Exhibit 2
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY NOR THE SECURITIES ISSUABLE UPON THE CONVERSION OF THIS SECURITY BEFORE MARCH 9, 2023.
NOUVEAU MONDE GRAPHITE INC.
as the Corporation
and
MITSUI & CO., LTD.
as the Holder
UNSECURED CONVERTIBLE NOTE
NOVEMBER 8, 2022
TABLE OF CONTENTS
ARTICLE 1 PRINCIPAL SUM | 1 | |||||
SECTION 1.1 | PRINCIPAL SUM | 1 | ||||
SECTION 1.2 | INTEREST | 1 | ||||
SECTION 1.3 | CRIMINAL RATEOF INTEREST | 2 | ||||
SECTION 1.4 | INTEREST ACT (CANADA) | 2 | ||||
SECTION 1.5 | USEOF PROCEEDS | 2 | ||||
SECTION 1.6 | MATURITY DATE | 2 | ||||
ARTICLE 2 INTERPRETATION | 2 | |||||
SECTION 2.1 | DEFINITIONS | 2 | ||||
SECTION 2.2 | GENDERAND NUMBER | 3 | ||||
SECTION 2.3 | HEADINGS,ETC. | 3 | ||||
SECTION 2.4 | CURRENCY | 3 | ||||
SECTION 2.5 | CERTAIN PHRASES,ETC. | 3 | ||||
SECTION 2.6 | ACCOUNTING TERMS | 3 | ||||
SECTION 2.7 | INCORPORATIONOF EXHIBITSAND SCHEDULES | 3 | ||||
ARTICLE 3 COVENANTS | 14 | |||||
SECTION 3.1 | AFFIRMATIVE COVENANTS | 14 | ||||
SECTION 3.2 | NEGATIVE COVENANTS | 16 | ||||
ARTICLE 4 VOLUNTARY CONVERSION OF THIS NOTE | 17 | |||||
SECTION 4.1 | VOLUNTARY CONVERSIONBYTHE HOLDER | 17 |
(i)
ARTICLE 5 REPURCHASE OF NOTE | 18 | |||||
SECTION 5.1 | REPURCHASEOF NOTEATTHE OPTIONOFTHE CORPORATION | 18 | ||||
ARTICLE 6 FID AND PROJECT FINANCING | 19 | |||||
SECTION 6.1 | PROCESSTO FID | 19 | ||||
SECTION 6.2 | AUTOMATIC CONVERSIONUPON AFFIRMATIVE DECISIONON FID | 19 | ||||
SECTION 6.3 | REPURCHASEIFNO AFFIRMATIVE DECISIONWITHRESPECTTO FID | 20 | ||||
SECTION 6.4 | JOINT VENTURE. | 20 | ||||
ARTICLE 7 ABOUT CONVERSION | 20 | |||||
SECTION 7.1 | EXPIRYOF NOTE CONVERSION RIGHT | 20 | ||||
SECTION 7.2 | ADJUSTMENTOF CONVERSION PRICE,ETC. | 20 | ||||
SECTION 7.3 | NO REQUIREMENTTO ISSUE FRACTIONAL SHARES | 21 | ||||
SECTION 7.4 | NOTICEOF SPECIAL MATTERS | 22 | ||||
SECTION 7.5 | CORPORATIONTO RESERVE SHARESAND HOLD PERIOD | 22 | ||||
SECTION 7.6 | HOLDERNOTA SHAREHOLDER | 22 | ||||
ARTICLE 8 CHANGE OF CONTROL | 22 | |||||
SECTION 8.1 | CHANGEOF CONTROL EVENT | 22 | ||||
ARTICLE 9 EVENTS OF DEFAULT | 23 | |||||
SECTION 9.1 | EVENTSOF DEFAULT | 23 | ||||
SECTION 9.2 | CONSEQUENCESOFAN EVENTOF DEFAULT | 24 | ||||
ARTICLE 10 MISCELLANEOUS | 24 | |||||
SECTION 10.1 | WAIVER | 24 | ||||
SECTION 10.2 | HOLDER MAY REMEDY DEFAULT | 25 | ||||
SECTION 10.3 | NOTICES,ETC. | 25 | ||||
SECTION 10.4 | CONFIDENTIALITY | 25 | ||||
SECTION 10.5 | SEVERABILITY | 26 | ||||
SECTION 10.6 | SUCCESSORSAND ASSIGNS,ETC. | 26 | ||||
SECTION 10.7 | GOVERNING LAW | 26 | ||||
SECTION 10.8 | DISPUTE RESOLUTION | 26 | ||||
SECTION 10.9 | COUNTERPARTS | 27 | ||||
SECTION 10.10 | LANGUAGE | 27 |
(ii)
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY NOR THE SECURITIES ISSUABLE UPON THE CONVERSION OF THIS SECURITY BEFORE MARCH 9, 2023.
UNSECURED CONVERTIBLE NOTE
US$25,000,000 | NOVEMBER 8, 2022 |
ARTICLE 1
PRINCIPAL SUM
Section 1.1 Principal Sum.
For value received, Nouveau Monde Graphite Inc. (the “Corporation”), a corporation existing under the federal laws of Canada, shall pay to the order of Mitsui & Co., Ltd., a company incorporated under the laws of Japan (the “Holder”), subject to conversion or redemption in accordance with the terms hereof, in lawful money of the United States in accordance with the terms set forth below, the principal sum of $25,000,000 (the “Principal”) on presentation and surrender of this convertible note (the “Note”) at the head office of the Corporation at 481 rue Brassard, Saint-Michel-des-Saints, Québec J0K 3B0 or such other place as the Corporation may designate on the Maturity Date (as defined herein). “Principal” also includes interest capitalized pursuant to Section 1.2.
Section 1.2 Interest.
(a) | The Principal amount shall bear interest from and after the date hereof (or with respect to capitalized interest from the applicable Quarter Date) at the Interest Rate. The interest accruing on the Principal hereunder shall be payable quarterly in arrears on each Quarter Date, provided that if interest is being paid in cash and the Quarter Date is not a Business Day, the interest shall be paid on the following Business Day. Payment of any interest shall be made, at the discretion of the Corporation but subject to Section 1.2(b), (i) in cash or, (ii) subject to TSXV and NYSE approvals, as required, by capitalizing interest and adding it to the Principal, provided that any portion of the Principal which represents capitalized interest shall be convertible into Common Shares only (and not Units), and further provided that the Conversion Price applicable to capitalized interest shall be the U.S. dollar equivalent of the “Market Price” as defined in TSXV rules determined at the quarter end on which such interest became payable. All accrued and unpaid or uncapitalized interest shall be treated as Principal and payable in cash at the Maturity Date, as per the terms of this Note. |
(b) | In the event the Corporation elects to pay interest payable under the other convertible notes issued on the date hereof to the holder thereof in cash, then the Holder shall be entitled, at its discretion, to require the Corporation to pay the interest for the applicable Quarter Date in cash. |
(c) | If the Corporation wishes to pay any interest by capitalizing such amount and adding it to the Principal, then the Corporation shall deliver a notice to the Holder not less than five (5) Business Days prior to the applicable Quarter Date. Any portion of the Principal which represents capitalized interest shall be convertible into Common Shares only (and not Units). Conversion of any portion of the Principal which represents capitalized interest shall be subject to TSXV and NYSE approvals, as required, at the future time of Conversion, and the Conversion Price applicable to capitalized interest shall be the U.S. dollar equivalent of the “Market Price” as defined in TSXV rules determined at the quarter end on which such interest became payable. |
(d) | The first interest payment shall be on the first Quarter Date following the date hereof, provided, that if interest is being paid in cash and the Quarter Date is not a Business Day, the interest shall be paid on the following Business Day. The first interest payment will include interest accrued from and including the date hereof to and including the first Quarter Date following the date hereof. |
1
(e) | With respect to the first interest payment, Term SOFR shall be the Term SOFR for a 3-month tenor as published by the Term SOFR Administrator on the date hereof, provided however, that if as of 5:00 p.m. (Montreal time) on the date hereof such rate for the 3-month tenor has not been published by the Term SOFR Administrator, then Term SOFR will be the 3-month Term SOFR as published by the Term SOFR Administrator on the first preceding Business Day for which such rate was published by the Term SOFR Administrator. For greater certainty, the Term SOFR for the first interest payment will be determined on the date hereof and shall remain in effect during the current quarter. |
Section 1.3 Criminal Rate of Interest.
In no event shall the aggregate “interest” (as defined in Section 347 (the “Criminal Code Section”) of the Criminal Code (Canada)) payable to the Holder under this Note exceed the effective annual rate of interest lawfully permitted under the Criminal Code Section. Further, if any payment, collection or demand pursuant to this Note in respect of such “interest” is determined to be contrary to the provisions of the Criminal Code Section, such payment, collection, or demand shall be deemed to have been made by mutual mistake of the Holder and the Corporation and such “interest” shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in the receipt by the Holder of interest at a rate not in contravention of the Criminal Code Section.
Section 1.4 Interest Act (Canada).
Each interest rate which is calculated under this Note on any basis other than a full calendar year (the “deemed interest period”) is, for the purposes of the Interest Act (Canada), equivalent to a yearly rate calculated by dividing such interest rate by the actual number of days in the deemed interest period, then multiplying such result by the actual number of days in the calendar year (365 or 366).
Section 1.5 Use of Proceeds.
The net proceeds from this Note will be used by the Corporation towards the payment of feasibility study cost, capital expenditures, operating expenses and financing costs associated with the development of the Matawinie Mine, the Transformation Plants and the Demonstration Plants, including related general and administrative expenses.
Section 1.6 Maturity Date.
On the Maturity Date, the Corporation shall pay, subject to conversion or redemption in accordance with the terms hereof, to the Holder in accordance with this Article 1, the Maturity Date Redemption Price.
ARTICLE 2
INTERPRETATION
Section 2.1 Definitions.
As used in this Note, the following terms have the following meanings:
“Affiliate” means an “affiliate” within the meaning of the Securities Act (Québec).
2
“Applicable Law” means all applicable federal, provincial and local laws, rules, ordinances, treaties, regulations, judgments, decrees or other valid governmental restrictions. Applicable Laws shall also include the decisions, guidelines and authority of any Governmental Authority having jurisdiction and all applicable judicial and administrative and regulatory decrees pertaining thereto including licences and permits and other similar requirements, whether legislative, municipal, administrative or judicial in nature.
“Bécancour Site” means that certain emplacement known and designated as being lot 3 294 065 of the Cadastre of Quebec, Registration Division of Nicolet (Nicolet 2) with the vacant lot thereon fronting on Avenue G.-A., Boulet, in the City of Bécancour.
“Business Day” means any day of the year, other than a Saturday, Sunday or a day on which banks are closed for the transaction of regular business in the City of Montreal, Québec, Canada or Tokyo, Japan, and for the purpose of determining the Term SOFR, any day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Capital Reorganization” has the meaning specified in Section 7.2(2).
“Change of Control Event” means the occurrence of (i) an event or a series of events whereby a Person or group of Persons acting in concert gain Decisive Influence, or (ii) a Disposal Event.
“Change of Control Event Redemption Date” has the meaning specified in Section 8.1(2).
“Change of Control Event Redemption Option” has the meaning specified in Section 8.1(2).
“Change of Control Event Redemption Price” means a price equal to (a) the sum of (x) the Principal (including, for greater certainty, any interest capitalized and added to the Principal in accordance with Section 1.2), plus (y) interest on this Note accruing from the issuance date at a rate of 15.0% per annum, compounded daily, up to the Change of Control Redemption Date, minus (b) the sum of all interest previously paid on this Note, whether paid in cash or capitalized and added to the Principal in accordance with Section 1.2.
“Common Shares” means the common shares in the share capital of the Corporation which the Corporation is authorized to issue.
“Conversion” means the conversion of this Note into Units (or, with respect to any portion of the Principal which represents capitalized interest or any accrued and unpaid or uncapitalized interest, into Common Shares) in accordance with the terms hereof.
“Conversion Price” means the rate at which Units shall be issued to the Holder upon conversion and the Common Shares and Warrants comprising such Units shall be delivered to the holder, calculated on the basis of a conversion price of $5.00, subject to adjustment in accordance with Article 7, provided that the Conversion Price applicable to capitalized interest or any accrued and unpaid or uncapitalized interest (which shall be convertible into Common Shares only (and not Units)) shall be the U.S. dollar equivalent of the “Market Price” as defined in TSXV rules determined at the quarter end on which such interest became payable.
“Corporation” means Nouveau Monde Graphite Inc., together with its successors and permitted assigns.
“Criminal Code Section” has the meaning specified in Section 1.3.
3
“Decisive Influence” means a person having, as a result of an agreement or through the ownership of shares or interests in another Person (directly or indirectly) (i) a majority of the voting rights in that other Person; or (ii) a right to elect or remove a majority of the members of the board of directors of that other Person.
“Demonstration Plants” means the flake, shaping, purification and coating demonstration plants located in in Saint-Michel-des-Saints and Bécancour.
“Disposal Event” means (i) any transfer or other disposal by the Corporation of any right, title or interest in or to the Matawinie Mine or the Transformation Plant or any of the assets and rights used, necessary or desirable in connection with the carrying out of the Project other than by way of a Permitted Encumbrance, or (ii) the occurrence of the Corporation otherwise ceasing to remain the sole absolute owner of the Matawinie Mine and the Transformation Plant, and of all assets and rights used, necessary or desirable in connection with the carrying out of the Project, in each case free and clear of all Liens (except Permitted Encumbrances), but excluding, in each case of clauses (i) and (ii), disposals or transfers to a wholly-owned subsidiary of the Corporation or a Joint Venture or as otherwise permitted in accordance with the terms and conditions hereof.
“Event of Default” has the meaning specified in Section 9.1.
“Event of Default Redemption Price” means a price equal to (a) the sum of (i) the Principal (including, for greater certainty, any interest capitalized and added to the Principal in accordance with Section 1.2), plus (ii) interest on this Note accruing from the issuance date at a rate of 15.0% per annum, compounded daily, up to the date of redemption, minus (b) the sum of all interest previously paid on this Note, whether paid in cash or capitalized and added to the Principal in accordance with Section 1.2.
