Contract analysis

From: Elaine Forsythe <eforsythe@calderwoodharkness.com> To: Denise Kowalski <denise.kowalski@usdoj.gov> Cc: Aaron Liu <aliu@calderwoodharkness.com> Date: Mon, 08 Apr 2024 04:47:00 -0000 Subject: Re: Torchlight Mining Corp. — Agreement on NPA Terms in Principle [ATR-SF-2024-00312]

Thank you both for the productive call earlier this afternoon. I am writing to confirm that, following our discussion today among the four of us, Torchlight Mining Corp. ("TMC") and the Antitrust Division of the U.S. Department of Justice (the "Division") have reached agreement in principle on the terms of a Non-Prosecution Agreement ("NPA") resolving the Division's investigation of TMC referenced as Grand Jury No. G

I want to express our appreciation for the Division's constructive engagement throughout the course of these negotiations. The process has been thorough but professional, and we are pleased to have reached this point.

To ensure a shared understanding of where we have landed — and drawing on the iterative drafts exchanged between the parties (including the Division's initial draft NPA circulated on January 10, 2024, TMC's counter-draft of February 5, 2024, and the subsequent discussions informed in part by our economist's final affected-commerce and penalty analysis dated March 12, 2024) — I would like to summarize the principal te

**1. Monetary Payment.** TMC will pay USD $48,500,000 to the United States Treasury within sixty (60) days of execution of the NPA. As discussed, this figure reflects the Division's standard starting point of 20% of affected commerce applied to TMC's share of affected commerce (USD $478 million), with an approximately 49.2% reduction reflecting cooperation credit and credit for TMC's compliance remediation efforts un

**2. Cooperation Obligations.** TMC agrees to continue full cooperation with the Antitrust Division in any related investigations or prosecutions for a period of three (3) years from the date of execution of the NPA. This includes, without limitation, making current and former employees available for interviews and testimony as reasonably requested by the Division.

**3. Enhanced Antitrust Compliance Program.** TMC will implement and maintain an Enhanced Antitrust Compliance Program substantially in the form described in draft Appendix A to the NPA. The program includes, among other elements, mandatory annual antitrust compliance training for all relevant personnel, the appointment of an independent Chief Compliance Officer reporting directly to the Board of Directors, and annua

**4. Independent Compliance Monitor.** TMC will retain an independent compliance monitor, approved by the Division, for a period of two (2) years from execution of the NPA. As discussed during our recent negotiations, the Division has provided informal pre-approval for Meridian Compliance Partners LLC to serve in this role, with Claudia Ferraro as Engagement Lead. TMC is finalizing the engagement terms with Meridian

**5. No Criminal Charges.** The Division agrees not to bring criminal charges against TMC or any current TMC employee based on the conduct described in the NPA, provided that TMC complies with all terms and obligations set forth therein.

**6. Gavin Holt Carve-Out.** The NPA does not cover Gavin Holt individually. The Division expressly reserves the right to pursue charges against Mr. Holt separately, and TMC understands and does not object to this reservation.

**7. Term and Breach Provision.** The NPA will have a term of three (3) years from the date of execution. In the event of a material breach by TMC, the Division may prosecute TMC based on the Agreed Statement of Facts set forth in Appendix B, subject to the breach and cure provisions to be set forth in the NPA.

**8. Agreed Statement of Facts (Appendix B).** The parties will finalize the Agreed Statement of Facts, which remains subject to limited remaining edits on both sides. We anticipate settling the final language prior to execution.

**Proposed Timeline for Finalization and Execution**

To maintain momentum, I would propose the following target timeline:

- **By approximately April 15, 2024:** Both sides exchange final comments on the remaining open language in the body of the NPA and in Appendix B (Agreed Statement of Facts). - **By approximately April 25, 2024:** TMC will secure Board of Directors authorization for the CEO to execute the NPA. I am preparing the requisite board resolution and anticipate scheduling a special meeting of the Board for this purpose. - **

As noted above, TMC is also finalizing the compliance monitor engagement terms with Meridian Compliance Partners and will submit the formal proposal to the Division in the near term.

Aaron and I remain available to discuss any open items at your convenience, and we are committed to working expeditiously toward execution.

I would note for the record that this email is intended to memorialize the parties' agreement in principle and does not itself constitute a binding commitment by either party. The NPA will be binding only upon execution by both parties in accordance with its terms.

We would appreciate it if you could confirm at your convenience that this summary accurately reflects the Division's understanding of the terms agreed in principle. Please do not hesitate to reach out if any aspect of the foregoing requires clarification or correction.

Thank you again for your professionalism throughout this process. We look forward to bringing this matter to a successful conclusion.

**Elaine Forsythe** Partner, Antitrust & Competition Practice Group Calderwood & Harkness LLP 555 California Street, 40th Floor San Francisco, CA 94104 T: (415) 555-7200 | F: (415) 555-7201 eforsythe@calderwoodharkness.com Matter No. 1039-00001

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