ループインダストリーズの四半期報告

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended May 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ___________ to __________

Commission File No. 000-54768

Loop Industries, Inc.

(Exact name of Registrant as specified in its charter)

Nevada		27-2094706
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

480 Fernand-Poitras Terrebonne, Québec, Canada J6Y 1Y4

(Address of principal executive offices zip code)

Registrant’s telephone number, including area code (450) 951-8555

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	LOOP	Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As at July 11, 2023, there were 47,521,187 shares of the Registrant’s common stock, par value $0.0001 per share, outstanding.

LOOP INDUSTRIES, INC.

TABLE OF CONTENTS

		Page No.
PART I. Financial Information

Item 1.	Financial Statements		F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		17
Item 4.	Controls and Procedures		17

PART II. Other Information

Item 1.	Legal Proceedings		18
Item 1A.	Risk Factors		18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3.	Defaults Upon Senior Securities		19
Item 4.	Mine Safety Disclosures		19
Item 5.	Other Information		19
Item 6.	Exhibits		20

	Signatures		21

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Loop Industries, Inc.

Three months ended May 31, 2023

Index to the Unaudited Interim Condensed Consolidated Financial Statements

Contents		Page(s)

Condensed consolidated balance sheets as at May 31, 2023 (Unaudited) and February 28, 2023		F‑2

Condensed consolidated statements of operations and comprehensive loss for the three months ended May 31, 2023 and 2022 (Unaudited)		F‑3

Condensed consolidated statements of changes in stockholders’ equity for the three months ended May 31, 2023 and 2022 (Unaudited)		F‑4

Condensed consolidated statements of cash flows for the three months ended May 31, 2023 and 2022 (Unaudited)		F‑5

Notes to the condensed consolidated financial statements (Unaudited)		F‑6

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Loop Industries, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands of U.S. dollars, except per share data)	As at
	May 31, 2023			February 28, 2023

Assets
Current assets
Cash and cash equivalents	$	21,970		$	29,591
Restricted cash		1,000			1,000
Sales tax, tax credits and other receivables (Note 3)		1,158			1,075
Inventories (Note 4)		871			727
Deposits on machinery and equipment (Note 5)		5,430			3,395
Prepaid expenses and other deposits (Note 5)		710			636
Total current assets		31,139			36,424
Investment in joint venture		381			381
Property, plant and equipment, net (Note 6)		2,446			2,545
Intangible assets, net (Note 7)		1,278			1,210
Total assets	$	35,244		$	40,560

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued liabilities (Note 9)	$	3,828		$	2,510
Customer deposits		1,000			1,012
Current portion of long-term debt (Note 10)		208			62
Total current liabilities		5,036			3,584
Long-term debt (Note 10)		3,098			3,240
Total liabilities		8,134			6,824

Stockholders’ Equity
Series A Preferred stock par value $0.0001; 25,000,000 shares authorized; one share issued and outstanding		-			-
Common stock par value $0.0001; 250,000,000 shares authorized; 47,521,187 shares issued and outstanding (February 28, 2023 – 47,469,224) (Note 12)		5			5
Additional paid-in capital		170,725			170,370
Additional paid-in capital – Warrants		20,385			20,385
Accumulated deficit		(162,884	)		(155,883	)
Accumulated other comprehensive loss		(1,121	)		(1,141	)
Total stockholders’ equity		27,110			33,736
Total liabilities and stockholders’ equity	$	35,244		$	40,560

Commitments (Note 17)

See accompanying notes to the condensed consolidated financial statements.

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Loop Industries, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands of U.S. dollars, except per share data)	Three Months Ended
	May 31, 2023			May 31, 2022
Revenue from contracts with customers	$	27		$	-

Expenses :
Research and development (Note 13)		4,490			6,800
General and administrative (Note 14)		2,465			11,037
Depreciation and amortization (Notes 6 and 7)		133			139
Total expenses		7,088			17,976

Other (income) loss :
Interest and other financial expenses		54			41
Interest income		(99	)		(13	)
Foreign exchange (gain) loss		(15	)		2
Total other (income) loss		(60	)		30
Net loss		(7,001	)		(18,006	)

Other comprehensive loss -
Foreign currency translation adjustment		20			(5	)
Comprehensive loss	$	(6,981	)	$	(18,011	)
Net loss per share
Basic and diluted	$	(0.15	)	$	(0.38	)
Weighted average common shares outstanding
Basic and diluted		47,516,104			47,400,571

See accompanying notes to the condensed consolidated financial statements.

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Loop Industries, Inc.

Condensed Consolidated Statement of Changes in Stockholders’ Equity

(Unaudited)

(in thousands of U.S. dollars, except for share data)	Three months ended May 31, 2022
	Common stock				Preferred stock						Additional					Accumulated
	par value $0.0001				par value $0.0001				Additional		Paid-in					Other			Total
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital		Capital – Warrants		Accumulated Deficit			Comprehensive Income (Loss)			Stockholders’ Equity
Balance, February 28, 2022		47,388,056	$	5		1	$	-	$	150,397	$	30,272	$	(134,583	)	$	(96	)	$	45,995
Issuance of shares upon the vesting of restricted stock units (Note 15)		12,653		-		-		-		-		-		-			-			-
Stock options issued for services (Note 15)		-		-		-		-		317		-		-			-			317
Restricted stock units issued for services (Note 15)		-		-		-		-		8,149		-		-			-			8,149
Foreign currency translation		-		-		-		-		-		-		-			(5	)		(5	)
Net loss		-		-		-		-		-		-		(18,006	)		-			(18,006	)
Balance, May 31, 2022		47,400,709	$	5		1	$	-	$	158,863	$	30,272	$	(152,589	)	$	(101	)	$	36,450

(in thousands of U.S. dollars, except for share data)	Three months ended May 31, 2023
	Common stock				Preferred stock						Additional					Accumulated
	par value $0.0001				par value $0.0001				Additional		Paid-in					Other			Total
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital		Capital – Warrants		Accumulated Deficit			Comprehensive Income (Loss)			Stockholders’ Equity
Balance, February 28, 2023		47,469,224	$	5		1	$	-	$	170,370	$	20,385	$	(155,883	)	$	(1,141	)	$	33,736
Issuance of shares upon the vesting of restricted stock units (Note 15)		51,963		-		-		-		-		-		-			-			-
Stock options issued for services (Note 15)		-		-		-		-		162		-		-			-			162
Restricted stock units issued for services (Note 15)		-		-		-		-		193		-		-			-			193
Foreign currency translation		-		-		-		-		-		-		-			20			20
Net loss		-		-		-		-		-		-		(7,001	)		-			(7,001	)
Balance, May 31, 2023		47,521,187	$	5		1	$	-	$	170,725	$	20,385	$	(162,884	)	$	(1,121	)	$	27,110

See accompanying notes to the condensed consolidated financial statements.

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Loop Industries, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands of U.S. dollars)	Three Months Ended May 31,
	2023			2022
Cash Flows from Operating Activities
Net loss	$	(7,001	)	$	(18,006	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization (Notes 6 and 7)		133			139
Stock-based compensation expense (Note 15)		355			8,466
Accretion and accrued interest expenses (Note 10)		17			40
Changes in operating assets and liabilities:
Sales tax and tax credits receivable (Note 3)		(83	)		594
Inventories (Note 4)		(144	)
Prepaid expenses (Note 5)		(90	)		(870	)
Accounts payable and accrued liabilities (Note 9)		1,321			(2,012	)
Customer deposits		(12	)		-
Net cash used in operating activities		(5,504	)		(11,649	)

Cash Flows from Investing Activities
Deposits on machinery and equipment (Note 5)		(2,023	)		73
Additions to intangible assets (Note 7)		(99	)		(69	)
Net cash used in investing activities		(2,122	)		4

Cash Flows from Financing Activities
Repayment of long-term debt (Note 10)		(16	)		-
Net cash (used) provided by financing activities		(16	)		-

Effect of exchange rate changes		21			(15	)
Net decrease in cash		(7,621	)		(11,660	)
Cash, cash equivalents and restricted cash, beginning of period		30,591			44,061
Cash, cash equivalents and restricted cash, end of period	$	22,970		$	32,401

Supplemental Disclosure of Cash Flow Information:
Income tax paid	$	-		$	-
Interest paid	$	21		$	-
Interest received	$	99		$	13

See accompanying notes to the condensed consolidated financial statements.

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Loop Industries, Inc.

Three Months Ended May 31, 2023 and 2022

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. The Company and Basis of Presentation

The Company

Loop Industries, Inc. (the “Company,” “Loop,” “we,” or “our”) is a technology company that owns patented and proprietary technology that depolymerizes no and low-value waste polyethylene terephthalate (“PET”) plastic and polyester fiber to its base building blocks (monomers). The monomers are filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber. The Company is currently in the pre-commercialization stage with limited revenues.

Basis of Presentation

These unaudited interim condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2023, filed with the SEC on May 18, 2023. The unaudited interim condensed consolidated financial statements comprise the consolidated financial position and results of operations of Loop Industries, Inc. and its subsidiaries, Loop Innovations, LLC and Loop Canada Inc. All subsidiaries are, either directly or indirectly, wholly owned subsidiaries of Loop Industries, Inc. (collectively, the “Company”). The Company also owns, through Loop Innovations, LLC, a 50% interest in a joint venture, Indorama Loop Technologies, LLC, which is accounted for under the equity method.

Intercompany balances and transactions are eliminated on consolidation. The condensed consolidated balance sheet as of February 28, 2023, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by US GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three months ended May 31, 2023 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 29, 2024, or for any other period.

The consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the continuing of operations, the realization of assets and the settlement of liabilities in the normal course of business.

All monetary amounts in these notes to the condensed consolidated financial statements are in thousands of U.S. dollars unless otherwise specified, except for per share data.

