of any increase in severance or termination pay or any increase or modification of any bonus, pension, insurance or benefit arrangement to, for or with any of such directors, officers, employees or consultants;

(xiv)                         neither the Company nor any of the Company Entities has adopted, or materially amended, any collective bargaining agreement, bonus, pension, profit sharing, stock purchase, stock option or other benefit plan (including any Company Plan or Canadian Plan); and

(xv)                            neither the Company nor any of the Company Entities has agreed, announced, resolved or committed to do any of the foregoing.

(l)                                     Compliance with Laws.  The business of the Company and of each of the Company Entities has been and is currently being conducted in compliance in all material respects with all applicable Laws (except Environmental Laws, in respect of which the sole representations and warranties of the Company are contained in Section 3.1(bb)), and none of the Company or any of the Company Entities has received any notice of any alleged material non-compliance or violation of any such Laws.  Without limiting the generality of the foregoing, all issued and outstanding Common Shares and Convertible Debentures have been

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issued in compliance, in all material respects, with all applicable Canadian Securities Laws.

(m)                               Permits.  Each of the Company and the Company Entities has obtained and is in compliance in all material respects with all material Permits required by applicable Laws necessary to conduct its current business and operations as they are now being conducted.  Except as disclosed in Section 3.1(m) of the Company Disclosure Letter, there are no actions, investigations or other Proceedings in progress, pending, or, to the knowledge of the Company, threatened against the Company or any of the Company Entities that could reasonably be expected to result in the suspension, loss or revocation of any such Permit.  The transactions contemplated hereby will not adversely affect any such Permit or the availability of any such Permit for the Company or any Company Entity, including the proposed sourcing of any rare earth materials from the Purchaser and its affiliates from and after the Effective Time.  To the knowledge of the Company, there are no proposed changes in any Law that could materially adversely impact any material Permit or the availability of any material Permit necessary to conduct the current business operations of the Company and each Company Entity.

(n)                                 Litigation.  Except as disclosed in Section 3.1(n) of the Company Disclosure Letter, there is no court, administrative, regulatory or similar proceeding (whether civil, quasi-criminal or criminal), arbitration or other dispute settlement procedure, investigation or inquiry before or by any Governmental Authority, or any claim, action, suit, demand, arbitration, charge, indictment, hearing or other similar civil, quasi-criminal or criminal, administrative or investigative matter or proceeding (collectively, “Proceedings”) against or involving the Company or any of the Company Entities (whether in progress, pending or, to the knowledge of the Company, threatened) that, if adversely determined, would, in the aggregate, result in an obligation, award or damages payable by the Company or any of the Company Entities in excess of $5,000,000 or prevent or significantly impede or materially delay the completion of the Arrangement and, to the knowledge of the Company, no event or circumstance has occurred which might reasonably be expected to give rise to any such Proceeding.  Neither the Company nor any of the Company Entities nor any of their respective properties or assets is subject to any outstanding judgment, order, writ, injunction, rule, award or decree of any Governmental Authority that involves or may involve, or restricts or may restrict, the right or ability of the Company or any of the Company Entities to conduct its business in all material respects as it has been conducted prior to the date hereof or that has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or could reasonably be expected to prevent or significantly impede or materially delay the completion of the Arrangement.

(o)                                 Insolvency.  No Proceeding is pending by or against the Company or any of the Company Entities, or, to the knowledge of the Company, is planned or threatened, in connection with the dissolution, liquidation, winding up,

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bankruptcy or reorganization of the Company or any of the Company Entities or for the appointment of a trustee, receiver, manager or other administrator of the Company or any of the Company Entities or any of their respective properties or assets nor, to the knowledge of the Company, is any such act or Proceeding threatened.  Neither the Company nor any of the Company Entities has sought protection under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the United States Bankruptcy Code or similar legislation.

(p)                                 Real Property.  The Company or one of the Company Entities holds (A) good, valid and marketable beneficial and legal title to all real property (“Owned Real Property”) identified in Section 3.1(p) of the Company Disclosure Letter as being owned by the Company or the relevant Company Entity (which real property constitutes all of the real property owned as of the date hereof by the Company and the Company Entities that relates to the Material Properties or is material to the Company) and (B) all registered encumbrances, Permits and licenses necessary to permit the Company and each of the Company Entities to carry out the operation of their respective businesses. There is no pending or, to the knowledge of the Company, threatened condemnation or expropriation Proceedings with respect to any Owned Real Property. There are no outstanding options or rights of first refusal to purchase any Owned Real Property (or any portion thereof or interest therein).  All of the material buildings, fixtures, systems and utilities on the Owned Real Property (i) were constructed and are maintained in accordance with applicable Laws in all material respects, (ii) subject to reasonable wear and tear, are in good operating condition and in a good state of maintenance and repair in all material respects and (iii) are suitable and adequate for the purposes for which they have been designed.  There are no Liens other than Permitted Liens registered against any Owned Real Property and, except for Permitted Liens, there are no statutory rights of way, easements, covenants or restrictive covenants relating to any Owned Real Property (or any portion thereof or interest therein).  The properties identified in Section 3.1(p) of the Company Disclosure Letter as Material Properties are the only properties, whether owned or leased by the Company or any of the Company Entities, that are material to the Company.

(q)                                 Leased Property.  With respect to the real property (“Leased Real Property”) identified as being leased or subleased by the Company or any of the Company Entities in Section 3.1(q) of the Company Disclosure Letter (which real property constitutes all of the real property leased or subleased as of the date hereof by the Company or any of the Company Entities for leases having an outstanding term of 12 months or more), (i) each lease or sublease for such property (each, a “Lease”), true, correct and complete copies of which are contained in the Company Data Room, constitutes a legal, valid and binding obligation of the Company or such Company Entity, as the case may be, enforceable against the Company or such Company Entity, as the case may be, in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other Laws relating to limitations of actions or affecting the availability of equitable remedies and the enforcement of

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creditors’ rights generally and general principles of equity and public policy and to the qualification that equitable remedies such as specific performance and injunction may be granted only in the discretion of a court of competent jurisdiction, and is in full force and effect, unamended by oral or written agreement, (ii) neither the Company nor any of the Company Entities, as the case may be, is in material breach of or default under any Lease and, to the knowledge of the Company, no event has occurred which, with the giving of notice or lapse of time, or both, would constitute a breach of or default under any Lease, (iii) to the knowledge of the Company, no third party has repudiated or has the right to terminate or repudiate any Lease except in accordance with its terms or with respect to the normal exercise of remedies in connection with any defaults thereunder or in accordance with any termination rights set out therein and (iv) to the knowledge of the Company, no counterparty to any Lease is in material default thereunder.

(r)                                    Assets.  The Company and the Company Entities own or otherwise hold good and valid legal title to, or hold a valid leasehold interest in, all material assets and properties that are required to conduct the business and operations of the Company and the Company Entities as presently conducted and (as disclosed in the Company Public Disclosure Record) proposed to be conducted and there are no Liens on any such assets or properties that could, individually or in the aggregate, materially adversely impact the normal use and operation thereof in the ordinary course of business of the Company and the Company Entities or materially detract from the value of any such assets or properties except for Permitted Liens.

(s)                                  Operational Matters.  Except as would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company:

(i)            all rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens, contract commitments, payments and obligations due and payable, or performable, as the case may be, on or prior to the date hereof under, with respect to, or on account of any direct or indirect assets of the Company, any of the Company Entities or any of their respective Joint Ventures have been duly paid, duly performed or provided for prior to the date hereof, in each case other than as are currently being paid or performed in the ordinary course of business; and

(ii)                                  all costs, expenses, and liabilities due and payable on or prior to the date hereof under the terms of any Contracts to which the Company or any of the Company Entities is directly or indirectly bound have been properly paid in accordance with the applicable terms other than payments being contested in good faith.

(t)                                    Taxes.

(i)            Each of the Company and the Company Entities has duly and timely filed all Returns required to be filed by it prior to the date hereof, other than

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those Returns identified in Section 3.1(t)(i) of the Company Public Disclosure Record as having been administratively waived, and all such Returns are true, complete and correct in all material respects and fully disclose all income and expenses as required or permitted by applicable Law.  The Company and each of the Company Entities has paid or has collected, withheld and remitted to the appropriate Governmental Authority on a timely basis all assessments and reassessments and all other Taxes due and payable by it, other than those which are being or have been contested in good faith pursuant to applicable Laws and in respect of which adequate reserves or accrual in accordance with Canadian GAAP have been provided in the Company Interim Financial Statements.  Except as provided in the Company Interim Financial Statements, no audit, action, investigation, deficiency, litigation, proposed adjustment or other Proceeding exists or has been asserted or, to the knowledge of the Company, threatened with respect to Taxes of the Company or any of the Company Entities, and neither the Company nor any of the Company Entities is a party to any Proceeding for assessment, reassessment or collection of Taxes and no such event has been asserted or, to the knowledge of the Company, threatened against the Company or any of the Company Entities or any of their respective assets, and there are no matters of dispute or matters under discussion with any Governmental Authority relating to Taxes assessed by any Governmental Authority against the Company or any of the Company Entities or relating to any matters which could result in claims for Taxes or additional Taxes.  No Lien, other than Permitted Liens, for Taxes has been filed or exists other than for Taxes not yet due and payable by the Company or any of the Company Entities.  The Company Interim Financial Statements accurately reflect, as of the dates thereof, the Company’s liability for Taxes due and accruing, including Taxes for which a tax return was not yet filed or required to be filed.  There are no currently effective material elections, agreements or waivers extending the statutory period or providing for an extension of time with respect to the assessment or reassessment of any Taxes, the filing of any Return or any payment of Taxes by the Company or any of the Company Entities.  None of the Company or any of the Company Entities has made, prepared and/or filed any elections, designations or similar filings relating to Taxes or entered into any agreement or other arrangement in respect of Taxes or Returns that could, in and of itself, require a material amount to be included in the income of the Company or any Company Entity for any period ending after the Effective Date.  None of the Company or any of the Company Entities has acquired property from a non-arm’s length person (within the meaning of the Tax Act) (i) for consideration the value of which is less than the fair market value of the property or (ii) to the knowledge of the Company, as a contribution of capital for which no shares were issued by the acquirer of the property and the recipient’s cost in such property is less than its fair market value at the time of such contribution.  The Company is a taxable Canadian corporation as defined in the Tax Act.  Section 3.1(t) of the Company Disclosure Letter contains a list of all jurisdictions in which the

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Company or any of the Company Entities has filed, or is required to file, a Return.  All Returns contained in the Company Data Room are true, complete and correct copies of such Returns.  Neither the Company nor any of the Company Entities is required to file any Return in respect of income taxes in any jurisdiction other than the jurisdiction of its formation.

(ii)           The Company and each of the Company Entities has withheld from each payment made to any of its present or former employees, officers and directors, and to all other persons, all material amounts required by applicable Law to be withheld, and has remitted such withheld amounts within the prescribed periods to the appropriate Governmental Authority.  The Company and the Company Entities have remitted all Canada Pension Plan contributions, provincial pension plan contributions, employment insurance premiums, employer health taxes and other Taxes payable by it in respect of its employees, agents and consultants, as applicable, and has remitted such amounts to the appropriate Governmental Authority within the time required under applicable Laws.  The Company and each of the Company Entities has charged, collected and remitted on a timely basis all Taxes required under applicable Laws on any sale, supply or delivery whatsoever, made by them.

(iii)          No facts, circumstances or events exist or have existed that have resulted in or may result in the application of any of sections 79 to 80.04 of the Tax Act to the Company or any of the Company Entities.

(iv)          Records or documents that meet the requirements of paragraphs 247(4)(a) to (c) of the Tax Act have been made and obtained by the Company and each of the Company Entities with respect to all material transactions between the relevant entity and any person not resident in Canada with whom such entity was not dealing at arm’s length within the meaning of the Tax Act, during a Taxation year commencing after 2005 and ending on or before the Effective Date.

(u)           Contracts.

(i)            Except as set forth in Section 3.1(u)(i) of the Company Disclosure Letter, none of the Company or any of the Company Entities is a party to or bound or governed by any of the following (each, together with all exhibits and schedules thereto, a “Material Contract”):

A.            any Contract under which the Company or any of the Company Entities is obliged to make payments on an annual basis in excess of $3,000,000 in the aggregate and that is not terminable by the Company or any of the Company Entities on less than 12 months’ notice;

B.            any partnership, limited or unlimited liability company agreement, joint venture, alliance agreement or other similar agreement or

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arrangement relating to the formation, creation, operation, management, business or control of any Joint Venture, other than any such agreement or arrangement relating to the operation or business of a property or asset in the ordinary course of business and which is not material with respect to such property or asset;

C.            any Contract (other than between the Company and any of its subsidiaries or among any of its subsidiaries) under which indebtedness for borrowed money in excess of $1,000,000 is outstanding or may be incurred or pursuant to which any property or asset of the Company or any of the Company Entities is mortgaged, pledged or otherwise subject to a Lien, any Contract under which the Company or any of the Company Entities has directly or indirectly guaranteed any liabilities or obligations of any person (other than the Company or any of its subsidiaries) in excess of $1,000,000 or any Contract restricting the incurrence of indebtedness by the Company or any of the Company Entities in any material respect or the incurrence of Liens on any properties or securities of the Company or any of the Company Entities in any material respect or restricting the payment of dividends or other distributions in any material respect;

D.            any Contract that (i) purports to limit or restrict in any material respect the ability of the Company or any of the Company Entities to (x) engage in any type of activity or business or (y) compete with any person or operate in any location or (ii) grants to any person “most favored nations” status or any type of special pricing or discount rights;

E.            any Contract (other than between the Company and any of its wholly-owned subsidiaries or among any of its wholly-owned subsidiaries) providing for the sale or exchange of, or option to sell or exchange, any property or asset with a fair market value in excess of $1,000,000, or for the purchase or exchange of, or option to purchase or exchange, any property or asset with a fair market value in excess of $1,000,000, in each case entered into in the past 12 months or in respect of which the applicable transaction has not been consummated;

F.             any Contract (other than between the Company and any of its wholly-owned subsidiaries or among any of its wholly-owned subsidiaries) entered into in the past 12 months or in respect of which the applicable transaction has not yet been consummated for the acquisition or disposition, directly or indirectly (by merger or otherwise), of material assets or shares (or other equity interests) of another person for aggregate consideration in excess of $20,000,000, in each case other than in the ordinary course of business;

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G.                                    any currency, commodity, interest rate or equity related hedge, derivative, swap or other financial risk management Contract;

H.                                   any Contract providing for indemnification by the Company or any of the Company Entities, other than Contracts which provide for indemnification obligations of less than $5,000,000;

I.                                        any standstill or similar Contract currently restricting the ability of the Company or any of the Company Entities to offer to purchase or purchase the assets or equity securities of another person;

J.                                        any Contract which, if terminated or modified or if it ceased to be in effect, would have or reasonably be expected to have a Material Adverse Effect on the Company; or

K.                                   any Contract providing for the Company or any of the Company Entities to assume or guarantee any liability, contingent or otherwise, arising under any Environmental Law.

True, correct and complete copies of each Material Contract are contained in the Company Data Room.

(ii)           None of the Company, the Company Entities or, to the knowledge of the Company, any of the other parties thereto, is in breach or violation of or in default under (in each case, with or without notice or lapse of time or both) any Material Contract in any material respect, and none of the Company or any of the Company Entities has received or given any notice of default under any Material Contract which remains uncured, and, to the knowledge of the Company, except as disclosed in Section 3.1(u)(ii) of the Company Disclosure Letter, there exists no state of facts which after notice or lapse of time or both would constitute a default under or breach or violation of any Material Contract or the inability of a party to any Material Contract to perform its obligations thereunder where, in any such case, such default, breach, violation or non-performance has had or would reasonably be expected to have a Material Adverse Effect on the Company.

(iii)          Except as described in Section 3.1(u)(iii) of the Company Disclosure Letter, there are no shareholders or stockholders agreements, registration rights agreements, voting trusts, proxies or similar agreements, arrangements or commitments to which the Company or any of the Company Entities is a party or, to the knowledge of the Company, with respect to any shares or other equity interests of the Company or any of the Company Entities or any other Contract relating to disposition, voting or dividends with respect to any shares or other equity securities of the Company or any of the Company Entities.

(iv)          To the knowledge of the Company, the Material Contracts constitute all of the Contracts that are required to conduct the business and operations of

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the Company and the Company Entities as presently conducted.  Neither the Company nor any of the Company Entities has received written notice of the termination of, or intent to terminate or otherwise fail to fully perform any Material Contract.

(v)           Employment Agreements and Collective Agreements.  Except as set forth in Section 3.1(v) of the Company Disclosure Letter, none of the Company or any of the Company Entities is a party to or bound or governed by, or subject to, or has any liability with respect to:

(i)            any employment, retention or change of control agreement with, or any written or oral agreement, commitment, obligation, arrangement, plan or understanding providing for any retention, bonus, severance, change of control, retirement or termination payments in excess of $250,000 to any current or former director, officer or employee of the Company or any Company Entity;

(ii)           any collective bargaining or union agreement or other similar arrangement with any labour union or employee associate, or any actual or, to the knowledge of the Company, threatened application for certification or bargaining rights in respect of the Company or any of the Company Entities;

(iii)          any labour dispute, work stoppage or slowdown, strike or lock-out relating to or involving any employees of the Company or any of the Company Entities that has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company; or

(iv)          any actual or, to the knowledge of the Company, threatened claim or other Proceeding arising out of or in connection with employment by the Company or any of the Company Entities or the termination thereof, other than such claims or other Proceedings as have not had and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

True, complete and correct copies of the agreements, arrangements, plans and understandings referred to in paragraphs (i) and (ii) of this Section 3.1(v) are contained in the Company Data Room and, in the case of any retention, severance, termination or other payments that may become payable in connection with the termination of the employment or engagement of, or resignation of, any of the persons referred to in Section 3.1(v)(i), the corresponding section of the Company Disclosure Letter contains a description and estimated calculation of the entitlements of each such person.

