Contract analysis

1. This Non-Prosecution Agreement ("Agreement") is entered into between the United States of America, acting through the Department of Justice, Antitrust Division, by and through Deputy Assistant Attorney General Julia Stafford-Hayes, and Trial Attorneys Denise Kowalski and Marcus Reeves of the Antitrust Division, San Francisco Field Office, 450 Golden Gate Avenue, Room 10-0101, San Francisco, California 94102 (colle

2. TMC is a publicly traded corporation whose common shares are listed and traded on the Toronto Stock Exchange (ticker symbol: TRCL) and the New York Stock Exchange (ticker symbol: TMC). For fiscal year 2021, TMC reported consolidated revenue of approximately CAD 4.27 billion (approximately USD 3.38 billion at applicable exchange rates).

3. This Agreement relates to a grand jury investigation opened on February 10, 2022, in the United States District Court for the Northern District of California, San Francisco Division, designated Grand Jury No. GJ-22-0194 (the "Investigation"), into suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The Investigation concerns suspected price-fixing, market allocation, and bid-rigging in t

4. The Department and TMC (collectively, the "Parties") enter into this Agreement voluntarily and in good faith, for the purpose of resolving the Department's Investigation as it relates to TMC, on the terms and conditions set forth herein. TMC enters into this Agreement after having been advised by its counsel, Calderwood & Harkness LLP, and with full knowledge and understanding of its rights and obligations hereund

5. The conduct that is the subject of this Agreement is described in detail in the Agreed Statement of Facts set forth in Appendix B to this Agreement (the "Agreed Statement of Facts"), which is incorporated herein by reference in its entirety and constitutes an integral part of this Agreement.

6. In summary, and as more fully set forth in Appendix B, from approximately January 2017 through approximately August 2021 (the "Relevant Period"), senior commercial personnel at TMC, Ridgecrest Minerals Inc. ("Ridgecrest"), a Delaware corporation headquartered at 1700 Lincoln Street, Suite 4200, Denver, Colorado 80203, and Pinnacle Earth Resources Ltd. ("Pinnacle"), an Ontario corporation headquartered at 85 Elm St

7. The key individuals who participated in the unlawful conduct on behalf of their respective companies were as follows: (a) Gavin Holt, TMC's former Vice President, U.S. Specialty Minerals Sales, who held that position from approximately 2016 through his departure from TMC effective September 30, 2021; (b) Carl Edgerton, Vice President of Sales at Ridgecrest Minerals Inc.; and (c) Kevin Tsang, former Senior Vice Pre

8. The participants coordinated their anticompetitive conduct through multiple channels, including: (a) In-person meetings held on the margins of quarterly conferences organized by the North American Specialty Minerals Council ("NASMC"), which took place at various locations including Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida; (b) Encrypted messaging via the "VaultChat" application, a commerciall

9. The Department estimates that the total volume of affected commerce — that is, the aggregate United States sales of high-purity feldspar, industrial talc, and rare-earth concentrates by TMC, Ridgecrest, and Pinnacle during the Relevant Period — was approximately USD 1.34 billion. TMC's share of affected commerce during the Relevant Period is estimated at approximately USD 478 million, representing approximately 35

10. The Department's Investigation was informed, in part, by the cooperation of Cascade Chemical Supply Co. ("Cascade"), a Washington state corporation headquartered at 901 West Riverside Avenue, Suite 300, Spokane, Washington 99201, which entered into a cooperation agreement with the Department in approximately September 2021. Cascade provided documents and testimony to the Department that provided significant evide

III. TMC'S COOPERATION AND REMEDIATION A. Cooperation.

11. Upon being notified of the Investigation, TMC engaged Calderwood & Harkness LLP on February 18, 2022, for the purpose of conducting a thorough internal investigation and facilitating TMC's full cooperation with the Department.

12. TMC issued a company-wide litigation hold on March 1, 2022, directing all relevant personnel to preserve documents and electronically stored information potentially relevant to the Investigation. TMC subsequently issued supplemental targeted preservation directives to personnel within the U.S. Specialty Minerals Division to ensure comprehensive preservation of all potentially relevant materials.