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2. Summary of Significant Accounting Policies

Liquidity Risk Assessment

Since its inception, the Company has been in the pre-commercialization stage with limited revenues from customers, and its ongoing operations and commercialization plans have been financed primarily by raising equity. The Company has incurred net losses and negative cash flow from operating and investing activities since its inception and expects to incur additional net losses while it continues to develop and plan for commercialization. As at May 31, 2023, the Company’s available liquidity was $24,543, consisting of cash and cash equivalents of $21,970 and an undrawn senior loan facility from a Canadian bank of $2,573. Management actively monitors the Company’s cash resources against the Company’s short-term cash commitments to ensure the Company has sufficient liquidity to fund its costs for at least twelve months from the financial statement issuance date. Management evaluates the Company’s liquidity to determine if there is substantial doubt about the Company’s ability to continue as a going concern. In preparing this liquidity assessment, management applies significant judgment in estimating future cash flow requirements of the Company based on budgets and forecasts, which includes developing assumptions related to: (i) estimation of amount and timing of future cash outflows and inflows and (ii) determining what future expenditures are committed and what could be considered discretionary. Based on this assessment, management believes that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations as they become due for a period of no less than twelve months from the date of issuance of these unaudited interim condensed consolidated financial statements.

The Company’s ability to move to the next stage of its strategic development and construct manufacturing plants is dependent on whether the Company can obtain the necessary financing through a combination of the issuance of debt, equity, and/or joint ventures, and/or government incentive programs, and/or customers. However, there is no assurance that the Company will be successful in attracting additional funding. Even if additional financing is available, it may not be available on terms favorable to the Company. Failure to secure additional financing on favorable terms when it becomes required would have an adverse effect on the Company’s financial position and on its ability to execute its business plan.

The Company has committed $3,116 of its cash resources for certain long lead equipment during the current fiscal year and may enter into additional commitments to accelerate commercial projects within targeted construction timeframes.

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include the going concern assessment, estimates for depreciable lives of property, plant and equipment and intangible assets, recoverability of tax credits receivable, assumptions made in calculating the fair value of stock-based compensation and other equity instruments, and the assessment of performance conditions for stock-based compensation awards.

Net earnings (loss) per share

The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. The Company includes common stock issuable in its calculation. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive.

For the three-month periods ended May 31, 2023 and 2022, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at May 31, 2023, the potentially dilutive securities consisted of 2,782,000 outstanding stock options (2022 – 1,570,000), 4,306,655 outstanding restricted stock units (2022 – 4,090,775), and 7,089,400 outstanding warrants (2022 – 11,659,418).

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3. Sales Tax, Tax Credits and Other Receivables

Sales tax, research and development tax credits and other receivables as at May 31, 2023 and February 28, 2023 were as follows:

	May 31, 2023		February 28, 2023
Sales tax	$	243	$	170
Investment tax credits		461		461
Research and development tax credits		428		402
Other receivables		26		42
	$	1,158	$	1,075

4. Inventories

Inventories as at May 31, 2023 and February 28, 2023 were as follows:

	May 31, 2023		February 28, 2023
Finished goods	$	585	$	242
Work in process		245		467
Raw materials		41		18
	$	871	$	727

As at May 31 and February 28, 2023, inventories included finished goods, work in process and raw materials. Finished goods inventories consist of bottle grade and fiber grade Loop™ PET resin which is intended to be sold to customers. Work in process inventories consist of monomers (dimethyl terephthalate and monoethylene glycol), either purified or yet to be purified, resulting from the depolymerization of PET feedstock. These monomers shall be polymerized into Loop™ PET resin in the future. Raw materials inventories consist of chemicals which are used as inputs in the PET depolymerization process.

5. Deposits and Prepaid Expenses

As at May 31, 2023, the Company had $5,430 (February 28, 2023 – $3,395) of non-refundable cash deposits on long-lead machinery and equipment that are intended to be used in the first planned Infinite Loop™ manufacturing facility.

Prepaid expenses and other deposits as at May 31, 2023 and February 28, 2023 were as follows:

	May 31, 2023		February 28, 2023
Insurance	$	545	$	545
Other		165		91
	$	710	$	636

The deposit for insurance represents a pre-payment of the final three months of the Company’s directors’ and officers’ insurance annual premium.

6. Property, Plant and Equipment

	As at May 31, 2023
	Cost		Accumulated depreciation, write-down and impairment			Net book value
Building	$	1,822	$	(324	)	$	1,498
Land		225		-			225
Building and Land Improvements		1,839		(1,247	)		594
Office equipment and furniture		274		(147	)		129
	$	4,160	$	(1,718	)	$	2,446

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	As at February 28, 2023
	Cost		Accumulated depreciation, write-down and impairment			Net book value
Building	$	1,822	$	(309	)	$	1,513
Land		225		-			225
Building and Land Improvements		1,839		(1,166	)		673
Office equipment and furniture		274		(140	)		134
	$	4,160	$	(1,615	)	$	2,545

Depreciation expense amounted to $101 for the three-month period ended May 31, 2023 (2022 – $119).

7. Intangible Assets

Intangible assets as at May 31, 2023 and February 28, 2023 were $1,278 and $1,210, respectively.

During the three-month periods ended May 31, 2023 and 2022, we made additions relating to patent application costs to intangible assets of $99 and $69, respectively.

Amortization expense for the three-month period ended May 31, 2023 amounted to $32 (2022 – $20).

8. Fair Value of Financial Instruments

The following tables presents the fair value of the Company’s financial liabilities as at May 31, 2023 and February 28, 2023:

	Fair Value as at May 31, 2023
	Carrying Amount		Fair Value		Level in the hierarchy
Financial liabilities measured at amortized cost:
Long-term debt	$	3,306	$	3,283	Level 2

	Fair Value as at February 28, 2023
	Carrying Amount		Fair Value		Level in the hierarchy
Financial liabilities measured at amortized cost:
Long-term debt	$	3,302	$	3,280	Level 2

The fair value of cash and cash equivalents, restricted cash, customer deposits, other receivables, and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity.

9. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities as at May 31, 2023 and February 28, 2023 were as follows:

	May 31, 2023		February 28, 2023
Trade accounts payable	$	1,534	$	1,020
Accrued machinery and equipment expenses		1,225		-
Accrued employee compensation		581		712
Accrued professional fees		236		410
Accrued engineering fees		55		96
Accrued director compensation		44		44
Other accrued liabilities		153		228
	$	3,828	$	2,510

The accrued machinery and equipment expenses as at May 31, 2023 are related to machinery and equipment to be used at the Company’s Terrebonne Facility.

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10. Long‑Term Debt

Long-term debt as of May 31, 2023 and February 28, 2023, was comprised of the following:

	May 31, 2023			February 28, 2023
Investissement Québec financing facility:
Principal amount	$	3,372		$	3,380
Unamortized discount		(244	)		(261	)
Accrued interest		178			183
Total Investissement Québec financing facility		3,306			3,302
Less: current portion of long-term debt		(208	)		(62	)
Long-term debt, net of current portion	$	3,098		$	3,240

Investissement Québec financing facility

The Company recorded interest expense on the Investissement Québec loan for the three-month period ended May 31, 2023 in the amount of $21 (2022 – $22) and an accretion expense of $17 (2022 – $18). During the three-month period ended May 31, 2023, the Company made repayments of $16 (2022 – nil) on the Investissement Québec loan.

Total repayments due on the Company’s indebtedness over the next five years are as follows:

Years ending	Amount
February 29, 2024	$	47
February 28, 2025		584
February 28, 2026		584
February 28, 2027		584
February 29, 2028		584
Thereafter		1,167
Total	$	3,550

Credit facility from a Canadian bank

On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company, entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank. The Credit Facility allows for borrowings of up to $2,573 in aggregate principal amount and provides for a two-year term. The Credit Facility is secured by the Company’s Terrebonne, Québec property and is subject to a minimum equity covenant, tested quarterly with which the Company was in compliance as at May 31, 2023. All borrowings under the Credit Facility will bear interest at an annual rate equal to the bank’s Canadian prime rate plus 1.0%. The Company is subject to a guarantee of the liabilities of Loop Canada Inc. As at May 31, 2023, the $2,573 Credit Facility was available and undrawn.

11. Related Party Transactions

Employment Agreement

On June 29, 2015, the Company entered into an employment agreement with Mr. Daniel Solomita, the Company’s President and Chief Executive Officer (“CEO”). The employment agreement is for an indefinite term.

On July 13, 2018, the Company and Mr. Solomita entered into an amendment and restatement of the employment agreement which provided for a long-term incentive grant of 4,000,000 shares of the Company’s common stock, in tranches of one million shares each, upon the achievement of four performance milestones. This was modified to provide a grant of 4,000,000 restricted stock units (“RSUs”) covering 4,000,000 shares of the Company’s common stock while the performance milestones remained the same. The grant of the restricted stock units became effective upon approval by the Company’s shareholders at the Company’s 2019 annual meeting, of an increase in the number of shares available for grant under the Plan. Such approval was granted by the Company’s shareholders at the Company’s 2019 annual meeting.

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On April 30, 2020, the Company and Mr. Solomita entered into an amendment of Mr. Solomita’s employment agreement. The amendment clarified the milestones consistent with the shift in the Company’s business from the production of terephthalate to the production of dimethyl terephthalate, another proven monomer of PET plastic that is simpler to purify. When a milestone becomes probable, the corresponding expense will be valued based on the grant date fair value on April 30, 2020, the date of the last modification of Mr. Solomita’s employment agreement. The closing price of the Company’s common stock on the Nasdaq on April 30, 2020 was $7.74 per share.

During the three-month period ended May 31, 2022, Mr. Solomita met a performance milestone in relation to the signature of a supply agreement with a customer. Accordingly, 1,000,000 performance incentive RSUs with a fair value of $7,740 were earned and issuable to Mr. Solomita. This amount was reflected as stock-based compensation expense during the three-month period ended May 31, 2022. During the three-month period ended May 31, 2023, no outstanding performance milestones were probable of being achieved and, accordingly, the Company did not record any additional stock-based compensation expense.