(w)          Health and Safety.  All material inspection reports under all applicable health and safety Laws and similar Laws pertaining to the employees and the business of the Company and the Company Entities for the past three (3) years are contained in the Company Data Room.  There are no notices of reassessment or penalty assessments or any other communications related thereto which the

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Company or any of the Company Entities have received from any Governmental Authority regarding occupational health and safety or workers compensation matters and there are no such assessments which are unpaid as of the date hereof.

(x)           Employment and Labour Laws.  The Company and the Company Entities have operated in accordance with all applicable Laws with respect to employment and labour in all material respects, including employment and labour standards, occupational health and safety, employment equity, pay equity, workers’ compensation, human rights, labour relations and privacy, and there are no current, pending or, to the knowledge of the Company, threatened Proceedings by or before any Governmental Authority with respect to any such matters, except where the failure to so operate would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on the Company.

(y)           Acceleration of Benefits.  Except as contemplated herein, in Section 3.1(y) of the Company Disclosure Letter or in the Plan of Arrangement, no person will, as a result of the Company completing the Arrangement, become entitled to (i) any retirement, severance, termination, bonus or other similar payment, (ii) the acceleration of the vesting of or the time to exercise any outstanding stock option or employee, officer or director awards, (iii) the forgiveness or postponement of payment of any material indebtedness owing by such person to the Company or any of the Company Entities or (iv) receive any additional payments or compensation under or in respect of any employee, officer or director benefits or incentive, performance or other compensation plans or arrangements.  Section 3.1(y) of the Company Disclosure Letter contains a description and calculation of the entitlements of each person who may become entitled to any payment or compensation referred to in clauses (i) to (iv) above.  Except as disclosed in Section 3.1(y) of the Company Disclosure Letter, no amount that could be received (whether in cash or property or the vesting of property) as a result of any of the transactions contemplated herein or in the Plan of Arrangement by any employee, officer or director of the Company or any of its affiliates who is a “disqualified individual” (as such term is defined in United States Treasury Regulation Section 1.280G-1) under any employment, severance or termination agreement, other compensation arrangement or Company Plan currently in effect would be characterized as an “excess parachute payment” (as such term is defined in Section 280G(b)(1) of the Code).

(z)           Pension and Employee Benefits.

(i)            The Company and each of the Company Entities have complied, in all material respects, with the terms of (A) all “employee benefit plans,” as defined in Section 3(3) of ERISA and (B) all other agreements, health, welfare, supplemental unemployment benefit, bonus, profit sharing, deferred compensation, disability, pension or retirement plans and other employee or director compensation or benefit plans, policies or

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arrangements which are maintained by or binding upon the Company or Company Entity or in respect of which the Company or any of the Company Entities has any actual or potential material liability (including the Stock Option Plan, the LTIP and the DSU Plan) (collectively, the “Company Plans”) and with all applicable Laws relating thereto in all material respects.  Section 3.1(z)(i) of the Company Disclosure Letter contains a complete list of all Company Plans.  Except as disclosed in Section 3.1(z)(i) of the Company Disclosure Letter, true, correct and complete copies of (I) the Company Plans (or, in the case of any Company Plans that are multi-employer pension or benefit plans, a summary of any material obligations of the Company or any of the Company Entities thereunder), (II) all determination letters from the Internal Revenue Service with respect to any of the Company Plans, (III) all current summary plan descriptions and annual reports with respect to any of the Company Plans, and (IV) all current trust agreements, insurance contracts and other documents relating to the funding or payment of benefits under any of the Company Plans, are contained in the Company Data Room.

(ii)           The Company and each of the Company Entities have complied, in all material respects, with the terms of every benefit plan, program, agreement or arrangement (whether written or unwritten) maintained, contributed to, or provided by the Company or any Company Entities for the benefit of any of the employees, former employees of the Company or the Company Entities or their respective dependants or beneficiaries in respect of employment or service in Canada (the “Canadian Plans”), including all bonus, deferred compensation, incentive compensation, share purchase, share option, stock appreciation, phantom stock, savings, profit sharing, severance or termination pay, health or other medical, life, disability or other insurance (whether insured or self-insured), supplementary unemployment benefit, pension, retirement and supplementary retirement plans, programs, agreements and arrangements, except for any statutory plans to which the Company or any Company Entity is obliged to contribute or comply including the Canada/Québec Pension Plan, or plans administered pursuant to applicable federal or provincial health, worker’s compensation or employment insurance legislation. Section 3.1(z)(ii) of the Company Disclosure Letter contains a complete list of all Canadian Plans.  True, complete, and up-to-date copies of (I) the Canadian Plans and all amendments thereto, (II) all summary descriptions of the Canadian Plans provided to past or present participants therein, (III) if applicable, the statement of investment policies and procedures for each Canadian Plan, (IV) all funding agreements and service provider contracts or other contracts in respect of the Canadian Plans (including insurance contracts, investment management agreements, subscription and participation agreements and record-keeping agreements), and (V) if applicable, the two most recent actuarial reports, the financial statements and evidence of any registration in respect of each Canadian Plan, are contained in the Company Data Room.

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(iii)          Except as set out in Section 3.1(z)(iii) of the Company Disclosure Letter:

A.            all of the Company Plans and Canadian Plans are and have been established, registered, qualified and, in all material respects, administered in accordance with (1) all applicable Laws, (2) the respective terms of such Company Plans and Canadian Plans and (3) the terms of any agreements between the Company or any of the Company Entities, as the case may be, and their respective employees and former employees who are participants in the Company Plans and Canadian Plans.  There have been no prohibited transactions or breaches of any of the duties imposed on “fiduciaries” (within the meaning of Section 3(21) of ERISA) by ERISA with respect to the Company Plans that could result in any material liability or excise tax under ERISA or the Code being imposed on the Company or any Company Entity.  Each Company Plan intended to be qualified under Section 401(a) of the Code is so qualified and has been determined by the Internal Revenue Service to be so qualified, and each trust created thereunder has been determined by the Internal Revenue Service to be exempt from tax under the provisions of Section 501(a) of the Code, and, to the knowledge of the Company, nothing has occurred since the date of any such determination that could reasonably be expected to give the Internal Revenue Service grounds to revoke such determination,

B.            all contributions or premiums required to be made by the Company or any of the Company Entities, as the case may be, under the terms of each Company Plan or Canadian Plan or by applicable Laws have been made in a timely fashion in accordance with applicable Laws and the terms of the Company Plans and Canadian Plans,

C.            each Company Plan and Canadian Plan is insured or funded as may be required by applicable Law and in good standing with such Governmental Authorities as may be applicable and, as of the date hereof, no currently outstanding notice of under-funding, non-compliance, failure to be in good standing or otherwise has been received by the Company or any of the Company Entities from any such Governmental Authorities.  No Company Plan or Canadian Plan provides any non-pension post-retirement or post-employment benefits (except to the extent required by Section 4980B of the Code).  To the knowledge of the Company, no Company Plan or Canadian Plan provides benefits to any individual who is not a current or former employee of the Company or a Company Entity, or the dependents or beneficiaries of any such current or former employee.  With respect to each group health plan benefiting any current or former employee of the Company or any member of the Controlled Group that is subject to

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Section 4980B of the Code, the Company and each member of the Controlled Group has complied in all material respects with the continuation coverage requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA,

D.            no Company Plan or Canadian Plan is subject to any pending or, to the knowledge of the Company, threatened investigation, examination, action, claim or other Proceeding initiated by any Governmental Authority or any other party, other than routine claims for benefits,

E.            neither the Company nor any member of the Controlled Group sponsors, maintains or has any material liability (whether actual or contingent, with respect to any of its assets or otherwise) with respect to any current or former “defined benefit plan” as defined in Section 3(35) of ERISA, a pension plan subject to the funding standards of Section 302 of ERISA or Section 412 of the Code, a “multiemployer plan” as defined in Section 3(37) of ERISA or Section 414(f) of the Code or a “multiple employer plan” within the meaning of Section 210(a) of ERISA or Section 413(c) of the Code.  Neither the Company nor any member of the Controlled Group has any liability under Title IV of ERISA (other than for premiums pursuant to Section 4007 of ERISA which have been timely paid) or Section 4971 of the Code, and, to the knowledge of the Company, no condition exists that presents a risk to the Company or any member of the Controlled Group of incurring any such liability.  Each Company Plan to which Section 412 of the Code or Section 302 of ERISA applies has satisfied the requirements of Sections 412, 430 and 436 of the Code and Sections 302 and 303 of ERISA, and no such Company Plan has a “funding shortfall” within the meaning of Section 430(c) of the Code or Section 303(c) of ERISA or is in “at-risk status” within the meaning of Section 430(i)(4) of the Code or Section 303(i)(4) of ERISA or subject to the limitations of Section 436 of the Code.  No Company Plan has an accumulated funding deficiency within the meaning of Section 302 of ERISA or Section 412 of the Code nor, to the knowledge of the Company, has any waiver of the minimum funding standards of Section 302 of ERISA and Section 412 of the Code been requested of or granted by the Internal Revenue Service with respect to any Company Plan, nor has any Lien in favour of any Company Plan arisen under Section 412(n) or 430(k) of the Code or Section 302(f) or 303(k) of ERISA.  Neither the Company nor any member of the Controlled Group has been required to provide security to any defined benefit pension plan pursuant to Section 401(a)(29) of the Code or Section 306 or 307 of ERISA.  With respect to each Company Plan that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code, the fair market value of the assets of such

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Company Plan equals or exceeds the actuarial present value of all accrued benefits under such Company Plan (whether or not vested), based upon the actuarial assumptions used to prepare the most recent actuarial report for such Company Plan and no event has occurred which would be reasonably expected to change any such funded status.  Since the date which is five years prior to the date of this Agreement, there has been no “reportable event” within the meaning of Section 4043 of ERISA and the regulations and interpretations thereunder which has not been fully and accurately reported in a timely fashion, as required, or which, whether or not reported, would constitute grounds for the Pension Benefit Guaranty Corporation to institute termination proceedings with respect to any Company Plan,

F.             neither the Company nor any of its affiliates with U.S. employees has prepaid or prefunded any welfare plan (as defined in the ERISA) through a trust, reserve, premium stabilization or similar account, nor does it provide benefits through a voluntary employee beneficiary association as defined in Section 501(c)(9) of the Code,

G.            except for Company Plans for which all material information relating thereto is contained in the Company Data Room, neither the Company nor any of its affiliates is a party to any contract, agreement or arrangement that is a “nonqualified deferred compensation plan” subject to Section 409A of the Code.  Each such nonqualified deferred compensation plan has been operated since January 1, 2005 in good faith compliance with Section 409A of the Code and the guidance and regulations issued thereunder.  No nonqualified deferred compensation plan that is intended to be grandfathered has been “materially modified” (within the meaning of United States Internal Revenue Service Notice 2005-1) at any time after October 3, 2004.  No stock option or other right to acquire Company or affiliate common stock or other equity of the Company or any of its affiliates (A) has an exercise price that has been or may be less than the fair market value of the underlying equity as of the date such option or right was granted, as determined by the Board of Directors or a committee thereof or the board of directors or a committee thereof of such affiliate, as applicable, in good faith, (B) has any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such option or right or (C) has been granted after December 31, 2004 with respect to any class of stock or equity of the Company or any of its affiliates that is not “service recipient stock” (within the meaning of applicable regulations under Section 409A of the Internal Revenue Section 409A),

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H.                                   neither the Company nor any Company Entity has ever sponsored or maintained, had any obligation to sponsor or maintain, or had any liability (whether actual or contingent, with respect to any of its assets or otherwise) with respect to any “registered pension plan” (as defined in subsection 248(1) of the Tax Act) with a “defined benefit provision” (as defined in subsection 147.1(1) of the Tax Act),

I.                                        except as expressly acknowledged under Section 5.8(b) of this Agreement or as otherwise set forth or disclosed in this Agreement or the Company Disclosure Letter, neither the execution, delivery or performance of this Agreement, nor the consummation of any of the other transactions contemplated by this Agreement, will result in any bonus, golden parachute, severance or other payment or obligation to any current or former employee or director of the Company or any Company Entity with respect to employment or service in Canada (whether or not under any Company Plan or any Canadian Plan), materially increase the benefits payable or provided under any Canadian Plan, result in any acceleration of the time of payment or vesting of any such benefit, or increase or accelerate employer contributions thereunder,

J.                                        none of the Canadian Plans require or permit any material retroactive increase in premiums or payments, and the level of insurance reserves, if any, under any self-insured Canadian Plan is reasonable and sufficient to provide for all unreported claims and incurred losses,

K.                                   neither the Company nor any Company Entity has any liability (whether actual or contingent, with respect to any of its assets or otherwise) with respect to any “multi-employer plan” (as defined in subsection 147.1(1) of the Tax Act), and, in particular and for greater certainty, neither the Company nor any Company Entity has any liability (whether actual or contingent, with respect to any of its assets or otherwise) with respect to any “multi-employer pension plan” (as defined in section 11 of the Supplemental Pension Plans Act (Quebec) and subsection 1(1) of the Pension Benefits Act (New Brunswick)), and

L.                                     no former or current director, officer or employee of the Company or any of the Company Entities owns, has or is entitled to any royalty, net profits interest, carried interest or other encumbrance of any kind or nature whatsoever which is based on revenues from any of the properties or assets of the Company or any Company Entity or any revenue or rights attributed thereto, or has any cause of action or other claim whatsoever against, or owes any amount to, the Company or any Company Entity, except for any claims in

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the ordinary course of business, such as for accrued vacation pay, accrued employee benefits or reimbursement of expenses.

(aa)                            Intellectual Property.

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(bb)                          Environment.  Except as disclosed in Section 3.1(bb) of the Company Disclosure Letter:

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(cc)                            Insurance.  The Company and the Company Entities maintain the material insurance policies described in Section 3.1(cc) of the Company Disclosure

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Letter, and the Company or the relevant Company Entity is in compliance in all material respects with all requirements with respect thereto.  Except for failures to maintain insurance or self-insurance that have not had and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, since January 1, 2010, each of the Company and the Company Entities, and their respective properties and assets, has been continuously insured with financially responsible insurers or has self-insured, in each case in such amounts and with respect to such risks and losses as (i) are required by applicable Law or by the Material Contracts and (ii) are customary for companies conducting the businesses conducted by the Company and the Company Entities and, to the knowledge of the Company, there is no condition specific to the Company or the Company Entities which would prevent the Company or the Company Entities from obtaining insurance policies for such risks and losses.  All material insurance policies of each of the Company and the Company Entities are in full force and effect.  All premiums due and payable through the date hereof under all such policies have been paid and the Company and the Company Entities are otherwise in compliance in all respects with the terms of such policies, except for such failures to be in compliance which have not had and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.  Neither the Company nor any of the Company Entities has received any notice of cancellation or termination with respect to any such policy.  There has been no denial of material claims nor material claims disputed by the Company’s or any of the Company Entities’ insurers in the past or present.

(dd)                          Relationships with Customers Etc.  Neither the Company nor any of the Company Entities has received any written or, to the knowledge of the Company, other notice or other communication that any material customer, supplier, distributor or sales representative intends to cancel, terminate, discontinue or not renew or change the terms or otherwise modify its relationship with the Company or any of the Company Entities, and, to the knowledge of the Company, no such action has been threatened, which, in either case, individually or in the aggregate, could have or reasonably be expected to have a Material Adverse Effect on the Company.

(ee)                            Books and Records.  The corporate records and minute books of the Company and the Company Entities have been maintained in accordance with all applicable Laws in all material respects, and such corporate records and minute books are complete and accurate in all material respects.  The financial books, records and accounts of the Company and the Company Entities have in all material respects been maintained in accordance with good business practices and in accordance with Canadian GAAP and with the accounting principles generally accepted in the country of domicile of each such entity on a basis consistent with prior years.

(ff)                                Non-Arm’s Length Transactions.  Except for employment or employment compensation agreements entered into in the ordinary course of business, as disclosed in the Company Public Disclosure Record, or as disclosed in

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Section 3.1(ff) of the Company Disclosure Letter, there are no current contracts, commitments, agreements, arrangements or other transactions between the Company or any of the Company Entities, on the one hand, and any (i) officer or director of the Company or any of the Company Entities, (ii) any holder of record or, to the knowledge of the Company, beneficial owner of or 10% or more of the outstanding Common Shares or (iii) any affiliate or associate or any such officer, director or Shareholder, on the other hand.

(gg)                          No Collateral Benefits.  To the knowledge of the Company, no “related party” (as defined in MI 61-101) of the Company that beneficially owns or exercises control or direction over 1% or more of the outstanding Common Shares will receive a “collateral benefit” (as defined in MI 61-101) as a consequence of the Arrangement.

(hh)                          Corrupt Practices Legislation.  Neither the Company nor any of the Company Entities (in each case, only from and after the date of acquisition or formation of such Company Entity) has taken or committed to take any action which would cause the Company or any of the Company Entities or affiliates to be in violation of the United States Foreign Corrupt Practices Act, the Corruption of Foreign Public Officials Act (Canada) or any applicable Law of similar effect, to the extent to which they may be applicable to the Company or any of the Company Entities or affiliates, and, to the knowledge of the Company, no such action has been taken by any person acting on behalf of the Company or any of the Company Entities or affiliates.

