Mitsui & Co. (MITSF) SC 13DNouveau Monde Graphite / MITSUI & CO ownership change

1.  Parties

2.  Definitions

a)  “Background IP” means, with respect to a Party, any inventions, technologies, know-hows, trade secrets and any other intellectual property owned or controlled by such Party prior to the date hereof or developed or otherwise obtained by such Party outside the scope of this Agreement.

b)  “CN Subscription Agreement” means the Convertible Note Subscription Agreement, dated October 19, 2022, between NMG and Mitsui.

c)  “FID Election” means the confirmation by each Party whether it desires to proceed with the Joint Venture and execute the Joint Venture Agreement and other definitive agreements, and the confirmation by Mitsui whether it desires to participate in the financing in connection with FID in response to the notice from NMG contemplated in Section 6.1 of the Note (provided, for greater certainty, that each of NMG and Mitsui acknowledges and agrees that no Party is under any obligation to provide an affirmative decision or provide financing in respect of the FID Election, and that a decision not to continue with the development of the VAP Project or the Supply Chain Project, as the case may be, in respect of same shall not serve as the basis of any claim against, or result in any liability for, a declining Party).

d)  “Foreground IP” means any inventions, technologies, know-hows, trade secrets and any other intellectual property discovered, conceived, created, acquired, or first reduced to practice in the performance of this Agreement.

e)  “Note” means any Note issued pursuant to the CN Subscription Agreement.

f)   “Offtake MOU” means the memorandum of understanding entered into as of October 19, 2022, between Panasonic and NMG for, inter alia, the supply and delivery of [OMITTED – COMMERCIALLY SENSITIVE INFORMATION.].

g)  “Pallinghurst Royalty” means the royalty granted under that certain Royalty Agreement, dated as of August 28, 2020, between Pallinghurst Graphite Limited and NMG, as assigned to Pallinghurst Graphite International Limited pursuant to an Assignment and Assumption Agreement dated December 17, 2020.

h)  Side Letter Agreement” means the agreement entered into by NMG and Mitsui in connection with Mitsui’s investment in the Note or any other securities of NMG.

3.  Purpose of this Agreement

a)  To execute a feasibility study (the “Feasibility Study”) regarding:

i)   [OMITTED – COMMERCIALLY SENSITIVE INFORMATION.]

ii)  the conclusion of a definitive offtake agreement between Panasonic and NMG (the “Panasonic Offtake Agreement”).

b)  To carry out certain activities, between NMG, Panasonic, and Mitsui, as further described in Section 7 (Feasibility Study Activities).

4.  Schedule

•  [OMITTED – COMMERCIALLY SENSITIVE INFORMATION.]: Panasonic to provide General Terms and Conditions (GTC) to NMG for discussing the terms and conditions of the Panasonic Offtake Agreement between Panasonic and NMG.

•  [OMITTED – COMMERCIALLY SENSITIVE INFORMATION.]: Panasonic to provide detailed packaging & logistic requirements to NMG, which would affect the transportation plan/design.

•  [OMITTED – COMMERCIALLY SENSITIVE INFORMATION.]: Panasonic to provide final specifications for NMG material, which would affect the specification of, and/or the designing and ordering of, equipment and facility for the commercial plant, subject to the progress of sampling work and sample product assessment.

•  [OMITTED – COMMERCIALLY SENSITIVE INFORMATION.]: NMG and Panasonic to agree on the final form of the Panasonic Offtake Agreement.

5.  Role of Each Party

a)  execute the engineering, procurement and construction (“EPC”) agreement and the operation and maintenance (“O&M”) agreement for the anode materials production, packing and storage facilities;

b)  implement processes to ensure that the anode material output satisfies certain specifications;

c)  promote R&D to optimize certain physical and chemical characters of the anode materials, and to optimize the cost of materials/production;

d)  undertake marketing activities; and

e)  investigate the appropriate structure of the JV.

Mitsuiwill:

a)  subscribe for a note in the amount of up to US$25 million as described in the CN Subscription Agreement subject to the signing by the relevant parties of the Offtake MOU, this Agreement, and the Side Letter Agreement;

b)  investigate the appropriate structure of the JV;

c)  undertake marketing activities; and

d)  participate in the review and proposal of the technical and economic aspects of the Supply Chain Project and VAP Project, including CAPEX and OPEX, through the Feasibility Study.

a)  provide the following technical support:

i)   undertake a quality evaluation and judgment of anode material;

ii)  provide guidance on quality evaluation and measurement methods;

iii)   provide confirmation and guidance on measures against foreign substances (magnetic removal) in the process;

b)  discuss the execution of the Panasonic Offtake Agreement; and

c)  participate in the review and proposal of the technical and economic aspects of the Supply Chain Project and the VAP Project, CAPEX and OPEX, through the Feasibility Study.