12. Stockholders’ Equity

Common Stock

For the period ended May 31, 2023	Number of shares		Amount
Balance, February 28, 2023		47,469,224	$	5
Issuance of shares upon settlement of restricted stock units		51,963		-
Balance, May 31, 2023		47,521,187	$	5

For the period ended May 31, 2022	Number of shares		Amount
Balance, February 28, 2022		47,388,056	$	5
Issuance of shares upon settlement of restricted stock units		12,653		-
Balance, May 31, 2022		47,400,709	$	5

During the three months ended May 31, 2023, the Company recorded the following common stock transaction:

(i)	The Company issued 51,963 shares of the common stock to settle restricted stock units that vested in the period.

During the three months ended May 31, 2022, the Company recorded the following common stock transaction:

(i)	The Company issued 12,653 shares of the common stock to settle restricted stock units that vested in the period.

13. Research and Development Expenses

Research and development expenses for the three-month periods ended May 31, 2023 and 2022 were as follows:

	May 31, 2023		May 31, 2022
Employee compensation	$	1,446	$	2,287
Machinery and equipment expenditures		1,236		1,890
External engineering		1,155		1,596
Plant and laboratory operating expenses		469		866
Other		184		161
	$	4,490	$	6,800

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14. General and Administrative Expenses

General and administrative expenses for the three-month periods ended May 31, 2023 and 2022 were as follows:

	May 31, 2023		May 31, 2022
Employee compensation(1)	$	833	$	8,785
Insurance		703		1,103
Professional fees		619		799
Other		310		350
	$	2,465	$	11,037

(1)	Includes stock-based compensation expense. During the three-month period ended May 31, 2022, the Company recorded a stock-based compensation expense of $7,740 related to the achievement of a performance milestone for 1,000,000 RSUs (Note 11).

15. Share-based Payments

Stock Options

The following tables summarizes the continuity of the Company’s stock options during the three-month periods ended May 31, 2023 and 2022:

	2023				2022
	Number of stock options		Weighted average exercise price		Number of stock options		Weighted average exercise price
Outstanding, beginning of period		2,542,000	$	5.27		1,570,000	$	6.87
Granted		240,000		3.11		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-
Outstanding, end of period		2,782,000	$	5.08		1,570,000	$	6.87
Exercisable, end of period		1,670,000	$	6.84		1,336,667	$	7.65

The Company applies the fair value method of accounting for stock-based compensation awards granted. Fair value is calculated based on a Black-Scholes option pricing model. There were no new issuances of stock options for the three-month period ended May 31, 2022. The principal components of the pricing model for the stock options granted in the three-month period ended May 31, 2023 were as follows:

Exercise price	$	3.11
Risk-free interest rate		3.84	%
Expected dividend yield		0	%
Expected volatility		79	%
Expected life	3 years

During the three-month periods ended May 31, 2023 and 2022, stock-based compensation expense attributable to stock options amounted to $162 and $317, respectively.

Restricted Stock Units

The following table summarizes the continuity of the restricted stock units during the three-month periods ended May 31, 2023 and 2022:

	2023					2022
	Number of units			Weighted average fair value price		Number of units			Weighted average fair value price
Outstanding, beginning of period		3,888,618		$	7.09		4,018,567		$	7.42
Granted		470,000			2.87		84,861			6.00
Settled		(51,963	)		8.66		(12,653	)		13.04
Forfeited		-			-		-			-
Outstanding, end of period		4,306,655		$	6.61		4,090,775		$	7.37
Outstanding vested, end of period		1,568,497		$	6.31		1,530,313		$	6.14

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The Company applies the fair value method of accounting for awards granted through the issuance of restricted stock units. Fair value is calculated based on the intrinsic value at grant date multiplied by the number of restricted stock unit awards granted.

During the three-month periods ended May 31, 2023 and 2022, stock-based compensation attributable to RSUs amounted to $193 and $8,149, respectively. During the three-month period ended May 31, 2022, the Company recorded a stock-based compensation expense of $7,740 related to the achievement of a performance milestone for 1,000,000 RSUs (Note 11).

Stock-Based Compensation Expense

During the three-month periods ended May 31, 2023 and 2022, stock-based compensation included in research and development expenses amounted to $159 and $396, respectively, and in general and administrative expenses amounted to $196 and $8,070, respectively. The amount recorded in general and administrative expenses for the three-month period ended May 31, 2022 includes $7,740 related to the achievement of a performance milestone for 1,000,000 RSUs (Note 11).

16. Equity Incentive Plan

On July 6, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”). The Plan permits the granting of warrants, stock options, stock appreciation rights and restricted stock units to employees, directors and consultants of the Company. A total of 3,000,000 shares of common stock were initially reserved for issuance under the Plan at July 6, 2017, with annual automatic share reserve increases, as defined in the Plan, amounting to the lessor of (i) 1,500,000 shares, (ii) 5% of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) or such number of shares determined by the Administrator of the Plan, effective March 1, 2018. On March 1, 2023, the share reserve was increased by 1,500,000 shares. On March 1, 2022, the Board of Directors opted to waive the annual share reserve increase. The Plan is administered by the Board of Directors who designates eligible participants to be included under the Plan, the number of awards granted, the share price pursuant to the awards and the vesting conditions and period. The awards, when granted, will have an exercise price of no less than the estimated fair value of shares at the date of grant and a life not exceeding 10 years from the grant date. However, where a participant, at the time of the grant, owns stock representing more than 10% of the voting power of the Company, the life of the options shall not exceed 5 years.

The following table summarizes the continuity of the Company’s Equity Incentive Plan units that were authorized for issuance as at and during the three-month periods ended May 31, 2023 and 2022:

	2023			2022
	Number of units*			Number of units*
Authorized, beginning of period		120,486			1,043,705
Automatic share reserve increase		1,500,000			-
Units granted		(710,000	)		(84,861	)
Units forfeited		-			-
Units expired		-			-
Authorized, end of period		910,486			958,844

*The use of the term “units” in the table above describes a combination of stock options and RSUs.

17. Commitments

Agreement to purchase of machinery and equipment

In December 2021, the Company entered into an agreement for the purchase of long lead machinery and equipment in connection with the construction of our first Infinite Loop™ manufacturing facility for up to $8,546, subject to various terms and conditions, including fabrication timelines and equipment inspection. Pursuant to the agreement, the Company has paid cash deposits of $5,430 (Note 5). The balance is expected to be paid by the end of this fiscal year.

Agreement with SK Geo Centric Co. Ltd. (“SKGC”)

On April 27, 2023, the Company and SKGC entered into an agreement to build Infinite Loop manufacturing facilities in Asia. Pursuant to the agreement, the Company and SKGC agreed to form a new entity, which will be headquartered in Singapore. SKGC will contribute 51% and Loop will contribute the remaining 49% of the initial equity capital of the new entity. The Company’s investment in the new entity will be accounted for under the equity method and initially recognized at cost.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information and any forward-looking statements should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q, including those risks identified in the “Risk Factors” section of our most recent Annual Report on Form 10-K.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of Loop Industries, Inc., a Nevada corporation (the “Company,” “Loop,” “we,” or “our”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, ability to improve and expand our capabilities, competition, expected activities and expenditures as we pursue our business plan, the adequacy of our available cash resources, regulatory compliance, plans for future growth and future operations, the size of our addressable market, market trends, and the effectiveness of the Company’s internal control over financial reporting. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Actual results may differ materially from the projections discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These risks and other factors include, but are not limited to, those listed under “Risk Factors.” Additional factors that could materially affect these forward-looking statements and/or projections include, among other things: (i) commercialization of our technology and products, (ii) our status of relationship with partners, (iii) development and protection of our intellectual property and products, (iv) industry competition, (v) our need for and ability to obtain additional funding relative to our current and future financial commitments, (vi) engineering, contracting, and building our manufacturing facilities, (vii) our ability to scale, manufacture, and sell our products in order to generate revenues, (viii) our proposed business model and our ability to execute thereon, (ix) adverse effects on the Company’s business and operations as a result of increased regulatory, media, or financial reporting scrutiny, practices, rumors, or otherwise, (x) disease epidemics and other health-related concerns and crises, which could result in reduced access to capital markets, supply chain disruptions and scrutiny, embargoing of goods produced in affected areas, government-imposed mandatory business closures and any resulting furloughs of our employees, government employment subsidy programs, travel restrictions or the like to prevent the spread of disease, or market or other changes that could result in non-cash impairments of our intangible assets, and property, plant and equipment, (xi) the effect of the continuing worldwide macroeconomic uncertainty and its impacts, including inflation, market volatility and fluctuations in foreign currency exchange and interest rates, (xii) the outcome of any SEC investigations or class action litigation filed against us, (xiii) our ability to hire and/or retain qualified employees and consultants, (xiv) other events or circumstances over which we have little or no control, and (xv) other factors discussed in our subsequent filings with the SEC.

Management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties, and a review of information filed by our competitors with the SEC or otherwise publicly available.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as at the date of this Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

We caution readers not to place undue reliance on any such forward-looking statements, which speak only as at the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

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General

As used in this Quarterly Report on Form 10-Q, the following terms are being provided so investors can better understand our business:

Depolymerization refers to the chemical process of breaking down a polymer molecule into its constituent monomers or smaller subunits. Depolymerization is the opposite of polymerization.

DMT is an acronym for dimethyl terephthalate, which is a monomer used in the production of polyethylene terephthalate (“PET”).

MEG is an acronym for monoethylene glycol, which is a monomer used in the production of PET.

Polymerization refers to a process of reacting monomer molecules together in a chemical reaction to form polymer chains or three-dimensional networks.

PET is an acronym for polyethylene terephthalate, which is a resin and a type of polyester showing excellent tensile and impact strength, chemical resistance, clarity, and processability, and reasonable thermal stability. PET is the material which is most commonly used for the production of polyester fiber and plastic packaging, including plastic bottles for water and carbonated soft drinks, containers for food and other consumer products; it is commonly identified by the number “1”, often inside an image of a triangle, on the packaging. PET is also used as a polyester fiber for a variety of applications including textiles, clothing and apparel.

rPET is an acronym for recycled polyethylene terephthalate.