“Existing Financial Indebtedness” means:
(a) | all indebtedness listed in the condensed consolidated interim unaudited financial statements of the Corporation for the three- and six- month periods ended June 30, 2022; |
(b) | the Mason Engagement; |
(c) | [REDACTED – COMMERCIALLY SENSITIVE INFORMATION]; |
(d) | [REDACTED – COMMERCIALLY SENSITIVE INFORMATION]; and |
(e) | the 3.0% net smelter royalty granted by the Corporation to Pallinghurst Graphite Limited pursuant to the royalty agreement dated August 28, 2020 as assigned to Pallinghurst Graphite International Limited pursuant to an Assignment and Assumption Agreement dated December 17, 2020. |
(f) | the royalty and payments granted by the Corporation to the Municipality of Saint-Michel-des-Saints pursuant to the Entente de collaboration de partage des bénéfices relative au projet minier Matawinie (collaboration and benefit-sharing agreement related to the Matawinie mining project) dated January 23, 2020 with the Municipality of Saint-Michel-des-Saints. |
“FID” means the Holder’s final investment decision following receipt of the notice referred to in, and compliance with, Section 6.1, in connection with the approval of the board of directors of the Corporation to proceed with construction of the Project following receipt of definitive commitments with respect to the Project Equity Financing and the Project Debt Financing (it being understood, for greater certainty, that no such commitment from the Holder or any other third party with respect to the Project Equity Financing and the Project Debt Financing exists as of the date hereof and that no definitive commitment shall be required from the Holder or any other third party in order to be able to send the notice contemplated by Section 6.1).
4
“FID Process Notice” has the meaning specified in Section 6.1(1).
“Financial Indebtedness” means any indebtedness for or in respect of:
(a) | moneys borrowed (and debit balances at banks or other financial institutions); |
(b) | any amount raised by acceptance under any acceptance credit facility or dematerialized equivalent; |
(c) | any amount raised pursuant to any note purchase facility or the issue of notes, debentures, loan stock or any similar instrument, including this Note; |
(d) | the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with IFRS, be treated as a finance or capital lease (meaning that the lease is capitalized as an asset and booked as a corresponding liability in the balance sheet); |
(e) | receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis provided that the requirements for derecognition under IFRS are met); |
(f) | any derivative transaction entered into and, when calculating the value of any derivative transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that derivative transaction, that amount shall be taken into account); |
(g) | any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of an underlying liability of a person which is not a member of the Corporation which liability would fall within one of the other paragraphs of this definition; |
(h) | any amount raised by the issue of redeemable shares which are redeemable (other than at the option of the Corporation) before the Maturity Date or are otherwise classified as borrowings under IFRS; |
(i) | any amount of any liability under an advance or deferred purchase agreement, if (a) the primary reason behind entering into the agreement is to raise finance or (b) the agreement is in respect of the supply of assets or services and payment is due more than 120 calendar days after the date of supply; |
(j) | any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing or otherwise being classified as a borrowing under IFRS; and |
(k) | without double counting, the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs a) to j) above. |
“Framework Agreement” means the Framework Agreement entered into as of October 19, 2022 among the Corporation, Mitsui & Co., Ltd. and Panasonic Energy Co., Ltd., as such agreement may be amended, restated or supplemented from time to time in accordance with its terms.
“Future Offtake Contracts” means any future supply agreements for graphite and/or anode products entered into by the Corporation after the date hereof but before the FID.
5
“Governmental Authority” means any federal, provincial or local governmental entity, quasi-governmental authority, court, commission, board, bureau, agency or instrumentality, or any regulatory, administrative or other department or agency, or any political or other subdivision, department or branch of any of the foregoing.
“Holder” means Mitsui & Co., Ltd., together with its successors and permitted assigns.
“IFRS” means generally accepted accounting practices and principles in the country in which the Corporation is incorporated including, if applicable, the International Financial Reporting Standards (IFRS) and guidelines and interpretations issued by the International Accounting Standards Board (or any predecessor and successor thereof), in force from time to time and applied on a consistent basis.
“Interest Rate” means, for any given period, an annual interest rate compounding daily equal to the greater of (i) 6.0%, and (ii) Term SOFR, plus 4.0%.
“Joint Venture” means the joint venture contemplated by Mitsui & Co., Ltd. and the Corporation pursuant to the Framework Agreement.
“JV Redemption Price” means a price equal to the sum of (i) the Principal (including, for greater certainty, any interest capitalized and added to the Principal in accordance with Section 1.2), plus (ii) any accrued and unpaid interest under this Note, in each case as of the date that Holder and the Corporation complete the initial investment into the JV.
“Intercompany Loan” means any loan provided by the Corporation to a wholly owned subsidiary provided that such loan is subordinated to the repayment of this Note on terms reasonably acceptable to the Holder.
“IQ Investment Agreement” means the investment agreement entered into as of the date hereof between the Corporation and Investissement Québec.
[REDACTED – COMMERCIALLY SENSITIVE INFORMATION].
“Liens” means any hypothec, resolutely right, title retention arrangement, other security agreement, trust or arrangement having the effect of creating a security in property for the payment of any debt, liability or obligation; servitude, right of way, usufruct, superficies, emphyteusis, other dismemberment of the right of ownership, interest in property or the production or profits therefrom (themselves including any royalty, stream or other participation interest in minerals or graphite products), and survey or title defects.
“Mason Engagement” means the subscription by the Corporation of common shares in the capital of Mason Graphite Inc. for an amount of C$5,000,000, together with the expenses contemplated by the investment agreement entered into between Mason Graphite Inc. and the Corporation, including the expenditures to be spent by the Corporation on the Lac Guéret property in order for the Corporation to be entitled to exercise its option to acquire a 51% interest in the Lac Guéret property and other related assets.
“Master Control Budget” means the total control budget of costs associated with the Project (including any principal or interest or other finance charges due and payable on any indebtedness of the Corporation and operating costs) until the completion of the Project.
6
“Matawinie Mine” means the Matawinie mining property comprising the Material Mining Tenements (which themselves include the mineral reserves/resources) together with all other constructions, buildings, improvements and equipment in relation thereto, including as may be located or erected from time to time on the lands leased by the Corporation from the Ministre de l’Énergie et des Ressources naturelles (Québec) or on lands acquired or leased from third parties.
“Material Adverse Effect” means, individually or in the aggregate, any event, change, occurrence, condition, circumstance, effect, fact or development that would reasonably be expected to have a material adverse effect on (i) the business, capitalization, assets, liabilities, results of operations, or condition (financial or otherwise) of the Corporation and its subsidiaries, taken as a whole, (ii) the Corporation’s ability to perform and comply with any of its respective obligations under this Note, or (iii) the validity or enforceability of this Note, except any such event, change, occurrence, condition, circumstance, effect, fact or development resulting from or arising in connection with
(a) | any change, event, occurrence, effect, state of facts or circumstance affecting generally the graphite mining and processing industry; |
(b) | changes, events or occurrences in general economic, political, or financial conditions in any jurisdiction in which the Corporation or its subsidiaries operate; or |
(c) | any natural disasters, acts of war (whether declared), uprisings and civil unrest, acts of terrorism or sabotage and epidemic, pandemic or other outbreaks of disease, including in each of the aforementioned cases, any escalation or worsening thereof. |
provided, however, that with respect to clause (a) to (c), such matter does not have a materially disproportionate effect on the Corporation and its subsidiaries, taken as a whole, relative to other Persons operating in the graphite mining and processing industry in general, and that references in this Note to dollar amounts are not intended to be and shall not be deemed to be illustrative or interpretative for purposes of determining whether a Material Adverse Effect has occurred.
“Material Mining Tenements” means the Mining Rights set out in Exhibit A.
“Maturity Date” means the date that is 36 months from the date hereof.
“Maturity Date Redemption Price” means a price equal to (i) the Principal (including, for greater certainty, any interest capitalized and added to the Principal in accordance with Section 1.2), plus (ii) accrued and unpaid interest on this Note (accrued at 6.0% per annum, compounded daily).
“Minerals” means any and all metals, minerals, mineral substances or products of whatever kind and nature in, under or upon the surface or subsurface of the Matawinie Mine (including ore, metals, precious metals, base metals, graphite, uranium, industrial minerals, concentrates, gems, diamonds, commercially valuable rock, aggregate, clays and other minerals which are lawfully mined, excavated or extracted solely from the Matawinie Mine pursuant to the rights granted with respect to the Matawinie Mine and by other instruments of title under which any portion of the Matawinie Mine is held).
“Mining Act” means the Mining Act (Québec) and the regulations adopted thereunder.
“Mining Rights” means exploration licences, mineral claims, mining leases, mining licences, mineral concessions, crown grants and other rights that may be granted pursuant to the Mining Act, as well as other tenure or other rights to Minerals or to access and work upon lands, such as ownership rights, leasing agreements, lands temporal occupation agreements, surface rights or otherwise, for the purpose of exploring, exploiting or benefiting from the Minerals, under the terms of the laws applicable in the province of Québec, whether contractual, statutory or otherwise, or any interest therein. Mining Rights includes any amendments, relocations, adjustments, resurvey, additional locations, derived rights or conversions of, or any renewal, amendment or other modification or extensions of any of the foregoing.
7
“Mitsui Side Letter Agreement” means the side letter entered into as of October 19, 2022 between the Corporation and Mitsui & Co., Ltd., as such agreement may be amended, restated or supplemented from time to time in accordance with its terms.
“No FID Redemption Price” means a price equal to (i) the Principal (including, for greater certainty, any interest capitalized and added to the Principal in accordance with Section 1.2), plus (ii) accrued and unpaid interest on this Note (accrued at 6.0% per annum, compounded daily), in each case as of the date of redemption.
“Note” has the meaning specified in Section 1.1.
“NYSE” means the New York Stock Exchange.
“Obligations” means all of the present and future obligations, liabilities, indebtedness, covenants and agreements, direct or indirect, absolute or contingent, matured or not, extended or renewed, of the Corporation to the Holder under this Note, including, if applicable, interest, interest on overdue and unpaid interest, fees, costs, expenses and indemnities, and “Obligation” means any of them.
“Operating Lease” means any leases which in accordance with the relevant accounting principles of the Corporation in force at the date hereof are not treated as finance or capital leases.
“Pallinghurst Investment Agreement” means the second amended and restated investment agreement entered into as of the date hereof between the Corporation and each of Pallinghurst Graphite International Limited and Pallinghurst Bond Limited.
“Pallinghurst Letter Agreement” means the letter agreement entered into as of October 19, 2022 between the Corporation and Pallinghurst Bond Limited as such agreement may be amended, restated or supplemented from time to time in accordance with its terms.
“Party” means a party to this Note and “Parties” means all of them.
“Permitted Encumbrances” means, in respect of any asset, any one or more of the following:
(a) | security for the Future Offtake Contracts; |
(b) | any encumbrance relating to a Permitted Financial Indebtedness (provided that the Corporation shall not be entitled pursuant to this clause (b) to enter into any hypothec or similar security agreement with respect to the 0.2% net smelter royalty in respect of the Matawinie mining property comprising the Material Mining Tenements granted by the Corporation to Mr. Eric Desaulniers pursuant to the option agreement dated February 28, 2014 (as amended from time to time); |
(c) | any netting or set-off arrangement entered into in the ordinary course of banking arrangements for the purpose of netting debt and credit balances with an Affiliate; |
8
(d) | any encumbrance relating to a Permitted Financial Lease or an Operating Lease provided that such encumbrance is limited to the property that is the subject of the Permitted Financial Lease or Operating Lease; |
(e) | any encumbrance arising under any instalment sale or conditional sale (excluding arising under any finance or capital lease, or Operating Lease) in respect of goods supplied in the ordinary course of business of the Corporation and on the supplier’s standard or usual terms; |
(f) | any encumbrances made or incurred in the ordinary course of business of the Corporation or its Affiliate to secure (a) workers’ compensation, surety or appeal notes, letters of credit, costs of litigation when required by law, order, and public and statutory obligations, or (b) the discharge of encumbrances or claims incidental to construction and mechanics’, warehouseman’s, carriers’ and other similar liens, provided such encumbrances (whether individually or in the aggregate with any other Permitted Encumbrances described in paragraphs (g) through (r) of this definition) do not and will not materially impair the development, construction and operation of the Project or the business of the Corporation, or otherwise have a Material Adverse Effect; |
(g) | any development or similar agreement concerning real property entered into with a governmental body or public utility which does not and will not (whether individually or in the aggregate with any other Permitted Encumbrances described in paragraphs (g) through (r) of this definition) materially detract from the value of such property or materially impair its use in the development, construction and operation of the Project or the business of the Corporation, or otherwise have a Material Adverse Effect, provided the Corporation party to any such agreement is not in default thereunder in in any material respect; |
(h) | any such minor defects as may be revealed by an up-to-date certificate of location, any registered or unregistered rights of way or servitude, or any encroachments, or any zoning by-laws or other municipal law restrictions as to the use of real property, provided the foregoing do not and will not (whether individually or in the aggregate with any other Permitted Encumbrances described in paragraphs (g) through (r) of this definition) materially detract from the value of the affected property or materially impair its use in the development, construction and operation of the Project or the business of the Corporation, or otherwise have a Material Adverse Effect; |
(i) | any security or deposits given to a public utility or any governmental body when required by such utility or governmental body pursuant to any Project Document, or in connection with the operations of the Corporation and in the ordinary course of business of the Corporation; |
(j) | any encumbrance for taxes, assessments or governmental charges or levies not at the time due or delinquent or, provided such encumbrance (whether individually or in the aggregate with any other Permitted Encumbrances described in paragraphs (g) through (r) of this definition) does not and will not materially impair the development, construction and operation of the Project or the business of the Corporation or otherwise have a Material Adverse Effect and provided adequate reserves in accordance with IFRS with respect thereto are maintained in the books and records of the Corporation, any encumbrance which relates to any such obligations to the extent such obligations are being diligently contested in good faith; |
(k) | any encumbrance or charge incidental to construction or current operations (including carrier’s warehouseman’s, mechanics’, construction, builder’s, material men’s and repairmen’s liens) that have not at such time been published pursuant to applicable law or which relate to obligations not due or delinquent or, provided such encumbrance (whether individually or in the aggregate with any other Permitted Encumbrances described in paragraphs (g) through (r) of this definition) does not and will not materially detract from the value of the affected property or materially impair its use in the development, construction and operation of the Project or the business of the Corporation or otherwise have a Material Adverse Effect and provided adequate reserves in accordance with IFRS with respect thereto are maintained in the books and records of the Corporation, any encumbrance which relates to any such obligations to the extent such obligations are being diligently contested in good faith; |
9
(l) | good faith deposits made in the ordinary course of business to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money), leases, surety, customs, performance bonds and other similar obligations, provided such encumbrances (whether individually or in the aggregate with any other Permitted Encumbrances described in paragraphs (g) through (r) of this definition) do not and will not materially impair the development, construction and operation of the Project or the business of the Corporation or otherwise have a Material Adverse Effect; |
(m) | the restrictions, exceptions, reservations, limitations, provisos and conditions, if any, expressed in any original patents or grants from any governmental body, provided such restrictions, exceptions, reservations, limitations, provisos and conditions (whether individually or in the aggregate with any other Permitted Encumbrances described in paragraphs (g) through (r) of this definition) do not and will not materially detract from the value of the affected property or materially impair its use in the development, construction and operation of the Project or the business of the Corporation or otherwise have a Material Adverse Effect; |
(n) | an hypothec securing the Corporation’s obligations created under the royalty agreement dated August 28, 2020, granted by the Corporation to Pallinghurst Graphite International Limited under the terms of a Deed of Hypothec executed before Mtre Lyes ARFA, Notary, on August 29, 2022 and registered at the Quebec Land Registry Office, in the Register of real rights of State resource development, for the Registration Divisions of Berthier, Joliette and Maskinonge, on August 30, 2022 under number 27 521 580; |
(o) | hypothecs on the Bécancour Site securing the repayment of the balance of the sale price and the performance of all Corporation’s obligations in favour of the vendor, 154639 Canada Inc., created under the terms of the deed of sale executed before Mtre Jamie MALUS, Notary, on February 3, 2021 and registered at the Quebec Land Registry Office, in the Land Book for the Registration Division of Nicolet (Nicolet 2), on the same date, under number 26 039 195; |
(p) | the vendor’s resolutory right with respect to the Bécancour Site, created under the terms of the deed of sale above mentioned and registered at the Quebec Land Registry Office, in the Land Book for the Registration Division of Nicolet (Nicolet 2), under number 26 039 195; |
(q) | the right reserved to or vested in any governmental body by the terms of any lease, grant or permit acquired by the Corporation by any statutory provision to terminate any such lease, grant or permit, or to require annual or other payments as a condition to the continuance thereof; |
(r) | any other encumbrances not included under paragraphs (a) through (n) above, in an amount not to exceed [REDACTED – FINANCIAL THRESHOLD] or its equivalent at any time, |
provided, however (for the avoidance of doubt) that no Lien described above, other than in paragraphs (a), (b), (c) and (e), shall constitute a Permitted Encumbrance if it was incurred in connection with the incurrence of any Permitted Financial Indebtedness.