13. TMC retained Redstone Digital Forensics Inc., a forensic technology firm based in McLean, Virginia, to conduct forensic data collection, processing, and hosting of electronically stored information generated by TMC employees in connection with the conduct under investigation.

14. In response to Grand Jury Subpoena No. GJ-22-0194-SD-003, served on February 14, 2022, and Grand Jury Subpoena No. GJ-22-0194-SD-007, issued on May 15, 2023, TMC produced to the Department approximately 555,000 documents comprising approximately 3.2 million pages. These productions were made on a rolling basis, with the first production commencing on April 4, 2022, and continuing through the completion of the col

15. TMC's internal investigation encompassed interviews of twenty-three (23) current and former employees, including employees at various levels within the U.S. Specialty Minerals Division and related corporate functions. The internal investigation also included a comprehensive review of TMC's pricing data from calendar years 2015 through 2022, to identify patterns and anomalies in TMC's pricing decisions for high-pu

16. TMC made its current employees Sandra Chu, Director of Pricing Analytics, and Thomas Eriksen, Regional Sales Manager for the Western Region, available for voluntary proffer sessions with the Department. Ms. Chu participated in a proffer session on March 10, 2023, and Mr. Eriksen participated in a proffer session on April 22, 2023. Both employees provided candid and complete information to the Department during th

17. TMC submitted a comprehensive cooperation proffer to the Department on February 15, 2023, which set forth in detail the findings of TMC's internal investigation, including the nature and scope of the conduct identified, the individuals involved, the methods of coordination, and the affected products and customers. TMC thereafter provided supplemental cooperation submissions to the Department as additional informa

18. TMC further engaged Hargrove Forensic Advisory LLC, a forensic economics and advisory firm based in Chicago, Illinois, under the direction of engagement partner Dr. Vanessa Tremblay, to conduct an independent economic analysis of pricing patterns and affected-commerce volumes for the products at issue during the Relevant Period. TMC made the results of that economic analysis available to the Department and cooper

19. TMC has acknowledged to the Department that its existing antitrust compliance program, which had been adopted in approximately 2014, was deficient in several material respects at the time of the conduct at issue. Specifically, TMC acknowledged that it had not conducted annual antitrust compliance training for its commercial personnel since approximately 2018, that its compliance program did not include any monito

20. In August 2023, TMC retained Meridian Compliance Partners LLC, a compliance consulting firm based in Washington, D.C. (engagement lead Claudia Ferraro), to design and implement an Enhanced Antitrust Compliance Program (the "Compliance Program") tailored to address the specific deficiencies identified during the Investigation and to reflect current best practices in antitrust compliance.

21. TMC submitted a detailed proposal for the Compliance Program to the Department on September 15, 2023. The Department reviewed the proposal and provided feedback, which TMC incorporated into the final design of the Compliance Program.

22. TMC has committed to implementing and maintaining the Compliance Program as described in Appendix A to this Agreement, and to doing so in accordance with the timelines and requirements set forth therein. The Compliance Program is an integral component of this Agreement, and TMC's failure to implement or maintain the Compliance Program in accordance with Appendix A may constitute a material breach of this Agreemen

IV. TERMS AND CONDITIONS A. Agreement Not to Prosecute

23. Subject to TMC's full and complete compliance with all obligations set forth in this Agreement, the Department agrees that it will not bring any criminal charges against TMC, or against any current employee of TMC, for the conduct described in this Agreement and in Appendix B. This agreement not to prosecute applies to criminal charges under Section 1 of the Sherman Act, 15 U.S.C. § 1, or any other federal crimin

24. Notwithstanding the foregoing, the agreement not to prosecute set forth in paragraph 23 above does not extend to Gavin Holt, individually, as more fully set forth in Section IV.F below.

25. This Agreement is binding only upon the Antitrust Division of the United States Department of Justice and does not bind any other component of the Department of Justice, any other federal department or agency, any state or local prosecuting authority, or any foreign government or prosecuting authority. The Department will, however, bring the cooperation of TMC and the existence of this Agreement to the attention

26. This Agreement does not constitute a deferred prosecution agreement within the meaning of the Department of Justice's policies and practices. No criminal information, indictment, or other criminal charging document has been or will be filed against TMC in connection with this Agreement. No court approval of this Agreement is required. B. Monetary Payment

27. TMC shall pay a monetary amount of USD 48,500,000 (Forty-Eight Million Five Hundred Thousand United States Dollars) to the United States Treasury (the "Monetary Payment") as a condition of this Agreement.