All monetary amounts in this Quarterly Report on Form 10-Q are in thousands of U.S. dollars unless otherwise specified, except for per share data.

Introduction

Loop is a technology company whose mission is to accelerate the world’s shift towards sustainable PET plastic and polyester fiber and away from our dependence on fossil fuels. Loop owns patented and proprietary technology that depolymerizes no and low-value waste PET plastic and polyester fiber, including plastic bottles and packaging, carpets and textiles of any color, transparency or condition and even ocean plastics that have been degraded by the sun and salt, to its base building blocks (monomers). The monomers are filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber, thus enabling our customers to meet their sustainability objectives. Loop is contributing to the global movement towards a circular economy by reducing and recovering plastic waste for a sustainable future.

The Company is presently in the planning stages of pursuing the construction of Infinite Loop™ commercial scale facilities. Loop is currently engaged in discussions to secure financing for its investments in the various planned manufacturing facilities and the sequencing of the manufacturing facilities will be determined in conjunction with the outcome of the Company’s financing discussions and discussions with our partners.

Background

Industry Background

We believe Loop's depolymerization technology offers a complementary solution to mechanical recycling by enabling the use of a wider variety of PET feedstock, including complex and degraded plastics as well as polyester fiber, to produce virgin quality rPET with no degradation through continued recycling.

Mechanically recycled PET plastic is produced principally through the conversion of bales of PET bottles. The materials have been collected and transported to a materials recovery facility, where they are sorted from other materials, baled, and sent to specific PET recycling facilities. The bales are broken and sorted to remove any non-PET materials. The PET is then ground and put through a separation process which separates the PET from the bottle cap and label materials. Clean PET flake is then further processed depending on its intended end market. It may become more highly refined PET pellets for new bottles or extruded into PET sheet for clamshells, trays, and cups. Recycled PET is also spun into fiber for carpet, clothing, fiber fill, or other materials.

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We believe mechanically recycled PET faces a number of challenges in meeting the quality specifications and growing volume requirements implied by commitments from major brands, mainly due to the cost and variety of acceptable PET feedstock. Some mechanical recycling processes involve remelting the PET flake which reduces the quality of the rPET output each time it is recycled relative to the specifications of virgin PET produced from fossil fuels. Each time PET plastic is mechanically recycled, its quality and clarity are reduced. Therefore, mechanically recycled PET may need to be mixed with virgin PET from fossil fuels to maintain quality. Lower quality mechanically recycled PET is often downcycled to alternate uses such as polyester fibers which may be dyed and used in carpets or clothing. Additionally, mechanically recycled PET manufactured for use in clear bottles or food containers requires predominantly clear and clean PET flakes separated from waste bales, and cannot accommodate colored or opaque PET flakes, lower quality fiber feedstock, or materially contaminated feedstock, which may be cheaper.

Depolymerization is a process in which plastics are broken down into their constituent molecules through chemical reactions, rather than being physically melted down and reprocessed as in mechanical recycling. This approach, which we utilize, has several advantages over mechanical recycling, which can have limitations due to the complexity and diversity of plastics.

One of the main limitations of mechanical recycling is that it is difficult to recycle plastics that have been contaminated or degraded. For example, if a plastic container has been exposed to heat or sunlight, it may become brittle and prone to breaking during the recycling process. Another limitation of mechanical recycling is that it is difficult to recycle certain types of plastics, such as multi-layered or composite plastics. These plastics are often used in food packaging or other products that require specialized properties like barrier protection or insulation. Depolymerization, however, can break down these degraded or complex plastics into their constituent molecules, which can then be purified and used to create new products.

Loop’s depolymerization technology has the potential to create a closed-loop system for plastic waste, whereby plastics can be recycled an infinite number of times without degrading the quality of the material. This is because the constituent molecules can be broken down and reassembled without losing their original properties, which can reduce the need for new plastics to be produced.

We believe Loop’s depolymerization technology offers a promising solution to the limitations of mechanical recycling by enabling the recirculation of more diverse and complex plastics, reducing waste and pollution, and creating a closed-loop system for plastic waste.

Our depolymerization technology breaks down waste PET into DMT and MEG. The monomers are purified and then recombined into virgin quality PET plastic and polyester fiber. We use low value PET plastic and polyester fiber waste as feedstock. Our technology can process PET plastic bottles and packaging of any color, transparency or condition, carpet, clothing and other polyester textiles that may contain colors, dyes or additives, and even PET plastics that have been recovered from the ocean and degraded by exposure to sun and salt. We believe that our ability to use many materials that mechanical recyclers cannot process is an important advantage of Loop™ PET resin and further expands the range of PET waste streams that may be recycled. This also means we are creating a new market for materials that have persistently been leaking out of the waste management system and into shared rivers, oceans and natural areas.

Supply Agreements with Global Consumer Brands

In the past years, we have seen major consumer brands make significant commitments to close the loop on their plastic use by transitioning their packaging to recyclable materials like PET, and by incorporating more recycled content into their packaging. We believe Loop™ PET resin provides the ideal solution for these brands because it is recyclable and is made from 100% recycled PET waste and polyester fiber, while being virgin-quality and suitable for use in food-grade packaging and polyester fiber.

Due to the commitments by large global consumer brands to incorporate more recycled content into their product packaging, the regulatory requirements for minimum recycled content in packaging imposed by governments, the virgin-quality of Loop™ branded PET resin and its marketability to enhance the sustainability credentials of consumer brands that incorporate it, we believe we will be able to sell Loop™ branded PET resin at a premium price relative to virgin and mechanically recycled PET resin.

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We currently have agreements with some of the world’s leading brands to be supplied from our planned commercial facilities, including:

	·	Multi-year supply agreement with Danone SA (“Danone”), one of the world’s leading global food and beverage companies, enabling Danone to purchase 100% sustainable and upcycled Loop™ branded PET for use in brands across its portfolio including evian®, Danone’s iconic natural spring water;

	·	Multi-year supply agreement with L’OCCITANE en Provence (“L’OCCITANE”) to supply 100% recycled and sustainable Loop™ PET resin and incorporate Loop™ PET resin into its product packaging; and

	·	Multi-year supply agreement with L’Oréal Group, the global leader in the beauty industry, enabling L’Oréal Group to purchase production capacity and incorporate Loop™ PET resin into its product packaging.

We also have a signed letter of intent with On AG, a sportswear brand and subsidiary of On Holding AG, to secure volumes of Loop™ PET resin from the Asian Infinite Loop™ manufacturing facility in Ulsan, South Korea, which Loop is planning to construct with its strategic partner SK Geo Centric.

We are pursuing amended supply agreements with existing customers and new agreements with additional customers that are located in North America, Europe, and Asia to sell the production volumes of our planned Infinite Loop™ commercial facilities.

Strategic Partnership with SK Geo Centric

In June 2021, Loop and SK Geo Centric (“SKGC”) concluded a definitive agreement for SKGC to become a strategic investor in Loop, with SKGC acquiring a 10% stake in Loop at $12.00 per share for a total of $56.5 million. The transaction, which closed in July 2021, also included warrants for SKGC to purchase Loop common stock at $15.00 and $20.00 per share. Concurrent with the strategic investment, Loop and SKGC entered into a memorandum of understanding (“MOU”) to form a joint venture with exclusivity to build sustainable PET plastic and polyester fiber manufacturing facilities throughout Asia.

SKGC is a global chemical company and member of the SK Group, one of South Korea’s largest conglomerates. SKGC is a general energy and chemical leader in the global market and is growing into a technology-based global chemical company through continuous R&D efforts. SKGC aims to achieve its “Green for Better Life” vision by establishing a plastics based circular economy through collaboration with various partners and stakeholders, such as Loop.

Asia represents approximately 60% of the world’s population and 70% of global PET consumption and is the main hub for the polyester fiber supply chain for textiles. The Asian market represents a prime opportunity for Loop’s growth and commercialization of its technology. SKGC is well established with a deep understanding of the Asian market, and vast expertise in building and operating large-scale petrochemical facilities, making them a uniquely well-suited partner for Loop in helping to ensure the successful commercialization of Loop’s technology in this market.

On April 27, 2023, Loop and SKGC entered into a joint venture agreement (the “JV Agreement”) to deploy Loop’s depolymerization technology in the Asian market through multiple commercial manufacturing facilities. Pursuant to the JV Agreement, Loop and SKGC agreed to form a new company (the “JV Company”), which will be headquartered in Singapore. SKGC will contribute 51% and Loop will contribute 49% of the initial equity capital of the JV Company. The JV Agreement outlines that the JV Company will have exclusive rights to commercialize Loop’s technology in the Asian market and Loop will receive an annual royalty fee for each of the commercial plants.

The first planned commercial manufacturing facility with Infinite Loop™ technology, located in Ulsan, South Korea, will have an annual capacity to supply 70,000 metric tons per year of Loop™ PET resin for packaging and polyester fiber applications, and is anticipated to break ground in 2023 and to have construction completed by the end of 2025. In addition to Infinite Loop™ Ulsan, the two partners have outlined plans which target a minimum of three additional commercial manufacturing facilities to be constructed throughout Asia by 2030. Loop and SKGC have partnered with SK ecoengineering, a subsidiary of the SK Group that brings considerable experience and proficiency as an EPC contractor, for the engineering and construction of the commercial manufacturing facilities.

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Infinite Loop™ Europe

We announced on September 10, 2020 a strategic partnership with SUEZ Group (“Suez”), with the objective to build the first Infinite Loop™ manufacturing facility in Europe. On June 16, 2022, Loop, together with Suez and SKGC, announced that the three companies will become equal participants in the strategic partnership.

The expanded partnership intends to combine SKGC's petrochemical manufacturing experience with Suez's resource management expertise and Loop’s breakthrough proprietary technology to supply up to 70,000 M/T of virgin quality, 100% recycled PET plastic and polyester fiber to the European market. The planned Infinite Loop™ facility will offer a solution to consumer goods companies which have committed to goals for significantly increased use of recycled content in their products and/or packaging and help to meet the growing demand for recycled PET resin and polyester fiber.