10
“Permitted Financial Indebtedness” means any one or more of the following:
(a) | any Existing Financial Indebtedness; |
(b) | any Financial Indebtedness incurred under the terms of the Note; |
(c) | any Financial Indebtedness incurred under any Intercompany Loan; |
(d) | any Financial Indebtedness arising under Permitted Financial Leases |
(e) | any Financial Indebtedness incurred for hedging or similar purposes, provided that (i) hedging shall only be permitted in connection with currency or interest rate protection and not for speculative purposes, and (ii) the negative mark to market of which shall not exceed [REDACTED – FINANCIAL THRESHOLD] at any time; |
(f) | any Financial Indebtedness incurred under the Future Offtake Contracts; |
(g) | any Financial Indebtedness incurred under the Project Debt Financing; and |
(h) | any other Financial Indebtedness not included under (a) to (g) above, the outstanding amount of which shall not exceed [REDACTED – FINANCIAL THRESHOLD] or its equivalent at any time. |
“Permitted Financial Lease” means, except for all financial leases related directly or indirectly to the Project, finance or capital leases (which in accordance with the relevant accounting principles of the Corporation in force at the date hereof are treated as finance or capital leases) of equipment are permitted provided that the aggregate capital value of the equipment leased does not exceed [REDACTED – FINANCIAL THRESHOLD] or its equivalent at any time. For greater certainty, Operating Leases do not constitute financial indebtedness and are therefore permitted.
“Person” means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative or Governmental Authority.
“Principal” has the meaning specified in Section 1.1
“Project” means the development, construction and operation of the Matawinie Mine, the Demonstration Plants and Transformation Plant, including logistic facilities related thereto.
“Project Debt Financing” means the debt financing with any commercial bank, savings bank, treasury branch or other commercial lender in an amount necessary to cover, together with the Project Equity Financing, all the costs associated with the Project.
“Project Documents” means the material agreements, feasibility studies, environmental permits, authorizations and other material documents that are required for the completion of the Project.
“Project Equity Financing” means the equity financing in an amount necessary to cover, together with the Project Debt Financing, all the costs associated with the Project.
“Quarter Date” means each of March 31, June 30, September 30 and December 31.
11
“Regulatory News Release” has the meaning specified in Section 10.4(2).
“Repurchase Amount” has the meaning specified in Section 5.1(1).
“Repurchase Date” has the meaning specified in Section 5.1(1).
“Repurchase Notice” has the meaning specified in Section 5.1(1).
“Repurchase Option” has the meaning specified in Section 5.1(1).
“Share Reorganization” has the meaning specified in Section 7.2(1).
“Subscription Agreement” means the subscription agreement dated October 19, 2022 between the Corporation and the Holder providing for the issuance by the Corporation and subscription by the Holder of this Note.
“Taxes or Tax” means all foreign and domestic federal, provincial, state, municipal and other governmental taxes, levies, imposts, deductions, charges, claims, and assessments and withholdings, and all liabilities with respect thereto (including interest and penalties).
“Term SOFR” means, for a 3-month tenor, the per annum forward looking term rate (Term SOFR) based on the secured overnight financing rate (SOFR), as such rate is published by the Term SOFR Administrator at the following website: https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html (or a successor administrator or service selected by the Holder in its reasonable discretion) on each Quarter Date, provided, however, that if as of 5:00 p.m. (Montreal time) on any determination day such rate for the 3-month tenor has not been published by the Term SOFR Administrator, then Term SOFR will be the 3-month Term SOFR as published by the Term SOFR Administrator on the first preceding Business Day for which such rate was published by the Term SOFR Administrator so long as such first preceding Business Day is not more than three (3) Business Days prior to such determination day. For greater certainty, the Term SOFR will be determined in advance on each Quarter Date and shall remain in effect during the immediately following quarter.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR selected by the Holder in its reasonable discretion).
“Transaction Documents” means this Note and any other agreement, document, instrument and certificate executed and exchanged in connection with the execution of this Note, including the Mitsui Side Letter Agreement, the Pallinghurst Letter Agreement, the Subscription Agreement, the Framework Agreement, the IQ Investment Agreement and the Pallinghurst Investment Agreement.
“Transformation Plant” means the constructions, engineering, permitting, procurement, buildings, improvements and equipment that make up the commercial anode material plant to be constructed by the Corporation on the Bécancour Site.
“TSXV” means the TSX Venture Exchange.
“Unit” means a unit of the Corporation entitling the Holder to one Common Share and one Warrant.
“Warrant” means a common share purchase warrant of the Corporation issued pursuant to a warrant certificate substantially in the form attached as Exhibit “B” hereto, pursuant to which the Holder will be entitled to acquire common shares of the Corporation at an exercise price of $5.70 per warrant share for a period of 24 months from the date of issuance of the Warrants at conversion from the Note to Units.
12
Section 2.2 Gender and Number.
Any reference in this Note to gender includes all genders and words importing the singular number only include the plural and vice versa.
Section 2.3 Headings, etc.
The provision of a Table of Contents, the division of this Note into Articles and Sections and the insertion of headings are for convenient reference only and are not to affect the interpretation of this Note.
Section 2.4 Currency.
Unless otherwise specifically indicated, (i) all references in this Note to dollars, are to U.S. dollars, and (ii) in the event that any amounts are required to be converted from Canadian dollars to United States dollars or vice versa, such amounts shall be converted using the most recent closing exchange rate of The Bank of Canada available before the relevant calculation date (it being understood and agreed that, for purposes of the determination of the U.S. dollar equivalent of the “Market Price” (as defined in TSXV rules) of the Common Shares on any given day, the exchange rate shall be determined using the applicable closing rate published by the Bank of Canada on the same day as the day on which closing price of the Common Shares on the TSXV is used to determine the “Market Price”).
Section 2.5 Certain Phrases, etc.
In this Note (i) the words “including” and “includes” mean “including (or includes) without limitation”, and (ii) in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.
Section 2.6 Accounting Terms.
All accounting terms not specifically defined in this Note shall be interpreted in accordance with IFRS.
Section 2.7 Incorporation of Exhibits and Schedules.
The exhibits and schedules attached to this Note shall, for all purposes of this Note, form an integral part of it.
Exhibit A | - | Material Mining Tenements | ||
Exhibit B | - | Form of Warrant Certificate |
13
ARTICLE 3
COVENANTS
Section 3.1 Affirmative Covenants.
So long as this Note remains outstanding :
(a) | Performance under this Note. The Corporation shall observe or perform any other covenant, obligation, condition or agreement contained in this Note and comply in all material respects with (i) all of the terms and provisions of its organizational, constating and governance documents; and (ii) its obligations under its material contracts and agreements. |
(b) | Preservation of Corporate Existence. The Corporation shall preserve and maintain its corporate existence, rights and privileges, and qualify and remain qualified as a corporation in good standing in each jurisdiction in which such qualification is required. |
(c) | Compliance with Applicable Laws. The Corporation shall comply in all material respects with all Applicable Laws, including all applicable securities laws and the TSXV and NYSE rules and regulations. |
(d) | Taxes. The Corporation shall pay when due all Taxes imposed upon it or any of its respective properties or assets or with respect to any of its respective franchises, business, income or property provided that no such Tax need be paid if the Corporation is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted. |
(e) | Use of Proceeds. The Corporation shall use the proceeds of this Note solely in accordance with Section 1.5 of this Note. |
(f) | Interest in Project etc. The Corporation shall remain, directly or through a wholly-owned subsidiary, the sole absolute owner of the Matawinie Mine, the Bécancour Site and the Transformation Plant, and of all assets and rights used, necessary or desirable in connection with the carrying out of the Project, free and clear of all Liens except Permitted Encumbrances. |
(g) | Conduct of Operation relating to the Project. The Corporation shall (i) conduct its business operations and activities relating to the Project, and use all assets relating thereto, in compliance with all Applicable Laws and good industry practices (ii) obtain all authorizations as are necessary to conduct operations as currently conducted or proposed to be conducted at the Project, the whole in accordance with good industry practices, and (iii) at all times do or cause to be done all things necessary to maintain the Project in good standing. |
(h) | Financial Reports. The Corporation shall make (i) consolidated annual audited financial statements of the Corporation and related management’s discussion and analysis (which will include, as required under applicable securities laws, a report of construction progress and activities) available on the Corporation’s website as soon they are available, and in any event no later than 90 days after the end of each financial year, and (ii) quarterly consolidated unaudited financial statements of the Corporation and related management’s discussion and analysis (which will include, as required under applicable securities laws, a report of construction progress and activities), available on the Corporation’s website as soon as they are available, and in any event no later than 45 days after the end of the relevant financial quarter. Such financial reports shall be prepared in accordance with accounting standards required under IFRS, and include a profit and loss account, balance sheet and cash flow statement. |
(i) | Access to Site. The Corporation shall ensure that the Holder is granted access to inspect the Matawinie Mine, the Demonstration Plants and the Transformation Plant and any other site relating to the Project within a reasonable time after giving notice thereof and during normal business hours, provided that such inspections shall not unreasonably interfere with the Corporation’s activities with respect to the Project. |
14
(j) | Insurance. The Corporation shall obtain and maintain insurance in connection with the Project and the Bécancour Site covering all risks and liabilities as per industry standards, on a basis consistent with good industry practice, including but not limited to (to the extent they continue to be relevant to the Project and the Transformation Plant and subject to customary exclusions): (i) mining construction and erection risks in connection with the Project to cover all materials, equipment, supplies, machinery forming part or intended to form part of the Project including permanent and temporary works, structures, spare parts, consumables, fuels and oils, common facilities and facilities which are improvements, tie-ins, connections and additions, modifications to existing facilities, pipelines and all other property and the mobile plant and equipment of the mining fleet; (ii) third-party liability insurance to cover personal injury, bodily injury to or illness of third parties (whether fatal or not) and loss of or damage to or loss of use of property including all other direct or indirect or consequential losses resulting from loss of or damage to property belonging to third parties; and (iii) cargo insurance transportation to cover material project cargoes (e.g. machinery). All insurances shall be placed with reputable insurers of financial standing. The Corporation shall cause the policies of insurance referred to above to include a provision that such policies will not be amended in any manner which is materially prejudicial to any Holder’s interest, or be cancelled, without 30 days’ prior written notice being given to all Holders by the Corporation. The Corporation shall provide all Holders promptly with such evidence of insurance as the Holders may from time to time reasonably require. Where the Corporation has received payment under any insurance policy in respect of loss or damage to property covered by the policies of insurance referred to above that does or is reasonably likely to materially reduce the value of the Material Mining Tenements, the Corporation shall use such amount of net proceeds as is necessary to fully rebuild and/or replace the Material Mining Tenements or any part thereof that is the subject of such net proceeds. |
(k) | Project Documents. The Corporation shall perform and observe all of its covenants and agreements contained in any of the Project Documents to which it is or becomes a party or of which it is the holder, take all reasonably necessary action to prevent the termination of any such Project Documents, other than by expiration of the term of such Project Documents and take any and all actions as may be reasonably necessary promptly to enforce its rights and to collect any and all sums due to it under the Project Documents, in each case to the extent that failure to do so is likely to either have a material adverse impact on the development, completion or operation of the Project or otherwise have a Material Adverse Effect. |
(l) | Title to Material Mining Rights. The Corporation shall keep all Material Mining Tenements that are required for the completion and operation of the Project in good standing, and not render any such Material Mining Tenements liable to forfeiture or revocation and not surrender, relinquish or amalgamate any part of any such Material Mining Tenements. |
(m) | [REDACTED – COMMERCIALLY SENSITIVE INFORMATION]. |
(n) | Notice of Litigation. Promptly upon the Corporation obtaining knowledge of the initiation of, or threat of, any litigation, arbitration, governmental investigation, proceeding or inquiry, not previously disclosed in writing by Corporation to the Holder, that would reasonably be expected to result in material liability to the Corporation if determined adversely to the Corporation, or that seeks to enjoin or otherwise prevent performance of the Corporation under this Note (including the conversion thereof), provide Holder written notice thereof, together with such other information as may be reasonably available to the Corporation from time to time to enable the Holder to evaluate such matter. |
15
(o) | Further Assurances. The Corporation will, from time to time, execute such other documents or deliver to Holder such instruments, certificates of title or other documents as the Holder at any time may reasonably request to evidence, perfect or otherwise implement the terms of this Note and the other Transaction Documents including, as applicable, the Conversion. |
Section 3.2 Negative Covenants.