28. The Monetary Payment was calculated by applying the Department's standard methodology for NPA payments in antitrust matters. The starting point for the calculation was twenty percent (20%) of TMC's estimated affected commerce of USD 478,000,000, yielding a base amount of USD 95,600,000. The Department then applied a reduction of approximately forty-nine point two percent (49.2%) from the base amount in recognitio

29. Payment shall be made by electronic funds transfer (wire transfer) within sixty (60) calendar days following the date of execution of this Agreement — that is, no later than July 5, 2024. Wire transfer instructions, including the appropriate Treasury account number and routing information, shall be provided by the Antitrust Division, San Francisco Field Office, 450 Golden Gate Avenue, Room 10-0101, San Francisco,

30. Failure by TMC to make the Monetary Payment in full by the deadline specified in paragraph 29 above shall constitute a material breach of this Agreement. In the event of late payment, simple interest shall accrue on the unpaid balance at the rate established by 28 U.S.C. § 1961, calculated from the date on which payment was due until the date on which payment is received by the United States Treasury.

31. The Monetary Payment is not deductible by TMC for United States federal income tax purposes, in accordance with 26 U.S.C. § 162(f), and TMC acknowledges that it will not claim any such deduction. C. Cooperation Obligations

32. TMC shall continue to cooperate fully and truthfully with the Department in any investigation or prosecution related to the conduct described in this Agreement and in Appendix B for a period of three (3) years from the date of execution of this Agreement (the "Cooperation Period"), extending through and including May 6, 2027.

33. TMC's cooperation obligations during the Cooperation Period include, but are not limited to, the following: (a) Making current employees of TMC and its subsidiaries reasonably available for interviews, proffer sessions, grand jury testimony, and trial testimony, upon reasonable notice by the Department, at times and locations mutually agreed upon by the Parties or, in the absence of agreement, as directed by the

34. TMC's cooperation obligations apply to investigations or prosecutions of individuals or entities other than TMC, including but not limited to any investigation or prosecution of Gavin Holt, Ridgecrest Minerals Inc., Pinnacle Earth Resources Ltd., and the current or former employees, officers, directors, and agents of such entities.

35. TMC shall designate Priya Anand, General Counsel of Torchlight Mining Corp., as the primary point of contact for all cooperation requests from the Department under this Agreement. Calderwood & Harkness LLP shall serve as counsel for TMC in connection with all cooperation-related matters during the Cooperation Period. Any changes in the designated point of contact or cooperation counsel shall be communicated to th

36. TMC shall implement and maintain the Enhanced Antitrust Compliance Program described in Appendix A to this Agreement (the "Compliance Program") throughout the Term of this Agreement and thereafter, as a continuing corporate obligation. The Compliance Program is designed to prevent, detect, and remediate antitrust violations, including price-fixing, market allocation, bid-rigging, and unlawful exchanges of competi

37. The key elements of the Compliance Program include, without limitation, the following: (a) Mandatory Annual Antitrust Compliance Training. TMC shall provide mandatory annual antitrust compliance training for all employees involved in pricing, sales, marketing, business development, and procurement functions, as well as for all members of senior management. Training shall be conducted in person or via live virtual

38. TMC shall provide the Department with copies of all annual compliance certifications executed pursuant to paragraph 37(c) above within thirty (30) calendar days of their execution. E. Independent Compliance Monitor

39. TMC shall retain an independent compliance monitor (the "Monitor") for a period of two (2) years from the date of execution of this Agreement, that is, through and including May 6, 2026 (the "Monitor Term").

40. The Department has approved the retention of Meridian Compliance Partners LLC, 1100 Connecticut Avenue NW, Suite 730, Washington, D.C. 20036 (engagement lead Claudia Ferraro), as the Monitor for purposes of this Agreement. Meridian Compliance Partners LLC was selected through a process in which TMC proposed the candidate and the Department reviewed and approved the selection, taking into account the firm's qualif

41. The Monitor shall perform the following functions during the Monitor Term: (a) Review and evaluate TMC's implementation of the Compliance Program described in Appendix A to this Agreement, including the adequacy of the program's design and the effectiveness of its operation; (b) Conduct at least two (2) comprehensive compliance reviews during the Monitor Term — the first at approximately twelve (12) months follow

42. TMC shall bear all reasonable fees and expenses of the Monitor incurred in connection with the performance of the monitoring function described in this Section IV.E. TMC shall not unreasonably withhold or delay payment of the Monitor's invoices.

