AAA,

Until now we’ve been exposed to very few aspects of the negotiation so we
kindly ask you to confirm if the following assumptions about the deal
conditions are correct:

a. YYY will be in charge of three diferent obligations:

(i) An obligation of transfering technology to XXX through a design
of a plant with the aplication of proprietary non patenteable
technology appropriate for convertion of spodumene to lithium
carbonate and lithium hydroxide. This technology to be supplied
shall be comitted to a certain price/capex threshold and technical
performance of the plant after comissioning
(ii) An obligation to provide technical assistance to the New
Plant/Newco through personel on site at the plant. These
professionals will be in charge of training the Brazilian team and
guarantiing proper levels of performance during a certain period
of time
(iii) YYY will make cash inflow investment in the New Plant/Newco
equivalent of 10% of total issued shares with the same per value of
subscribed shares by XXX NV

Taking into account the foregoing assumptions we stronYYYy recommend you

to discuss and define the corporate arrangement with YYY driven by the
following legal aspects:

1. Interference and/or participation over New business decision making

process from YYY perspective
2. Tax cost efficiency over all kind of payments and remuneration to be
remitted to YYY
3. Legal exposure of YYY to New Business liabilities and obligations
4. Enforceability of conditions assumed by YYY with XXX in concern with
minimum levels of performance and transference of technology

Follow below few considerations about the legal treatment of the various forms
of companies in Brazil (including SCPs) and some other legal aspects that will
be of a higher relevance for the New Business arrangement definitions towards
the most posssible efficiency:

A. Company Types
a. Non incorporated or Silent Partnership (SCPs)
1. Is an unincorporated organization of which two or more members
carry on a business and share its profits;

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2. This type of structure is not widely applied to mining projects;
3. Usually the SCP’s are applied to ventures with a determined
object and due to such the duration of the company will be for a
determined period;
4. One of the partners is assigned as the “ostensible partner”, and
carries out SCPs entire operations under his own name;
5. The ostensible partner is held responsible, joint and unlimitedly,
for the partnership’s liabilities before third parties;
6. The other members are the “silent partners”, such partners are
only liable to the “ostensible partner”. Silent partners are not liable
before third parties such as employees, clients, IRS, Environmental
Public Bodies and likewise. Their liability’s amount is limited to the
one held by the “ostensible partner”
7. This structure works as a private agrement between ostensible x
silent partners except for tax purposes. Tax law considers that SCPs
are equivalent to corporate entities for purposes of Income Tax. Due
to this legal aspect, the dividends and profits distribution by SCPs
are exempt of taxes

b. Limitadas
1. Is the most common type of legal entities incorporated under the
Brazilian Corporate law. Such, is the form that most closely
resembles US LLCs.
2. The responsibility of each quotaholder is limited to the amount of
his quotas
3. Is incorporated through an Articles of Association, which must be
duly registered before the Board of Trade. Must be form for at least
two quotaholders, resident or snonresident
4. Nonresident quotaholders must be represented by an individual
resident in Brazil
5. It has less legal formalities than a corporation and no financial
statements must be published in official gazettes or major private
newspapers unless the legal entity qualifies under the "Super
Limitada" threshold. Under such concept, local financial statements
of the Brazilian entity may be subject to a statutory accounting audit
if book value of assets is higher than R$240 million, or gross revenue
in excess of R$300 million/year (including for this purpose the other
companies of the group)
6. The effective control of the “Ltda.” is exercised by the quotaholder
representing 75% (or more) of the quotas and as a rule a member
may not sell its quota without the consent of the other quotaholders

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c. Limited Liability Corporation (S/A)
1. Type of organization adopted by the companies of the group:
LSM, XXX Mineração and XXX Mineração de Lítio S/A
2. Corporations are allowed to issue different classes of shares, such
as voting and non-voting shares
3. Shareholders liability is limited to the payment of the shares to
which the shareholders have subscribed
4. Foreign shareholders must have legal representatives in Brazil.
5. The S.A must have at least two shareholders which may be
individuals and/or legal entities (resident or non-resident)
6. A corporation may be either a publicly traded corporation
("Sociedade por Ações Aberta"), or a closed corporation ("Sociedade
por Ações Fechada"), whose shares and securities are not available to
the general public
7. The Corporate Capital of the Corporation must be totally
subscribed and at least 10%, of the subscribed capital must be
deposited in a bank in order to incorporate such type of entity
8. At least 5% of annual net income must be set aside in a legal
reserve until it reaches 20% of capital
9. The control is exercised by the majority (50% of voting shares +1)
which means the minority shareholder can be the controller in case
the other shareholders do not attend the General Meetings (and don
´t vote) and when the minority is part of a Shareholders Agreement
10. Corporations are required to file their financial statements
with the local commercial registry and publish them in the Official
Gazette, as well as in a major private newspaper
11. Finally, it is important to highlight that the Corporations
must adopt at least the following administration bodies: (i) Board of
Directors and (ii) Supervisory/Administrative Council. The members
of the Board of Director must be fiscal residents in Brazil or having a
permanent visa. Members of the Administrative Council can be
foreigners and not necessarily resident in Brazil

d. Consortium
1. Is an unincorporated entity, by virtue of which two or more
partners intend to carry on a business and share its profits
2. Consortium agreement does not imply in joint liability of its
partners, being each one responsible only for their own obligations,
according to the provisions of respective consortium agreement
3. The consortium agreement shall determine with more detail the
organization role of each consortium and providing the obligations
and rights of each partner in order to carry on a certain enterprise