So long as any amount owing under this Note remains unpaid, except with the Holder’s prior written consent:
(a) | Disposal. Other than in the ordinary course of business, the Corporation shall not, and shall cause its subsidiaries not to, transfer, assign or otherwise dispose of any legal or beneficial interest in any of its property, except (i) disposals of obsolete, worn out or redundant movable property; (ii) disposals of movable property where the movable property disposed of is replaced with comparable movable property; and (iii) disposals of any legal or beneficial interest in any immovable property for an aggregate market value of less than or equal to [REDACTED – FINANCIAL THRESHOLD], or in any movable property, in each case, on arm’s length terms and provided no such disposal has a material adverse impact on the development, completion or operation of the Project or otherwise have a Material Adverse Effect. |
(b) | Dividend. The Corporation shall not, and shall cause its subsidiaries not to, declare or make any dividend payment or repurchase shares (other than dividend payments or share repurchases involving only the Corporation and a wholly-owned subsidiary thereof). |
(c) | Intercompany Loans. The Corporation shall not, and shall cause its subsidiaries not to, provide any loans to an Affiliate, except for any Intercompany Loans. |
(d) | Financial Support. The Corporation shall not, and shall cause its subsidiaries not to, for the benefit of any party outside of an Affiliate (i) grant any loans, (ii) grant any guarantees, or (iii) otherwise give financial assistance, except for (A) trade credits or guarantees issued in the ordinary course of business of the Corporation (including, for the avoidance of doubt, any performance guarantee issued in relation to any Future Offtake Contracts), or (B) with respect to Permitted Financial Indebtedness or Permitted Encumbrances. |
(e) | Financial Indebtedness. The Corporation shall not, and shall cause its subsidiaries not to, incur or permit subsisting any Financial Indebtedness other than the Permitted Financial Indebtedness. |
(f) | Negative Pledge. The Corporation shall not, and shall cause its subsidiaries not to, create or permit subsisting any security over any of its assets or enter into arrangement to have a similar effect except for the Permitted Encumbrances. |
(g) | Continuation of Business. The Corporation shall not, and shall cause its subsidiaries not to, cease carrying on its business. |
(h) | Arm’s Length Transactions. The Corporation shall not, and shall cause its subsidiaries not to, engage in, directly or indirectly, any transaction with any related party (including the purchase, sale or exchange of assets or the rendering of any service), except (i) in the ordinary course of business of the Corporation and its subsidiaries and pursuant to the reasonable requirement of the Corporation’s or any other Affiliate’s business and upon fair and reasonable terms, (ii) for any |
16
transaction with an Affiliate on terms that are not less favourable to the Corporation and its subsidiaries than those which might be obtained in an arm’s length transaction at the time, or (iii) pursuant to rights and obligations existing as of the date hereof, provided that this clause does not apply to the issue of securities, advances, fees and indemnities payable to directors, officers and employees of the Corporation. |
(i) | Investments. [REDACTED – COMMERCIALLY SENSITIVE], the Corporation shall not, and shall cause its subsidiaries not to, invest any of the proceeds hereunder for purposes other than solely related to the Project or activities necessary or reasonably incidental to the carrying on of the Project (which, for greater clarity, shall exclude investments in or activity carried out through a company not being an Affiliate unless otherwise expressly permitted hereunder). |
(j) | Certain Agreements. Enter into any agreement or arrangement (including, without limitation, in connection with the Project Equity Financing and Project Debt Financing) that restricts or prohibits the payment of any Change of Control Event Redemption Price, Event of Default Redemption Price, No FID Redemption Price or JV Redemption Price. |
ARTICLE 4
VOLUNTARY CONVERSION OF THIS NOTE
Section 4.1 Voluntary Conversion by the Holder.
(1) | Upon and subject to the provisions and conditions of this Article 4, the Holder shall have the right, at its sole and absolute discretion, at any time, and from time to time, up to and including the Maturity Date, to convert this Note (in whole or in part, provided that the Holder shall not have the right to convert this Note in part unless the portion of the Note to be converted pursuant to this Section 4.1 amounts to $500,000 or more) into such number of Units equal to the Principal (excluding any portion which represents capitalized interest) divided by the Conversion Price, provided that (i) any portion of the Principal which represents capitalized interest or any accrued and unpaid or uncapitalized interest shall be convertible into Common Shares only (and not Units), (ii) conversion thereof shall be subject to TSXV and NYSE approvals, as required, at the future time of Conversion, and (iii) the Conversion Price applicable to capitalized interest or any accrued and unpaid or uncapitalized interest shall be the U.S. dollar equivalent of the “Market Price” as defined in TSXV rules determined at the quarter end on which such interest became payable. |
(2) | The Holder may exercise its right to effect the Conversion by sending to the Corporation at its principal address a notice to such effect in accordance with the provisions of this Article 4. Upon receipt by the Corporation of such notice, the Holder shall be entered in the books of the Corporation as at the date of Conversion as the holder of the number of Common Shares and Warrants to which the Holder is entitled to upon Conversion and, as soon as practicable, the Corporation shall deliver to the Holder certificates (or electronic evidence of holdings satisfactory to the Holder) for such Common Shares and Warrants and, if applicable, execute an electronic transfer (without deduction for any related fees or expenses) for any amount payable under Section 7.3. Upon delivery of the certificates (or electronic evidence of holdings) for Common Shares and Warrants to which the Holder is entitled to upon Conversion, the Principal, including any portion of the Principal which represents capitalized interest and any accrued and unpaid or uncapitalized interest thereon, in respect of which such notice was given, shall be deemed repaid in full and no longer owing by the Corporation. |
(3) | The Holder’s right of Conversion pursuant to this Section 4.1 shall extend only to the maximum number of whole Common Shares and Warrants into which the Principal, including any portion of the Principal which represents capitalized interest and any accrued and unpaid or uncapitalized interest thereon, is then converted in accordance with the provisions of paragraph Section 4.1(1). Fractional interests in Common Shares and Warrants shall be adjusted for in accordance with Section 7.3. |
17
(4) | If a Conversion is in respect of capitalized interest or accrued and unpaid or uncapitalized interest, the Corporation shall promptly following receipt of the notice contemplated by Section 4.1(2) make and diligently pursue an application to TSXV and/or NYSE, as the case may be, to seek approval for the Conversion of such capitalized interest or accrued and unpaid or uncapitalized interest. |
ARTICLE 5
REPURCHASE OF NOTE
Section 5.1 Repurchase of Note at the Option of the Corporation
(1) | The Corporation shall have the right, at its sole and absolute discretion, from time to time from and after the earlier of (i) December 31, 2023 and (ii) the occurrence of FID, up to and including the Maturity Date, to repurchase this Note in whole for cash (the “Repurchase Option”) by paying to the Holder an amount equal to (the “Repurchase Amount”) the higher of: |
(a) | the sum of (i) the Principal (including, for greater certainty, any interest capitalized and added to the Principal in accordance with Section 1.2), (ii) any accrued and unpaid or uncapitalized interest under this Note, and (iii) an amount equal to the unaccrued interest or uncapitalized under this Note from and after the date of repurchase up to the Maturity Date (at a rate per annum that is equal to 6.0%, compounded daily); and |
(b) | (A) the sum of (i) the Principal (including, for greater certainty, any interest capitalized and added to the Principal in accordance with Section 1.2), plus (ii) interest on this Note accruing from the issuance date at a rate of 12.0% per annum, compounded daily, up to the date of redemption, minus (B) the sum of all interest previously paid on this Note, whether paid in cash or capitalized and added to the Principal in accordance with Section 1.2, |
provided that it first gives no less than forty-five (45) days written notice to that effect to the Holder. The notice to be delivered by the Corporation pursuant to this Section 5.1 (the “Repurchase Notice”) shall, among other things, specify the date on which the repurchase is to be completed (the “Repurchase Date”), which date shall be no less than forty-five (45) days from the date on which the Repurchase Option is exercised.
(2) | Upon receipt by the Holder of a Repurchase Notice from the Corporation, the Holder shall have the right to effect the Conversion pursuant to Section 4.1 up to three (3) Business Days prior to the Repurchase Date. Thereafter, if the Holder has not exercised its right, the Holder shall (i) surrender this Note for immediate cancellation to the Corporation, and (ii) thereafter be entitled, on the Repurchase Date, to receive the Repurchase Amount by way of transfer of immediately available funds (or as may otherwise be agreed by the parties). Notwithstanding the foregoing, despite having received a Repurchase Notice the Holder may convert any or all of the Principal at any time up to the Repurchase Date in accordance with the procedures set forth in Section 4.1. |
18
ARTICLE 6
FID AND PROJECT FINANCING
Section 6.1 Process to FID
(1) | If, at any time prior to the Maturity Date, the Corporation contemplates a Project Equity Financing and/or Project Debt Financing in an amount necessary to cover all the costs associated with the Project such that FID could occur, then the Corporation shall notify the Holder in writing of same, with such notice (the “FID Process Notice”) (i) specifying the main terms on which the Project Equity Financing and/or Project Debt Financing are being contemplated, (ii) specifying the targeted date for the announcement of same (which date shall be no less than 30 days from the date such notice is delivered to the Holder pursuant to this Section 6.1), and (iii) shall include current drafts of (A) the Master Control Budget, (B) the detailed plan for the construction of the Project, and (C) any contemplated Future Offtake Contracts with respect to the forecasted production from the Transformation Plant. |
(2) | The Holder shall, within twenty (20) Business Days of receipt of the FID Process Notice, respond in writing to the Corporation and advise the Corporation whether it is considering seeking participation in financing of the Project or otherwise making an affirmative decision with respect to FID. If the Holder advises the Corporation it is seeking participation in financing of the Project or otherwise making an affirmative decision with respect to FID, the Corporation shall keep the Holder informed of material developments in connection therewith, with a view to allow the Holder to make its final investment decision. |
(3) | For clarity, the purpose of the FID Process Notice to be delivered pursuant to this Section 6.1 is to allow the Holder to make a final investment decision with respect to the Project, but in no way shall this Section 6.1 give the Holder any right to participate in any Project Equity Financing and/or Project Debt Financing or to maintain its pro-rata ownership in any class of equity or debt securities of the Corporation (provided that this Section 6.1 shall not affect any rights the Holder has under the Mitsui Side Letter Agreement, including any pre-emptive rights thereunder). |
Section 6.2 Automatic Conversion upon Affirmative Decision on FID.
(1) | Upon and subject to the provisions and conditions of this Article 6, if at any time prior to the Maturity Date, the Holder makes an affirmative decision with respect to FID and closing of the Project Equity Financing and/or Project Debt Financing occurs, then, subject to the then applicable Conversion Price being lower than each of (a) the U.S. dollar equivalent of the closing price of the Common Shares on the TSXV on the trading day prior to such closing and (b) the price per share at which Common Shares are being offered and issued in the Project Equity Financing (it being understood, that if the conditions set out in (a) and (b) are not met, there would be no automatic conversion), this Note shall automatically be converted into such number of Units equal to the Principal (excluding any portion which represents capitalized interest) divided by the Conversion Price, provided that (i) any portion of the Principal which represents capitalized interest or any accrued and unpaid or uncapitalized interest shall be convertible into Common Shares only (and not Units), (ii) conversion thereof shall be subject to TSXV and NYSE approvals, as required, at the future time of Conversion, and (iii) the Conversion Price applicable to capitalized interest or any accrued and unpaid or uncapitalized interest shall be the U.S. dollar equivalent of the “Market Price” as defined in TSXV rules determined at the quarter end on which such interest became payable. |
(2) | Upon closing of the Project Equity Financing and/or the Project Debt Financing, the Holder shall, subject to Section 6.2(1), as soon as reasonably practicable, be entered in the books of the Corporation as at the date of closing of the Project Equity Financing and/or the Project Debt Financing, as the holder of the number of Common Shares and Warrants to which the Holder is entitled to upon Conversion and, as soon as practicable, the Corporation shall deliver to the Holder certificates(or electronic evidence of holdings satisfactory to the Holder) for such Common Shares and Warrants and, if applicable, execute an electronic transfer (without deduction for any related fees or expenses) for any amount payable under Section 7.3. Upon delivery of the certificates (or electronic evidence of holdings) for Common Shares and Warrants to which the Holder is entitled to upon Conversion, the Principal, including any accrued and unpaid or uncapitalized interest thereon shall be deemed repaid in full and no longer owing by the Corporation. |
19
(3) | The automatic Conversion of this Note pursuant to this Article 6 shall extend only to the maximum number of whole Common Shares and Warrants into which the Principal, including any accrued and unpaid or uncapitalized interest thereon, is then converted in accordance with the provisions of paragraph (1). Fractional interests in Common Shares and Warrants shall be adjusted for in accordance with Section 7.3. |
(4) | If a Conversion is in respect of capitalized interest or accrued and unpaid or uncapitalized interest, the Corporation shall promptly following closing of the Project Equity Financing and/or the Project Debt Financing make and diligently pursue an application to TSXV and/or NYSE, as the case may be, to seek approval for the Conversion of such accrued and unpaid or uncapitalized interest. |
Section 6.3 Repurchase if no Affirmative Decision with respect to FID.
(1) | If, following completion of the FID process in compliance with Section 6.1, all conditions to the FID have been satisfied and the Corporation decides to proceed with the Project Equity Financing and/or Project Debt Financing, but the Holder does not make an affirmative decision with respect to FID, then the Corporation shall, concurrently with closing of the Project Equity Financing and/or Project Debt Financing, redeem all of the Holder’s Notes in whole for cash at the No FID Redemption Price. |
Section 6.4 Joint Venture.
If the Holder and the Corporation decide to enter into the Joint Venture contemplated by the parties pursuant to the Framework Agreement, the Corporation shall redeem all of this Note at the JV Redemption Price. The proceeds from the JV Redemption Price shall be used as part of the Holder’s equity investment for the Joint Venture.
ARTICLE 7
ABOUT CONVERSION
Section 7.1 Expiry of Note Conversion Right.
If, at the Maturity Date, the Holder has not exercised its Conversion right and this Note has not otherwise been converted or redeemed in accordance with the terms hereof, the Principal outstanding including, for greater certainty, any interest capitalized and added to the Principal in accordance with Section 1.2) together with any accrued and unpaid or uncapitalized interest thereon, shall be due and payable in full by the Corporation to the Holder in accordance with Section 1.2, and the Holder’s right to convert this Note will automatically terminate.
Section 7.2 Adjustment of Conversion Price, etc.