(ii)                                  Export Controls.  The Company and the Company Entities have at all times conducted their business and the ownership or use of any of their assets in compliance in all material respects with (x) all applicable United States statutory and regulatory requirements under the Arms Export Control Act (22 U.S.C. 1778), the International Traffic in Arms Regulations (22 C.F.R. Parts 120-130), the Export Administration Regulations and associated executive orders, the Laws implemented and administered by the Office of Foreign Assets Control (“OFAC”), U.S. Department of the Treasury, and anti-boycott regulations administered by the U.S. Department of Commerce (50 U.S.C. 2401 et seq.) and the U.S. Department of the Treasury (Section 999 of the Code), (y) all applicable import and export Laws in Canada, including the Export and Import Permits Act (Canada), the Special Economic Measures Act (Canada), the United Nations Act (Canada) and the Customs Act (Canada) and (z) all other applicable import and export controls in other jurisdictions in which the Company and the Company Entities conduct business or own or use any of their assets (collectively “Export Control Laws”).  Without limiting the foregoing:

(i)                                     the Company and the Company Entities have obtained in a timely manner all necessary export licenses and other consents, authorizations, waivers, approvals and orders from, and have made and filed all necessary notices, registrations, declarations and filings with, any Governmental Authority, or have met, in all material respects, the requirements of any applicable license exceptions or exemptions, as required in connection with the export and re-export of their products and services, and releases of

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technology and technical data to foreign nationals located in the United States and abroad (“Export Approvals”);

(ii)                                  the Company and each of the Company Entities is in compliance with the material terms of all applicable Export Approvals;

(iii)                               neither the Company nor any of the Company Entities has received any written or other notice or been charged with the violation of any Export Control Laws.  To the knowledge of the Company, none of the Company or any of the Company Entities is under investigation with respect to any violation of any Export Control Laws or Export Approvals and, to the knowledge of the Company, there are no facts or circumstances which could form the basis for any such violation; and

(iv)                              to the knowledge of the Company, none of the Company or any of the Company Entities , nor any of their respective directors, officers or employees, or any person authorized to act on behalf of any of them, (i) is a person that is, or is owned or controlled by a person that is the subject of any sanctions administered or enforced by OFAC, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority; or (ii) is now engaged in or facilitating or currently has an intention to engage in or facilitate any dealings or transactions with any person that will result in a violation of the Export Control Laws.

(jj)                                  Financial Advisers or Brokers.  Except for obligations to the Financial Advisor (whose fees shall be satisfied by the Company prior to the Effective Date), none of the Company or any of the Company Entities has incurred any obligation or liability, contingent or otherwise, or agreed to pay or reimburse any broker, finder, financial adviser or investment banker, for any brokerage, finder’s, advisory or other fee or commission, or for the reimbursement of expenses, in connection with this Agreement, the transactions contemplated hereby or any alternative transaction in relation to the Company.

(kk)                            Fairness Opinion.  The Special Committee and the Board of Directors has received a verbal report from the Financial Advisor to the effect that, as of the date of this Agreement, the consideration to be received by the Shareholders under the Arrangement is fair from a financial point of view to such Shareholders, which report has not been modified, amended, qualified or withdrawn.  A true, correct and complete copy of the Fairness Opinion will be provided by the Company to the Purchaser prior to the mailing of the Circular.

(ll)                                  Special Committee and Board of Directors Approval.  The Special Committee, at a meeting duly called and held, has unanimously determined, in consultation with legal and financial advisors, that this Agreement and the Arrangement are fair to the Shareholders and are in the best interests of the Company and has unanimously determined to recommend approval of this Agreement and the Arrangement to the Board of Directors.  The Board of Directors, at a meeting duly called and held, has unanimously determined that this Agreement and the

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Arrangement are fair to the Shareholders and are in the best interests of the Company, has unanimously approved the execution and delivery of this Agreement and the transactions contemplated by this Agreement and has unanimously resolved to recommend that the Shareholders vote in favour of the Arrangement Resolution.  Each director and executive officer of the Company intends, to the knowledge of the Company, to vote all of the Common Shares held by him or her in favour of the Arrangement Resolution and has agreed that references to such intention may be made in the Circular and other documents relating to the Arrangement.

(mm)                      Shareholder Rights Plan.  The Shareholder Rights Plan is in full force and effect, unamended at the date hereof.  As at the date of this Agreement, to the knowledge of the Company, no “Flip-in Event” (as defined in the Shareholder Rights Plan) has occurred and the Board of Directors has not waived the application of the Shareholder Rights Plan to or in respect of any transaction or potential transaction other than the transactions contemplated herein.  Neither the execution or the delivery of this Agreement nor the taking of any action contemplated by this Agreement results, or will result, in the Purchaser or the Parent becoming an Acquiring Person (as defined in the Shareholder Rights Plan) and the transactions contemplated herein constitute an Exempt Acquisition (as defined in the Shareholder Rights Plan).

(nn)                          Full Disclosure.  The Company Public Disclosure Record discloses all material facts related to the Company, the Company Entities, their respective businesses, financial conditions, assets, liabilities and operations, in each case to the extent required to be disclosed pursuant to applicable Canadian Securities Laws, and no representation or warranty of the Company contained in this Agreement or in the Company Disclosure Letter or in any certificate furnished to the Purchaser pursuant to any provision of this Agreement, taken together and with the Company Public Disclosure Record, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances in which they were made.

3.2                               Representations and Warranties of the Purchaser and the Parent

Except as specifically disclosed in the correspondingly numbered subsection of the Parent Disclosure Letter or the Parent Public Disclosure Record (other than any disclosure contained under the captions “Risk Factors” or “Forward Looking Statements” or similar captions and any other disclosure contained therein that is predictive, cautionary or forward-looking in nature), each of the Purchaser and the Parent represents and warrants to and in favour of the Company as follows and acknowledges that the Company is relying upon such representations and warranties in entering into this Agreement:

(a)                                  Organization and Corporate Capacity.  The Parent has been duly organized and is validly existing and in good standing under the Laws of the State of Delaware.  The Parent has the power and authority to own its property and to conduct its business as described in the Parent Public Disclosure Record and is duly qualified

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to transact business and is in good standing (to the extent such concept is recognized) in each jurisdiction in which the conduct of its business as currently conducted or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect on the Parent.  The Purchaser has been duly organized and is validly existing and in good standing under the Laws of Canada.  The Parent owns, directly or indirectly, all of the issued and outstanding shares of the Purchaser.

(b)                                 Authority Relative to this Agreement.  Each of the Parent and the Purchaser has the requisite corporate or limited liability company power, authority and capacity to enter into and perform its obligations under this Agreement and to complete the transactions contemplated hereby.  The execution and delivery of this Agreement and the completion by the Parent and the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or limited liability company action of the Parent and the Purchaser and no other corporate proceedings on the part of the Parent or the Purchaser, as the case may be, are necessary to authorize the execution and delivery by it of this Agreement or the Arrangement or the completion by the Parent and the Purchaser of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by each of the Parent and the Purchaser and constitutes the legal, valid and binding obligation of the Parent and the Purchaser enforceable against each of them in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other Laws relating to or affecting the availability of equitable remedies and the enforcement of creditors’ rights generally and general principles of equity and public policy and to the qualification that equitable remedies such as specific performance and injunction may be granted only in the discretion of a court of competent jurisdiction.

(c)                                  Required Approvals.  No authorization, licence, Permit, certificate, registration, consent or approval of, or filing with, or notification to, any Governmental Authority is necessary for the execution and delivery by the Parent or the Purchaser of this Agreement, the performance by either of them of its obligations hereunder and the completion by either of them of the Arrangement, other than:

(i)                                     the Interim Order and any filings required in order to obtain, and approvals required under, the Interim Order;

(ii)                                  the Final Order, and any filings required in order to obtain the Final Order;

(iii)                               the Required Regulatory Approvals relating to the Purchaser and the Parent; and

(iv)                              any other authorizations, licences, Permits, certificates, registrations, consents, approvals and filings and notifications with respect to which the failure to obtain or make the same would not reasonably be expected to prevent or significantly impede or materially delay the completion of the Arrangement.

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(d)                                 No Violation.  Subject to obtaining the authorizations, consents and approvals and making the filings referred to in Section 3.2(c) and complying with applicable Laws, the execution and delivery by each of the Parent and the Purchaser of this Agreement, the performance by each of them of its respective obligations hereunder and the completion of the Arrangement does not and will not (nor will they with the giving of notice or the lapse of time or both) (i) result in a contravention, breach, violation or default under any Law applicable to it, (ii) result in a contravention, conflict, violation, breach or default under its constating documents or (iii) result in a contravention, breach or default under or termination of, or acceleration or permit the acceleration of the performance required by, any material agreement, contract, covenant, undertaking, commitment, instrument, licence, permit or authorization to which it is a party or by which it is bound, except, in the case of each of clauses (i) and (iii) above, as would not reasonably be expected to have a Material Adverse Effect on the Parent.

(e)                                  Capitalization of the Parent.  As of the date of this Agreement, the authorized capital of the Parent consists of 350,000,000 shares of common stock, of which 96,395,822 shares are issued and outstanding, and 5,000,000 shares of preferred stock, par value US$0.001 per share, of which 2,070,000 shares of convertible preferred stock are issued and outstanding.  All of the issued and outstanding shares of common stock and preferred stock of the Parent (i) have been duly authorized and validly issued and are fully paid and nonassessable, (ii) have not been issued in violation of the articles, charter, by-laws or other constating documents of the Parent, or any agreement, contract, covenant, undertaking, or commitment to which the Parent is a party or bound, and (iii) have been issued and sold in compliance with U.S. Securities Laws in all material respects.  Except as set forth in the Parent Public Disclosure Record, as of the date of this Agreement, there are no outstanding agreements, subscriptions, warrants, options, rights or commitments (nor has it granted any right or privilege capable of becoming an agreement, subscription, warrant, option, right or commitment) obligating the Parent to issue or sell any shares of common stock or other securities of the Parent, including any security or obligation of any kind convertible into or exchangeable or exercisable for any shares of common stock or other security of the Parent.  The issuance of the Consideration Shares pursuant to the Plan of Arrangement will not obligate the Parent or the Purchaser to issue shares of common stock or other securities of the Parent or the Purchaser to any person except as contemplated in this Agreement and the Plan of Arrangement and will not result in a right of any holder of securities of the Parent or the Purchaser to adjust the exercise, conversion, exchange or reset of price under any of such securities.

(f)                                    Material Subsidiaries.  As of the date of this Agreement, the only material subsidiaries of the Parent are: (i) Molycorp Minerals, LLC; (ii) Molycorp Metals & Alloys, Inc., an Illinois corporation; and (iii) Molycorp Silmet AS, a public limited company organized under the laws of the Republic of Estonia (collectively, the “Parent Material Subsidiaries”).  All of the issued and outstanding shares of capital stock of each Parent Material Subsidiary held by the

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Parent have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Parent, free and clear of all Liens except those Liens imposed by applicable securities Laws and those Liens imposed by the transaction documents pursuant to which the Parent Material Subsidiaries were acquired or formed, as applicable.  Each Parent Material Subsidiary has been duly organized, is validly existing and in good standing (to the extent such concept is recognized) under the Laws of the jurisdiction of its organization, has the power and authority to own its property and to conduct its business as described in the Parent Public Disclosure Record and is duly qualified to transact business and is in good standing (to the extent such concept is recognized) in each jurisdiction in which the conduct of its business as currently conducted or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect on the Parent.

(g)                                 Consideration Shares.  The Consideration Shares to be issued pursuant to the Plan of Arrangement (i) have been duly authorized, and, upon issuance, will be validly issued, fully paid and nonassessable and (ii) will not be issued in violation of the articles, charter, by-laws or other constating documents of the Parent or the Purchaser, as the case may be, or any agreement, contract, covenant, undertaking, or commitment to which the Parent or the Purchaser is a party or bound.  The Molycorp Shares are listed on the NYSE.

(h)                                 Parent Public Disclosure Record and Listing Compliance.

(i)            The Parent has filed or furnished, as applicable, on a timely basis, all forms, filings, registrations, submissions, statements, certifications, reports and documents required to be filed or furnished by it with the U.S. Securities and Exchange Commission (the “SEC”) under the 1934 Exchange Act since December 31, 2010.  As of their respective dates, the documents and information comprising the Parent Public Disclosure Record complied in all material respects with the requirements of the 1933 Securities Act and the 1934 Exchange Act and the rules and regulations of the SEC promulgated thereunder, as applicable, and none of such documents or information, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(ii)           The Parent is in compliance in all material respects with the requirements of the NYSE for continued listing of its shares of common stock thereon.  The Parent has not taken any action designed to terminate, or likely to have the effect of terminating, the registration of its shares of common stock under the 1934 Exchange Act or the listing of such shares on the NYSE.

(i)                                     Parent Financial Statements.  Except as set forth in the Parent Public Disclosure Record, the Parent Financial Statements were prepared in accordance with U.S. GAAP applied on a basis consistent with those of previous periods and in

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accordance with applicable Laws, except that interim financial statements are subject to normal period-end adjustments and may omit notes which are not required by applicable U.S. Securities Laws or U.S. GAAP.  Except as set forth in the Parent Public Disclosure Record, the Parent Financial Statements present fairly, in all material respects, the assets, liabilities and financial condition of the Parent and its consolidated subsidiaries on a consolidated basis as at the respective dates thereof and the revenues, earnings, results of operations, changes in shareholders’ equity and cash flows of the Parent and its consolidated subsidiaries on a consolidated basis for the periods covered thereby (subject, in the case of the interim financial statements, to normal period-end adjustments).

(j)                                     Internal Controls.  Each of the Parent and the Parent Material Subsidiaries (from and after the date of their acquisition by the Purchaser) maintains a system of internal accounting controls sufficient to provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements by the Parent in conformity with U.S. GAAP and to maintain asset accountability.  Except as set forth in the Parent Public Disclosure Record, since December 31, 2010, (A) the Parent is not aware of any material weakness in the Parent’s internal control over financial reporting (whether or not remediated) and (B) no change in the Parent’s internal control over financial reporting has occurred that has materially and adversely affected, or is reasonably likely to materially and adversely affect, the Parent’s internal control over financial reporting.  The Parent is not subject to any significant deficiencies or material weaknesses with applicable provisions of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder.

(k)                                  No Undisclosed Liabilities.  As of the date of this Agreement, the Parent and the Parent Material Subsidiaries have no liability or obligation of any nature (whether accrued, absolute, contingent or otherwise), other than (A) liabilities and obligations disclosed in the Parent Public Disclosure Record, (ii) liabilities and obligations incurred in the ordinary course of business since December 31, 2011 that have not had and would not reasonably be expected to have, individually or in aggregate with all other liabilities and obligations of the Parent and the Parent Material Subsidiaries (other than those disclosed in the Parent Public Disclosure Record), a Material Adverse Effect on the Parent and (iii) liabilities and obligations incurred in connection with this Agreement and the transactions contemplated hereby.

(l)                                     Absence of Certain Changes.  Since December 31, 2011:

(i)            each of the Parent and the Parent Material Subsidiaries has conducted its business only in the ordinary course consistent with past practice;

(ii)           there has not been any event, occurrence, development or state of circumstances or facts that has had or could reasonably be expected to have a Material Adverse Effect on the Parent;

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(iii)          there has not been any material write-down by the Parent or any of the Parent Material Subsidiaries of any of the assets of the Parent or any of the Parent Material Subsidiaries;

(iv)          there has not been any incurrence, assumption or guarantee by the Parent or of any of the Parent Material Subsidiaries of any indebtedness for borrowed money, any creation or assumption by the Parent or any of the Parent Material Subsidiaries of any Lien (other than a Permitted Lien), or any making by the Parent or any of the Parent Material Subsidiaries of any loan, advance or capital contribution to or investment in any other person, except in each case, in the ordinary course of business or as contemplated or permitted by the Commitment Letter;

(v)           the Parent has not effected any material change in its accounting policies, principles, methods, practices or procedures;

(vi)          the Company has not effected or passed any resolution to approve a split, division, consolidation, combination or reclassification of any of its shares of common stock; and

(vii)         neither the Parent nor any of the Parent Material Subsidiaries has agreed, announced, resolved or committed to do any of the foregoing.

(m)                               Compliance with Laws.  The business of the Parent and of each of the Parent Material Subsidiaries has been and is currently being conducted in compliance with all applicable Laws, except where any failure of compliance would not, and could not reasonably be expected to, result in a Material Adverse Effect on the Parent.

(n)                                 Litigation.  As of the date of this Agreement, there is no Proceeding against or involving the Parent or any of the Parent Material Subsidiaries (whether in progress or, to the knowledge of the Parent, threatened) that, if adversely determined, would or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Parent or prevent or significantly impede or materially delay the completion of the Arrangement and, to the knowledge of the Parent, no event has occurred which might reasonably be expected to give rise to any such Proceeding.  Neither the Parent nor any of the Parent Material Subsidiaries nor any of their respective properties or assets is subject to any outstanding judgment, order, writ, injunction, rule, award or decree of any Governmental Authority that involves or may involve, or restricts or may restrict, the right or ability of the Parent or any of the Parent Material Subsidiaries to conduct its business in all material respects as it has been conducted prior to the date hereof or that has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Parent or could reasonably be expected to prevent or significantly impede or materially delay the completion of the Arrangement.

(o)                                 Insolvency.  No Proceeding is pending by or against the Parent or any of the Parent Material Subsidiaries, or, to the knowledge of the Parent, is planned or

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threatened, in connection with the dissolution, liquidation, winding up, bankruptcy or reorganization of the Parent or any of the Parent Material Subsidiaries or for the appointment of a trustee, receiver, manager or other administrator of the Parent or any of the Parent Material Subsidiaries or any of their respective properties or assets nor, to the knowledge of the Parent, is any such act or Proceeding threatened.  Neither the Parent nor any of the Parent Material Subsidiaries has sought protection under the United States Bankruptcy Code or similar legislation.

(p)                                 Taxes.  Each of the Parent and the Parent Material Subsidiaries has duly and timely filed all Returns required to be filed by it prior to the date hereof, other than those which have been administratively waived, and all such Returns are true, complete and correct in all material respects.  The Parent and each of the Parent Material Subsidiaries has paid or has collected, withheld and remitted to the appropriate Governmental Authority on a timely basis all assessments and reassessments and all other Taxes due and payable by it, other than those which are being or have been contested in good faith pursuant to applicable Laws and in respect of which adequate reserves or accruals in accordance with U.S. GAAP have been provided.  Except as would not result in a Material Adverse Effect on the Parent, no audit, action, investigation, deficiency, litigation, proposed adjustment or other Proceeding exists or has been asserted or, to the knowledge of the Parent, threatened with respect to Taxes of the Parent or any of the Parent Material Subsidiaries.  The Purchaser is a “taxable Canadian corporation” and not a “mutual fund corporation”, each within the meaning of the Tax Act.