6.  Feasibility Study Materials

7.  Feasibility Study Activities

a)  The Feasibility Study of flake graphite production including mining and flotation at Matawinie property

b)  Technical and cost feasibility study of spheronization, purification, carbon coating and anode production

c)  The Feasibility Study of flake graphite competitiveness evaluation (NMG and other graphite mines in Canada)

d)  Discussion and alignment on the anode price formula for Panasonic Offtake Agreement

e)  Process yield rate based on such specifications

f)   Compliance / regulation matters: regulation of wastewater and waste; permits, etc.

g)  EPC plan: mass production equipment, organization, project schedule

h)  Expansion plan: in Canada and outside Canada

i)   Create a business plan for the optimized profit of the JV

j)   [OMITTED – COMMERCIALLY SENSITIVE INFORMATION.]

k)  Any other activities agreed in writing by all of the Parties

8.  Steering Committee

9.  Mitsui’s Consent and Consultation

a)  NMG shall seek Mitsui’s prior written consent for any of the following terms, which consent shall not be unreasonably withheld, delayed or conditioned:

i)   updates to the project schedule which have a material impact on the critical path;

ii)  material updates to the Feasibility Study plan (and any material amendments or modifications thereto);

iii)   material updates to the Feasibility Study Budget, unless previously approved;

iv)   any material cost overrun in respect of the Feasibility Study Budget [OMITTED – COMMERCIALLY SENSITIVE INFORMATION.];

v)  any amendments to this Agreement, or the execution of or any amendments to any agreement intended to supersede and replace this Agreement;

vi)   NMG’s agreement to conversion of the Pallinghurst Royalty into a graphite stream agreement or other similar forward purchase agreement;

b)  NMG shall inform and consult with Mitsui well in advance on the following matters:

i)   any material changes to the scope of the JV, including but not limited to, a change in site location or engineering design change;

ii)  the participation of any third party in the Supply Chain Project or VAP Project;

iii)   the execution of any Project Agreement or any amendment thereto or termination or replacement thereof;

iv)   the execution of, or amendments to the execution of any agreements in respect of the Supply Chain Project or VAP Project (other than Project Agreements which are addressed in Section 9.b)iii) above), or termination or replacement thereof, other than in connection with any agreement entered into during the normal course of business or which reflect an enforceable undertaking or cash obligation the value of which is below [OMITTED – COMMERCIALLY SENSITIVE INFORMATION.] for the term of the agreement;

v)  any other matter requiring the decision, election or approval of the Steering Committee under this Agreement.

c)  If the NMG and Mitsui have been unable to agree for a seven business day period on any matter requiring consent of Mitsui under Section 9(a) above, then the matter will be escalated as follows:

i)   first escalation: to Mr. Eric Desaulniers, President and CEO, for NMG and General Manager of Advanced Materials Division for Mitsui, who will discuss such matters in good faith for seven business days; and

ii)  second escalation: if not resolved within such seven business days, then to Mr. Arne H Frandsen, Chair of the Board of Directors, for NMG and Chief Operating Officer of Performance Chemicals BU for Mitsui, who will discuss the matter in good faith; and

iii)   final escalation: in accordance with Section 18 (Dispute Resolution).

10.  Project Agreements

•  the joint venture agreement (“Joint Venture Agreement”) between NMG and Mitsui;

•  the Panasonic Offtake Agreement;

•  the EPC agreement(s) with the EPC contractor(s);

•  any land lease / purchase agreement with landowners in respect of the project site (if applicable);

•  the material supply agreement(s) of natural graphite and other materials;

•  the O&M agreement (if applicable);

•  any project finance agreement with the project lenders (if applicable); and

•  any other agreement determined by NMG and Mitsui at the Steering Committee to be a “Project Agreement”.

11.  Joint Venture Agreement

a)  An optimized business plan to maximize the sales amount and to minimize the capital and operating expenditures of the JV

b)  Put/call rights

c)  Budgets

d)  Dividends

e)  Voting rights

f)   Board composition

g)  Customary rights which a minority equity-holder would request in a joint venture of the nature of the transaction to be expected under the Joint Venture Agreement

12.  Representations and Warranties

a)  such Party is in good standing under the laws of the jurisdiction of its formation, and that it has all requisite power and authority to enter into and to perform its obligations under this Agreement;

b)  there is no litigation pending or, to the best of its knowledge, threatened to which such Party or any of its affiliates is a party that, if adversely determined, would have a material adverse effect on the financial condition, prospects, or business of the project or such Party’s ability to perform its obligations under this Agreement; and

c)  its execution, delivery, and performance of this Agreement has been duly authorized and does not and will not violate: (i) any law, rule, regulation, order, or decree applicable to it; (ii) its organizational documents.