(1) | If and whenever at any time after the date hereof and prior to the Maturity Date the Corporation shall (i) subdivide, re-divide or change its then outstanding Common Shares into a greater number of Common Shares, (ii) reduce, combine or consolidate its then outstanding Common Shares into a lesser number of Common Shares, or (iii) issue Common Shares (or securities exchangeable for or convertible into Common Shares) to the holders of all or substantially all of its then outstanding Common Shares by way of a stock dividend or other distribution (any of such events herein called a “Share Reorganization”), then the Conversion Price shall be adjusted effective immediately after the effective date of any such event in (i) or (ii) above or the record date at which the holders of Common Shares are determined for the purpose of any such stock dividend or other distribution in (iii) above, as the case may be, by multiplying the Conversion Price in effect on such effective date or record date, as the case may be, by a fraction, (y) the numerator of |
20
which shall be the number of Common Shares outstanding on such effective date or record date, as the case may be, before giving effect to such Share Reorganization and (z) the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Share Reorganization including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would be outstanding if such securities were exchanged for or converted into Common Shares. |
(2) | If and whenever at any time after the date hereof and prior to the Maturity Date, there is a capital reorganization of the Corporation or a reclassification or other change in the Common Shares (other than a Share Reorganization) or a consolidation or merger, amalgamation or arrangement of the Corporation with or into any other corporation or other entity (other than a consolidation, merger, amalgamation or arrangement which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other securities), or a transfer of all or substantially all of the Corporation’s assets to another corporation or other entity in which the holders of Common Shares are entitled to receive shares, other securities or other property (any of such events being called a “Capital Reorganization”), the Holder shall be entitled to receive, and shall accept, upon the exercise of the right of Conversion at any time after the effective date thereof, in lieu of Common Shares and/or Warrants to which the Holder was theretofore entitled on Conversion, the kind and amount of shares, share purchase warrants or other securities or money or other property that the Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Common Shares and/or Warrants to which the Holder was entitled upon Conversion, subject to adjustment thereafter in accordance with provisions the same, as nearly as may be possible, as those contained in this Section 7.2(2). |
(3) | So long as all of this Note has not been Converted or otherwise redeemed in accordance with the terms hereof, the number of Common Shares issuable upon exercise of the Warrants underlying this Note and the exercise price of any Warrants underlying this Note shall be adjusted in accordance with the terms and conditions of the form of Warrant attached as Schedule “B” hereto, as if the Holder had been the registered holder of the number of Warrants to which the Holder was entitled upon Conversion at the relevant time, subject to adjustment thereafter in accordance with provisions the same, as nearly as may be possible, as those contained in the form of Warrant attached as Schedule “B” hereto. |
(4) | If any question arises with respect to the adjustments provided in this Section 7.2, such question shall be conclusively determined by a firm of chartered professional accountants appointed by the Corporation and acceptable to the Holder. Such chartered professional accountants shall be given access to all necessary records of the Corporation and their determination shall be binding upon the Corporation and the Holder. |
Section 7.3 No Requirement to Issue Fractional Shares.
The Corporation shall not be required to issue fractional Common Shares or Warrants upon the Conversion. If any fractional interest in a Common Share or Warrant would, except for the provisions of this Section 7.3, be deliverable upon the Conversion, the Corporation shall, in lieu of delivering any certificate of fractional interest, satisfy the fractional interest by paying to the Holder an amount of lawful money of the United States equal (computed to the nearest whole cent, and one-half of a cent being rounded up) to the Principal remaining outstanding after so much of the Principal, including any portion of the Principal which represents capitalized interest and any accrued and unpaid or uncapitalized interest thereon, as may be converted into a whole number of Common Shares and Warrants has been so converted.
21
Section 7.4 Notice of Special Matters.
The Corporation shall give notice to the Holder, in the manner provided in Article 8, of its intention to fix a record date for any event referenced in Section 7.2 which may give rise to an adjustment in the number of Common Shares or Warrants which may be acquired pursuant to Section 4.1, and, in each case, the notice shall specify the particulars of the event and the record date and the effective date for the event; provided that the Corporation shall only be required to specify in the notice such particulars of the event as shall have been fixed and determined on the date on which such notice is given. Such notice shall be given not less than 14 days prior to the applicable record date.
Section 7.5 Corporation to Reserve Shares and Hold Period.
The Corporation shall at all times reserve and keep available out of its authorized Common Shares and solely for the purpose of Conversion provided, and conditionally allot to the Holder, such number of Common Shares as shall then be issuable upon the Conversion, assuming immediate exercise of the Warrants forming part of the Units. The Corporation covenants with the Holder that all Common Shares which shall be so issuable shall be duly and validly issued as fully-paid and non-assessable. This Note, together with (a) in the event the Conversion occurs within four months of the Closing Date, any certificates representing the Common Shares or the Warrants issuable upon the Conversion and (b) any certificates representing the Common Shares issuable on exercise the Warrants if such exercise occurs within four months of the Closing Date shall bear the following legend (and such other legend as required by the TSXV, the NYSE or applicable securities laws):
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY BEFORE MARCH 9, 2023.”
Any certificate representing Warrants issued on Conversion within four months from the date hereof shall bear the legend set forth in the form of warrant certificate attached as Exhibit “B” hereto.
Section 7.6 Holder not a Shareholder.
Nothing in this Note shall, in itself, confer or be construed as conferring upon the Holder any right or interest whatsoever as a shareholder of the Corporation, including, but not limited to, the right to vote at, to receive, subject to Section 7.4, notice of, or to attend, meetings of shareholders or any other proceedings of the Corporation, or the right to receive dividends and other distributions.
ARTICLE 8
CHANGE OF CONTROL
Section 8.1 Change of Control Event.
(1) | As soon as reasonably practicable after the Corporation has entered into definitive documentation with respect, or is otherwise subject, to a Change of Control Event, the Corporation shall notify the Holder of same, and the Holder shall be entitled, but not obligated, to (i) have the Principal (including, for greater certainty, any interest capitalized and added to the Principal in accordance with Section 1.2), together with any accrued and unpaid or uncapitalized interest under this Note, converted into Units at the Conversion Price (provided that any portion of the Principal which represents capitalized interest or accrued and unpaid or uncapitalized interest shall be convertible into Common Shares only (and not Units)), effective immediately prior to the completion of the Change of Control Event, the whole in accordance with the procedures set forth in Section 4.1, or (ii) have the Corporation redeem all, but not less than all, of this Note at the Change of Control Event Redemption Price following the consummation of the Change of Control Event, the whole in accordance with the procedures set forth Section 8.1(2). |
22
(2) | Upon the occurrence of a Change of Control Event, the Corporation shall make an offer to the Holder (the “Change of Control Event Redemption Option”) to redeem this Note in whole for cash by paying to the Holder an amount equal to the Change of Control Event Redemption Price. The Change of Control Event Redemption Option shall be exercisable by the Holders for 30 days following receipt by the Holder of the offer from the Corporation. If accepted by the Holder, the settlement date of the Change of Control Event Redemption Option shall be on the fifth (5th) Business Day after the end of the 30-days exercise period (the “Change of Control Event Redemption Date”). For the avoidance of doubt, subject to the terms of this Note, if not accepted by the Holder, the Holder will continue to hold the Note as if no Change of Control Event occurred and without prejudice to any of its rights associated with the Note. |
ARTICLE 9
EVENTS OF DEFAULT
Section 9.1 Events of Default.
The occurrence of any of the following events shall constitute an “Event of Default” under this Note:
(a) | the Corporation fails to make payment when due of the Principal outstanding or of any accrued and unpaid or uncapitalized interest thereon, unless such default is remedied within five (5) Business Days after notice thereof by the Holder to the Corporation; |
(b) | (i) default by the Corporation in the performance or observance of any other covenant, condition or obligation contained in this Note, or (ii) default in any material respects in the performance or observance of any covenant, condition or obligation contained in any Transaction Document, unless in each case such default is remedied within 15 days after notice thereof by the Holder to the Corporation; |
(c) | any representation or warranty made or deemed to be made by the Corporation in this Note or in any other Transaction Documents is found to be false or inaccurate in any material respect (unless such representation or warranty is already qualified by materiality or Material Adverse Effect or words to that effect, in which case it shall be an event of default if any such representation or warranty is found to be false or inaccurate in any respect), unless the circumstances giving rise to the false or inaccurate representation are capable of remedy and are remedied within 20 Business Days of the earlier of the Holder giving notice to the Corporation or the Corporation becoming aware of such false or inaccurate representation; |
(d) | (i) any Financial Indebtedness is not paid when due nor within any applicable grace period; (ii) any Financial Indebtedness is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described); (iii) any commitment for any Financial Indebtedness is cancelled or suspended by a creditor as a result of an event of default (however described); or (iv) any creditor becomes entitled to declare any Financial Indebtedness due and payable prior to its specified maturity as a result of an event of default (however described), provided in each case that the aggregate amount of such Financial Indebtedness or commitment for Financial Indebtedness falling within clauses (i) to (iv) above exceeds a total of [REDACTED – FINANCIAL THRESHOLD] (or the equivalent thereof in any other currency); and |
23
(e) | any termination or withdrawal of any Material Mining Tenements required for the completion and operation of the Project, or termination or cancellation of any Project Document, which in either case has a material adverse impact on the development, completion or operation of the Project or otherwise has a Material Adverse Effect, unless such withdrawal or termination is capable of being remedied and is remedied within 30 Business Days after the earlier of the Corporation’s actual knowledge thereof or notice thereof is given to the Corporation by the Holder; |
(f) | a Material Adverse Effect occurs after the date of this Note; |
(g) | a proceeding in bankruptcy or insolvency of the Corporation or for a receiver or trustee for any of its property is filed by or against the Corporation provided that the Corporation shall not be in default hereunder if it is contesting such proceeding in good faith; |
(h) | any execution, distress or other enforcement process, whether by court order or otherwise, becomes enforceable against any material property and assets of the Corporation, provided that the Corporation shall not be in default hereunder if it is contesting such proceeding in good faith and has obtained a stay of such proceedings and has set aside in trust a satisfactory amount of money to satisfy the claim in the event that it is not successful in opposing the proceeding; or |
(i) | if, at any time prior to the Conversion, the Common Shares are no longer listed and posted for trading on any of the TSXV, the Toronto Stock Exchange, the NYSE or another recognized stock exchange. |
Section 9.2 Consequences of an Event of Default.
Promptly after the Corporation becomes aware that an Event of Default has occurred, the Corporation will notify the Holder in writing of the nature and extent of such Event of Default and the action, if any, it has taken or proposes to take with respect to such Event of Default. Upon the later of the occurrence of any Event of Default or expiry of any agreed cure period for an Event of Default, as applicable, the Holder may by notice to the Corporation, require the Corporation to redeem all, but not less than all, of this Note for cash at the Event of Default Redemption Price. Upon receipt by the Corporation of such notice, the Event of Default Redemption Price shall become immediately due and payable, the Corporation shall immediately pay in accordance with the instructions provided by the Holder in the aforementioned notice, the Event of Default Redemption Price. Upon payment of the Event of Default Redemption Price, the Principal, including any portion of the Principal which represents capitalized interest and any accrued and unpaid or uncapitalized interest thereon, shall be deemed repaid in full and no longer owing by the Corporation.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Waiver.
(1) | No amendment or waiver of any provision of this Note, nor consent to any departure by the Corporation or any other Person from such provisions, is effective unless in writing and approved by the Holder. Any amendment, waiver or consent is effective only in the specific instance and for the specific purpose for which it was given. |
(2) | No failure on the part of the Holder to exercise, and no delay in exercising, any right under this Note shall operate as a waiver of such right; nor shall any single or partial exercise of any right under this Note preclude any other or further exercise of such right or the exercise of any other right. |
24
Section 10.2 Holder May Remedy Default.
If the Corporation fails to do anything hereby required to be done by it, the Holder may, but shall not be obliged to, do such thing and all sums thereby expended by the Holder shall be payable forthwith by the Corporation, but no such performance by the Holder shall be deemed to relieve the Corporation from any default hereunder.
Section 10.3 Notices, etc.
Any notice, direction or other communication to be given under this Note shall, except as otherwise permitted, be in writing and given by delivering it or sending it by email or other similar form of recorded communication addressed:
(a) | To the Corporation at: |
Nouveau Monde Graphite Inc.
481 rue Brassard
Saint-Michel-des-Saints, Québec, J0K 3B
Attention: | Eric Desaulniers, President and Chief Executive Officer | |
Email: | [REDACTED – CONTACT INFORMATION] | |
Attention: | Josée Gagnon, Vice-President Legal Affairs and Corporate Secretary; | |
Email: | [REDACTED – CONTACT INFORMATION] |
(b) | To the Holder at: |
Mitsui & Co., Ltd.
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] |
Any such communication shall be deemed to have been validly and effectively given if (i) personally delivered, on the date of such delivery if such date is a Business Day and such delivery was made prior to 4:00 p.m. (Montreal time), otherwise on the next Business Day, (ii) transmitted by email or similar means of recorded communication on the Business Day following the date of transmission. Any party may change its address for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to the Party at its changed address.
Section 10.4 Confidentiality.
(1) | Except as specifically otherwise provided for herein, the Parties will keep confidential this Note and will refrain from using it other than for the activities contemplated hereunder or publicly disclosing it unless required by law or by the rules and regulations of any regulatory authority or stock exchange having jurisdiction or with the consent of the other party hereto, such consent not to be unreasonably withheld, provided that the provisions of this Section 10.4 shall not apply to information which is or becomes part of the public domain other than through a breach of the terms hereof. |
25
(2) | The Parties will consult with each other prior to issuing any press release or other public statement regarding this Note. In addition, each Party will obtain prior consent from the other Party before issuing any press release or public statement regarding this Note, except if such disclosure is required by law or by the rules and regulations of any regulatory authority or stock exchange having jurisdiction (a “Regulatory News Release”) and the other Party unreasonably withholds consent to such press release or other public statement or does not provide such consent in a timely manner. Notwithstanding the above, when practicable, where a Party requests consent from the other Party of any press release or public statement and the other Party has not responded to such request within five (5) Business Days, then the Party proposing the press release or public statement will be entitled to proceed with its disclosure as if it had received consent from the other Party, which five (5) Business Days period shall be reduced to twelve (12) hours in the case of a Regulatory News Release. |
(3) | Where a request is made for permission under this Section 10.4 to disclose confidential information, a reply thereto will be made as soon as possible and in any event within three (3) Business Days after receipt of such request, failing which the Party requesting will be entitled to disclose such information in the limited circumstances specified in such request as if such consent had been given. |
Section 10.5 Severability.