(q)                                 Mining and Mineral Rights.  Without limiting the generality of Section 3.2(h)(i):  (A) the estimated proven and probable mineral reserves with respect to the rare earth mining operations currently conducted by the Parent Material Subsidiary, Molycorp Minerals, LLC and located in Mountain Pass, California (the “Mountain Pass Mine”), as reported in the Parent Public Disclosure Record, have been prepared and disclosed, as required by, and in material compliance with, U.S. Securities Laws; (B) there has been no material reduction in the aggregate amount of estimated mineral reserves at the Mountain Pass Mine as disclosed in the Parent Public Disclosure Record (as of the respective dates of the documents and information therein), except as a result of mining and related activities; and (C) the methods used in estimating such mineral reserves at the Mountain Pass Mine are consistent with accepted mineral reserve estimation practices.  Molycorp Minerals, LLC owns fee simple title to the stated reserves at the Mountain Pass Mine, as described in the Parent Public Disclosure Record.

(r)                                    Environmental Laws.  The business of the Parent and of each of the Parent Material Subsidiaries has been and is currently being conducted in compliance with all applicable Environmental Laws, except where any failure of compliance would not, and could not reasonably be expected to, result in a Material Adverse Effect on the Parent.

(s)                                  Non-Arm’s Length Transactions.  Except for employment, indemnification or other compensation agreements entered into in the ordinary course of business or

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as disclosed in the Parent Public Disclosure Record, there are no current contracts, commitments, agreements, arrangements or other transactions between the Parent or any of the Parent Material Subsidiaries, on the one hand, and any (A) officer or director of the Parent or any of the Parent Material Subsidiaries, (B) any holder of record or, to the knowledge of the Parent, beneficial owner of or 5% or more of the outstanding share of the Parent’s common stock or (C) any affiliate or associate of any such officer, director or shareholder, on the other hand.

(t)                                    Corrupt Practices Legislation.  Neither the Parent nor any of the Parent Material Subsidiaries (in each case, only from and after the date of acquisition or formation of such Parent Material Subsidiary) has taken or committed to take any action which would cause the Parent or any of the Parent Material Subsidiaries to be in violation of the United States Foreign Corrupt Practices Act or any applicable Law of similar effect, to the extent to which they may be applicable to the Parent or any of the Parent Material Subsidiaries or affiliates, and, to the knowledge of the Parent, no such action has been taken by any person acting on behalf of the Parent or any of the Parent Material Subsidiaries.

(u)                                 Investment Canada.  The Parent is not a Canadian within the meaning of the Investment Canada Act.

(v)                                 Commitment Letter; Sufficient Funds.  The Parent has delivered to the Company true and complete fully-executed copies of a commitment letter (the “Commitment Letter”) made by Morgan Stanley Senior Funding, Inc. (the “Lender”), evidencing the financing described therein (the “Debt Financing”).  The commitments described in the Commitment Letter are not subject to any condition precedent other than the conditions expressly set forth therein.  There are no other agreements, side letters or arrangements that would permit the Lender to reduce the amount of the Debt Financing or that would otherwise affect the availability of the Debt Financing.  The Commitment Letter is in full force and effect, has not been amended, restated, modified, withdrawn, terminated or otherwise modified or varied and is a legal, valid and binding obligation of the Parent and, to the knowledge of the Parent, the Lender (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity whether considered in a proceeding in equity or at law), as applicable, no amendment or modification to the Commitment Letter is contemplated (provided that the Commitment Letter may be (or may have been) amended (i) to add lenders, lead arrangers, bookrunners, syndication agents or similar entities who had not executed the Commitment Letter or (ii) otherwise so long as such amendment would not reasonably be expected to delay or prevent the completion of the Arrangement and the consummation of the transactions contemplated by this Agreement and the terms of the Commitment Letter as so amended are not materially less beneficial to the Parent, with respect to conditionality, than the terms in the Commitment Letter as in effect on the date of this Agreement), and no event has occurred or circumstance exists, including the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, which, with or without notice, lapse of time

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or both, would or would reasonably be expected to (x) constitute a default or breach on the part of the Parent under the Commitment Letter or (y) constitute or result in a failure to satisfy any condition precedent set forth in the Commitment Letter assuming satisfaction of the conditions set forth in Section 8.1 and Section 8.3.  All commitment and other fees or expenses required to be paid under or in connection with the Commitment Letter on or prior to the date hereof have been paid.  The Parent does not have any reason to believe that it shall be unable to satisfy on a timely basis any term or condition of closing of the Debt Financing to be satisfied by it contained in the Commitment Letter; is not aware of any existing fact, occurrence or condition that may cause the financing commitment contained in the Commitment Letter to terminate or be ineffective or any of the terms or conditions of closing of the Debt Financing not to be met or of any impediment to the funding of the cash payment obligations of the Parent pursuant to or in connection with this Agreement or the Arrangement; and is not aware of any existing fact, occurrence or condition that has or will cause the assumptions or statements set forth in the Commitment Letter to be untrue or incorrect. Assuming the Debt Financing contemplated in the Commitment Letter is funded, the net proceeds contemplated by the Commitment Letter, together with other funds available to the Parent and the Purchaser, shall be sufficient for the Purchaser to pay at the Effective Time in full the aggregate cash portion of the consideration for Shares and the aggregate amount payable pursuant to the Arrangement in accordance with the terms of the Agreement and the Plan of Arrangement and to pay all related fees and expenses for which the Purchaser or the Parent is responsible under the terms of the Agreement.

(w)                               Full Disclosure.  The Parent Public Disclosure Record discloses all material facts related to the Parent, the Parent Material Subsidiaries, their respective businesses, financial conditions, assets, liabilities and operations, in each case to the extent required to be so disclosed pursuant to applicable U.S. Securities Laws, and no representation or warranty of the Parent or the Purchaser contained in this Agreement, or in any certificate furnished to the Company pursuant to any provision of this Agreement, taken together and with the Parent Disclosure Letter and the Parent Public Disclosure Record, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances in which they were made.

3.3                               Survival of Representations and Warranties

No investigation by or on behalf of any Party will mitigate, diminish or affect the representations and warranties made by the other Parties.  Except for the representations and warranties contained in this Article 3, no Party nor any other persons on behalf of a Party makes any express or implied representation or warranty with respect to such Party or with respect to any other information provided or otherwise made available to any other Party in connection with the transactions contemplated hereby.  The representations and warranties of the Parties contained in this Agreement will not survive the completion of the Arrangement and will expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms.  This Section 3.3 will not limit any covenant or

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agreement of any of the Parties, which, by its terms, contemplates performance after the Effective Time or the date on which this Agreement is terminated, as the case may be.

ARTICLE 4
COVENANTS REGARDING THE CONDUCT OF BUSINESS

4.1                               Covenants of the Company

The Company covenants and agrees that, until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, unless the Purchaser otherwise consents in writing (to the extent that such consent is permitted by applicable Law), which consent will not be unreasonably withheld, conditioned or delayed, or as is otherwise disclosed in Section 4.1 of the Company Disclosure Letter or expressly permitted or specifically contemplated by this Agreement or the Plan of Arrangement or as is otherwise required by applicable Law:

(a)           the respective businesses of the Company and the Company Entities will be conducted only, their respective facilities will be maintained, and the Company and the Company Entities will continue to operate their respective businesses only in, the ordinary course of business in an effort to preserve the value thereof;

(b)           the Company and the Company Entities will comply with the terms of all Material Contracts and the Company will use commercially reasonable efforts to maintain and preserve intact its and the Company Entities’ respective business organizations, assets, properties, rights, goodwill and business relationships and keep available the services of its and the Company Entities’ respective officers and employees as a group;

(c)           the Company will not, and will not permit any of the Company Entities to, directly or indirectly:

(i)            alter or amend its articles, charter, by-laws or other constating documents;

(ii)           declare, set aside or pay any dividend on or make any distribution or payment or return of capital in respect of the Common Shares;

(iii)          split, divide, consolidate, combine or reclassify the Common Shares or any other securities;

(iv)          issue, grant, sell or pledge or authorize or agree to issue, grant, sell or pledge any Common Shares or other securities of the Company or the Company Entities (including, for greater certainty, Options, DSUs, SARs or any equity-based awards), or securities convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, Common Shares or other securities of the Company or the Company Entities, other than the issuance of Common Shares issuable pursuant to the exercise of Options or Convertible Debentures outstanding on the date hereof;

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(v)                                 redeem, purchase or otherwise acquire any of its outstanding Common Shares or other securities or securities convertible into or exchangeable or exercisable for Common Shares or any such other securities unless otherwise required by the terms of such securities and other than in transactions between two or more Company wholly-owned subsidiaries or between the Company and a Company wholly-owned subsidiary;

(vi)                              amend the terms of any securities of the Company or the Company Entities;

(vii)                           adopt a plan of liquidation or resolution providing for the liquidation or dissolution of the Company or any of the Company Entities;

(viii)                        reorganize, amalgamate or merge with any other person;

(ix)                                make any material changes to any of its accounting policies, principles, methods, practices or procedures (including by adopting any material new accounting policies, principles, methods, practices or procedures), except as disclosed in the Company Public Disclosure Record, as required by applicable Laws or under Canadian GAAP;

(x)                                   make any material change to its general practices and policies relating to the payment of accounts payable or the collection of accounts receivable; or

(xi)                                enter into, modify or terminate any Contract with respect to any of the foregoing;

(d)                                 the Company will promptly notify the Purchaser in writing of any “material change” (as defined in the Securities Act) in relation to the Company, and the Company will promptly notify the Purchaser in writing of any circumstance or development that, to the knowledge of the Company, has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company;

(e)                                  the Company will not, and will not permit any of the Company Entities to, directly or indirectly:

(i)                                     except for sales in the ordinary course of business, sell, pledge, lease, licence, dispose of or encumber any assets or properties (including the shares or other equity securities of any Company Entity) of the Company or of any Company Entity having a value greater than $1,000,000 in the aggregate;

(ii)                                  (A) acquire (by merger, amalgamation, consolidation, arrangement or acquisition of shares or other equity securities or interests or assets or otherwise) any corporation, partnership, association or other business organization or division thereof or any property or asset, or make any investment by the purchase of securities, contribution of capital, property

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transfer, or purchase of any property or assets of any other person that has a value greater than $20,000,000 in the aggregate or (B) enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement with respect to such a transaction;

(iii)                               incur any indebtedness (including the making of any payments in respect thereof, including any premiums or penalties thereon or fees in respect thereof) or issue any debt securities, or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other person, or make any loans or advances in excess of $1,000,000 in the aggregate to any other persons, except to employees pursuant to policies to reimburse expenses in advance or pursuant to or in respect of existing credit facilities or debt instruments or the maintenance or extension thereof (or the agreements, indentures or guarantees governing or relating to such facilities or instruments, or the maintenance or extension thereof), or the refinancing, renewal or replacement of existing indebtedness on substantially market terms and without increasing the principal amount thereof;

(iv)                              enter into any material currency, commodity, interest rate or equity related hedge, derivative, swap or other financial risk management Contract, other than in the ordinary course of business;

(v)                                 pay, discharge or satisfy any material claim, liability or obligation prior to the same being due, other than the payment, discharge or satisfaction of liabilities reflected or reserved against in the Financial Statements, or voluntarily waive, release, assign, settle or compromise any Proceeding, where such payment, discharge, satisfaction, waiver, release, assignment, settlement or compromise exceeds $1,000,000 individually or $5,000,000 in the aggregate or would entail any non-monetary damages;

(vi)                              settle or compromise any action, claim or other Proceeding brought by any present, former or purported holder of its securities in connection with the transactions contemplated by this Agreement or the Arrangement;

(vii)                           enter into any material new line of business, enterprise or other activity that is inconsistent with the existing businesses of the Company and the Company Entities in the manner such existing businesses generally have been carried on;

(viii)                        expend or commit to expend any amounts with respect to capital expenses, where such expenditure or commitment exceeds $3,000,000 individually or $15,000,000 in the aggregate, except to the extent reserved for in the Company Financial Statements; or

(ix)                                authorize any of the foregoing, or enter into or modify any Contract to do any of the foregoing;

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(f)                                    the Company will not, and will not permit any of the Company Entities to, directly or indirectly:

(i)                                     terminate, fail to renew, cancel, waive, release, grant or transfer any rights of material value or modify or change in any material respect any existing Material Contract except in the ordinary course of business, or as required by its terms;

(ii)                                  enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee), or modify, amend or exercise any right to renew any lease or sublease of real property or acquire any interest in real property that would exceed $1,000,000 per year; or

(iii)                               enter into any Contract containing any restriction on the ability of the Company or any of the Company Entities to assign all or any material portion of its rights, interests or obligations thereunder, unless such restriction expressly permits the assignment of such rights, interests or obligations (or portion thereto) to the Purchaser or any of its affiliates in connection with or following the completion of the Arrangement or the other transactions contemplated by this Agreement;

(g)                                 without the consent of the Parent, which consent will not be unreasonably withheld or delayed, neither the Company nor any of the Company Entities will, except pursuant to any existing Contracts or employment, pension, supplemental pension, termination or compensation arrangements or policies or plans in effect on the date hereof, and except as is necessary to comply with applicable Laws and as required to comply with Section 5.8:

(i)                                     grant to any senior management employee, officer or director of the Company or any of the Company Entities an increase in compensation in any form other than in the ordinary course;

(ii)                                  grant any general salary increase or pay any bonus or other material compensation to the employees of the Company or any of the Company Entities other than the payment of any of the foregoing (or increases thereof) consistent with historical practices;

(iii)                               take any action with respect to the grant or increase of any severance, change of control, retirement, retention or termination pay not in accordance with existing policies;

(iv)                              enter into any employment agreement, deferred compensation or other similar agreement with any senior management employee, officer or director of the Company or any of the Company Entities;

(v)                                 terminate the employment of the Company’s senior management employees (including the Company Senior Management) other than for cause;

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(vi)                              increase any benefits payable under its current severance or termination pay policies;

(vii)                           adopt or amend or make any contribution to or any award under any Company Plan or Canadian Plan or other bonus, profit sharing, option, pension, retirement, deferred compensation, insurance, incentive compensation, compensation or other similar plan, agreement, trust, fund or arrangement for the benefit of directors or senior officers or former directors or senior officers of the Company or any of the Company Entities; or

(viii)                        take any action to accelerate the time of payment of any compensation or benefits, amend or waive any performance or vesting criteria or accelerate vesting under any Company Plan or Canadian Plan;

(h)                                 other than as set out in Section 3.1(e) of the Company Disclosure Letter, the Company will not grant to any officer or director of the Company any equity based awards pursuant to the Company Plan, the Canadian Plan or otherwise;

(i)                                     the Company will not, and will not permit any of the Company Entities to, make any loan to any officer or director of the Company or any of the Company Entities, except for the advance of expenses consistent with historical practice;

(j)                                     the Company will use its commercially reasonable efforts to cause the current insurance (or re-insurance) policies maintained by the Company or any of the Company Entities, including directors’ and officers’ insurance, not to be cancelled or terminated and to prevent any of the coverage thereunder from lapsing, unless at the time of such termination, cancellation or lapse, replacement policies underwritten by insurance or re-insurance companies of nationally recognized standing having comparable deductions and providing coverage comparable to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect; provided, however, that, except as contemplated by Section 5.9(b), none of the Company or any of the Company Entities will obtain or renew any insurance (or re-insurance) policy for a term exceeding 12 months;

(k)                                  the Company will promptly provide written notice to the Purchaser of the resignation or dismissal of any of its senior management employees;

(l)                                     the Company will use its commercially reasonable efforts to maintain and preserve all of its rights under each of its material Permits;

(m)                               the Company will, and will cause each of the Company Entities to:

(i)                                     duly and timely file all Returns required to be filed by it on or after the date hereof and all such Returns will be true, complete and correct;

(ii)                                  timely withhold, collect, remit and pay all Taxes which are to be withheld, collected, remitted or paid by it to the extent due and payable, unless such

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Taxes are disputed in good faith and the Company has taken adequate reserves therefor in accordance with Canadian GAAP;

(iii)                               not change in any respect any of its methods of reporting income or deductions or accounting for income tax purposes from those employed in the preparation of their most recently filed Returns and financial statements except as may be required by applicable Laws;

(iv)                              not make, change, revoke or rescind any material election relating to Taxes or make any material amendment with respect to any Return;

(v)                                 not surrender any right to claim a Tax refund, offset or other reduction in Tax liability;

(vi)                              not consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment or reassessment;

(vii)                           not settle, compromise or agree to the entry of judgment with respect to any action, claim or other Proceeding relating to Taxes; and

(viii)                        not enter into any tax sharing, tax allocation or tax indemnification agreement;

(n)                                 the Company will not, and will not permit any of the Company Entities to, commence any litigation for damages in excess of $5,000,000 or providing for the grant of injunctive relief or other non-monetary remedy (other than litigation in connection with the collection of accounts receivable or to enforce the terms of this Agreement or the Non-Disclosure Agreement);

(o)                                 the Company will not, and will not permit any of the Company Entities to, enter into or renew any Contract containing:

(i)                                     any limitation or restriction on the ability of the Company or any of the Company Entities or, following completion of the transactions contemplated hereby, the ability of the Purchaser or any of its affiliates, to engage in any type of activity or business;

(ii)                                  any limitation or restriction on the manner in which, or the localities in which, all or any portion of the business of the Company or any of the Company Entities or, following consummation of the transactions contemplated hereby, all or any portion of the business of the Purchaser or any of its affiliates, is or would be conducted; or

(iii)                               any limit or restriction on the ability of the Company or any of the Company Entities or, following completion of the transactions contemplated hereby, the ability of the Purchaser or any of its affiliates, to solicit customers or employees;

(p)                                 the Company will not, and will not permit any of the Company Entities to, take any action that would (i) reasonably be expected to prevent or significantly

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impede or materially delay the completion of the Arrangement or (ii) render, or reasonably be expected to render, any representation or warranty made by the Company in this Agreement untrue or inaccurate in any material respect (disregarding for this purpose all materiality or Material Adverse Effect qualifications contained therein);

(q)                                 the Company will pay or cause to be satisfied all Transaction Expenses prior to the Effective Date; and

(r)                                    the Company will, within 10 Business Days of the date of this Agreement, provide to the Purchaser and the Parent true, correct and complete copies of those documents noted in Section 3.1(z)(i) of the Company Disclosure Letter as not being contained in the Company Data Room.