On February 16, 2023, the three companies announced that the Chemesis industrial platform in Saint-Avold, located in the Grand Est region of France, has been selected as the site for their planned manufacturing facility in Europe. We are working with our partners Suez and SKGC on acquiring the project site, alignment of various levels of government support and additional steps for the project which include advancing permitting, site specific engineering, customer offtake contracts, feedstock and financing.

Product activations with evian, L’Occitane, On AG, and Garnier

Loop has collaborated with multiple customers in recent and upcoming launches for products and product packaging incorporating Loop™ PET manufactured from monomers produced at the Terrebonne Facility.

In 2021, Loop, in partnership with iconic global beverage brand evian, unveiled a new “evian Loop” prototype virgin-quality water bottle made from 100% recycled content. The monomers used to produce the evian Loop bottles were made at the Terrebonne Facility. Evian began selling water bottles made from Loop™ PET in South Korea in October 2022. The waste plastic used to produce these bottles includes polyester fibers from carpets and clothing which are considered unrecyclable and destined for landfill and other natural environments. This initiative reflects evian’s commitment to its stated goal for circularity and 100% recycled content by 2025.

On October 11, 2022, Loop and L’OCCITANE, a global manufacturer and retailer of sustainable beauty and wellness products, unveiled a new bottle for the brand’s Almond Shower Oil that was manufactured with 100% recycled Loop™ PET resin produced using monomers from Loop’s Terrebonne Facility. Loop has partnered with L’OCCITANE to help meet the brand’s sustainability goal of using 100% recycled PET in its bottles by 2025. In partnership with the brand, a pilot project was executed where the bottle (excluding cap and label) was produced using 100% recycled Loop™ PET resin and was successfully carried out on L’OCCITANE production lines. This initiative marks a significant step forward in the partnership between the two companies and sets the pathway to implement Loop’s technology across other products in the brand’s assortment. As part of this partnership with L’OCCITANE, Loop’s branding is featured prominently on the front of the packaging, with additional details speaking to Loop’s technology on the back label.

We also entered into an agreement in May 2022 with On AG to supply Loop™ PET to be utilized in polyester fiber by the brand, pursuant to which Loop™ PET resin was delivered in the year ended February 28, 2023.

On April 19, 2023, Loop and Garnier, one of the world’s largest mass market beauty brands, launched the brand’s first Micellar Cleansing Water All-In-1 bottle made of Loop™ PET produced using monomers from Loop’s Terrebonne Facility (excluding cap and label). The Loop logo, featured on the front of this packaging innovation, serves as an anchor to highlight Loop’s technology, the quality of materials and the bottle’s recyclability. The inclusion of Loop branding on the packaging strongly supports Garnier's sustainability goals by promoting the infinitely recyclable potential of the product and brings awareness to PET plastic circularity. This packaging innovation will first be distributed in Garnier’s largest market, the US, and the brand’s home market of France.

Loop continues to pursue opportunities for new activations and marketing campaigns with additional consumer goods brand companies.

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Terrebonne Facility

As part of our plan for the commercialization of future Infinite Loop™ manufacturing facilities, we enhanced our Terrebonne, Québec pilot plant to become a small-scale PET depolymerization production facility, incorporating all key pieces of depolymerization equipment that will be used in the full-scale commercial facilities. In addition to our research and development activities, this facility is used to deliver initial production volumes to support co-branded market launch campaigns with partners and customers and will also be used to showcase the Infinite Loop™ end-to-end technology and train operational teams in advance of the commissioning of the Infinite Loop™ full-scale commercial facilities.

On December 22, 2022, we announced that we had reduced hours of operation at the Terrebonne Facility in order to reduce operating costs and preserve liquidity. The primary purpose of the Terrebonne Facility was to demonstrate that Loop’s breakthrough depolymerization technology was scalable, and also to produce commercial quantities of virgin quality PET resin and polyester fiber for global brands. We believe the Terrebonne Facility has achieved this objective. We will continue to fulfill existing commitments related to ongoing sales contracts.

In the three-month period ended May 31, 2023, 2023, Loop reported revenues of $27 from the sale of Loop™ PET resin produced from monomers manufactured at the Terrebonne Facility to several global consumer brands, including those with whom Loop is collaborating on product launches. In addition to supplying customers with initial volumes of Loop™ PET, the Terrebonne Facility continues to support our customers and partners with R&D and analytical capabilities.

Market Opportunity

The estimated global annual market demand for PET plastic and polyester fiber is approximately $180 billion. We believe plastic pollution and climate change continue to be the most persistently covered environmental issues by media and local and global environmental non-governmental organizations. Some of the main concerns associated with PET are the greenhouse gas (“GHG”) emissions associated with its production from non-renewable hydrocarbons and the length of time it persists in landfills and the natural environment. There is an increasing demand for action to address the global plastic crisis, as evidenced by the March 2022 endorsement by 175 nations of a historic resolution at the UN Environmental Assembly to end plastic pollution and forge an international legally binding agreement by the end of 2024. In the last few years, governments in North America, Europe and Asia have been enacting and proposing laws and regulations mandating the use of minimum recycled content in packaging, which underlies the strength of this issue in the marketplace. Consumer brands are seeking a solution to their plastic challenge, and they are taking action. In recent years we have seen major brands make significant commitments to close the loop on their plastic packaging by transitioning their packaging to recyclable materials and by incorporating more recycled content into their packaging.

Global consumer packaged goods companies (“CPG companies”), apparel manufacturers, and retail brands have announced significant public commitments and targets to make the transition to a circular plastic economy, for example:

	·	Adidas Group aims to replace all virgin polyester with recycled polyester in all of its Adidas products by 2024;
	·	Danone, the provider of evian® brand bottled water, committed to a goal of using 100% recycled content packaging by 2025;
	·	Coca-Cola committed to an average recycled content of 50% across its packaging by 2030;
	·	PepsiCo stated 10 European markets are moving key Pepsi-branded products to 100% rPET bottles by 2022, and in the U.S., all Pepsi-branded products will be converted to 100% rPET bottles by 2030;
	·	In 2020, L’OCCITANE committed to implementing 100% recycled content plastic in their bottles by 2025;
	·	Nike has announced a 2025 target of diverting 100% of its waste from landfills, with at least 80% recycled back into its products and goods;
	·	L’Oréal Group committed to using 100% recycled or biobased plastic in their packaging by 2030;
	·	Ikea maintains its goal that, by 2030, all plastic used in its products will be based on renewable or recycled material; and
	·	By 2025, Lululemon aims to achieve at least 75% sustainable materials for their products, including fibers that are recycled, renewable, regenerative, sourced responsibly and are manufactured using low-resource processes.

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There is a growing regulatory and policy environment to encourage a reduction in the production of virgin fossil fuel-based plastic and for minimum recycled content in packaging imposed by various governments:

North America:

	o	Canada has announced a goal of zero-plastic waste by 2030 and is targeting for all plastic packaging to contain 50% recycled content by 2030.
	o	California law requires that plastic bottles contain at least 25% post-consumer resin by 2025, and at least 50% by 2030.

Europe:

	o	As of January 2021, the European Union introduced a new tax of €800/ton on non-recycled plastic packaging based on the amount of plastic packaging placed on each member state’s market.
	o	Spain imposed a tax of €450 per ton on non-reusable plastic packaging, effective January 1, 2023.
	o	Italy introduced a tax in January 2023 of €450 per ton on virgin plastic used in manufacture or importation of single use plastic.
	o	Effective April 2022, a new £200/ton tax applies in the UK to plastic packaging produced or imported into the UK that does not contain at least 30% recycled plastic.
	o	France maintains its goal of having 100% plastics recycled by 2025 and 77% of beverage bottles to be collected.

Asia: South Korea continues to target reduction of plastic waste by 20%, an increase in recycling rates from 54% to 70% by 2025, and utilization of 30% renewable plastic by 2030.

The growing regulatory environment combined with global consumer goods companies, apparel manufacturers, and retail brand commitments for 2025 and 2030 are expected to further increase the demand for rPET.

Closed-loop circularity and keeping materials within their own cycle (bottle-to-bottle and fiber-to-fiber) is gaining increasing attention as the focus on sustainability intensifies. Governments and regulators have considered or enacted heightened standards for recycled materials that discourage downcycling of bottles into polyester fiber. Additionally, it is becoming increasingly difficult to secure inventory of post-consumer bottles due to the increased demand from the bottle industry as they strive to achieve their own sustainability goals. A fiber-to-fiber recycling strategy addresses these problems and allows fashion brands and companies to secure volume and support the increasing demand of recycled polyester fiber in the textile industry.

We believe the commercialization plans of Loop™ PET resin and polyester fiber may provide the ideal solution for global brands because Loop™ PET resin and polyester fiber contains 100% recycled PET and polyester fiber content. The Loop™ PET resin and polyester fiber is virgin-quality and is suitable for use in food-grade packaging. That means CPG companies will be able to market packaging made from a 100% recycled Loop™ branded PET resin and polyester fiber.

Commercialization Strategy

Our objective is to achieve global expansion of Loop’s technology through a mix of fully owned manufacturing facilities, strategic partnerships, and licensing agreements. We believe that industrial companies, some of which today may not be in the business of manufacturing PET resin or polyester fiber, will view involvement with Infinite Loop™ projects as a significant growth opportunity, which may offer attractive economic returns either as Loop manufacturing partners or as licensees of the technology.

On December 22, 2022, we announced a shift in our commercialization strategy which now focuses on our planned joint venture projects with SKGC in Asia and Europe. These projects have a lower requirement for Loop equity investment and higher expected return on capital, and leverage SKGC’s engineering and operational infrastructure. In addition, the joint venture projects will provide Loop with an annual technology licensing fee. SKGC is committed to commercializing Loop’s technology as the underpinning of its sustainable plastics strategy. Loop is working collaboratively with SKGC to put in place a financing plan for the rollout of large-scale manufacturing in Asia and Europe, including the first Asian manufacturing facility in Ulsan, South Korea, which is anticipated to break ground in 2023 and to have construction completed by the end of 2025.