If any provision of this Note is deemed by any court of competent jurisdiction to be invalid or void, the remaining provisions shall remain in full force and effect.
Section 10.6 Successors and Assigns, etc.
Neither this Note nor any of the rights, interests or obligations hereunder may be transferred or assigned, by operation of law or otherwise, as a whole or in part by any party without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed, and in compliance with all Applicable Law.
Section 10.7 Governing Law.
This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws.
Section 10.8 Dispute Resolution.
Any dispute, controversy, or claim arising out of, related to, or in connection with this Agreement and any dispute, controversy, or claim arising out of, related to, or in connection with the Note, the Mitsui Side Letter Agreement or the Framework Agreement (as between the Corporation and the Holder) 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 Note, the Mitsui Side Letter Agreement or the Framework Agreement, 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.
26
Section 10.9 Counterparts.
This Note may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same instrument.
Section 10.10 Language.
This Note has been drawn up in the English language at the express request of the parties. Cette débenture a été rédigée en anglais à la demande expresse des parties.
[Signature page follows.]
27
IN WITNESS WHEREOF the parties have executed this Note as of the date first written above.
NOUVEAU MONDE GRAPHITE INC. | ||||
By: | /s/ Eric Desaulniers | |||
Name: | Eric Desaulniers | |||
Title: | President and CEO | |||
MITSUI & CO., LTD. | ||||
By: | /s/ Katsuto Kawahara | |||
Name: | Katsuto Kawahara | |||
Title: | General Manager Advanced Materials Division Performance Materials Business Unit |
[Signature Page – Convertible Note Agreement]
Exhibit A
Material Mining Tenements
[OMITTED – COMMERCIALLY SENSITIVE INFORMATION.]
29
Exhibit B
Form of Warrant Certificate
See attached.
30
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY AND ANY SECURITY ISSUED ON EXERCISE HEREOF MUST NOT TRADE THE SECURITY BEFORE MARCH 9, 2023.
The following legend is applicable to “U.S. Persons” as such term is defined in Rule 902(k) of Regulation S:
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES, AGREES FOR THE BENEFIT OF NOUVEAU MONDE GRAPHITE INC. (THE “CORPORATION”) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH (I) THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144A UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN SUCH RULE 144A) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN THAT THE OFFER, SALE OR TRANSFER IS BEING MADE IN RELIANCE ON SUCH RULE 144A, OR (II) RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, AND, IN THE CASE OF (C) AND (D), THE SELLER FIRST FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
THESE WARRANTS MAY NOT BE EXERCISED BY OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A “U.S. PERSON” OR A PERSON IN THE UNITED STATES UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT.
The following legend is applicable to all persons who are not “U.S. Persons” as such term is defined in Rule 902(k) of Regulation S:
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. THESE WARRANTS MAY NOT BE EXERCISED BY OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A “U.S. PERSON” OR A PERSON IN THE UNITED STATES UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT.
31
THIS WARRANT CERTIFICATE IS VOID IF NOT EXERCISED ON OR BEFORE
5:00 P.M. (MONTREAL TIME) ON [•], 20[•].
THIS WARRANT IS TRANSFERABLE.
WARRANT CERTIFICATE
NOUVEAU MONDE GRAPHITE INC.
[•], 202[•]
Warrant Certificate No. [•] | [•] WARRANTS (the “Warrants”), each Warrant entitling the holder to acquire, subject to adjustment, one Common Share of Nouveau Monde Graphite Inc. |
THIS IS TO CERTIFY THAT, for value received, [•] (the “Holder”) is entitled to subscribe for and purchase [•] fully paid and non-assessable Common Shares (the ”Warrant Shares”) of Nouveau Monde Graphite Inc. (the “Corporation”) at the Exercise Price (as defined below) per Warrant Share until 5:00 p.m. (Montreal time) (the “Expiry Time”) on the Expiry Date (as defined below).
The Warrants are exercisable at any time and from time to time after the date of this Warrant Certificate up to the Expiry Time, in whole or in part. All references herein to dollar amounts are to the lawful money of the United States, unless specified otherwise.
RECITALS
1. Interpretation
In this Warrant Certificate, unless the context otherwise requires, capitalized terms used but not otherwise defined in this Warrant Certificate shall have the following meanings:
(a) | “Business Day” means any day of the year: (i) other than a Saturday, Sunday or a statutory holiday in Montreal, Québec, and (ii) on which the TSXV is open for business; |
(b) | “Common Shares” means common shares in the share capital of the Corporation; |
(c) | “Current Market Price” means on any given date the volume weighted average trading price on the TSXV (or, if the Common Shares are not listed and posted for trading on the TSXV, the NYSE or such other stock exchange or over-the-counter market on which the Common Shares may be listed or quoted) for the 20 Trading Days ending three Trading Days prior to the relevant date; |
(d) | “Exercise Price” means $5.70 per Warrant Share, subject to adjustment in accordance with the provisions of Section 5; |
(e) | “Expiry Date” means [•], 20[•]; |
(f) | “NYSE” means the New York Stock Exchange; |
(g) | “Regulation S” means Regulation S promulgated under the U.S. Securities Act; |
32
(h) | “Trading Day” means a day on which not less than a board lot of Common Shares has traded on the TSXV (or, if the Common Shares are not listed and posted for trading on the TSXV, the NYSE or such other stock exchange or over-the-counter market on which the Common Shares may be listed or quoted); |
(i) | “TSXV” means the TSX Venture Exchange. |
(j) | “U.S. Person” means a “U.S. person” as such term is defined in Rule 902(k) of Regulation S; |
(k) | “U.S. Securities Act” means the United States Securities Act of 1933, as amended; |
(l) | “United States” means “United States” as such term is defined in Rule 902(l) of Regulation S; and |
(m) | “Warrant Certificate” means this certificate representing the Warrants. |
2. Exercise of Warrants.
(a) The Warrants may be exercised in whole or in part from time to time in the sole discretion of the Holder by delivery to the Corporation at its principal office in Montreal, Québec, of a written notice of exercise (an “Exercise Form”) in the form attached as Schedule “A” hereto prior to the Expiry Time specifying the number of Warrant Shares with respect to which the Warrants are then being exercised and accompanied by payment in full of the purchase price for the Warrant Shares then being purchased and the original copy of this Warrant Certificate. The Holder shall be entitled at its discretion to pay the purchase price for the Warrant Shares being purchased either in U.S. dollars or in Canadian dollars, it being agreed that in the event the purchase price is paid in Canadian dollars, the exchange rate shall be determined using the closing rate published by The Bank of Canada on the last Business Day prior to delivery of the Exercise Form. In the event that the Holder subscribes for and purchases less than the full number of Warrant Shares entitled to be subscribed for and purchased under this Warrant Certificate prior to the Expiry Time, the Corporation shall issue a new certificate to the Holder in the same form as this Warrant Certificate with appropriate changes, such certificate to be delivered by courier to the Holder concurrently with the delivery by courier to the Holder of the certificates representing, or other evidence of ownership of, the Warrant Shares acquired on exercise.
(b) Upon due exercise of the Warrants by the Holder, the Warrant Shares so subscribed for shall be deemed to have been issued as fully paid and non-assessable shares and the person to whom such Warrant Shares are to be issued shall be deemed to have become the holder of record of such Warrant Shares on the date of exercise unless the transfer books of the Corporation shall be closed on such date, in which case the Warrant Shares so subscribed for shall be deemed to have been issued and such person shall be deemed to have become the holder of record of such Warrant Shares on the date on which such transfer books were reopened and such Warrant Shares shall be issued at the Exercise Price in effect on the date of exercise.
(c) Notwithstanding the partial exercise of the Warrants by the Holder, the Warrants may be exercised at any time (and from time to time) prior to the Expiry Time for all or any part of the Warrant Shares which, prior to such time, have not been issued to the Holder.
(d) The Corporation shall use its reasonable best efforts to cause a certificate or other electronic form evidencing the number of Warrant Shares so subscribed for to be delivered by courier or by email to the person in whose name such Warrant Shares are to be issued (as specified in Exercise Form) at the address specified in the notice of exercise, within five (5) Business Days thereafter.
33
(e) | Subject to the terms hereof, this Warrant Certificate may be transferred, subject to the terms set forth in the transfer form attached as Schedule “B” hereto (“Transfer Form”). No transfer of this Warrant Certificate shall be effective unless this Warrant Certificate is accompanied by a duly executed Transfer Form or other instrument of transfer in such form as the Corporation may from time to time prescribe, together with such evidence of the genuineness of each endorsement, execution and authorization and of other matters as may be required by the Corporation, and delivered to the Corporation. No transfer of this Warrant Certificate shall be made if, in the opinion of counsel to the Corporation, such transfer would result in the violation of any applicable securities laws. Subject to the foregoing, the Corporation shall issue and mail, as soon as practicable, and in any event within five (5) Business Days of the receipt by the Corporation of this Warrant Certificate and the Transfer Form, a new Warrant Certificate (with or without legends as determined by the Corporation) registered in the name of the transferee or as the transferee may direct and shall take all other necessary actions to effect the transfer as directed. |
(f) | The Warrants and the Warrant Shares issuable upon exercise of the Warrants have not been and will not be registered under the U.S. Securities Act. |
(g) | If this Warrant includes a legend describing transfer restrictions imposed by the U.S. Securities Act or state securities laws, then this Warrant may be offered, sold, pledged or otherwise transferred only if: (A) the sale is to the Corporation; (B) the sale is made outside the United States in accordance with Rule 904 of Regulation S and in compliance with applicable local laws and regulations; (C)(i) the sale is made in accordance with the exemption from registration provided by Rule 144A under the U.S. Securities Act, if available, to a person who the Holder reasonably believes is a “qualified institutional buyer” within the meaning of said Rule 144A that is purchasing for its own account or for the account of a qualified institutional buyer and to whom notice is given that the offer, sale or transfer is being made in reliance on Rule 144A, and in accordance with applicable state securities laws or (ii) the sale is made pursuant to Rule 144 under the U.S. Securities Act, if available, and in accordance with applicable state securities or “blue sky” laws; or (D) the sale is made in a transaction (other than a transaction described in subparagraphs (A), (B) or (C) above) that does not require registration under the U.S. Securities Act or any applicable state securities or “blue sky” laws governing the offer and sale of such securities; and, with respect to an offer, sale, pledge, transfer or other disposition made under subparagraph (C) or (D) above (and, if required by any transfer agent for the applicable securities, subparagraph (B) above) the Holder has, prior to such sale, furnished to the Corporation an opinion of counsel, which opinion shall be reasonably satisfactory in form and substance to the Corporation and shall confirm the compliance of such transaction with the registration requirements of the U.S. Securities Act, all applicable “blue sky” or state securities laws or exemptions therefrom. No transfer of the Warrants represented by this Certificate shall be made if in the opinion of counsel to the Corporation such transfer would result in the violation of any applicable securities laws. |
(h) | This Warrant may not be exercised by, or for the account or benefit of, a U.S. Person or a person in the United States unless (A) an exemption from the registration requirements of the U.S. Securities Act and all applicable state securities laws is available to the Holder hereof or the Common Shares issuable upon exercise is not otherwise subject to the registration requirements of the U.S. Securities Act and the Holder has furnished an opinion of counsel in form and substance reasonable satisfactory to the Corporation to such effect or, at the Corporation’s option, as applicable, other evidence of exemption satisfactory to the Corporation; or (B) the Holder is an “accredited investor” that satisfies one or more of the criteria set forth in Rule 501(a) of Regulation D under the U.S. Securities Act, it has delivered a United States accredited investor certificate to the Corporation in form and substance reasonable satisfactory to the Corporation in connection with the exercise of the Warrants, and the representations, warranties and covenants made by the Holder therein are true and correct on the date of exercise of the Warrants in respect to the exercise of the Warrants and it represents to the Corporation as such. |
(i) The following shall apply to Holders of Warrants and Warrant Shares that are not U.S. Persons and not in the United States:
(i) | the Warrants and the Warrant Shares issuable upon exercise of the Warrants are subject to a forty (40) day “distribution compliance period” (as defined in Regulation S, the “Distribution Compliance Period”), and the Warrants or Warrant Shares may not be offered or sold, prior to the expiration of the Distribution Compliance Period, unless (A) in accordance with Rule 903 or 904 of Regulation S; (B) pursuant to an effective registration statement under the U.S. Securities Act; or (C) pursuant to an available exemption from the registration requirements of the U.S. Securities Act and upon delivery of an opinion of counsel reasonably satisfactory to the Corporation to such effect. |
3. Rights of Holder Before Exercise of Warrants
The Holder shall not have any rights whatsoever as a shareholder in respect of the Warrant Shares until the Warrants are exercised, in whole or in part, and payment for the Warrant Shares thereby purchased has been made.
4. Adjustments to Number or Kind of Securities Issuable on Exercise
(a) | If, at any time prior to the Expiry Time, there occurs: |
(i) | a reclassification or redesignation of the Common Shares or any other capital reorganization other than a Common Share Reorganization (as defined below); or |
(ii) | a consolidation, merger or amalgamation of the Corporation with or into any other corporation or entity or an arrangement with any other corporation or entity which results in the cancellation, reclassification or redesignation of the Common Shares or a change or conversion of the Common Shares into other shares or securities or the holders of the Common Shares becoming entitled to receive shares or other securities of the other corporation or entity, or the transfer of all or substantially all of the assets of the Corporation to another corporation or entity in which the holders of Common Shares are entitled to receive shares, other securities or other property, or the Corporation being controlled (within the meaning of the Income Tax Act (Canada)) by another corporation or entity; |
(any such event being herein called a “Capital Reorganization”), then, immediately upon the effective time of such Capital Reorganization and at all times thereafter, a Holder who exercises its right to subscribe for Warrant Shares shall be entitled to receive and shall accept for the same aggregate consideration, upon such exercise, in lieu of the number of Warrant Shares that it was theretofore entitled to receive upon exercise of the Warrants, the kind and aggregate number of shares or other securities or property that the Holder would have been entitled to receive upon such Capital Reorganization if, at the effective time thereof, the Holder had been the registered holder of the number of Warrant Shares that it was theretofore entitled to receive upon exercise of the Warrants.