Subject to the obligations of the Company herein, neither the Parent nor the Purchaser shall have the right to control, directly or indirectly, the operations or the business of the Company or any of the Company Entities at any time prior to the Effective Time.

4.2                               Covenants of the Parent

The Parent covenants and agrees that, until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, unless the Company otherwise consents in writing (to the extent that such consent is permitted by applicable Law), which consent will not be unreasonably withheld, conditioned or delayed, or as is otherwise disclosed in Section 4.2 of the Parent Disclosure Letter or expressly permitted or specifically contemplated by this Agreement or as is otherwise required by applicable Law:

(a)                                  the respective businesses of the Parent and the Parent Material Subsidiaries will be conducted only, their respective facilities will be maintained, and the Parent and Parent Material Subsidiaries will continue to operate their respective businesses only in, the ordinary course of business in an effort to preserve the value thereof;

(b)                                 the Parent will use commercially reasonable efforts to maintain and preserve intact its and the Parent Material Subsidiaries’ respective business organizations, assets, properties, rights, goodwill and business relationships and keep available the services of its and its subsidiaries’ respective officers and employees as a group;

(c)                                  the Parent will not, and will not permit any of the Parent Material Subsidiaries to, directly or indirectly:

(i)                                     alter or amend its articles, charter, by-laws or other constating documents in a manner adverse to the Shareholders;

(ii)                                  declare, set aside or pay any dividend on or make any distribution or payment or return of capital in respect of any of its securities other than in the ordinary course of business and consistent with past practice except, in

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the case of any of the Parent’s wholly-owned subsidiaries, for dividends payable to the Parent;

(iii)                               split, divide, consolidate, combine or reclassify the Molycorp Shares;

(iv)                              amend the terms of the Molycorp Shares or any other securities of the Parent except, in each case, as would not have an adverse effect on the Molycorp Shares or the holders thereof;

(v)                                 adopt a plan of liquidation or resolution providing for the liquidation or dissolution of the Parent or any of its subsidiaries;

(vi)                              reorganize, amalgamate or merge with any other person (other than any of the Parent’s direct or indirect wholly-owned subsidiaries);

(vii)                           make any material changes to any of its accounting policies, principles, methods, practices or procedures (including by adopting any material new accounting policies, principles, methods, practices or procedures), except as disclosed in the Parent Public Disclosure Record, as required by applicable Laws or under U.S. GAAP;

(viii)                        make any material change to its general practices and policies relating to the payment of accounts payable or the collection of accounts receivable; or

(ix)                                enter into, modify or terminate any agreement, contract, covenant, undertaking, or commitment with respect to any of the foregoing;

(d)                                 the Parent will promptly notify the Company in writing of any circumstance or development that, to the knowledge of the Parent, has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Parent;

(e)                                  the Parent will not, and will not permit any of the Parent Material Subsidiaries to, take any action that would (i) reasonably be expected to prevent or significantly impede or materially delay the completion of the Arrangement or (ii) render, or reasonably be expected to render, any representation or warranty made by the Purchaser or the Parent in this Agreement untrue or inaccurate in any material respect (disregarding for this purpose all materiality or Material Adverse Effect qualifications contained therein).

ARTICLE 5
ADDITIONAL COVENANTS

5.1                               Pre-Acquisition Reorganizations

(a)                                  Subject to the provisions of this Section 5.1, the Company agrees that, upon request by the Purchaser, the Company will, and will cause the Company Entities to, at the expense of the Purchaser, use its and their commercially reasonable efforts to: (i) effect such reorganizations of the Company’s or the Company

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Entities’ business, operations and assets and the integration of other affiliated businesses of the Company as the Purchaser may request, acting reasonably (each a “Pre-Acquisition Reorganization”) and (ii) cooperate with the Purchaser and its advisors to determine the nature of the Pre-Acquisition Reorganizations that might be undertaken and the manner in which they most effectively could be undertaken.  The Purchaser acknowledges and agrees that the Pre-Acquisition Reorganizations shall not (a) impede, delay or prevent completion of the Arrangement (including by giving rise to Proceedings by any person), (b) in the opinion of the Company, acting reasonably, prejudice the Shareholders or the holders of Options or Convertible Debentures in any material respect, (c) require the Company to obtain the approval of the Shareholders, (d) be considered in determining whether a representation, warranty or covenant of the Company hereunder has been breached, it being acknowledged by the Purchaser that actions taken pursuant to any Pre-Acquisition Reorganization could require the consent of third parties under applicable Contracts and Government Authorities, (e) require the Company or any Company Entity to contravene any applicable Laws, their respective organizational documents or any Material Contract, or (f) result in any Taxes being imposed on, or any adverse Tax or other consequences to, any securityholder of the Company incrementally greater than the Taxes or other consequences to such party in connection with the consummation of the Arrangement in the absence of any Pre-Acquisition Reorganization.  The Purchaser will provide written notice to the Company of any proposed Pre-Acquisition Reorganization at least fifteen Business Days prior to the anticipated Effective Time.  Upon receipt of such notice, the Company and the Purchaser will, at the expense of the Purchaser, work cooperatively and use commercially reasonable efforts to prepare prior to the Effective Time all documentation necessary and do such other acts and things as are necessary to give effect to such Pre-Acquisition Reorganization.  The Parties will seek to have the steps and transactions contemplated under any such Pre-Acquisition Reorganization made effective at such times (as directed by the Purchaser) on or prior to the Effective Date (but after the Purchaser will have waived or confirmed that all conditions referred to in Section 8.1, Section 8.2 and Section 8.3 have been satisfied), provided, however, that no such Pre-Acquisition Reorganization will be made effective unless: (A) it is reasonably certain, after consulting with the Company, that the Arrangement will become effective; and (B) such Pre-Acquisition Reorganization can be reversed or unwound in a timely fashion without adversely affecting the Company and the Company Entities in the event that the Arrangement does not become effective and this Agreement is terminated.  If the Arrangement is not completed, the Purchaser will (a) forthwith reimburse the Company for all reasonable fees and expenses (including any professional fees and expenses) incurred by the Company and the Company Entities in considering and effecting any Pre-Acquisition Reorganization, and (b) be responsible for any costs of the Company and the Company Entities in reversing or unwinding any Pre-Acquisition Reorganization that was effected prior to the termination of this Agreement in accordance with its terms.  The obligation of the Purchaser to reimburse the Company for fees and expenses and to be responsible for costs as set out in this Section 5.1 will be in addition to any other payment the Purchaser may be obligated to make hereunder and will survive termination of

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this Agreement.  The Parent shall indemnify and save harmless the Company and its subsidiaries from and against any and all liabilities, losses, damages, claims, costs, expenses, interest awards, judgments and penalties suffered or incurred by any of them in connection with or as a result for their co-operation or assistance with or participation in any Pre-Acquisition Reorganization.  No director, officer, employee or agent of the Company or its subsidiaries shall be required to take any action in respect of a Pre-Acquisition Reorganization in any capacity other than as a director, officer, employee or agent of the Company or the Company Entities, as the case may be.  Neither the Parent nor the Purchaser will contact employees of the Company or its subsidiaries in respect of a Pre-Acquisition Reorganization, except after prior consultation with the President and Chief Executive Officer or the Chief Financial Officer of the Company.

(b)                                 The Parent and the Purchaser acknowledge and agree that the planning for and implementation of any Pre-Acquisition Reorganization shall not be considered a breach of any covenant under this Agreement and shall not be considered in determining whether a representation or warranty of the Company hereunder has been breached.  The Parent, the Purchaser and the Company shall work cooperatively and use reasonable commercial efforts to prepare prior to the Effective Time all documentation necessary and do such other acts and things as are necessary to give effect to such Pre-Acquisition Reorganization.  For greater certainty, the Company shall not be liable for the failure of the Parent or the Purchaser to benefit from any anticipated tax efficiency as a result of a Pre-Acquisition Reorganization and the completion of any such transaction shall not be a condition to the completion of the Arrangement.

5.2                               Access to Information

(a)                                  Subject to compliance with applicable Laws and the terms of any existing Contracts, each of the Company, the Company Entities and the Parent will, and will cause its respective subsidiaries to, afford to the other and its Representatives, until the earlier of the Effective Time or the termination of this Agreement in accordance with its terms, continuing access to the Company Data Room or Parent Data Room, as the case may be, and reasonable access, during normal business hours and upon reasonable notice, to its respective businesses, properties, books and records and such other data and information as the other may reasonably request, as well as to their respective management personnel, subject, however, to such access not interfering with the ordinary conduct of its businesses.  Subject to compliance with applicable Laws and such requests not materially interfering with the ordinary conduct of the business of the Company and the Company Entities, the Company will also make available to the Purchaser and its Representatives all information reasonably requested by the Purchaser for the purposes of preparing, considering and implementing integration and strategic plans for the combined businesses of the Company and the Purchaser and its affiliates following completion of the Arrangement.  Without limiting the generality of the provisions of the Non-Disclosure Agreement, each of the Parties acknowledges that all information provided to it under this Section 5.2(a), or otherwise pursuant to this Agreement or in connection with the transactions

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contemplated hereby, is subject to the Non-Disclosure Agreement, which will remain in full force and effect notwithstanding any other provision of this Agreement or any termination of this Agreement.  If any provision of this Agreement otherwise conflicts or is inconsistent with any provision of the Non-Disclosure Agreement, the provisions of this Agreement will supersede those of the Non-Disclosure Agreement but only to the extent of the conflict or inconsistency and all other provisions of the Non-Disclosure Agreement will remain in full force and effect.

(b)                                 Other than as may be required in respect of information requested by Governmental Authorities in connection with obtaining the Required Regulatory Approvals, nothing in this Section 5.2 or in any other provision of this Agreement will require the Company, the Company Entities or the Parent, or its respective subsidiaries, to disclose information if such disclosure would violate a written confidentiality agreement with a third party or customer specific or competitively sensitive information after taking into account the Non-Disclosure Agreement (“Confidential Data”).  For greater certainty, until the Effective Time, access to and exchange of Confidential Data as between the Parties will be limited to what is reasonably necessary for the purposes of securing all necessary regulatory approvals, the preparation and settlement of definitive documents and the advancement of the Arrangement and will be limited such that the dissemination of Confidential Data will be confined to the Representatives of the Parties and their counsel who have a need to know such information for such purposes and who agree to respect such confidentiality in their dealings with Confidential Data.  For the purpose of this Section 5.2(b), counsel to the Purchaser shall include counsel to the Parent.

5.3                               Covenants of the Company Regarding the Arrangement

Subject to the terms and conditions of this Agreement, the Company will perform all obligations required to be performed by the Company under this Agreement, cooperate with the Purchaser and the Parent in connection therewith, and use commercially reasonable efforts to do such other acts and things as may be necessary or desirable in order to complete the Arrangement and the other transactions contemplated hereby, including:

(a)                                  publicly announcing the entering into of this Agreement, the support of the Board of Directors of the Arrangement (including the voting intentions of each director and executive officer of the Company referred to in Section 2.5(c)) and the recommendation of the Board of Directors to the Shareholders to vote in favour of the Arrangement Resolution;

(b)                                 if necessary in order to waive or suspend the operation of or to otherwise render inoperative the Shareholder Rights Plan in respect of the Arrangement, immediately deferring the separation time of the rights under the Shareholder Rights Plan in respect of the Arrangement and, unless otherwise requested by the Purchaser, continuing to defer such separation time in respect of the Arrangement until a time that is no earlier than the Effective Time and, if from time to time requested by the Purchaser, taking such other actions as may be necessary to

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waive or suspend the operation of or to otherwise render inoperative the Shareholder Rights Plan in respect of the Arrangement;

(c)                                  cooperating with the Purchaser and the Parent in connection with, and using its commercially reasonable efforts to assist the Purchaser and the Parent in, obtaining all Required Regulatory Approvals relating to the Purchaser or the Parent or relating to the Company or any of its subsidiaries which are customarily applied for by a purchaser in transactions of this nature; provided that the Company and/or its subsidiaries will not be required to make any applications of the Purchaser or the Parent under applicable Law, but will rather provide assistance with any such applications made by, on behalf of, or jointly with the Purchaser or the Parent;

(d)                                 using its commercially reasonable efforts to obtain all necessary waivers, consents and approvals required to be obtained by the Company or the Company Entities from other parties to any Contracts in order to complete the Arrangement, including, without limitation, the Required Regulatory Approvals; provided, however, that, notwithstanding anything to the contrary in this Agreement, in connection with obtaining any waiver, consent or approval from any person (other than a Governmental Authority) with respect to any transaction contemplated by this Agreement, none of the Company or any of the Company Entities will be required to pay or commit to pay to such person whose waiver, consent or approval is being solicited any cash or other consideration, make any commitment or incur any liability or other obligation other than such fees or expenses contemplated by the terms of such Contract unless requested by the Purchaser;

(e)                                  using its commercially reasonable efforts to effect all necessary registrations, filings and submissions of information required by Governmental Authorities from the Company or any of the Company Entities relating to the Arrangement;

(f)                                    applying for and using its commercially reasonable efforts to obtain all Required Regulatory Approvals relating to the Company or any of the Company Entities which are customarily applied for by an offeree and, in doing so, keeping the Purchaser reasonably informed as to the status of the proceedings related to obtaining such Required Regulatory Approvals, including providing the Purchaser with copies of all related applications and notifications (other than, subject to Section 5.2(b), Confidential Data contained in such applications and notifications), in draft form, in order for the Purchaser to provide its reasonable comments thereon, and copies of all notices and correspondence received by the Purchaser from any Governmental Authority with respect thereto;

(g)                                 promptly advising the Purchaser of any requests by a Governmental Authority for any substantive meeting or discussion (whether in person, by telephone or otherwise) in respect of any filing, investigation or inquiry concerning the Arrangement and providing the Purchaser the opportunity to attend or have its Representatives attend and participate thereat (except to the extent that in any such case the Governmental Authority expressly requests that the Purchaser and its Representatives should not be present at the meeting or discussion or part or parts of the meeting or discussion);

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(h)                                 not extending or consenting to any extension of any waiting period under applicable Laws or entering into any agreement with any Governmental Authority to not complete the Arrangement, except with the consent of the Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed);

(i)                                     defending all lawsuits or other legal, regulatory or other Proceedings against the Company challenging or affecting this Agreement or the completion of the Arrangement; and

(j)                                     paying or causing to be paid all Transaction Expenses prior to the Effective Date.

5.4                               Covenants of the Purchaser and the Parent Regarding the Arrangement

Subject to the terms and conditions of this Agreement, each of the Purchaser and the Parent will perform all obligations required to be performed by it under this Agreement, cooperate with the Company in connection therewith, and use commercially reasonable efforts to do such other acts and things as may be necessary or desirable in order to complete the Arrangement and the other transactions contemplated hereby, including:

(a)                                  cooperating with the Company and the Company Entities in connection with, and using its commercially reasonable efforts to assist the Company and the Company Entities in, obtaining the waivers, consents and approvals referred to in Section 5.3(d); provided, however, that, notwithstanding anything to the contrary in this Agreement, in connection with obtaining any waiver, consent or approval from any person (other than a Governmental Authority) with respect to any transaction contemplated by this Agreement, neither the Purchaser nor the Parent, nor any of their respective subsidiaries, will be required to pay or commit to pay to such person whose waiver, consent or approval is being solicited any cash or other consideration, make any commitment or incur any liability or other obligation;

(b)                                 using its commercially reasonable efforts to effect all necessary registrations, filings and submissions of information required by Governmental Authorities from the Purchaser or the Parent relating to the Arrangement;

(c)                                  applying for and using its commercially reasonable efforts to obtain all Required Regulatory Approvals relating to the Purchaser or the Parent or relating to the Company or any of the Company Entities which are customarily applied for by an offeror and, in doing so, keeping the Company reasonably informed as to the status of the proceedings related to obtaining such Required Regulatory Approvals, including providing the Company with copies of all related applications and notifications in draft form (other than, subject to Section 5.2(b), Confidential Data contained in such applications and notifications), in draft form, in order for the Company to provide its reasonable comments thereon;

(d)                                 promptly advising the Company of any requests by a Governmental Authority for any substantive meeting or discussion (whether in person, by telephone or otherwise) in respect of any filing, investigation or inquiry concerning the Arrangement and providing the Company the opportunity to attend or have its

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Representatives attend and participate thereat (except to the extent that in any such case the Governmental Authority expressly requests that the Company and its Representatives should not be present at the meeting or discussion or part or parts of the meeting or discussion);

(e)                                  not extending or consenting to any extension of any waiting period under applicable Laws, except with the consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed);

(f)                                    defending all lawsuits or other legal, regulatory or other Proceedings against or relating to the Purchaser or the Parent challenging or affecting this Agreement or the completion of the Arrangement; and

(g)                                 forthwith carrying out the terms of the Interim Order and Final Order to the extent applicable to it and taking all necessary actions to give effect to the transactions contemplated herein and the Plan of Arrangement, including providing the Depositary with sufficient Consideration Shares and funds to pay the aggregate share and cash consideration payable to the Shareholders pursuant to the Plan of Arrangement.