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The global expansion plan for our technology will allow our customers, mostly comprised of CPG brand companies and apparel companies, to expand the use of Loop™ PET resin and polyester fiber into their packaging and clothing. As countries around the globe continue to increase sustainability targets and recycled content mandates, our customers are increasing the use of sustainably produced materials into their products.

The Infinite Loop™ manufacturing technology is the key pillar of our commercialization blueprint. We believe our technology is at the forefront of the global transition away from fossil fuels and petrochemicals and into the circular economy, where PET plastic and polyester fiber are produced by recycling waste plastic rather than depleting finite resources. The Infinite Loop™ manufacturing technology allows for waste PET plastic and polyester fiber to be broken down into its base building blocks, monomers DMT and MEG, using Loop’s patented technology. Once the monomers are purified, they are then repolymerized into PET plastic or polyester fiber using INVISTA know how, which Loop licenses, and Chemtex Global Corporation’s engineering. The INVISTA polymerization process and the associated designs are historically proven in the commercial production of PET resin and polyester fiber.

We have completed our basic design package for the Infinite Loop™ full-scale manufacturing facilities. The engineering philosophy we have adopted is “design one, build many.” This approach allows for the basic design package to be used as the base engineering platform for all future geographical expansion. We believe this approach allows for quick execution, speed to market, and lends itself well to modular construction. The basic design package has a capacity of up to 70,000 M/T of PET resin output per year. Permitting, site and regulatory considerations may impact plant capacity.

Our market strategy is to assist global consumer goods brands in meeting their public sustainability commitments by offering co-branded packaging or polyester fibers that are made with Loop, 100% recycled, virgin-quality PET or polyester fibers. We believe that Loop™ recycled PET resin and polyester fiber could command premium pricing over virgin, petroleum-based PET resin and provide attractive economic returns. We are targeting multi-year take or pay offtake agreements for planned Infinite Loop™ production. Factors under consideration in determining project economics include the feasibility design engineering and cost estimate work, timing and permitting of a facility, customer offtake demand, commitment terms, and feedstock sources, quality, availability, PET bale index pricing, logistics, and ramp up, among others.

Recent developments

Signature of Venture Agreement with SKGC

The first planned commercial manufacturing facility with Infinite Loop™ technology, located in Ulsan, South Korea, will have an annual capacity to supply 70,000 metric tons per year of Loop™ PET resin for packaging and polyester fiber applications, and is anticipated to break ground in 2023 and to have construction completed by the end of 2025. In addition to Infinite Loop™ Ulsan, the two partners have outlined plans which target a minimum of three additional commercial manufacturing facilities to be constructed throughout Asia by 2030. Loop and SKGC have partnered with SK ecoengineering, a subsidiary of the SK Group who brings considerable experience and proficiency as an EPC contractor, for the engineering and construction of the commercial manufacturing facilities.

Successful completion of SKGC technical due diligence

On March 28, 2023, Loop and SKGC announced the successful completion of a technical due diligence conducted by SKGC. The technical due diligence marks the next phase in Loop and SKGC's long-standing partnership to commercialize Loop’s technology through Infinite Loop™ manufacturing facilities in the Asian market. SKGC executed a comprehensive due diligence to validate Loop’s technology and its production facility in Terrebonne, Quebec. The scope of the technical due diligence included the depolymerization of low value PET waste into its base monomers of DMT and MEG, the purification of the monomers, as well as the polymerization into virgin-quality Loop™ PET resin and polyester fiber. Key parameters of Loop’s technology that were validated were the production yields, operational stability, quality of the output monomers and overall performance of the production facility. The technical due diligence validated that the PET resin and polyester fiber produced using Loop’s technology is of virgin quality. The technical due diligence report, signed by both parties, confirms Loop’s innovative technology.

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Customer product activations

On April 19, 2023, Loop and Garnier, launched the brand’s first Micellar Cleansing Water All-In-1 bottle made of Loop™ PET, which was produced using monomers from Loop’s Terrebonne Facility (excluding cap and label). The Loop logo, featured on the front of this packaging innovation, serves as an anchor to highlight Loop’s technology, the quality of materials and the bottle’s recyclability.

Proprietary Technology and Intellectual Property

We believe the power of our technology lies in its ability to use post-industrial and post-consumer waste PET plastic and polyester fiber feedstocks, which could end up in landfills, rivers, oceans and natural areas, to create Loop™ PET resin. We believe our technology can deliver high-purity profitable virgin-quality, 100% recycled PET resin suitable for use in food-grade packaging and polyester fiber.

Our Generation II technology (“GEN II”) is a methanolysis-based depolymerization technology that uses temperatures below 90 °C to depolymerize waste PET and polyester fiber. The low temperature offers several key advantages which the Company believes will improve its ability to commercialize the GEN II technology, including;

	·	Lower energy usage during depolymerization, and therefore reduced processing cost and lower GHG emissions relative to higher temperature processes;
	·	Avoidance of side reactions with non-PET waste, which are inherent in waste PET feedstock streams, during depolymerization which may occur during higher temperature and higher pressure depolymerization processes. This allows for a simplified distillation purification process resulting in fewer, and more effective, steps to isolate the desired high purity DMT and MEG monomers suitable to produce virgin-quality PET required to meet food contact regulations as well as the quality and clarity requirements of global consumer product companies;
	·	Allowing the depolymerization of less costly and low-quality feedstocks, which cannot be effectively recycled today, such as carpet fiber, clothing and mixed plastics, and upcycling them into high-quality PET that can be used in food contact use; and
	·	The GEN II technology uses only trace amounts of water, eliminates the need for a halogenated solvent and uses a catalyst at low concentration.

We believe that GEN II requires less energy and fewer resource inputs than conventional PET production processes. We also believe it is an environmentally sustainable method for producing virgin-quality food-grade PET plastic by decoupling PET manufacturing from the fossil fuel industry.

To independently validate that our GEN II technology can produce DMT and MEG monomers at mini-pilot and pilot scale, we commissioned Kemitek, a College Centre for Technology Transfer specialized in the fields of green chemistry and chemical process scale-up. Kemitek’s findings allowed them to confirm that our technology produces monomers that meet our purity specifications for the production of PET resin and polyester fiber. The complete Kemitek report was filed with the SEC by the Company on December 14, 2020.

Additionally, Loop’s strategic partners, Suez and Danone, among others, collectively engaged an independent, globally recognized third-party engineering firm to execute a thorough due diligence and technology validation report. We believe the final report, which was communicated in May 2022, validated and reinforced the quality, effectiveness, and scalability of our technology. Our technology was further validated in March 2023, when Loop and SKGC announced the successful completion of the technical due diligence conducted by SKGC. Key parameters of Loop’s technology that were validated through SKGC’s comprehensive due diligence include the production yields, operational stability, quality of the output monomers and overall performance of Loop’s Terrebonne Facility. The technical due diligence validated that the PET resin and polyester fiber produced using Loop’s technology is of virgin quality.

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To protect our technology and intellectual property rights, we rely on a combination of patents, trademarks, trade secrets, confidentiality agreements and provisions as well as other contractual provisions to protect our proprietary rights, which are primarily our patents, brand names, product designs and marks.

The GEN II technology portfolio currently consists of four patent families:

	·	One family has two issued U.S. patents and a pending U.S. application, all expected to expire on or around September 2037. Internationally, this patent family has four issued or allowed patents in foreign jurisdictions, Bangladesh, Argentina, Taiwan and Brazil, and pending applications in Canada, China, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, South Korea, and various other countries, all expected to expire on or around September 2038, if granted, not including any patent term extensions.
	·	An additional aspect of the GEN II technology, as claimed in two issued U.S. patents and a pending U.S. application, all expected to expire on or around June 2039. Internationally, this patent family includes five issued or allowed patents in foreign jurisdictions, including Morocco, Algeria, Indonesia and Bangladesh, and pending applications in Canada, China, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, South Korea, and various other countries, all expected to expire on or around June 2039, if granted, not including any patent term extensions.
	·	Another aspect of the GEN II technology, which is the subject of an issued U.S. patent and a pending U.S. application. Internationally, this patent family includes pending applications in Canada, Europe, India, Singapore, Papua New Guinea, Brazil, and South Africa. Any patents that would ultimately be granted from this application would be expected to expire on or around March 2040, not including any patent term extensions.
	·	Another aspect of the GEN II technology, which is the subject of an issued U.S. patent and a pending U.S. application, both expected to expire on or around March 2040. Internationally, this patent family includes two issued patents in foreign jurisdictions, Bangladesh and South Africa, and pending applications in Canada, China, Korea, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, and various other countries, all expected to expire on or around March 2040, if granted, not including any patent term extensions.

Loop owns registrations for its trademarks in Cambodia, Canada, the European Union, Taiwan, the United Kingdom, and the U.S. Loop also has pending applications in Canada, Japan, South Korea, the U.S., and Vietnam.

Government Regulation and Approvals

As we seek to further develop and commercialize our technology, we will be subject to extensive and frequently developing federal, state, provincial and local laws and regulations. Compliance with current and future regulations, including food packaging regulations, could increase our operational costs.

Our operations require various governmental permits and approvals. We are in the process of obtaining all necessary permits and approvals for the operation of our business; however, any of these permits or approvals may be subject to denial, revocation or modification under various circumstances. Failure to obtain or comply with the conditions of permits and approvals or to have the necessary approvals in place may adversely affect our operations and may subject us to penalties. See “Risk Factors” below for additional information.

We believe that if we are successful in addressing food packaging regulations in various countries and economic regions, the regulatory environment may provide Loop™ PET resin a competitive advantage relative to mechanically recycled alternative resins and virgin PET.