34
(b) | If necessary as a result of any Capital Reorganization, appropriate adjustments shall be made in the application of the provisions of this section with respect to the rights and interest thereafter of the Holder to the end that the provisions set forth in this section shall thereafter correspondingly be made applicable as nearly as may reasonably be practicable in relation to any shares or other securities or property thereafter issuable and deliverable upon the exercise of the Warrants. |
(c) | If at any time after the date hereof and prior to the Expiry Time any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of Section 5, then the number of Warrant Shares issuable upon the subsequent exercise of the Warrants shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Warrant Shares issuable upon the exercise of the Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction employed in the adjustment or readjustment of the Exercise Price. |
5. Adjustment of Exercise Price
(a) | If, at any time prior to the Expiry Time, the Corporation shall: |
(i) | subdivide, re-divide or change the outstanding Common Shares into a greater number of shares; |
(ii) | reduce, combine or consolidate the outstanding Common Shares into a lesser number of shares; or |
(iii) | fix a record date for the issue or distribution (other than a distribution referred to in subsection 5(c) of this Warrant Certificate) to the holders of all or substantially all of the Common Shares payable in Common Shares or securities exchangeable for or convertible into Common Shares; |
(any such event being herein called a “Common Share Reorganization”), then the Exercise Price shall be adjusted, effective immediately after the effective date or record date at which holders of Common Shares are determined for the purposes of the Common Share Reorganization, by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction of which:
A. | the numerator shall be the number of Common Shares outstanding on such effective date or record date before giving effect to such Common Share Reorganization; and |
B. | the denominator shall be the number of Common Shares outstanding immediately after giving effect to such Common Shares Reorganization, including, without limitation, in the case of a distribution of securities exchangeable for or convertible into Common Shares, the number of Common Shares that would have been outstanding if such securities had been exchanged for or converted into Common Shares on such date. |
To the extent that any adjustment in the Exercise Price occurs pursuant to this subsection (a) as a result of the fixing by the Corporation of a record date for the distribution of securities exchangeable for or convertible into Common Shares, the Exercise Price shall be readjusted immediately after the expiration of any relevant exchange or conversion right to the Exercise Price which would then be in effect based upon the number of Common Shares actually issued and remaining issuable pursuant to such exchangeable or convertible securities after such expiration.
(b) | If, at any time prior to the Expiry Time, the Corporation shall fix a record date for the issue to the holders of all or substantially all of the Common Shares of rights, options or warrants under which such holders are entitled, during a period expiring not more than 45 days after the record date for such issue (which period is herein called the “Rights Period”), to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares at a price per share to the holder (or, in the case of securities exchangeable for or convertible into Common Shares, at an exchange or conversion price per share) of less than 95% of the Current Market Price of the Common Shares on such record date (any such event being herein called a “Rights Offering”), the Exercise Price shall be adjusted, effective immediately after the record date, to a price determined by multiplying the Exercise Price in effect on such date by a fraction of which: |
35
(i) | the numerator shall be the aggregate of: |
A. | the number of Common Shares outstanding on the record date for the Rights Offering; and |
B. | the number determined by dividing: |
(I) | either: |
(x) | the product of the number of Common Shares offered for issue during the Rights Period upon exercise of the rights, warrants or options under the Rights Offering and the price at which such Common Shares are offered; or |
(y) | the product of the exchange or conversion price of the securities so offered and the number of Common Shares for or into which the securities so offered pursuant to the Rights Offering are exchangeable or convertible, |
as the case may be, by:
(II) | the Current Market Price of the Common Shares as of the record date for the Rights Offering; and |
(ii) | the denominator shall be the aggregate of the number of Common Shares outstanding on such record date and the number of Common Shares offered pursuant to such Rights Offering (or the number of Common Shares into which the securities so offered may be exchanged or converted). |
If by the terms of the rights, options or warrants referred to in this subsection (b), there is more than one purchase, conversion or exchange price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible securities so offered, shall be calculated for purposes of the adjustment on the basis of the lowest purchase, conversion or exchange price per Common Share, as the case may be. Any Common Shares owned by or held for the account of the Corporation or any subsidiary of the Corporation shall be deemed not to be outstanding for the purpose of any such computation. To the extent that any adjustment in the Exercise Price occurs pursuant to this subsection (b) as a result of the fixing by the Corporation of a record date or the distribution of rights, options or warrants referred to in this subsection (b), the Exercise Price shall be readjusted immediately after the expiration of any relevant exchange, conversion or exercise right to the Exercise Price which would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiration.
(c) | If, at any time prior to the Expiry Time, the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the Common Shares: |
(i) | Common Shares or other securities of the Corporation including, without limitation, rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares or any property or asset of the Corporation (other than rights, options or warrants pursuant to which holders of Common Shares are entitled, during a period expiring not more than 45 days after the record date for such issue, to subscribe for or purchase Common Shares at a price per share (or in the case of securities exchangeable for or convertible into Common Shares at an exchange or conversion price per share at the date of issue of such securities) of at least 95% of the Current Market Price of the Common Shares on such record date), and including, without limitation, evidences of indebtedness; or |
(ii) | any property or other assets including, without limitation, cash, |
and such issuance or distribution does not constitute a Rights Offering or a Common Share Reorganization (any such issuance or distribution being herein called a “Special Distribution”), then the Exercise Price shall be adjusted, effective immediately after the record date at which the holders of Common Shares are determined for purposes of the Special Distribution, to a price determined by multiplying the Exercise Price in effect on the record date of the Special Distribution by a fraction of which:
36
A. | the numerator shall be the difference between: |
(I) | the product of the number of Common Shares outstanding on the record date and the Current Market Price of the Common Shares on the record date; and |
(II) | the fair market value to the holders of Common Shares, as determined by the board of directors of the Corporation acting reasonably, of the securities, rights, options, warrants, evidences of indebtedness or other assets issued or distributed in the Special Distribution; and |
B. | the denominator shall be the product of the number of Common Shares outstanding on the record date and the Current Market Price of the Common Shares on the record date. |
Any Common Shares owned by or held for the account of the Corporation or any subsidiary shall be deemed not to be outstanding for the purpose of such computation. To the extent that any adjustment in the Exercise Price occurs pursuant to this subsection (c) as a result of the fixing by the Corporation of a record date for the distribution of exchangeable or convertible securities or rights, options or warrants referred to in this subsection (c), the Exercise Price shall be readjusted immediately after the expiration of any relevant exchange, conversion or exercise right to the Exercise Price which would then be in effect if the fair market value had been determined on the basis of the number of Common Shares issued and remaining issuable pursuant to such exchangeable or convertible securities immediately after such expiration.
6. Adjustment Rules
(a) | Subject to the other provisions of this section 6, any adjustment made pursuant to sections 4 or 5 are cumulative and shall be made successively whenever any event referred to in either of such sections shall occur. |
(b) | In any case where an adjustment shall become effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event: |
(i) | issuing to the Holder, by reason of the adjustment required by such event, the additional Warrant Shares issuable upon exercise of the Warrants after such record date and before the occurrence of such event; and |
(ii) | delivering to the Holder any distributions declared with respect to such additional Warrant Shares after the exercise of the Warrants and before such event, |
provided, however, that the Corporation shall deliver to the Holder an appropriate instrument evidencing the Holder’s right, upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Warrant Shares issuable upon exercise of the Warrants and to such distributions declared with respect to any such additional Warrant Shares issuable on the exercise of the Warrants.
(c) | No adjustment in the Exercise Price shall be required unless the adjustment would result in a change of at least 1% in the Exercise Price then in effect and no adjustment shall be made in the number of Warrant Shares issuable on the exercise of the Warrants unless it would result in a change of at least one one-hundredth of a Warrant Share, provided, however, that any adjustments which, except for the provisions of this subsection (c) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment. |
(d) | No adjustment in the Exercise Price or in the number or kind of securities issuable on exercise of the Warrants shall be made in respect of any event described in sections 4 or 5 if the Holder is entitled to participate in such event (subject to TSXV acceptance) on the same terms mutatis mutandis as if the Holder had exercised the Warrants prior to or on the effective date or record date, as the case may be, of such event. |
(e) | If the Corporation shall set a record date to determine shareholders for the purpose of entitling them to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, no adjustment in the Exercise Price or the number of Warrant Shares issuable upon exercise of these Warrants shall be required by reason of the setting of such record date. |
(f) | In the absence of a resolution of the directors of the Corporation fixing a record date for a stock dividend or other distribution comprising a Common Share Reorganization, a Rights Offering or a Special Distribution, the Corporation shall be deemed to have fixed as the record date therefor the effective date of such event. |
(g) | The Corporation will not, whether pursuant to an adjustment under sections 4 and 5 or any other circumstances, be obligated to issue any fraction of a Warrant Share on any exercise or partial exercise of the Warrants. If any fractional interest in a Warrant Share would, except for the provisions of this section 5(g), be issuable upon the exercise or partial exercise of the Warrants, the number of Warrant Shares issuable shall be rounded down to the nearest whole number. |
(h) | In the event of any question arising with respect to the adjustments provided for in sections 4 or 5, such question shall conclusively be determined by a firm of reputable chartered accountants appointed by the Corporation, which accountants may be the Corporation’s auditors. Such accountants shall have access to all necessary records of the Corporation and such determination shall be binding upon the Corporation and the Holder. |
37
7. Proceedings Prior to Action Requiring Adjustment
(a) | As a condition precedent to the taking of any action that would require an adjustment pursuant to sections 4 or 5, the Corporation shall take or cause to be taken all such action as, in the opinion of counsel of the Corporation, may be necessary in order that the Holder shall be entitled to receive, upon exercise of the Warrants, the shares or other securities or property provided for under the provisions hereof. |
(b) | Adjustments to the Exercise Price or the number of Warrant Shares purchasable pursuant to this Warrant Certificate may be subject to the prior approval of the TSXV. |
8. Notice
At least twenty-one (21) days prior to any record date or effective date, as the case may be, for any event which requires or might require an adjustment in any of the rights of the Holder under this Warrant Certificate, including the Exercise Price and the number of Warrant Shares that are purchasable under this Warrant Certificate, the Corporation will deliver to the Holder, at the Holder’s registered address, a certificate of the Corporation specifying the particulars of such event and, if determinable, the required adjustment and the calculation of such adjustment. In case any adjustment has been given that is not then determinable, the Corporation will promptly after such adjustment is determinable deliver to the Holder, at the Holder’s registered address, a certificate providing the calculation of such adjustment. The Corporation hereby covenants and agrees that the register of transfers and share transfer books for the Warrant Shares will be open, and that the Corporation will not take any action that might deprive the Holder of the opportunity of exercising the rights of subscription contained in this Warrant Certificate, during such twenty-one (21) day period.
9. Replacement
Upon receipt of evidence satisfactory to the Corporation of the loss, theft, destruction or mutilation of this Warrant Certificate and, if requested by the Corporation, upon delivery of a bond of indemnity satisfactory to the Corporation (or, in the case of mutilation, upon surrender of this Warrant Certificate), the Corporation will issue to the Holder a replacement certificate (containing the same terms and conditions as this Warrant Certificate).
10. Covenants
The Corporation covenants with the Holder that so long as any obligations of the Corporation under this Warrant Certificate remain outstanding:
(a) | it will preserve and maintain its corporate existence, rights and privileges, and qualify and remain qualified as a corporation in good standing in each jurisdiction in which such qualification is required; |
(b) | it will cause the certificate(s) representing, or other evidence of ownership of, the Warrant Shares, from time to time, subscribed and paid for, upon the exercise of the Warrants, to be duly issued and delivered in accordance with the conditions hereof; |
(c) | all Warrant Shares, which shall be issued upon exercise of the Warrants and payment of the Exercise Price, shall be fully paid and non-assessable shares; |
(d) | it will reserve and keep available a sufficient number of Warrant Shares for the purpose of enabling it to satisfy its obligation to issue Warrant Shares upon the exercise of the Warrants; |
(e) | it will use all reasonable efforts to maintain its status as a “reporting issuer” or the equivalent in each of the provinces in Canada and not in default of any requirement of applicable securities laws; |
(f) | it will use all reasonable efforts to ensure that the Common Shares remain listed on either the TSXV or Toronto Stock Exchange and the NYSE |
(g) | except as required by law, it will not close its transfer books or take any other action which might deprive the Holder of the opportunity of exercising its right to subscribe for Warrant Shares pursuant to the Warrant during the period of twenty-one (21) days after the giving of a notice required by section 8 or unduly restrict such opportunity; |
(h) | it will file such forms and documents as may be required under securities laws relating to this Warrant Certificate and the transactions contemplated hereunder; and |
38
(i) | it will well and truly perform and carry out all of the acts or things to be done by it as provided by this Warrant Certificate. |
11. Representations and Warranties
The Corporation represents and warrants to the Holder that:
(a) | it is duly incorporated and validly existing under the laws of its jurisdiction and is at the date hereof up-to-date in all material corporate filings and in good standing under the laws of Canada; |
(b) | it has all requisite corporate power, authority and capacity to enter into this Warrant Certificate and to perform its obligations and complete the transactions contemplated hereunder, including the issuance of the Warrant Shares upon the exercise of the Warrants, and it and each of its subsidiaries has all requisite corporate power and authority and is duly qualified and holds all certificates, authority, permits and licences to carry on its businesses as now conducted and to own its properties and assets; |
(c) | the execution and delivery by the Corporation of this Warrant Certificate, and the performance by the Corporation of its obligations hereunder, will not (or would not with the giving of notice, the lapse of time, or both) conflict with or result in a breach of: (i) its constitutional documents, (ii) any applicable law, (iii) any agreement or instrument to which it is a party or by which it is bound or by which any of its properties or assets are bound, or (iv) any judgment, injunction, determination or award which is binding on it; |
(d) | it has obtained all required corporate authorization for the creation and issuance of the Warrants and the performance of its obligations in connection with the Warrants and has provided for the issuance, subject only to receipt by the Corporation of the Exercise Price, of the Warrant Shares which Warrant Shares, when issued, will be issued as fully paid and non-assessable shares; |
(e) | it has obtained all regulatory approvals (including, without limitation, the approvals of TSXV and NYSE) necessary or desirable for the issuance of the Warrants, the Warrant Shares to the Holder and the Warrant Shares, when issued, will be listed and posted for trading on the TSXV and the NYSE; and |
(f) | this Warrant Certificate is a valid and enforceable obligation of the Corporation, enforceable in accordance with the provisions of this Warrant Certificate. |
12. Time of the Essence
Time shall be of the essence of this Warrant Certificate.
13. Governing Law
This Warrant Certificate shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflict of laws.
14. Dispute Resolution
Any dispute, controversy, or claim arising out of, related to, or in connection with this Agreement and any dispute, controversy, or claim arising out of, related to, or in connection with the Note, the Mitsui Side Letter Agreement or the Framework Agreement (as between the Corporation and the Holder), in each case as defined under the Convertible Note Subscription Agreement entered into on October 19, 2022, by and between the Holder and the Corporation (the “Subscription Agreement”), and the Subscription Agreement, 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 Warrant Certificate, the Subscription Agreement, the Note, the Mitsui Side Letter
39
Agreement and the Framework Agreement, 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.