43. The Monitor shall be independent of TMC and shall not serve as legal counsel, business advisor, or consultant to TMC on any matter other than the monitoring function described in this Agreement. The Monitor shall not have any financial interest in TMC, other than the fees and expenses payable for the monitoring engagement.

44. The Monitor's reports prepared pursuant to paragraph 41(c) above shall not be subject to any claim of attorney-client privilege, work-product protection, or other privilege as between TMC and the Department. TMC expressly waives any such privilege with respect to the Monitor's reports to the extent necessary to effectuate this provision. The Monitor's reports may, however, be treated as confidential by the Depart

45. This Agreement does not cover, protect, or confer any benefit whatsoever upon Gavin Holt, individually. Mr. Holt is not a party to this Agreement and is not a beneficiary of the Department's agreement not to prosecute set forth in Section IV.A above.

46. The Department reserves all rights to investigate, indict, and prosecute Gavin Holt for any conduct whatsoever, including without limitation the conduct described in this Agreement and in Appendix B. Nothing in this Agreement shall be construed to limit, constrain, or condition the Department's exercise of prosecutorial discretion with respect to Mr. Holt.

47. TMC's obligation to cooperate with the Department under Section IV.C of this Agreement expressly includes cooperation in any investigation or prosecution of Gavin Holt, whether arising from the conduct described in this Agreement or otherwise. TMC shall make its current employees, documents, records, and other resources available to the Department in connection with any such investigation or prosecution, in accor

48. Nothing in this Agreement shall be construed to create any rights, benefits, or entitlements for Gavin Holt, or any obligation on the part of the Department to refrain from the investigation or prosecution of Gavin Holt, or to afford Gavin Holt any notice or opportunity to be heard in connection with any determination made by the Department under this Agreement.

49. TMC represents that Gavin Holt's employment with TMC terminated effective September 30, 2021, approximately four months before the commencement of the grand jury investigation on February 10, 2022. TMC further represents that Mr. Holt is separately represented by counsel in connection with the Department's Investigation, specifically by Patrick Dunleavy of Briarcliff Law Group PLLC, 50 California Street, Suite 28

50. This Agreement shall be in effect for a period of three (3) years commencing on the date of execution hereof, that is, from May 6, 2024, through and including May 6, 2027 (the "Term").

51. Upon the successful completion of the Term by TMC, including the full satisfaction of all obligations set forth in this Agreement — including, without limitation, payment of the Monetary Payment, fulfillment of all cooperation obligations, implementation and maintenance of the Compliance Program, and completion of the Monitor Term without material deficiency — this Agreement shall expire, and the Department's agr

V. BREACH A. Material Breach by TMC

52. If the Department determines, in its sole reasonable discretion, that TMC has committed a material breach of any obligation set forth in this Agreement, the Department may take the following actions: (a) Prosecute TMC for any federal criminal violation of which the Department has knowledge, including but not limited to violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, based on the conduct described in th

53. Before making a final determination that a material breach has occurred, the Department shall provide TMC with written notice specifying the nature of the alleged breach and the factual basis therefor. TMC shall have a period of thirty (30) calendar days from the date of receipt of such written notice to respond to the Department's allegations and, where applicable, to cure the alleged breach. The Department shal

54. In determining whether a material breach has occurred, the Department shall consider the totality of the circumstances, including the nature, severity, and duration of the conduct at issue; the degree to which the breach was intentional, knowing, or the result of negligence; any remedial actions taken or proposed by TMC; the impact of the breach on the objectives of this Agreement; and any other factors the Depar

55. Any disputes regarding whether a material breach has occurred shall be resolved by the Department in its reasonable discretion. The Department's determination shall be subject to judicial review only in the context of any subsequent criminal prosecution of TMC, and the standard of review shall be whether the Department's determination was reasonable under the circumstances.