5.5                               Additional Covenants with Respect to Exchangeable Share Structure

(a)                                  Each of the Purchaser and the Parent will use their commercially reasonable efforts to:

(i)                                     obtain all orders, if any, required from the applicable Securities Regulatory Authorities to permit the first resale of (x) the Exchangeable Shares issued pursuant to Section 3.1(c) of the Plan of Arrangement and (y) the Molycorp Shares issued from time to time upon exchange of such Exchangeable Shares in accordance with their terms, in each case without qualification with or approval of or the filing of any prospectus, or the taking of any proceeding with, or the obtaining of any further order, ruling or consent from, any Securities Regulatory Authorities (other than, with respect to such first resales, any restrictions on transfer by reason of a holder being a “control person” of the Parent, the Purchaser or Callco for purposes of Canadian Securities Laws (collectively, the “Exemptive Relief”);

(ii)                                  cause the Exchangeable Shares to be listed and posted for trading on the TSX by the Effective Time and to take reasonable steps to maintain such listing for so long as there are any Exchangeable Shares issued and outstanding (other than Exchangeable Shares held by the Parent or any of its affiliates);

(iii)                               cause the Molycorp Shares to be issued from time to time upon exchange of the Exchangeable Shares in accordance with their terms to be listed and posted for trading on the NYSE;

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(iv)                              ensure that the Purchaser is, at the Effective Time and for so long as there are any Exchangeable Shares issued and outstanding (other than Exchangeable Shares held by the Parent or any of its affiliates), a “taxable Canadian corporation” and not a “mutual fund corporation,” each within the meaning of the Tax Act; and

(v)                                 file a registration statement on Form S-3 in order to register the Molycorp Shares issued from time to time upon exchange of the Exchangeable Shares in accordance with their terms under the 1933 Securities Act (the “Registration Statement”), and use its commercially reasonable efforts to cause the Registration Statement to become effective at or prior to the Effective Time and to maintain the effectiveness of such registration for so long as there are any Exchangeable Shares issued and outstanding (other than Exchangeable Shares held by the Parent or any of its affiliates).

(b)                                 The Purchaser acknowledges and agrees that it shall execute joint elections under subsection 85(1) or 85(2) of the Tax Act (and in each case, where applicable, the analogous provisions of provincial income tax Laws) with respect to the transfer of Eligible Shares to the Purchaser pursuant to Section 3.1(c) of the Plan of Arrangement with Shareholders who are Eligible Holders who are entitled to receive Exchangeable Shares under the Arrangement, in each case subject to and in accordance with Section 3.4 of the Plan of Arrangement.

5.6                               Additional Covenants with Respect to Financing

(a)                                  Without limiting the generality of Section 5.4, the Parent shall and, where appropriate, shall cause its subsidiaries to use their commercially reasonable efforts to consummate any such financing arrangements (the “Acquisition Financing”) as may be required in order to complete the transactions contemplated by this Agreement.  The Parent and/or the Purchaser, as applicable, shall have the right from time to time to amend, replace, supplement or otherwise modify, or waive any of its rights under, the Commitment Letter or any definitive agreements with respect to the Debt Financing, and/or substitute other debt or equity financing (“Alternative Financing”) for all or any portion of the Debt Financing from the same and/or alternative Debt Financing Sources, provided that any such amendment, replacement, supplement or other modification to or waiver of any provision of the Commitment Letter or any definitive agreements with respect to the Debt Financing that amends the Debt Financing and/or substitution of all or any portion of the Debt Financing shall not (A) expand upon the conditions precedent to the Debt Financing as set forth in the Commitment Letter or (B) be reasonably expected to prevent or materially impede or materially delay the availability of the Debt Financing and/or the consummation of the Arrangement and the other transactions contemplated by this Agreement.  The Parent and/or the Purchaser, as applicable, shall be permitted to reduce the amount of Debt Financing under the Commitment Letter or any definitive agreements with respect to the Debt Financing in its reasonable discretion, provided, that the Parent shall not reduce the Debt Financing to an amount committed below the amount that is required,

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together with the financial resources of the Parent and the Purchaser, including cash on hand and marketable securities of the Parent, the Purchaser, the Company and their respective subsidiaries, to consummate the Arrangement and the other transactions contemplated by this Agreement, and provided, further, that such reduction shall not (A) expand upon the conditions precedent to the Debt Financing as set forth in the Commitment Letter or (B) be reasonably expected to prevent or materially impede or materially delay the availability of such reduced Debt Financing and/or the consummation of the Arrangement and the other transactions contemplated by this Agreement.  Subject to obtaining Alternative Financing, the Parent and the Purchaser shall use commercially reasonable efforts to consummate and obtain the Debt Financing on the terms and conditions described in the Commitment Letter, including using commercially reasonable efforts to (i) negotiate and enter into definitive agreements with respect to the Commitment Letter on the terms and conditions contemplated by the Commitment Letter, which definitive agreements will not materially expand upon the conditions to the receipt of the Debt Financing as set forth in the Commitment Letter or amend or modify the terms of the Commitment Letter in a manner that would reasonably be expected to impair the ability of the Parent or the Purchaser, as applicable, to consummate the Debt Financing, and (ii) satisfy on a timely basis all conditions contained in the Commitment Letter that are within its control.  The Parent and the Purchaser shall and, where appropriate, shall cause their respective subsidiaries to refrain from taking, directly or indirectly, any actions that could reasonably be expected to result in any of the conditions contained in the Commitment Letter or in any definitive agreement related to the Debt Financing, in each case, that are within the control of the Parent or the Purchaser, or their respective subsidiaries, not being satisfied.

(b)                                 The Parent shall, in accordance with the confidentiality provisions of the Commitment Letter, deliver to the Company a copy of any definitive agreements and related documents promptly after execution thereof and, upon the Company’s reasonable request, provide the Company with summaries of its discussions and dealings with the Lender, provided that the Company agrees to abide by the confidentiality provisions of the Commitment Letter.  Without limiting the generality of the foregoing, the Parent agrees to notify the Company promptly (and in any event not later than 48 hours after such occurrence), if at any time prior to the Effective Time: (a) the Commitment Letter shall expire or be terminated for any reason; (b) the Parent reasonably determines that it shall be unable to satisfy, on a timely basis, any term or condition of the Debt Financing to be satisfied by it, that in each case would reasonably be expected to impair the ability of the Parent or the Purchaser, as applicable, to consummate the Debt Financing; or (c) the Lender advises the Parent in writing that such source either no longer intends to provide or underwrite the Debt Financing on the terms set forth in the Commitment Letter.

(c)                                  The Parent and the Purchaser acknowledge and agree that obtaining the Acquisition Financing (including, for greater certainty, the Debt Financing) is not a condition to their respective obligations hereunder.

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(d)                                 The Company shall, and shall cause each of the Company Entities to, at the Purchaser’s sole expense, provide, and cause its and their respective directors, officers, employees, independent auditors, counsel and other Representatives to provide, to the Parent and the Purchaser all such reasonable and timely cooperation and assistance in connection with the arrangement of the Acquisition Financing as may be reasonably requested by the Parent or the Purchaser or any of the lenders or their affiliates involved in the Acquisition Financing (including, for greater certainty, the Debt Financing), including but not limited to using its commercially reasonable efforts to participate in meetings, drafting sessions and due diligence sessions with the Lender, prospective lenders, investors and rating agencies, as applicable, in connection with the Acquisition Financing; provided, however, that such cooperation and assistance may not materially interfere with the conduct of the business of the Company and the Company Entities.

5.7                               Mutual Covenants

Each of the Parties covenants and agrees that, subject to the terms and conditions of this Agreement, until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms:

(a)                                  it will use commercially reasonable efforts to satisfy (or cause the satisfaction of) the conditions precedent to its obligations hereunder as set forth in Article 8 to the extent the same is within its control and to take, or cause to be taken, all other commercially reasonable actions and to do, or cause to be done, all other things necessary and commercially reasonable to permit the completion of the Arrangement in accordance with its obligations under this Agreement, the Plan of Arrangement and applicable Laws and cooperate with the other Parties in connection therewith, including using its commercially reasonable efforts to (i) obtain all Required Regulatory Approvals required to be obtained by it, (ii) effect or cause to be effected all necessary registrations, filings and submissions of information requested by Governmental Authorities required to be effected by it in connection with the Arrangement, (iii) oppose, lift or rescind any injunction or restraining order against it or other order or action against it seeking to stop, or otherwise adversely affecting its ability to make and complete, the Arrangement and (iv) cooperate with the other Parties in connection with the performance by it of its obligations hereunder;

(b)                                 it will use commercially reasonable efforts not to take or cause to be taken any action which is inconsistent with this Agreement or which would reasonably be expected to prevent or significantly impede or materially delay the completion of the Arrangement;

(c)                                  it will give prompt notice to the others of: (i) the occurrence or failure to occur of any event, which occurrence or failure would cause or may cause any representation or warranty on its part contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date of this Agreement to the earlier of the Effective Date and the termination of this Agreement; and (ii) any failure of such Party, or any officer, director, employee or agent thereof,

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to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; and

(d)                                 it will use commercially reasonable efforts to execute and do all acts, further deeds, things and assurances as may be required in the reasonable opinion of the other Parties’ legal counsel to permit the completion of the Arrangement.

5.8                               Employment Agreements; Options; Convertible Debentures

(a)                                  The Purchaser agrees that the Company and any successor to the Company (including any Surviving Corporation) shall continue to honour and comply with the terms of all existing employment, change of control and severance agreements of the Company and the Company Entities (as the same may be amended or modified as permitted hereunder and thereunder), complete and correct copies of all of which agreements have been provided to the Purchaser.

(b)                                 The Purchaser acknowledges that, pursuant to the provisions of the Stock Option Plan, the Company may facilitate as necessary the acceleration of vesting of any unvested Options as may be necessary or desirable to allow the Optionholders to exercise their Options for the purpose of participating in the Arrangement as Shareholders.  The Purchaser and the Company each acknowledges and agrees that the Company will elect to forego any deduction under the Tax Act with respect to the cash payments to be made by the Company pursuant to the Plan of Arrangement to holders of Options who are a resident of Canada for purposes of the Tax Act and, to effect the foregoing, the Company will comply with the requirements described in subsection 110(1.1) of the Tax Act.

(c)                                  The Purchaser agrees that the Company and any successor to the Company (including any Surviving Corporation) shall continue to honour and comply with the terms of the Debenture Indenture, it being acknowledged by the Purchaser that the Arrangement will constitute a “Cash Change of Control” as that term is defined in the Debenture Indenture.

5.9                               Indemnification and Insurance

(a)                                  The Company and the Purchaser agree that all rights to indemnification or exculpation now existing in favour of the present and former directors and officers of the Company or of any of the Company Entities (each such present or former director or officer of the Company or of any of the Company Entities being herein referred to as an “Indemnified Party” and such persons collectively being referred to as the “Indemnified Parties”) as provided in the constating documents of the Company or any of the Company Entities or any Contract by which the Company or any of the Company Entities is bound and which is in effect as of the date hereof, will survive the completion of the Plan of Arrangement and continue in full force and effect and without modification, with respect to actions or omissions of the Indemnified Parties occurring prior to the Effective Time, for the period contemplated therein.

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(b)                                 The Purchaser will, or will cause the Company and the Company Entities to, maintain in effect without any reduction in scope or coverage for seven (7) years from the Effective Date customary policies of directors’ and officers’ liability insurance providing protection no less favourable to the protection provided by the policies maintained by the Company and the Company Entities which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date; provided, however, that the Purchaser acknowledges and agrees that prior to the Effective Time, notwithstanding any other provision hereof, the Company may, at its option, purchase prepaid non-cancellable run-off directors’ and officers’ liability insurance on terms substantially similar to the directors’ and officers’ liability policies currently maintained by the Company, but providing coverage for a period of seven (7) years from the Effective Date with respect to claims arising from or related to facts or events which occurred on or prior to the Effective Date.

(c)                                  The provisions of this Section 5.9 are and are intended to be for the benefit of, and will be enforceable by, each Indemnified Party, his or her heirs, executors, administrators and other legal representatives and such rights will be held by the Company, and any successor to the Company (including any Surviving Corporation), in trust for such persons and the Company hereby accepts such trust and agrees to hold the benefit of and enforce performance of such covenants on behalf of each Indemnified Party, his or her heirs, executors, administrators and other legal representatives; provided, however, that no approval of any beneficiary of such trust will be required in connection with an amendment or variation of this Section 5.9 prior to the Effective Time.

(d)                                 If the Company or any of the Company Entities or any of their respective successors or assigns (i) consolidates with or merges into any other person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, the Purchaser shall ensure that any such successor or assign (including, as applicable, any acquirer of substantially all of the properties and assets of the Company or any of the Company Entities) assumes all of the obligations set forth in this Section 5.9.

ARTICLE 6
ACQUISITION PROPOSALS

6.1                               Non-Solicitation

(a)                                  Except as expressly contemplated by this Agreement or to the extent that the Purchaser has otherwise consented to in writing, until the earlier of the Effective Time or the date, if any, on which this Agreement is terminated pursuant to Section 7.1, neither the Board of Directors nor the Company shall, and the Company shall cause the Company Entities and each of its and their respective Representatives to not, directly or indirectly through any other person:

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(i)                                     initiate, solicit, knowingly facilitate or knowingly encourage (including by way of furnishing or affording access to information), or take any other action that knowingly promotes or facilitates, directly or indirectly, any inquiries or the making of any proposal or offer with respect to an Acquisition Proposal or potential Acquisition Proposal;

(ii)                                  participate or engage in any discussions or negotiations regarding, or provide any information with respect to, or otherwise co-operate in any way with, or assist or participate in, encourage or otherwise facilitate, any effort or attempt by any other person (other than the Purchaser and its affiliates) to make or complete an Acquisition Proposal;

(iii)                               withdraw, modify, change or qualify, or publicly propose to withdraw, modify, change or qualify, in a manner adverse to the Purchaser or the Parent, the approval of the Board of Directors of the transactions contemplated hereby and the recommendation of the Board of Directors that the Shareholders vote in favour of the Arrangement Resolution;

(iv)                              approve, recommend or remain neutral with respect to, or publicly propose to approve, recommend or remain neutral with respect to, any Acquisition Proposal (it being understood that publicly taking no position or a neutral position with respect to an Acquisition Proposal until the fifth Business Day after such Acquisition Proposal has been publicly announced shall not constitute a violation of this Section 6.1(a)(iv)); or

(v)                                 accept or enter into, or publicly propose to accept or enter into, any letter of intent, memorandum of understanding, agreement in principle, agreement, arrangement or undertaking related to an Acquisition Proposal (an “Acquisition Agreement”).

(b)                                 The Company shall, and shall cause the Company Entities and each of its and their respective Representatives to, immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with or involving any person (other than the Purchaser and its affiliates) conducted heretofore by the Company or the Company Entities, or any of its or their respective Representatives, with respect to any Acquisition Proposal or which could reasonably be expected to lead to an Acquisition Proposal and, in connection therewith, the Company will immediately discontinue access to any person (other than the Purchaser and its affiliates) to any data room (virtual or otherwise). The Company agrees not to release any third party from any standstill agreement to which it is a party unless such party has made an Acquisition Proposal that the Board of Directors, after consultation with its financial advisors and outside legal counsel, has determined in good faith would be reasonably likely to result in a Superior Proposal.  Within three Business Days from the date hereof, the Company shall request the return or destruction of all information provided to any third parties who have entered into a confidentiality agreement with the Company since January 1, 2009 relating to any potential Acquisition Proposal and shall use commercially reasonable efforts to ensure that such requests are honoured in accordance with the terms of such confidentiality agreements.

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(c)                                  The Company shall promptly (and, in any event, within 72 hours of receipt by the Company) notify the Purchaser, at first orally and then in writing, of any proposal, inquiry, offer or request relating to or constituting an Acquisition Proposal, or which could reasonably be expected to lead to an Acquisition Proposal, in each case, received after the date hereof, of which any of its Representatives is or becomes aware, or any request received by the Company or any of its Representatives for non-public information relating to the Company or any of the Company Entities in connection with an Acquisition Proposal or for access to the properties, books and records or a list of securityholders of the Company or any of the Company Entities in connection with an Acquisition Proposal.  Such notice shall include a description of the material terms and conditions of such Acquisition Proposal or proposal, inquiry, offer or request.  At the Purchaser’s reasonable request, the Company will keep the Purchaser promptly and fully informed of the status, including any change to the material terms and conditions, of any such Acquisition Proposal, proposal, inquiry, offer or request.

(d)                                 Notwithstanding Section 6.1(a) or any other provision of this Agreement to the contrary, following receipt by the Company of any proposal, inquiry, offer or request (or any amendment thereto) that is not an Acquisition Proposal but which the Company reasonably believes could lead to an Acquisition Proposal, the Company may respond to the proponent to advise it that, in accordance with this Agreement, the Company can only enter into discussions or negotiations with a party in accordance with Section 6.2.

6.2                               Right to Match

(a)                                  Notwithstanding Section 6.1(a) or any other provision of this Agreement to the contrary, if after the date hereof the Company or any of the Company Entities, or any of its or their respective Representatives, receives a written Acquisition Proposal (including, for greater certainty, an amendment, change or modification to an Acquisition Proposal made prior to the date hereof) that was not solicited after the date hereof in contravention of Section 6.1, the Company and its Representatives may:

(i)                                     contact the person making such Acquisition Proposal and its Representatives solely for the purpose of clarifying the terms and conditions of such Acquisition Proposal and the likelihood of its consummation so as to determine whether such Acquisition Proposal is, or could reasonably be expect to lead to, a Superior Proposal; and

(ii)                                  if the Board of Directors determines in good faith, after consultation with its outside legal counsel and financial advisors, that such Acquisition Proposal is, or could reasonably be expected to lead to, a Superior Proposal and that the failure to take the relevant action would conflict with its fiduciary duties:

A.                                   furnish information with respect to the Company and the Company Entities to the person making such Acquisition Proposal and its Representatives provided that (1) the Company first enters into a

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confidentiality agreement with such person that is no less favourable to the Company than the Non-Disclosure Agreement, and sends a copy of such agreement to the Purchaser promptly following its execution, and (2) the Company promptly provides to the Purchaser any material non-public information concerning the Company or the Company Entities that is provided to such person which was not previously provided to the Purchaser, the Parent or their respective Representatives; and

B.                                     engage in discussions and negotiations with respect to the Acquisition Proposal with the person making such Acquisition Proposal and its Representatives.