15. Headings
The division of this Warrant Certificate into sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Warrant Certificate. The section headings in this Warrant Certificate are not intended to be full or accurate descriptions of the text to which they refer and shall not be considered part of this Warrant Certificate.
16. Number and Gender
In this Warrant Certificate, words (including, without limitation, defined terms) in the singular include the plural and vice-versa and words in one gender include all genders.
17. Currency
Unless otherwise specifically indicated, all references in this Warrant Certificate to dollars, are to U.S. dollars.
18. Invalidity
If any provision of this Warrant Certificate is determined to be invalid or unenforceable by a court of competent jurisdiction from which no further appeal lies or is taken, that provision shall be deemed to be severed herefrom, and the remaining provisions of this Warrant Certificate shall not be affected thereby and shall remain valid and enforceable.
19. Amendment
This Warrant Certificate may only be amended, supplemented or otherwise modified by a written agreement signed by the Corporation and the Holder.
20. Further Assurances
The Corporation shall do such acts and shall execute such documents and will cause the doing of acts and will cause the execution of such further documents as are within its power in order to give full effect to the provisions of this Warrant Certificate.
21. Hold Periods, Legends and Re-sale Restrictions
(a) | If any of the Warrants are exercised prior to March 9, 2023, the certificates representing, or other evidence of ownership of, the Warrant Shares to be issued pursuant to such exercise shall bear the following legends: |
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY SHALL NOT TRADE THE SECURITY BEFORE MARCH 9, 2023.”
40
(b) | If any Warrants are exercised in the United States or by or on behalf, or for the account or benefit of, of a U.S. Person, the certificates representing, or other evidence of ownership of, the Warrant Shares to be issued pursuant to such exercise shall bear the following legend: |
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF NOUVEAU MONDE GRAPHITE INC. (THE “CORPORATION”) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH (I) THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144A UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN SUCH RULE 144A) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN THAT THE OFFER, SALE OR TRANSFER IS BEING MADE IN RELIANCE ON SUCH RULE 144A, OR (II) RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, AND, IN THE CASE OF (C) AND (D), THE SELLER FIRST FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
(i) | further, the Holder understands and acknowledges that, until such time as the Warrant Shares are no longer restricted securities pursuant to Rule 144(a)(3) under the U.S. Securities Act, the Warrant Shares may not be offered or sold or otherwise transferred, directly or indirectly, in the United States or to, or for the account or benefit of a U.S. Person, and it will not deposit any of the Warrant Shares with Cede & Co. or any successor thereto and it will also cause any nominee holding the Warrant Shares on its behalf to comply with the foregoing re-sale and transfer restrictions. In addition, if the Warrants are exercised in the United States or by or on behalf of, or for the account or benefit of, a U.S. Person, the Holder exercising such Warrants will be deemed to have represented to the Corporation that the Holder has implemented appropriate internal controls and procedures to ensure that the Warrant Shares shall be properly identified in its records as restricted securities under the U.S. Securities Act that are subject to the re-sale and transfer restrictions set forth herein; |
(ii) | provided that, if the Warrants or Warrant Shares are being sold outside the United States in compliance with the requirements of Rule 904 of Regulation S and in compliance with local laws and regulations, the legend may be removed by providing a declaration to the registrar and transfer agent of the Corporation, in substantially the form set forth as Schedule “C” hereto (or in such other form as the Corporation may prescribe from time to time), together with such other evidence as the Corporation or its transfer agent may require, which may include, but is not limited to, an opinion of counsel reasonably satisfactory to the Corporation, to the effect that the transfer may be completed and the legend removed without registration under the U.S. Securities Act or any applicable state securities or “blue sky” laws; and |
(iii) | provided further, if the Warrants or Warrant Shares are being sold pursuant to clause (C) or (D), the legend may be removed by delivery to the registrar and transfer agent of the Corporation of an opinion of counsel, reasonably satisfactory to the Corporation, to the effect that such legend is no longer required under applicable requirements of the U.S. Securities Act or any applicable state securities or “blue sky” laws. |
22. Successors and Assignment
Subject to compliance with all applicable securities legislation and the rules and regulations of the TSXV and NYSE, this Warrant Certificate and the rights evidenced by this Warrant Certificate may be transferred or assigned by the Holder to a third party in accordance with Section 2(g).
This Warrant Certificate shall enure to the benefit of and be binding upon the Corporation, the Holder and their successors. Reference in this Warrant Certificate to a “successor” of any body corporate shall be construed so as to include, but not limited to:
(a) | any amalgamated or other corporation of which such body corporate or any of its successors is one of the amalgamating or merging corporations; |
41
(b) | any corporation resulting from any court approved arrangement of which such body corporate or any of its successors is a party; |
(c) | any corporation resulting from the continuance of such body corporate or any successor of it under the laws of another jurisdiction of incorporation; and |
(d) | any successor (determined as aforesaid or in any similar or comparable procedure under the laws of any other jurisdiction) of any corporation referred to in clause (a), (b) or (c). |
23. Day not a Business Day
In the event that any day on or before which any action is required to be taken hereunder is not a Business Day, then such action shall be required to be taken on or before the requisite time on the next succeeding day that is a Business Day.
24. Signature and Electronic Copies
This Warrant Certificate may be signed digitally or by other electronic means, which shall be deemed to be an original and shall be deemed to have the same legal effect and validity as a certificate bearing an original signature. A signed copy of this Warrant Certificate transmitted by facsimile, email or other electronic transmission shall be deemed to have the same legal effect and validity as delivery of an originally executed copy of this Warrant Certificate, provided that if this Warrant Certificate bears a digital or electronic signature as contemplated above and the Corporation is delivering this Warrant Certificate by electronic transmission pursuant to this Section 24, then the Corporation represents to the Holder that the electronically transmitted Warrant Certificate is the only executed copy to be issued to the Holder by the Corporation.
[INTENTIONALLY LEFT BLANK]
42
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be executed by their duly authorized officers as of [•], 2022.
NOUVEAU MONDE GRAPHITE INC. | ||
Per: |
| |
Name: Eric Desaulniers | ||
Title: President and Chief Executive Officer | ||
Per: |
| |
Name: Charles-Olivier Tarte | ||
Title: Chief Financial Officer |
SCHEDULE “A”
WARRANT EXERCISE FORM
TO: NOUVEAU MONDE GRAPHITE INC. (the “Corporation”)
In accordance with the provisions of a warrant certificate dated [•], 2022 between the undersigned and the Corporation (the “Warrant Certificate”), the undersigned hereby exercises the Warrants, as indicated below:
# of Warrant Shares Purchased | Exercise Price/Share | Total Price | ||
| US$ | US$ |
Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Warrant Certificate.
In connection with the exercise of the Warrant Certificate, the undersigned represents as follows: (Please check the ONE box applicable):
☐ | A. The undersigned hereby certifies that: (a) at the time of exercise, it is not a U.S. Person or a person in the United States, (b) did not execute or deliver this Warrant Exercise Form while within the United States, (c) it is not exercising any of the Warrants represented by the Warrant Certificate by or on behalf of, or for the account of benefit of, a U.S. Person or a person in the United States; and (d) it has in all other respects complied with the terms of Regulation S or any successor rule or regulation of the United States Securities and Exchange Commission in effect; |
☐ | B. The undersigned holder hereby certifies that it is an “accredited investor” that satisfies one or more of the criteria set forth in Rule 501(a) of Regulation D under the U.S. Securities Act, it has delivered a United States accredited investor certificate to the Corporation in form and substance reasonable satisfactory to the Corporation in connection with the exercise of the Warrants, and the representations, warranties and covenants made by the Holder therein are true and correct on the date of exercise of the Warrants in respect to the exercise of the Warrants and it represents to the Corporation as such; or |
☐ | C. The undersigned holder is delivering a written opinion of United States counsel in form and substance reasonably satisfactory to the Corporation to the effect that the Warrant Shares to be delivered upon exercise hereof have been registered under the U.S. Securities Act and all applicable state securities laws or are otherwise exempt from registration thereunder. |
Notes:
1. | Warrant Shares will not be registered or delivered to an address in the United States unless Box B or C above is checked and the undersigned, upon exercise, will be deemed to have represented and warranted that it will comply with the re-sale and transfer restrictions set forth in Section 20 of the Warrant Certificate. |
2. | If Box B above is checked, holders are encouraged to consult with the Corporation in advance to determine whether the United States accredited investor certificate tendered in connection with the exercise will be in form and substance reasonably satisfactory to the Corporation. |
3. | If Box C above is checked, holders are encouraged to consult with the Corporation in advance to determine whether the legal opinion tendered in connection with the exercise will be in form and substance reasonably satisfactory to the Corporation. |
To pay for that portion of the Warrants being exercised, the undersigned, encloses a certified cheque or bank draft in [U.S.]/[Canadian] currency made payable to the Corporation in the amount of [US/CDN]$ [•][, representing the Canadian equivalent of the purchase price for the Warrant Shares purchased hereunder, determined in accordance with the terms of the Warrant Certificate].
44
The undersigned hereby directs that the Warrant Shares be issued as follows:
NAME(S) IN FULL | ADDRESS(ES) | NUMBER OF WARRANT SHARES | ||
The Warrant Certificate issued representing the Warrant Shares following this exercise is to be in the name indicated below and, if issued, Warrants Certificate is to be forwarded to the undersigned at the address set forth below:
Name: | ||
Address: |
If the Warrant Exercise Form indicates that Warrant Shares are to be issued to a person or persons other than the registered holder of the Warrant Certificate, the signature on this Warrant Exercise Form must be guaranteed by a Canadian chartered bank, or eligible guarantor institution with membership in an approved signature guarantee medallion program. The guarantor must affix a stamp bearing the actual words “Signature Guaranteed”.
[Signature page follows.]
45
Dated this___________________________ day of ________________, 20___
Signature of Holder guaranteed by: _______________________________________________________
Medallion Signature Guarantee Stamp: |
Signature of Holder |
Name of Holder |
Name of Authorized Representative |
Address of Holder |
46
SCHEDULE “B”
TRANSFER FORM
FOR VALUE RECEIVED, the undersigned (the “Transferor”) hereby sells, assigns and transfers unto , (the “Transferee”) (include name and address of the transferee) ____________________ (number of Warrants) Warrants exercisable for common shares of Nouveau Monde Graphite Inc. (the “Corporation”) registered in the name of the undersigned on the register of the Corporation maintained therefor, and hereby irrevocably appoints the Corporate Secretary of the Corporation as the attorney of the undersigned to transfer the said securities on the books maintained by the Corporation with full power of substitution.
Capitalized terms not defined herein have the meaning set out in the attached Warrant Certificate dated , 2022 (the “Warrant Certificate”).
DATED this _______ day of ___________________, 20___.
Signature of Transferor guaranteed by: |
|
If the Warrant Certificate includes a legend describing transfer restrictions imposed by the U.S. Securities Act or state securities laws, then the undersigned hereby represents, warrants and certifies that (one (only) of the following must be checked):
☐ | A. the transfer is being made only to the Corporation; |
☐ | B. the transfer is being made outside the United States in accordance with Rule 904 of Regulation S and in compliance with all applicable local securities laws and regulations; |
☐ | C. the transfer is being made pursuant to the exemption from the registration requirements of the U.S. Securities Act provided by (i) Rule 144 under the U.S. Securities Act or (ii) Rule 144A under the U.S. Securities Act, and in either case in accordance with all applicable state securities laws; or |
☐ | D. the transfer is being made in another transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws; |
Notes:
1. | In the case of a transfer in accordance with Box B, the Corporation shall first have received an executed declaration in the form set forth as Schedule “C” of the Warrant Certificate. |
2. | In the case of a transfer in accordance with Box C or Box D, the Corporation shall first have received an opinion of counsel in form and substance reasonably satisfactory to the Corporation, to such effect. |
3. | If Box C or Box D above is checked, holders are encouraged to consult with the Corporation in advance to determine whether the legal opinion tendered in connection with the exercise will be in form and substance reasonably satisfactory to the Corporation, to such effect. |
4. | Certificates will not be registered or delivered to an address in the United States unless either of Box C or Box D above is checked. |
5. | In the case of a transfer within the United States to, or for the account or benefit of a U.S. Person or to a person in the United States, the certificates representing the Warrants will be endorsed with a United States restrictive legend. |
47
Medallion Signature Guarantee Stamp
Signature of Transferor |
Name of Transferor |
Name of Authorized Representative |
Address of Transferor |
48
It is understood that the Corporation may require additional evidence necessary to verify the foregoing.
DATED this _______ day of ___________________, 20___.
Signature of Transferor |
Name of Transferor |
Name of Authorized Representative |
Address of Transferor |
Note:
The signature of the Transferor must correspond with the name written upon the face of this Warrant Certificate in every particular without any changes whatsoever.
49
SCHEDULE “C”
FORM OF DECLARATION FOR REMOVAL OF U.S. LEGEND
TO: | Nouveau Monde Graphite Inc. | |
AND TO: | The registrar and transfer agent for the securities of Nouveau Monde Graphite Inc. |
The undersigned (A) acknowledges that the sale of the securities of Nouveau Monde Graphite Inc. (the “Corporation”) to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) and (B) certifies that (1) the undersigned is not an “affiliate” of the Corporation (except any officer or director who is an affiliate solely by virtue of holding such position) as that term is defined in Rule 405 under the U.S. Securities Act, a “distributor” or an affiliate of “distributor”, (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed on or through the facilities of a “designated offshore securities market” (as defined in Rule 902 of Regulation S under the U.S. Securities Act) and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on their behalf has engaged or will engage in any “directed selling efforts” in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purpose of “washing-off” the resale restrictions imposed because the securities are “restricted securities” as that term is described in Rule 144(a)(3) under the U.S. Securities Act, (5) the seller does not intend to replace such securities sold in reliance on Rule 904 of the U.S. Securities Act with fungible unrestricted securities, and (6) the sale is not a transaction, or part of a series of transactions, which, although in technical compliance with Regulation S under the U.S. Securities Act, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act. Unless otherwise specified, terms set forth above in quotation marks have the meanings given to them by Regulation S under the U.S. Securities Act. The undersigned in making this Declaration acknowledges that the Corporation is relying on the contents hereof and hereby agrees to indemnify and hold harmless the Corporation for any and all liability, losses, claims and demands in any way related to the subject matter of this Declaration.
DATED at __________________________ this _______ day of _______________, 20__.
By: | X |
| ||
Name: | ||||
Title: |
50