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 4. The consortium agreement must be filed with the local Board of
Trade (“Junta Comercial”) located in the same jurisdiction of its main
office
5. From a tax standpoint, since the consortium does not constitute a
corporate entity as such, it is not regarded as a taxpayer for income
tax purposes

B. Intellectual Property Licenses and Transfer of Technology

a. Types of agreements subject to registration with the INPI
i. Supply of Technology Agreements
1. must be registered with the INPI to be effective vis-
à-vis third parties
2. Brazilian laws limit the tax deduction of payments
remitted in consideration for the supply of
technology. This limit varies according to the
industry involved, reaching a maximum of 5
percent, calculated upon net sales of the products
manufactured under the agreement, and includes
payments in consideration for the transfer of
technology, rendering of technical assistance and
licensing of patents and trademarks in aggregate
3. In case of an agrément entered into with a foreign
related company, the same percentage applies as a
limit for remittance of payments.

ii. Specialized Technical Services and Technical Assistance

Agreements
1. includes agreements regarding services that envolve
technology transfer (i.e., technical assistance
agreements for the incorporation/absorption of the
technology by the recipient company) or services
related to the main industrial activity of the
recipiente company (i.e., specialized technical
services in connection with the engineering project
for a manufacturing facility, start-up of a production
or assembly line and installation of industrial
equipment, among others). They are also subject to
registration with the INPI
2. temporary work visas to expatriate professionals
whom need to render services locally may be issued
grounded on a Technical Assistance Agreement

C. Foreign Capital in Brazil

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 a. Investments
Foreign direct equity investments under Brazilian law includes:
a. items imported by entities with headquarters
in Brazil as capital contributions (e.g.,
machinery, equipment);
b. capitalization of foreign credits which are
remittable by Brazilian companies abroad;
and
c. the inflow of foreign funds to Brazil as capital
contribution.

b. Registration of Foreign Direct Equity Investments

i. Foreign direct equity investment registration is carried out
through Central Brank - BACEN
ii. A company may only remit dividends/profits to a
nonresident or/and effect the repatriation of foreign capital
invested in Brazil should the foreign investment made by
the foreign parent company has been previously and duly
registered with BACEN

c. Conversion of Credits
i. Foreign capital registration is also required upon the
conversion of credits held by the foreign stockholder
against its Brazilian subsidiary. Credits remittable abroad,
such as those related to principal or interest of loans,
service fees, and royalties, among others, can be converted
into equity of the Brazilian company. For this purpose, a
conversion process will be carried out, involving the
implementation of symbolic/simultaneous foreign
exchange operations representing the payment of the debt
and the inflow of the corresponding funds to Brazil as
capital contribution. In case of conversion of amounts
subject to taxation, such as interest accrued on loans, the
company must present the tax payment evidence to the
commercial bank carrying out the symbolic/simultaneous
foreign exchange operation.

D. Possible Corporate Arrengements between YYY and XXX based on the

legal premisses above mentioned
a. Option 1 – Arrangement with a SCP
i. YYY establishes a subsidiary in Brazil in order to remit the
cash inflow capital. This is mandatory due to the fact YYY
may not remit it directly to SCP once it is an

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 unincorporated entity and the foreign investment will not
be able to registration before Central Bank
ii. YYY Brazilian subsidiary enter into a SCP agreement with
XXX vehicle (Newco) that will explore the business. Newco
shall figure as Ostensive Partner of SCP. The Newco could
be XXX Mineração or XXX Mineração de Lítio S/A (which
has never had any kind of operation before)
iii. By this SCP Agreement YYY Brazil pays the cash inflow
capital of USD 10 KK to Newco and become eligible to
receive a stake of acrrued dividends/profits from the
lithium business
iv. Newco enter into a Technology Transfer Agreement and a
Technical Assistance Agreement with YYY China in order
to:
1. Be able to pay royalties abroad;
2. Employ expatriates legally with temporary work
visas
3. Accrue the benefits of the deduction of royalties paid
abroad until the threshold of 5% of net sales
4. Charge and impose contractual penalties to YYY
China (such as royalties retention) in case of lack of
performance of the plant

E. Option 2 – Corporate Arrangement directly with YYY China without a

SCP
i. Newco (XXX Mineração de Lítio S/A) begins to operate on
a form of a S/A
ii. Newco shall operate the new lithium business separately
from XXXs other activities
iii. YYY China subscribe capital of USD 10 KK on Newco and
become eligible to receive dividends/profits to be remitted
abroad. Unproportional dividends distribution is not
allowed on this type of company
iv. YYY China may be eligible to define a certain numbers of
chair at the Supervisory/Administrative Council of Newco
v. XXX will exercise control of Newco once it will be the
major partner with more than 50% of voting shares
vi. Newco should still enter into a Technology Transfer
Agreement and a Technical Assistance Agreement with
YYY China in order to:
1. Be able to pay royalties abroad;
2. Employ expatriates legally with temporary work
visas

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3. Accrue the benefits of the deduction of royalties paid
abroad until the threshold of 5% of net sales
4. Charge and impose contractual penalties to YYY
China (such as royalties retention) in case of lack of
performance of the plant

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