(b)                                 Section 6.1(a) or any other provision of this Agreement to the contrary notwithstanding, the Company may, at any time after the date of this Agreement and prior to the Company Meeting, terminate this Agreement and accept, approve, recommend or enter into any agreement, understanding or arrangement in respect of an Acquisition Proposal (with the exception of a confidentiality and standstill agreement described in Section 6.2(a), the execution of which shall not be subject to the conditions of this Section 6.2(b)) if and only if:

(i)                                     such Acquisition Proposal did not result from a breach of Section 6.1 and the Company has complied with the other terms of this Section 6.2;

(ii)                                  the Board of Directors has determined in good faith, after consultation with its outside legal counsel and financial advisors, that such Acquisition Proposal constitutes or could reasonably be expected to constitute a Superior Proposal and that the failure to take the relevant action would conflict with its fiduciary duties;

(iii)                               the Company has (A) given written notice to the Purchaser of the determination of the Board of Directors that such Acquisition Proposal constitutes a Superior Proposal and that the Board of Directors intends to withdraw, modify, qualify or change in a manner adverse to the Purchaser or the Parent its approval or recommendation of the Arrangement (including the recommendation that the Shareholders vote in favour of the Arrangement Resolution) (the “Superior Proposal Notice”) and (B) provided the Purchaser with a copy of the document containing such Acquisition Proposal (together, if applicable, with a summary of the value that the Board of Directors has, after consultation with its financial advisors and outside legal counsel, determined should be ascribed to any non-cash consideration included in such Acquisition Proposal);

(iv)                              a period of least five full Business Days (such five Business Day Period, the “Right to Match Period”) shall have elapsed from the later of the date on which the Purchaser received the Superior Proposal Notice and the date on which the Purchaser received a copy of the documents referred to in clause (B) of Section 6.2(b)(iii), it being understood that the Right to

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Match Period shall expire at 12:00 p.m. (Toronto time) at the end of the fifth full Business Day following such later date;

(v)                                 if the Purchaser and the Parent have offered to amend the terms of this Agreement and the Arrangement during the Right to Match Period pursuant to Section 6.2(c), the Board of Directors has determined, after consultation with its outside legal counsel and financial advisors, that such Acquisition Proposal continues to be a Superior Proposal when assessed against this Agreement and the Arrangement as they are proposed to be amended as at the termination of the Right to Match Period; and

(vi)                              the Company terminates this Agreement pursuant to Section 7.1(d)(i) and pays the Termination Payment pursuant to Section 7.2(b)(iii).

(c)                                  During the Right to Match Period, the Purchaser and the Parent will have the opportunity, but not the obligation, to offer to amend the terms of this Agreement and the Arrangement.  The Company agrees that, if requested by the Purchaser, it will negotiate with the Purchaser and the Parent in good faith to make such amendments to the terms of this Agreement and the Arrangement as would enable it to proceed with the transactions contemplated hereby on such amended terms.  The Board of Directors will review in good faith any such offer made by the Purchaser and the Parent to amend the terms of this Agreement and the Arrangement in order to determine, as part of exercising its fiduciary duties, and in consultation with its financial advisors and outside legal counsel, whether such offer to amend the terms of this Agreement and the Arrangement would, upon its acceptance, result in the applicable Acquisition Proposal ceasing to be a Superior Proposal when assessed against this Agreement and the Arrangement as they are proposed to be amended as at the termination of the Right to Match Period. If the Board of Directors determines that the applicable Acquisition Proposal would cease to be a Superior Proposal when assessed against this Agreement and the Arrangement as they are proposed to be amended as at the termination of the Right to Match Period, the Company will forthwith so advise the Purchaser and will promptly thereafter accept the offer by the Purchaser and the Parent to amend the terms of this Agreement and the Arrangement and the Parties agree to take such actions and execute such documents as are necessary to give effect to the foregoing.

(d)                                 The Board of Directors shall reaffirm its recommendation in favour of the Arrangement by news release promptly after (A) any Acquisition Proposal that the Board of Directors determines not to be a Superior Proposal is publicly announced or made or (B) the Board of Directors determines that an Acquisition Proposal which previously constituted a Superior Proposal would cease to be a Superior Proposal when assessed against this Agreement and the Arrangement as they are proposed to be amended as at the termination of the Right to Match Period.  The Purchaser shall be given a reasonable opportunity to review and comment on the form and content of any such news release.  Such news release shall state that the Board of Directors has determined that the applicable Acquisition Proposal is not a Superior Proposal.

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(e)                                  Each successive material amendment, change or modification to any Acquisition Proposal that results in an increase in, or modification of, the consideration (or value of such consideration) to be received by the Shareholders or other material terms and conditions thereof shall constitute a new Acquisition Proposal for the purposes of this Section 6.2 and shall result in the commencement of a new Right to Match Period from the date specified in Section 6.2(b)(vi) with respect to such new Acquisition Proposal.  If the Company provides the Purchaser with a Superior Proposal Notice on a date that is less than five Business Days prior to the Company Meeting, the Company shall adjourn the Company Meeting to a date that is not later than the tenth Business Day following the first day of the Right to Match Period.

(f)                                    The Company shall ensure that each of the Company Entities, and each of its and their respective Representatives, is aware of the provisions of Section 6.1 and this Section 6.2 and the Company shall be responsible for any breach of Section 6.1 or this Section 6.2 by such persons.

(g)                                 Nothing contained in this Agreement shall prohibit the Board of Directors from making a change in recommendation or from making any disclosure to any Shareholders or holders of Convertible Debentures prior to the Effective Time, including for greater certainty disclosure of a change in recommendation, if, in the good faith judgment of the Board of Directors, after consultation with outside legal counsel, failure to take such action or make such disclosure would conflict with the Board of Director’s exercise of its fiduciary duties or such action or disclosure is otherwise required under Law (including without limitation by responding to an Acquisition Proposal under a directors’ circular or otherwise as required under applicable Law).

ARTICLE 7
TERMINATION

7.1                               Termination

(a)                                  Termination By Mutual Consent.  This Agreement may be terminated at any time prior to the Effective Time by mutual written consent of the Company and the Purchaser.

(b)                                 Termination by either the Company or the Purchaser.  This Agreement may be terminated by either the Company or the Purchaser at any time prior to the Effective Time:

(i)                                     if the Effective Time does not occur on or before the Outside Date, except that the right to terminate this Agreement under this Section 7.1(b)(i) shall not be available to a Party if the failure of that Party or its affiliate to fulfill any of its obligations or breach of any of its representations and warranties under this Agreement has been a principal cause of, or resulted in, the failure of the Effective Time to occur by such date;

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(ii)                                  if the Company Meeting is held and the Arrangement Resolution is not approved by the Shareholders in accordance with applicable Laws and the Interim Order; or

(iii)                               if any Law makes the completion of the Arrangement or the transactions contemplated by this Agreement illegal or otherwise prohibited, and such Law has become final and non-appealable.

(c)                                  Termination by the Purchaser.  This Agreement may be terminated by the Purchaser at any time prior to the Effective Time if:

(i)                                     (A) the Board of Directors fails to publicly make a recommendation that the Shareholders vote in favour of the Arrangement Resolution or withdraws, modifies, changes or qualifies in a manner adverse to the Purchaser and the Parent its approval or recommendation of the Arrangement, (B) the Purchaser requests that the Board of Directors reaffirm its recommendation that the Shareholders vote in favour of the Arrangement Resolution and the Board of Directors shall not have done so within six Business Days following receipt of such request, (C) the Board of Directors accepts, approves, endorses or recommends any Acquisition Proposal, (D) the Company enters into an Acquisition Agreement in respect of any Acquisition Proposal (with the exception of a confidentiality and standstill agreement described in Section 6.2(a)) or (E) the Company or the Board of Directors publicly proposes or announces its intention to do any of the foregoing (each of the foregoing, a “Change of Recommendation”);

(ii)                                  the Company breaches Section 6.1(a) or 2.2(c); or

(iii)                               subject to compliance with Section 7.4, the Company breaches any of its representations, warranties, covenants or agreements contained in this Agreement, which breach would cause any of the conditions set forth in Section 8.1 or Section 8.3 not to be satisfied, provided, however, that the Purchaser is not then in breach of this Agreement so as to cause any of the conditions set forth in Section 8.1 or Section 8.2 not to be satisfied; or

(d)                                 Termination by the Company.  This Agreement may be terminated by the Company at any time prior to the Effective Time:

(i)                                     subject to the Company complying with the terms of Article 6 and paying the Termination Fee in accordance with Section 7.2(b)(iii) and provided that the Board of Directors has determined in good faith, after consultation with its financial advisors and outside legal counsel, that such Acquisition Proposal constitutes a Superior Proposal, if the Board of Directors approves, and authorizes the Company to enter into, an Acquisition Agreement with respect to an Acquisition Proposal prior to the Company Meeting;

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(ii)                                  subject to compliance with Section 7.4, if the Purchaser or the Parent breaches any of its representations, warranties, covenants or agreements contained in this Agreement, which breach would cause any of the conditions set forth in Section 8.1 or Section 8.2 not to be satisfied, provided, however, that the Company is not then in breach of this Agreement so as to cause any of the conditions set forth in Section 8.1 or Section 8.3 not to be satisfied; or

(iii)                               if the Purchaser has been unable to obtain the Exemptive Relief, if any is required, or the approval of the Exchangeable Shares to be issued pursuant to Section 3.1(c) of the Plan of Arrangement for listing on the TSX or the Parent has been unable to obtain approval of the Molycorp Shares to be issued pursuant to Section 3.1(d) of the Plan of Arrangement, or on exchange of the Exchangeable Shares in accordance with their terms, for listing on the NYSE, subject in each case to the satisfaction of the customary listing conditions of the TSX or NYSE, as the case may be, by the Outside Date or has advised the Company in writing that it will not be able to obtain such approval on or before the Outside Date.

7.2                               Termination Fee

(a)                                  If a Termination Fee Event occurs, the Company shall pay to the Purchaser a termination fee of $30,000,000 (the “Termination Fee”) by wire transfer in immediately available funds to an account specified by the Purchaser.  The Termination Fee shall in each case be payable at the time specified in Section 7.2(b).

(b)                                 “Termination Fee Event” means:

(i)                                     the termination of this Agreement by either the Company or the Purchaser pursuant to Section 7.1(b)(ii), if (A) an Acquisition Proposal shall have been made public or proposed publicly to the Company or the Shareholders after the date hereof and prior to the Company Meeting and (B) the Company or one or more of the Company Entities shall have (x) completed any Acquisition Proposal within one year after this Agreement is terminated or (y) entered into an Acquisition Agreement in respect of any Acquisition Proposal within one year after this Agreement is terminated, which Acquisition Proposal, as it may be modified or amended, is subsequently completed (whether before or after the expiry of such one-year period), in which case the Termination Fee shall be paid on or prior to the date on which such Acquisition Proposal is completed;

(ii)                                  the termination of this Agreement by the Purchaser pursuant to Section 7.1(c)(i), 7.1(c)(ii) or 7.1(c)(iii), in which case the Termination Fee shall be paid within two Business Days following the Termination Fee Event; or

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(iii)                               the termination of this Agreement by the Company pursuant to Section 7.1(d)(i), in which case the Termination Fee shall be paid prior to or concurrent with the Termination Fee Event.

(c)                                  The Company acknowledges that the agreements contained in this Section 7.2 are an integral part of the transactions contemplated in this Agreement and that without these agreements the other Parties would not enter into this Agreement.  Accordingly, if the Company fails to timely pay any amount due pursuant to this Section 7.2 and, in order to obtain the payment, the Purchaser commences a suit which results in a judgment against the Company for the payment set forth in this Section 7.2, the Company shall pay the Purchaser its reasonable and documented costs and expenses (including reasonable and documented attorneys’ fees) in connection with such suit, together with interest on such amount at the prime rate of the Royal Bank of Canada in effect on the date such payment was required to be made to and including the date on which such payment was actually received.

(d)                                 Each Party acknowledges that all of the payment amounts set out in this Section 7.2 are payments of liquidated damages which are a genuine pre-estimate of the damages which the Purchaser will suffer or incur as a result of the event giving rise to such payment and the resultant termination of this Agreement and are not penalties.  The Company irrevocably waives any right that it may have to raise as a defense that any such liquidated damages are excessive or punitive.  For greater certainty, the Parties agree that the payment of an amount pursuant to this Section 7.2 in the manner provided therein is the sole and exclusive remedy of the Parent and the Purchaser in respect of the event giving rise to such payment other than the right to injunctive relief to restrain the breach or threatened breach of the covenants or agreements set forth in the Non-Disclosure Agreement; provided, however, that nothing contained in this Section 7.2, and no payment of any such amount, shall relieve or have the effect of relieving the Company in any way from liability for damages incurred or suffered by the Parent or the Purchaser as a result of an intentional or wilful breach of this Agreement.  Each Debt Financing Source and its respective successors and permitted assigns shall be express third party beneficiaries of, and shall be entitled to enforce, this Section 7.2 with respect to the remedies of the Company under this Agreement.

(e)                                  Notwithstanding any other provision in this Agreement in no event will the Company be required to pay any amount in excess of the Termination Fee regardless of the number of breaches or alleged breaches of this Agreement which may give rise to the ability to terminate this Agreement and the requirement to pay such fee.

7.3                               Void upon Termination

If this Agreement is terminated in accordance with Section 7.1, this Agreement shall become void and of no force and effect and no Party will have any liability or further obligation to the other Party hereunder, except that the provisions of this Section 7.3, Section 5.1 (to the extent it relates to the Purchaser’s obligations), Section 5.2, Section 7.2 and Article 9 (other than Section 9.6, Section 9.9 and Section 9.10) shall survive any termination hereof in accordance with Section 7.1, provided, however, that neither the termination of this Agreement nor anything

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contained in Section 7.2 or this Section 7.3 will relieve any Party from any liability for any intentional or wilful breach by it of this Agreement, including any intentional or wilful making of a misrepresentation in this Agreement.  Notwithstanding anything to the contrary contained in this Agreement, the Non-Disclosure Agreement shall survive any termination hereof in accordance with Section 7.1.

7.4                               Notice and Cure Provisions

If either the Company, on the one hand, or the Purchaser or the Parent, on the other hand, determines at any time prior to the Effective Time that it intends to refuse to complete the transactions contemplated hereby because of any unfilled or unperformed condition contained in this Agreement, such Party will so notify the other Party forthwith upon making such determination in order that the other Party will have the right and opportunity to take such steps, at its own expense, as may be necessary for the purpose of fulfilling or performing such condition within a reasonable period of time, but in no event later than the Outside Date.  Neither the Company, on the one hand, nor the Purchaser or the Parent, on the other hand, may elect not to complete the transactions contemplated hereby pursuant to the conditions precedent contained in Article 8 or exercise any termination right arising therefrom and no payments will be payable as a result of such election pursuant to Section 7.2 unless forthwith, and in any event prior to the Effective Time, the Party intending to rely thereon has given a written notice to the other Party specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Party giving such notice is asserting as the basis for the non-fulfillment of the applicable condition precedent or the exercise of the termination right, as the case may be.  If any such notice is given, provided that the other Party is proceeding diligently to cure such matter, if such matter is susceptible to being cured, the Party giving such notice may not terminate this Agreement as a result thereof until the earlier of the Outside Date and the expiration of a period of 15 Business Days from such notice.  If such notice has been given prior to the date of the Company Meeting, such meeting, unless the Parties otherwise agree, will be postponed or adjourned until the expiry of such period (without causing any breach of any other provision contained herein).

ARTICLE 8

CONDITIONS PRECEDENT

8.1                               Mutual Conditions Precedent

The respective obligations of the Parties to complete the Arrangement are subject to the satisfaction, or mutual waiver by the Purchaser and the Company, on or before the Effective Date, of each of the following conditions, each of which are for the mutual benefit of the Parties and which may be waived, in whole or in part, by the Purchaser and the Company at any time:

(a)                                  the Arrangement Resolution will have been approved by the Shareholders at the Company Meeting in accordance with the Interim Order and applicable Laws;

(b)                                 each of the Interim Order and Final Order will have been obtained in form and substance satisfactory to each of the Company and the Purchaser, each acting reasonably, and will not have been set aside or modified in any manner unacceptable to either the Company or the Purchaser, each acting reasonably, on appeal or otherwise;

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(c)                                  the Required Regulatory Approvals will have been obtained or concluded or, in the case of waiting or suspensory periods, expired or been terminated;

(d)                                 no Law will have been enacted, issued, promulgated, enforced, made, entered, issued or applied and no Proceeding will otherwise have been taken under any Laws or by any Governmental Authority (whether temporary, preliminary or permanent) that makes the Arrangement illegal or otherwise directly or indirectly cease trades, enjoins, restrains or otherwise prohibits completion of the Arrangement as contemplated herein; and

(e)                                  this Agreement will not have been terminated in accordance with its terms.