13.  Intellectual Property

a)  As between the Parties, each Party shall own and retain all right, title and interest in and to its Background IP and nothing in this Agreement shall be construed as a transfer, license, and/or assignment by a Party to any of the other Parties of ownership of right, title or interest in and to the Background IP.

b)  Each Party shall have sole ownership of any Foreground IP that is separately created independently and solely by such Party without incorporating and/or embodying proprietary and confidential information of Background IP of either of the other Parties. If two or more Parties have jointly created a Foreground IP and where it is not possible to separate the rights arising from their individual contributions from each other, all right, title and interest in and to such Foreground IP shall be owned jointly by such Parties.

c)  If Mitsui and NMG proceed with the JV, Mitsui and NMG will enter into an agreement that addresses Foreground IP related to the JV.

14.  Confidentiality

a)  Any commercial, business, technical, financial, marketing or other information of a confidential nature received or obtained by any Party in any form or medium from any of the other Parties in connection with the business and operations of disclosing Party and the subject matter of this Agreement and all discussions between the Parties regarding the transactions contemplated by this Agreement (hereinafter called the “Confidential Information”) shall be treated as strictly confidential. Such Confidential Information shall include all information described above, (i) which, at the time of disclosure, is clearly marked as “confidential” and, to the extent it is disclosed orally, is identified as confidential and confirmed as such by the disclosing Party to the receiving Party within 30 calendar days of the initial oral disclosure or (ii) which the receiving Party would reasonably understand to be confidential or proprietary due to the nature of the information itself or the circumstances of its disclosure. For avoidance of doubt, all information obtained by observation by the receiving Party during any visit to the disclosing Party production facilities, including, but not limited to, technology, infrastructure, processes, site information, design and/or development plants, equipment and components, software, process design, operating conditions, and the like, constitutes the Confidential Information of the disclosing Party without the need for marking or summary. All Confidential Information shall be and remain the property of the disclosing Party and no right or license is hereby or otherwise granted, directly or indirectly, to the receiving Party with respect to any Confidential Information other than the right to use the Confidential Information in accordance with the terms of this Agreement.

b)  The receiving Party shall not, without the prior written consent of the disclosing Party, disclose the Confidential Information to any person, firm or company except to the receiving Party’s Affiliates, directors, officers, employees, representatives (including without limitation, financial advisors, legal counsel, consultants, and accountants) and brokers or those of receiving Party’s Affiliates (collectively, the “Representatives”) provided that, with respect to the receiving Party, Representatives shall mean only those persons who actually receive the Confidential Information, on a need to know basis in order to accomplish the Purpose, provided that the receiving Party shall ensure that such Representatives shall observe the same obligations as those of the receiving Party under the obligation of confidentiality hereunder and shall not use the Confidential Information for any purposes other than the Purpose. The receiving Party agrees to be responsible for any breach of the terms of this Section 14 by any of such Representatives. For the avoidance of doubt, the Parties acknowledge and agree that no Party shall issue a press release disclosing this Agreement or its subject matter without the express written consent of the other Parties.

c)  The term “Affiliate” shall mean any entity that controls, is controlled by or is under common control with a Party. For the purpose of this definition, the term “controls”, “controlled” or “control” means (i) the beneficial ownership (whether direct or indirect) of more than fifty percent (50%) of the voting power of an entity, or (ii) in the case of an entity that does not have outstanding voting shares or securities, the majority (i.e., more than fifty percent (50%)) of the equity interests in such entity is now or hereafter owned or controlled, directly or indirectly, by another entity; but, for the preceding clauses (i) and (ii) above, only for so long as such requirement is met.

d)  The above restrictions shall not apply to Confidential Information: (a) which the receiving Party can prove was already known to the receiving Party at the time of disclosure by the disclosing Party and that is not known by the receiving Party to be the subject of an obligation of confidentiality of any kind; (b) which is in or comes into the public domain other than through breach of the obligation of confidentiality hereunder; (c) which is lawfully acquired by the receiving Party from a third party without restriction on disclosure or use; (d) which is independently developed by the receiving Party without the use of reference to the Confidential Information, as can be demonstrated by the receiving Party’s records or (e) to the extent that it is required to be disclosed by law or the requirements of any recognized stock exchange or authority of competent jurisdiction to whose rules the Party making the disclosure is subject. In the case of Subsection 14(d)(e), the receiving Party shall, unless legally prohibited, promptly notify the other Party to that effect, in order to give the other Party, the opportunity to seek such protection for its Confidential Information as it deems appropriate; or (f) which relates specifically to the Feasibility Study or the transactions contemplated by this Agreement and which is disclosed confidentially to Investissement Québec or any successor thereof.