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Loop’s PET resin was subjected to independent testing by an external and certified laboratory, which confirmed the PET complies with FDA Regulation 21 CFR § 177.1630 on August 26, 2021, as well as EU Commission Regulation No 10/2011 on July 27, 2021. These results attest that Loop’s PET is safe for use in food-contact applications, including but not limited to bottled water, carbonated drinks and food trays. Demonstration of compliance with food-contact requirements follows the No Objection Letter (“NOL”) from the FDA previously granted to Loop in March 2021. The NOL confirms that Loop’s monomers can produce rPET of a purity suitable for food-contact use, provided it meets the applicable requirements of Title 21 of the Code of Federal Regulations. The monomers used in the PET resin submitted for testing were produced at Loop’s small-scale production facility in Terrebonne, Québec (the “Terrebonne Facility”).

We have received from the European Chemicals Agency a confirmation of registration for our MEG on November 17, 2020, and for our DMT on December 7, 2020. The registration under the Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”) Regulation (EC 1907/2006) confirms that our monomers are of a purity equal to what is currently recognized within Europe and entitles us to manufacture/import the monomers into Europe. It should be noted that MEG and DMT are on the positive list for plastic materials, which means that the two monomers can be used as food contact materials.

On August 31, 2021, Loop also received a NOL from Health Canada, which states that the PET produced by Loop’s recycling process is suitable for use in the manufacture of water bottles and articles for contact with all food types under all conditions of use.

Human Capital

As of May 31, 2023, we had 73 employees of which 24 work in research and development, 35 in engineering and operations, and 14 in administrative functions.

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Results of Operations

The following table summarizes our operating results for the three-month periods ended May 31, 2023 and 2022, in thousands of U.S. Dollars.

	Three months ended May 31,
	2023			2022			Change
Revenue from contracts with customers	$	27		$	-		$	27

Expenses
Research and development
Machinery and equipment expenditures		1,236			1,890			(654	)
External engineering		1,155			1,596			(441	)
Employee compensation		1,286			1,891			(605	)
Stock-based compensation		160			396			(236	)
Plant and laboratory operating expenses		469			866			(397	)
Other		184			161			23
Total research and development		4,490			6,800			(2,310	)

General and administrative
Professional fees		619			799			(180	)
Employee compensation		637			715			(78	)
Stock-based compensation		196			8,070			(7,874	)
Insurance		703			1,103			(400	)
Other		310			350			(40	)
Total general and administrative		2,465			11,037			(8,572	)

Depreciation and amortization		133			139			(6	)
Interest and other financial expenses		54			41			13
Interest income		(99	)		(13	)		(86	)
Foreign exchange loss		(15	)		2			(17	)
Total expenses		7,028			18,006			(10,978	)
Net loss	$	(7,001	)	$	(18,006	)	$	11,005

First Quarter Ended May 31, 2023

Revenues

Revenues for the three-month period ended May 31, 2023 were $27. For the same period in 2022, there were no revenues. The revenues resulted from the delivery of initial volumes to customers of Loop™ PET resin produced using monomers manufactured at the Terrebonne Facility.

Research and Development

Research and development expense for the three-month period ended May 31, 2023 decreased $2,310 to $4,490, as compared to $6,800 for the same period in 2022. The decrease was primarily attributable to a $654 decrease in purchases of machinery and equipment used at the Terrebonne Facility, a $605 decrease in employee compensation expenses, a $441 decrease in external engineering costs for design work for our Infinite Loop™ manufacturing process, a $397 decrease in plant and laboratory expenses to operate our Terrebonne Facility, and a $236 decrease in stock-based compensation expenses.

General and administrative expenses

General and administrative expenses for the three-month period ended May 31, 2023 decreased $8,572 to $2,465, as compared to $11,037 for the same period in 2022. The decrease was primarily attributable to a $7,874 decrease in stock-based compensation which is mainly attributable to a $7,740 expense recorded in relation to the achievement of a performance milestone for 1,000,000 RSUs in the three-month period ended May 31, 2022, and a $400 decrease in insurance costs.

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Net Loss

The net loss for the three-month period ended May 31, 2023 decreased $11,005 to $7,001, as compared to $18,006 for the same period in 2022. The decrease is primarily due to the decrease in general and administrative expenses of $8,572, and the $2,310 decrease in research and development expenses.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Since its inception, the Company has been in the pre-commercialization stage with limited revenues, with its ongoing operations and commercialization plans financed primarily by raising equity. To date, we have been successful in raising capital to finance our ongoing operations. Our liquidity position consists of cash and cash equivalents on hand of $21,970 at May 31, 2023 and an undrawn senior loan facility from a Canadian bank of $2,573. Our liquidity position is subject to risks and uncertainties, including those discussed under “Cautionary Statements Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and the Risk Factors section included in Part I, Item 1A of our 2023 Annual Report on Form 10-K.

Management actively monitors the Company’s cash resources against the Company’s short-term cash commitments to ensure the Company has sufficient liquidity to fund its costs for at least twelve months from the financial statement issuance date. Management evaluates the Company’s liquidity to determine if there is substantial doubt about the Company’s ability to continue as a going concern. In preparing this liquidity assessment, management applies significant judgment in estimating future cash flow requirements of the Company based on budgets and forecasts which includes developing assumptions related to: (i) estimation of amount and timing of future cash outflows and cash inflows and (ii) determining what future expenditures are committed and what could be considered discretionary. Management prepared the Company’s consolidated financial statements on a going concern basis in accordance with ASC 205-40, as management believes that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations as they become due for a period of no less than 12 months from the date of issuance of these unaudited interim condensed consolidated financial statements.

Management continues to pursue our growth strategy and is evaluating our financing plans to continue to raise capital to finance the start-up of commercial operations and continue to fund our ongoing operations. We will require a significant amount of capital to fund our growth as we invest in our planned commercial facilities in Europe, Asia and North America, as well as additional research and development. In addition to our cash on hand, we may also raise additional capital through equity offerings or debt financings, government incentives, as well as through collaborations or strategic alliances to execute our growth strategy. Such financing will depend on many factors, including actual construction costs of the planned commercial facilities, potential delays in our supply chain, and our ability to secure customers, which may not be available on acceptable terms, if at all. If we are unable to raise additional capital when required, our business, financial condition and results of operations would be adversely affected.

In December 2021, the Company entered into an agreement for the purchase of long lead machinery and equipment for up to $8,546 which can be used in any Infinite Loop™ manufacturing facility. The payment of these amounts is based on certain milestones subject to various terms and conditions, including fabrication timelines, and equipment inspection. Pursuant to the agreement, the Company has paid a cash deposit of $5,430.

We have a long-term debt obligation to Investissement Québec in connection with a financing facility for the expansion of the Terrebonne Facility up to a maximum of $3,382. We received the first disbursement in the amount of $1,624 on February 21, 2020 and the second disbursement in the amount of $1,758 on August 26, 2021. There is a 36-month moratorium on both capital and interest repayments as of the first disbursement date. At the end of the 36-month moratorium, capital and interest will be repayable in 84 monthly installments. The loan bears interest at a rate of 2.36%. We have also agreed to issue to Investissement Québec warrants to purchase shares of our common stock in an amount equal to 10% of each disbursement up to a maximum aggregate amount of $338. The warrants were issued at a price per share equal to the higher of (i) $11.00 per share and (ii) the ten-day weighted average closing price of Loop Industries shares of common stock on the Nasdaq stock market for the 10 days prior to the issue of the warrants. The warrants can be exercised immediately upon grant and have a term of three years from the date of issuance. The loan can be repaid at any time by us without penalty. On February 21, 2020, upon the receipt of the first disbursement under this facility, we issued a warrant to purchase 15,153 shares of common stock at a price of $11.00 to Investissement Québec, which expired in February 2023. On August 26, 2021, upon the receipt of the second disbursement under this facility, we issued a warrant to purchase 17,180 shares of common stock at a price of $11.00 to Investissement Québec, which remains outstanding. There is no remaining amount available under the financing facility after the second disbursement.

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On November 21, 2022, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “the Financing Facility Amendment”). As per the Financing Facility Amendment, a total of $37 of the principal amount is repayable in monthly installments in the fiscal year ending February 29, 2024 and the remainder of the principal amount is repayable in 72 monthly installments. Under the original terms of the Financing Facility, the principal amount was repayable in 84 monthly installments beginning in March of 2023. The Financing Facility Amendment does not modify the interest rates, the repayment terms of accrued interest or any other terms of the Financing Facility.

On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company, entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank. The Credit Facility allows for borrowings of up to $2,573 in aggregate principal amount and provides for a two-year term. The Credit Facility is secured by the Company’s Terrebonne, Québec property and is subject to a minimum equity covenant, tested quarterly. All borrowings under the Credit Facility will bear interest at an annual rate equal to the bank’s Canadian prime rate (as defined in the Credit Facility) plus 1.0%. The Company is subject to a guarantee of the liabilities of Loop Canada Inc. As at May 31, 2023, the Credit Facility was undrawn.

Flow of Funds

Summary of Cash Flows

A summary of cash flows for the three months ended May 31, 2023 and 2022 was as follows, in thousands of U.S. Dollars:

	Three Months Ended May 31,
	2023			2022
Net cash used in operating activities	$	(5,504	)	$	(11,649	)
Net cash used in investing activities		(2,122	)		4
Net cash used by financing activities		(16	)		-
Effect of exchange rate changes on cash		21			(15	)
Net (decrease) increase in cash	$	(7,621	)	$	(11,660	)

Net Cash Used in Operating Activities

During the three-month period ended May 31, 2023, we used $5,504 in operations compared to $11,649 during the three-month period ended May 31, 2022. As discussed above in the Results of Operations, the year-over-year decrease is mainly due to decreased operating expenses as we have completed the upgrade of the Terrebonne Facility and our basic design package for the Infinite Loop™ full-scale manufacturing facilities.

Net Cash Used in Investing Activities

During the three months ended May 31, 2023, we used $2,122 in investing activities compared to $4 during the three-month period ended May 31, 2022. During the three months ended May 31, 2023 we made $2,023 in deposits on machinery and equipment for use in a commercial project, and we made investments in intangible assets of $99, particularly in our patent technology in the United States and around the world.