8.2                               Additional Conditions Precedent to the Obligations of the Company

The obligation of the Company to complete the Arrangement will be subject to the satisfaction, or waiver by the Company, on or before the Effective Date, of each of the following conditions, each of which is for the exclusive benefit of the Company and which may be waived by the Company at any time, in whole or in part, in its sole discretion and without prejudice to any other rights that the Company may have:

(a)                                  each of the Purchaser and the Parent will have complied in all material respects with its obligations, covenants and agreements in this Agreement to be performed and complied with on or before the Effective Date;

(b)                                 the representations and warranties of the Purchaser and the Parent in Section 0 will be true and correct (disregarding for this purpose all materiality or Material Adverse Effect qualifications contained therein) as of the Effective Date as if made on and as of such date (except for such representations and warranties which refer to or are made as of another specified date, in which case such representations and warranties will have been true and correct as of that date) and except (i) as affected by transactions, changes, conditions, events or circumstances contemplated or permitted by this Agreement or (ii) for breaches of representations and warranties which have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Parent;

(c)                                  there will not have occurred prior to the date hereof a Material Adverse Effect on the Parent that has not been publicly disclosed or disclosed to the Company in writing by the Purchaser prior to the date hereof and, between the date hereof and the Effective Time, there will not have occurred a Material Adverse Effect on the Parent or any event, occurrence, circumstance or development that would reasonably be expected to have a Material Adverse Effect on the Parent;

(d)                                 the Company will have received a certificate of the Parent signed by a senior officer of the Parent for and on behalf of the Parent and without personal liability and dated the Effective Date certifying that the conditions set out in Section 8.2(a), Section 8.2(b) and Section 8.2(c) have been satisfied, which certificate will cease to have any force and effect after the Effective Time;

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(e)                                  the Company will have received certified copies of resolutions duly passed by the board of directors of the Parent (acting for itself and on behalf of the Purchaser) approving this Agreement and the completion of the transactions contemplated hereby;

(f)                                    the Purchaser or the Parent will have deposited, or caused to be deposited with the Depositary, sufficient funds to effect payment in full of the aggregate cash consideration payable by the Purchaser and the Company under the Plan of Arrangement;

(g)                                 the Registration Statement shall have been declared effective under the 1933 Securities Act;

(h)                                 the Purchaser and the Parent shall have obtained the Exemptive Relief on terms satisfactory to the Company, acting reasonably;

(i)                                     the Support Agreement and the Voting and Exchange Trust Agreement shall have each been executed and delivered by each of the parties thereto; and

(j)                                     the Exchangeable Shares to be issued pursuant to Section 3.1(c) of the Plan of Arrangement shall have been approved for listing on the TSX and the Molycorp Shares to be issued pursuant to Section 3.1(d) of the Plan of Arrangement, or on exchange of the Exchangeable Shares in accordance with their terms shall have been approved for listing on the NYSE, subject only to the satisfaction of the customary listing conditions of the TSX or NYSE, as the case may be.

8.3                               Additional Conditions Precedent to the Obligations of the Purchaser and the Parent

The obligation of the Purchaser and the Parent to complete the Arrangement will be subject to the satisfaction, or waiver by the Purchaser, on or before the Effective Date, of each of the following conditions, each of which is for the exclusive benefit of the Purchaser and the Parent and which may be waived by the Purchaser at any time, in whole or in part, in its sole discretion and without prejudice to any other rights that the Purchaser and the Parent may have:

(a)                                  the Company will have complied in all material respects with its obligations, covenants and agreements in this Agreement to be performed and complied with on or before the Effective Date;

(b)                                 the representations and warranties of the Company in Section 3.1 will be true and correct (disregarding for this purpose all materiality or Material Adverse Effect qualifications contained therein) as of the Effective Date as if made on and as of such date (except for such representations and warranties which refer to or are made as of another specified date, in which case such representations and warranties will have been true and correct as of that date) except (i) as affected by transactions, changes, conditions, events or circumstances contemplated or permitted by this Agreement or (ii) for breaches of representations and warranties which have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company;

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(c)                                  the aggregate number of Common Shares held, directly or indirectly, by the Shareholders who have properly exercised Dissent Rights in connection with the Arrangement shall not exceed 10% of the outstanding Common Shares;

(d)                                 there will not have occurred prior to the date hereof a Material Adverse Effect on the Company that has not been publicly disclosed or disclosed to the Purchaser in writing by the Company prior to the date hereof and, between the date hereof and the Effective Time, there will not have occurred a Material Adverse Effect on the Company or any event, occurrence, circumstance or development that would reasonably be expected to have a Material Adverse Effect on the Company;

(e)                                  the Purchaser will have received a certificate of the Company signed by a senior officer of the Company for and on behalf of the Company and without personal liability and dated the Effective Date certifying that the conditions set out in Section 8.3(a), Section 8.3(b), Section 8.3(c) and Section 8.3(d) have been satisfied, which certificate will cease to have any force and effect after the Effective Time;

(f)                                    the Purchaser will have received certified copies of resolutions duly passed by the Board of Directors approving this Agreement and the completion of the transactions contemplated hereby;

(g)                                 each of the Company and the Company Entities shall have obtained all waivers, consents, permits, approvals, releases, licences or authorizations required to be obtained from any lender or other third party in connection with or in order for the Company to complete the Arrangement, except for waivers, consents, permits, approvals, releases, licences or authorizations the failure of which to obtain would not have a Material Adverse Effect on the Company;

(h)                                 the Plan of Arrangement shall not have been modified or amended in a manner adverse to the Purchaser or the Parent without the Purchaser’s consent, which consent shall not be unreasonably withheld or delayed;

(i)                                     there shall not be pending or threatened in writing any Proceeding involving any Governmental Authority that is reasonably likely to result in any:

(i)                                     prohibition or restriction on the acquisition by the Purchaser or the Parent of any Common Shares or the completion of the Arrangement or any person obtaining from any of the Parties any material damages directly in connection with the Arrangement;

(ii)                                  prohibition or material limit on the ownership by the Purchaser or the Parent of the Company or any of the Company Entities or any material portion of their respective businesses; or

(iii)                               imposition of limitations on the ability of the Purchaser or the Parent to acquire or hold, or exercise full rights of ownership of, any Common Shares, including the right to vote such Common Shares; and

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(j)                                     executed mutual releases in a form acceptable to the Purchaser and the Company, acting reasonably, will have been received by the Purchaser on or prior to the Effective Date from (i) each director and officer of the Company and each of the Company Entities who will cease to act as a director or officer of such entity as of the Effective Date and (ii) any other person who will receive a severance, change of control or termination payment at or before the Effective Time.

ARTICLE 9

GENERAL

9.1                               Notices

Any demand, notice or other communication to be given in connection with this Agreement must be given in writing and will be given by personal delivery or by electronic means of communication addressed to the recipient as follows:

(i)                                     if to the Purchaser or the Parent as follows:

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(ii)                                  if to the Company:

or to such other street address, individual or electronic communication number or address as may be designated by notice given by either Party to the other.  Any demand, notice or other communication given by personal delivery will be conclusively deemed to have been given on the day of actual delivery thereof and, if given by electronic communication, on the day of transmittal thereof if given during the normal business hours of the recipient and on the Business Day during which such normal business hours next occur if not given during such hours on any day.

9.2                               Expenses

Except as otherwise specified herein and except in respect of any fees associated with any filings made pursuant to applicable anti-trust Laws, which fees shall be split evenly between the Purchaser and the Company, each Party will pay its respective legal and accounting costs and expenses incurred in connection with the preparation, execution and delivery of this Agreement and all documents and instruments executed pursuant to this Agreement and any other costs and expenses whatsoever and howsoever incurred, and will indemnify and save harmless the others from and against any claim for any broker’s, finder’s or placement fee or commission alleged to have been incurred as a result of any action by it in connection with the transactions hereunder.

9.3                               No Assignment

Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any Party without the prior written consent of the other Parties.

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9.4                               Benefit of Agreement

This Agreement will enure to the benefit of and be binding upon the respective successors (including any successor by reason of amalgamation or statutory arrangement) and permitted assigns of the Parties.

9.5                               Time of Essence

Time is of the essence of this Agreement.

9.6                               Public Announcements

No Party shall issue any press release or otherwise make any written public statement with respect to the Arrangement or this Agreement without the consent of the other Parties (which consent shall not be unreasonably withheld, conditioned or delayed).  The Company shall not make any filing with any Governmental Authority with respect to the Arrangement or the transactions contemplated hereby without prior consultation with the Purchaser, and the Purchaser shall not make any filing with any Governmental Authority with respect to the Arrangement or the transactions contemplated hereby without prior consultation with the Company, provided, however, that the foregoing shall be subject to each Party’s overriding obligation to make any disclosure or filing required under applicable Laws, and the Party making the disclosure shall use commercially reasonable efforts to give prior oral or written notice to the other Party and reasonable opportunity for the other Party to review or comment on the disclosure or filing (other than with respect to confidential information contained in such disclosure or filing), and if such prior notice is not possible, to give notice immediately following the making of any such disclosure or filing, and provided further, however, that, except as otherwise required pursuant to this Agreement, the Company shall have no obligation to obtain the consent of or consult with the Purchaser prior to any press release, public statement, disclosure or filing by the Company with regard to an Acquisition Proposal or a Change of Recommendation.

9.7                               Governing Law; Attornment; Service of Process; Waiver of Jury Trial

(a)                                  (i)            This Agreement shall be governed, including as to validity, interpretation and effect, by the laws of the Province of Ontario and the laws of Canada applicable therein.  Subject to the immediately following subsection (ii), each of the Parties hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of the Province of Ontario in respect of all matters arising under and in relation to this Agreement or the Arrangement.  Notwithstanding the foregoing, the Company agrees that it will not bring or support any action (whether at law, in equity, in contract, in tort or otherwise) against any Debt Financing Source in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including any dispute arising out of or relating in any way to the Commitment Letter or the performance thereof.

(ii)                                  Notwithstanding the foregoing, the Parent and the Purchaser acknowledge and irrevocably agree that (A) any Proceeding (whether at law, in equity, in contract, in tort or otherwise) involving any Debt Financing Source

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arising out of, or in any way relating to, this Agreement, any of the transactions contemplated by this Agreement, the Debt Financing, the Commitment Letter or the performance of services thereunder or related thereto shall be subject to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan, New York, New York, and any appellate court thereof and each such Party hereto submits for itself and its property with respect to any such Proceeding to the exclusive jurisdiction of such court, (B) not to bring or permit any of their affiliates to bring or support anyone else in bringing any such Proceeding in any other court, (C) to waive and hereby waive, to the fullest extent permitted by Law, any objection which any of them may now or hereafter have to the laying of venue of, and the defense of an inconvenient forum to the maintenance of, any such Proceeding in any such court, (D) that a final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law, and (E) that any such Proceeding shall be governed by, and construed in accordance with, the Laws of the State of New York, without regard to the conflicts of Law rules of such State that would result in the application of the Laws of any other State or jurisdiction.

(b)           Each Party hereby agrees that any service of process, summons, notice or document by registered mail addressed to such person at its address set forth in Section 9.1 shall be effective service of process for any suit, action or proceeding relating to any dispute arising out of this Agreement or the transactions contemplated by this Agreement, including, but not limited to, any Proceeding described in Section 9.7(a)(ii)(A) in any such court described in Section 9.7(a)(ii)(A).

(c)           Each Party hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or other proceeding arising out of this Agreement or the transactions contemplated by this Agreement, including but not limited to any Proceeding described in Section 9.7(a)(ii)(A) in any such court described in Section 9.7(a)(ii)(A).

(d)           The provisions of this Section 9.7 shall be enforceable by each Debt Financing Source, its affiliates, successors and permitted assigns.

9.8          Entire Agreement

This Agreement constitutes, together with the Non-Disclosure Agreement, the entire agreement between the Parties with respect to the subject matter thereof.  There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the Parties with respect thereto except as expressly set forth in this Agreement and the Non-Disclosure Agreement.

9.9          Third Party Beneficiaries

Except for (i) the rights of the Shareholders, the Optionholders and the holders of SARs, RSUs, Performance Units and DSUs to receive the consideration payable to them following the

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Effective Time pursuant to the Plan of Arrangement and (ii) the rights of the Lender and Debt Financing Sources set forth in Sections 7.2, 9.7, 9.10 and 9.17, this Agreement is not intended to confer any rights or remedies upon any other person, provided, however, that Section 5.8 is intended for the benefit of the employees of the Company or the Company Entities that are or will be party to the agreements referred to in Section 5.8(a), Section 5.9 is intended for the benefit of the Indemnified Parties and Section 9.16(b) is intended for the benefit of the directors, officers and employees of the Company and such sections will be enforceable by each of such persons and his or her heirs, executors, administrators and other legal representatives (collectively, the “Company Beneficiaries”) and the Company and any successors to the Company (including any Surviving Corporation) will hold the rights and benefits of Section 5.8, Section 5.9, Section 9.16(b) and this Section 9.9 in trust for and on behalf of the Company Beneficiaries and the Company hereby accepts such trust and agrees to hold the benefit of and enforce performance of such covenants on behalf of the Company Beneficiaries and such rights are in addition to, and not in substitution for, any other rights that any Company Beneficiary may have by contract or otherwise.

9.10        Amendment

(a)           This Agreement may, at any time and from time to time before or after the holding of the Company Meeting but not later than the Effective Time, be amended by written agreement of the Parties hereto without, subject to applicable Laws, further notice to or authorization on the part of the Shareholders, and any such amendment may, without limitation:

(i)            change the time for performance of any of the obligations or acts of the Parties;

(ii)           waive any inaccuracies or modify any representation, warranty, term or provision contained herein or in any document delivered pursuant hereto; or

(iii)          waive compliance with or modify any of the conditions precedent referred to in Article 8 or any of the covenants herein contained or waive or modify performance of any of the obligations of the Parties,

provided, however, that no such amendment may reduce or materially affect the consideration to be received by the Shareholders under the Arrangement without their approval at the Company Meeting or, following the Company Meeting, without their approval given in the same manner as required by applicable Laws for the approval of the Arrangement as may be required by the Court; provided further, that, so long as the Commitment Letter has not been terminated, no amendment (x) to Sections 7.2, 9.7, 9.9 and 9.10 or (y) that is materially adverse to the interests of the affected Debt Financing Sources shall be permitted, in each case, without the prior written consent of the affected Debt Financing Sources (and the affected Debt Financing Sources and their respective successors and permitted assigns shall be express third party beneficiaries of, and shall be entitled to enforce, such consent right).

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(b)           Notwithstanding the foregoing, the Plan of Arrangement may only be supplemented or amended in accordance with the provisions thereof.

9.11        Waiver and Modifications

Any Party may (a) waive, in whole or in part, any inaccuracy of, or consent to the modification of, any representation or warranty made to it hereunder or in any document to be delivered pursuant hereto, (b) extend the time for the performance of any of the obligations or acts of the other Parties (c) waive or consent to the modification of any of the covenants herein contained for its benefit or waive or consent to the modification of any of the obligations of the other Parties hereto or (d) waive the fulfillment of any condition to its own obligations contained herein.  No waiver or consent to the modifications of any of the provisions of this Agreement will be effective or binding unless made in writing and signed by the Party or Parties purporting to give the same and, unless otherwise provided, will be limited to the specific breach or condition waived.  The rights and remedies of the Parties hereunder are cumulative and are in addition to, and not in substitution for, any other rights and remedies available at law or in equity or otherwise.  No single or partial exercise by a Party of any right or remedy precludes or otherwise affects any further exercise of such right or remedy or the exercise of any other right or remedy to which that Party may be entitled.  No waiver or partial waiver of any nature, in any one or more instances, will be deemed or construed a continued waiver of any condition or breach of any other term, representation or warranty in this Agreement.

9.12        Severability

If any provision of this Agreement is determined by any court of competent jurisdiction to be illegal or unenforceable, that provision will be severed from this Agreement and the remaining provisions will continue in full force and effect so long as the economic or legal substance of the transactions contemplated herein is not affected in any manner that results in a Material Adverse Effect on the Company or the Parent, or both, or would prevent or significantly impede or materially delay the completion of the Arrangement.

9.13        Mutual Interest

Notwithstanding the fact that any part of this Agreement has been drafted or prepared by or on behalf of one of the Parties, all Parties confirm that they and their respective counsel have reviewed and negotiated this Agreement and that the Parties have adopted this Agreement as the joint agreement and understanding of the Parties, and the language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and the Parties waive the application of any Laws or rule of construction providing that ambiguities in any agreement or other document will be construed against the Party drafting such agreement or other document and agree that no rule of construction providing that a provision is to be interpreted in favour of the person who contracted the obligation and against the person who stipulated it will be applied against any Party.

9.14        Further Assurances

Subject to the provisions of this Agreement, the Parties will, from time to time, do all acts and things and execute and deliver all such further documents and instruments, as the other Parties may, either before or after the Effective Date, reasonably require to effectively carry out

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or better evidence or perfect the full intent and meaning of this Agreement and, in the event the Arrangement becomes effective, to document or evidence any of the transactions or events set out in the Plan of Arrangement.

9.15        Injunctive Relief

The Parties agree that irreparable harm would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached for which money damages would not be an adequate remedy at law.  It is accordingly agreed that the Parties will be entitled to an injunction or injunctions and other equitable relief to prevent breaches of this Agreement, any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief hereby being waived.

9.16        No Personal Liability

(a)           No director, officer or employee of the Purchaser or the Parent will have any personal liability to the Company under this Agreement or any other document delivered in connection with this Agreement or the Arrangement on behalf of the Purchaser or the Parent.

(b)           No director, officer or employee of the Company will have any personal liability to the Purchaser or the Parent under this Agreement or any other document delivered in connection with this Agreement or the Arrangement on behalf of the Company.

9.17        Lender Liability

Subject to the rights of the parties to the Commitment Letter under the terms thereof, none of the Parties hereto, nor any of their respective affiliates, solely in their respective capacities as parties to this Agreement, shall have any rights or claims against the Lender or any Debt Financing Source, solely in their respective capacities as lenders, underwriters or arrangers in connection with the Debt Financing.

9.18        Counterparts

This Agreement may be executed and delivered in any number of counterparts (including by facsimile or electronic transmission), each of which will be deemed to be an original and all of which taken together will be deemed to constitute one and the same instrument.