e)  The receiving Party may disclose the disclosing Party’s Confidential Information to the other Party (the “Subsequent Receiving Party”) and provided that, such Confidential Information shall be expressly identified as the disclosing Party’s Confidential Information at the time of disclosure to the Subsequent Receiving Party. Such Confidential Information shall be deemed to be disclosed directly by the disclosing Party from which the Confidential Information originated, to the Subsequent Receiving Party. The Subsequent Receiving Party shall be directly liable to the disclosing Party for any breach of the obligations under this Agreement.

The receiving Party shall defend, indemnify and hold harmless the disclosing Party for any claim, demand, action, cause of action, damage, loss, fee, debt or expense, including any professional and attorneys’ fees reasonably required, that the disclosing Party may directly or indirectly incur in connection with the non-compliance or the failure of receiving Party (or of its Representatives) to comply with this Section 14 in whole or in part.

Each Party understands, and will communicate to its Representatives, that applicable securities laws restrict the purchase or sale of securities by any person who is in possession of material, non-public information from the issuer of such securities and on the communication of such information to any other person when it is reasonably foreseeable that such other person is likely to purchase or sell such securities in reliance upon such information.

15.  Term and Termination of this Agreement

16.  Governing Law

17.  Binding Provisions; Survival

a)  Sections 2 (Definitions), 3 (Purpose of this Agreement), 6 (Feasibility Study Materials), 8 (Steering Committee), 9 (Mitsui’s Consent and Consultation), 12 (Representations and Warranties), 13 (Intellectual Property), 14 (Confidentiality), 16 (Governing Law), 17 (Binding Provisions), 18 (Dispute Resolution), 19 (Limitations) and 21 (Miscellaneous) set forth binding obligations of the Parties; and

b)  Sections 13 (Intellectual Property), 14 (Confidentiality), 16 (Governing Law), 17 (Binding Provisions), 18 (Dispute Resolution) and 19 (Limitations) shall survive the termination of this Agreement.

18.  Dispute Resolution

Any dispute, controversy, or claim arising out of, related to, or in connection with this Agreement (as between NMG, Mitsui, and/or Panasonic) and any dispute, controversy, or claim arising out of, related to, or in connection with the CN Subscription Agreement, the Note, or the Side Letter Agreement (as between NMG and Mitsui), including with respect to the formation, applicability, breach, termination, validity, or enforceability thereof, shall be resolved by arbitration. The arbitration shall be conducted by three arbitrators and administered by the International Chamber of Commerce (the “ICC”) in accordance with the Rules of Arbitration of the International Chamber of Commerce in effect at the time of the arbitration (the “ICC Rules”), except as they may be modified herein or by mutual agreement of the parties. The seat of the arbitration shall be New York City, United States of America, and it shall be conducted in the English language. Notwithstanding any choice of law clause in this Agreement, the CN Subscription Agreement, the Note or the Side Letter, the arbitration and this agreement to arbitrate shall be governed by Title 9 (Arbitration) of the United States Code. The arbitration award shall be final and binding on the parties, and the parties undertake to carry out any award without delay. Judgment upon the award may be entered by any court having jurisdiction over the award or over the relevant Party or its assets. The costs of the arbitration shall be shared equally by the parties; however, the arbitral panel shall have the ability to award costs to the prevailing Party in any arbitration.

Notwithstanding the foregoing, any Party may seek for any equitable relief permitted under an applicable law, including without limitation, injunctions, at any court having a competent jurisdiction.

19.  Limitations

20.  Notice

a)  To NMG at the address provided in Section 1:

Attention:  Eric Desaulniers, President and Chief Executive Officer;

Email:    [REDACTED – CONTACT INFORMATION.]

CC:     [REDACTED – CONTACT INFORMATION.]

b)  To Mitsui at the address provided in Section 1:

Attention:  General Manager of Advanced Materials, Division Performance

      Materials Business Unit

Email:    [REDACTED – CONTACT INFORMATION.]

Attention:  General Manager of Business Development Department (TKCTP),

      Advanced Materials Division

Email:    [REDACTED – CONTACT INFORMATION.]

Attention:  General Manager of The Fifth Business Department (TKCTF),

      Advanced Materials Division

Email:    [REDACTED – CONTACT INFORMATION.]

c)  To Panasonic at the address provided in Section 1:

Attention:  Shoichiro Watanabe

Email:    [REDACTED – CONTACT INFORMATION.]

21.  Miscellaneous