DESCRIPTION OF THE BUSINESS AND OPERATIONS  Our Business  Our Structure  Alaris Royalty Corp. 2011 Annual Report   5  GLYPH<g120> Any material change in business of the company  GLYPH<g120> Material acquisition or divestiture  GLYPH<g120> Incurring new debt over predetermined levels, or any material change to existing debt facilities  GLYPH<g120> Entering into non-arm’s length transactions above prescribed levels  GLYPH<g120> Mergers or corporate reorganizations  GLYPH<g120> Extraordinary capital expenditures  We do not have any significant influence over any of our Private Company Partners nor do we have any  ability to exercise control over the Private Company Partners. In most cases, we do not have any voting  rights over the Private Company Partners, and where we do have voting rights, we have only a small  percentage of the votes (less than 15%).We do not have any significant ability to participate in management  decisions and are not involved in the day-to-day operations of the Private Company Partner within the  normal course of business. However, we do require Private Company Partners to provide us with monthly  (unaudited) financial statements so we can monitor their financial health, as well as annual (audited)  financial statements. Although we generally do not have any significant voting rights, we have strong  protective covenants in place with our Private Company Partners to protect our Distributions and typically  require our prior consent on a number of items outside of the ordinary course of business, such as:  Our Distribution ranks in priority to the Private Company Partner’s common equity. In addition, the  Distribution is paid by the Private Company Partner out of earnings before taxes, making the after-tax cost  of our financing attractive to our Private Company Partners. Our financing structure is characterized as  equity, and as a result, principal payments of our financing are not required. We provide cash financing to private companies at an agreed upon valuation, in exchange for a pre- determined distribution or royalty from such private companies. Our Distribution is received monthly but  is determined twelve months in advance in accordance with a mutually agreed upon performance metric  which is based upon a “top-line” financial performance measure of a Private Company Partner, such as  gross revenues, gross profit, same store sales, same clinic sales and same customer net sales. Each year, our  Distribution is adjusted based on the percentage change in the audited performance metric. In keeping  with our business objective of generating predictable, stable cash flows, our Distribution is only based on  organic growth and/or organic decline of the private company. As such, any growth or decline in the  private company from acquisitions, new locations or margin improvements do not get factored into such  adjustment for a period of time (typically 12-24 months).  We are a Canadian company that provides alternative financing to a diversified range of profitable, well- managed private businesses in North America. We use an innovative financing structure that allows us to  provide capital in a manner that maximizes valuations, is tax effective and allows existing owners of the  private companies to retain control of their businesses. Our primary objective is to generate predictable,  stable cash flows from our Private Company Partners to allow us to provide an attractive yet stable yield as  well as liquidity to our investors. 