Net Cash (Used) Provided by Financing Activities

During the three months ended May 31, 2023, we repaid $16 of long-term debt.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

ITEM 4. CONTROLS AND PROCEDURES

Management’s Evaluation of our Disclosure Controls and Procedures

A. Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), pursuant to Rule 13a-15(b) of the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of May 31, 2023.

B. Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended May 31, 2023 that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

SEC Investigation

As previously disclosed, we received a subpoena from the SEC in October 2020 requesting certain information from us, including information regarding testing, testing results and details of results from our GEN I and GEN II technologies, and certain of our partnerships and agreements. In March 2022, we received a second subpoena requesting additional information, including information concerning our reverse-merger in 2015, and communications with certain individuals and entities. There have been no additional information requests from the SEC relating to the Company’s business or technology.

The SEC informed us that its investigation does not mean that the SEC has concluded that anyone has violated the law and that the investigation does not mean that the SEC has a negative opinion of us. We cannot predict when this matter will be resolved or what, if any, action the SEC may take following the conclusion of the investigation.

On September 30, 2022 the SEC filed a complaint (the “SEC complaint”) against several named defendants (“Defendants”), and also identified as a relief defendant Daniel Solomita, our Chief Executive Officer. The SEC complaint does not allege wrongdoing by the Company or Mr. Solomita. The SEC complaint identifies Mr. Solomita and an entity he owns as relief defendants because they purportedly received monies from the Defendants in 2015 that the SEC alleges were derived from the Defendants’ fraud. The SEC complaint does not allege that Mr. Solomita was aware of the alleged wrongdoing by the Defendants and does not allege that he was aware that any alleged monies received were derived from fraud.

Litigation

From time to time, we may become involved in various lawsuits and legal proceedings or investigations which arise in the ordinary course of business. Except as noted above, we are not presently a party to any legal proceedings, government actions, administrative actions, investigations or claims that are pending against us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business, financial condition or operating results. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

It is possible that we may expend financial and managerial resources in the defense of our intellectual property rights in the future if we believe that our rights have been violated. It is also possible that we may expend financial and managerial resources to defend against claims that our products and services infringe upon the intellectual property rights of third parties.

ITEM 1A. RISK FACTORS

We are subject to various risks and uncertainties in the course of our business. Risk factors relating to us are set forth under “Risk Factors” in our Annual Report on Form 10-K, filed on May 18, 2023. No material changes to such risk factors have occurred during the three months ended May 31, 2023.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

The following Exhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below.

Exhibit Index

		Incorporated by Reference
Number	Description	Form	File No.	Filing Date	Exhibit No.
3.1	Articles of Incorporation, as amended to date	10-K	000-54768	May 30, 2017	3.1
3.2	By-laws, as amended to date	8-K	000-54768	April 10, 2018	3.1
10.1*	Joint Venture Agreement, dated April 27, 2023, between SK Geo Centric Co., Ltd. and Loop Industries, Inc.		Filed herewith
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		Filed herewith
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		Filed herewith
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		Furnished herewith
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		Furnished herewith
101.INS	XBRL Instance Document		Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document		Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document		Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document		Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document		Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document		Filed herewith
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)		Filed herewith

* Portions of this document (indicated by “[***]”) have been omitted because such information is not material and is the type of information that the registrant treats as private or confidential.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Date: July 12, 2023	By:	/s/ Daniel Solomita
	Name:	Daniel Solomita
	Title:	President and Chief Executive Officer, and Director (Principal Executive Officer)

Date: July 12, 2023	By:	/s/ Fady Mansour
	Name:	Fady Mansour
	Title:	Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer)

EX-31.1 2 loop_ex311.htm CERTIFICATION loop_ex311.htm

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Daniel Solomita, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Loop Industries, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 12, 2023		/s/ Daniel Solomita
		Daniel Solomita
		President and Chief Executive Officer (principal executive officer)

EX-31.2 3 loop_ex312.htm CERTIFICATION loop_ex312.htm

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Fady Mansour, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Loop Industries, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 12, 2023		/s/ Fady Mansour
		Fady Mansour
		Chief Financial Officer (principal financial officer and principal accounting officer)

EX-32.1 4 loop_ex321.htm CERTIFICATION loop_ex321.htm

EXHIBIT 32.1

SECTION 906 CERTIFICATION

In connection with the accompanying Quarterly Report on Form 10-Q of Loop Industries, Inc. for the quarter ended May 31, 2023, the undersigned, Daniel Solomita, President and Chief Executive Officer of Loop Industries, Inc., does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)	such Quarterly Report on Form 10-Q for the quarter ended May 31, 2023, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)	the information contained in such Quarterly Report on Form 10-Q for the quarter ended May 31, 2023, fairly presents, in all material respects, the financial condition and results of operations of Loop Industries, Inc.

Date: July 12, 2023		/s/ Daniel Solomita
		Daniel Solomita
		President and Chief Executive Officer (principal executive officer)

EX-32.2 5 loop_ex322.htm CERTIFICATION loop_ex322.htm

EXHIBIT 32.2

SECTION 906 CERTIFICATION

In connection with the accompanying Quarterly Report on Form 10-Q of Loop Industries, Inc. for the quarter ended May 31, 2023, the undersigned, Fady Mansour, Chief Financial Officer of Loop Industries, Inc., does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	such Quarterly Report on Form 10-Q for the quarter ended May 31, 2023, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)	the information contained in such Quarterly Report on Form 10-Q for the quarter ended May 31, 2023, fairly presents, in all material respects, the financial condition and results of operations of Loop Industries, Inc.

Date: July 12, 2023		/s/ Fady Mansour
		Fady Mansour
		Chief Financial Officer (principal financial officer and principal accounting officer)

EX-10.1 6 loop_ex101.htm JOINT VENTURE AGREEMENT loop_ex101.htm

EXHIBIT 10.1

Dated April 27, 2023

JOINT VENTURE AGREEMENT

between

SK GEO CENTRIC CO., LTD.,

and

LOOP INDUSTRIES, INC.

Contents

Clause		Page

ARTICLE 1.	DEFINITIONS AND INTERPRETATION	1
ARTICLE 2.	PURPOSE	2
ARTICLE 3.	FORMATION OF THE JV COMPANY	6
ARTICLE 4.	FORMATION OF THE JV KOREA	8
ARTICLE 5.	CAPITAL CONTRIBUTIONS; DEBT FINANCING	10
ARTICLE 6.	CONSTITUTIONAL DOCUMENTS	15
ARTICLE 7.	THE BUSINESS; EXCLUSIVITY AND OTHER ARRANGEMENTS	15
ARTICLE 8.	PREEMPTIVE RIGHTS	23
ARTICLE 9.	SHARE TRANSFER RESTRICTIONS	24
ARTICLE 10.	GENERAL MEETING	26
ARTICLE 11.	THE BOARD OF DIRECTORS	27
ARTICLE 12.	MANAGEMENT TEAM; OTHER PERSONNEL	31
ARTICLE 13.	ACCOUNTING, FINANCIAL POLICIES & BUSINESS PLAN	32
ARTICLE 14.	TERM AND TERMINATION	33
ARTICLE 15.	CONSEQUENCE OF TERMINATION	34
ARTICLE 16.	REPRESENTATIONS AND WARRANTIES	35
ARTICLE 17.	CONFIDENTIALITY	35
ARTICLE 18.	NOTICE	37
ARTICLE 19.	GOVERNING LAW AND DISPUTE RESOLUTION	37
ARTICLE 20.	MISCELLANEOUS	37
SCHEDULE 1 DEFINITIONS		Sch. 1-1
SCHEDULE 2 MATTERS REQUIRING UNANIMOUS SHAREHOLDERS’ CONSENT		Sch. 2-1
SCHEDULE 3 MATTERS REQUIRING UNANIMOUS BOARD APPROVAL		Sch. 3-1
SCHEDULE 4 CONTACT INFORMATION FOR NOTICES		Sch. 4-1
EXHIBIT A FORM OF JOINDER AGREEMENT (LOOP)		A-1
EXHIBIT B FORM OF JOINDER AGREEMENT (JV COMPANY)		B-1
EXHIBIT C FORM OF JOINDER AGREEMENT (PERMITTED TRANSFEREE)		C-1
EXHIBIT D FORM OF PERFORMANCE TARGET APPENDICES		D-1

JOINT VENTURE AGREEMENT

THIS JOINT VENTURE AGREEMENT (this “Agreement”) is entered into as of April 27, 2023 (the “Effective Date”) by and between:

SK GEO CENTRIC CO., LTD. (formerly known as SK Global Chemical Co., Ltd.), a joint stock company (chusik hoesa in Korean) duly organized and validly existing under the laws of the Republic of Korea (“Korea”) with its principal offices at 51, Jong-ro, Jongno-gu, Seoul, Korea 03161 (“SKGC”); and

LOOP INDUSTRIES, INC., a corporation duly organized and validly existing under the laws of the State of Nevada, United States of America (“USA”) with its principal offices at 480 Fernand-Poitras, Terrebonne, Québec, Canada J6Y 1Y4 (“Loop Parent”).

Each of SKGC, Loop Parent and, subject to execution of the joinder agreements contemplated in Section 2.2 and Section 2.3, respectively, Loop (as defined below) and the JV Company (as defined below) is referred to herein individually as a “Party” and collectively as the “Parties.” Each of Loop Parent and Loop is referred to herein individually as a “Loop Party” and collectively as the “Loop Parties.”

RECITALS

WHEREAS, SKGC and Loop Parent entered into a securities purchase agreement dated June 22, 2021 (as amended, the “Securities Purchase Agreement”), pursuant to which SKGC subscribed for shares of common stock and other securities of Loop Parent;

WHEREAS, concurrently with and as a condition to SKGC’s entry into the Securities Purchase Agreement, SKGC and Loop Parent entered into that certain Joint Venture Memorandum of Understanding dated June 22, 2021 (the “MOU”), which sets forth, among other things, the principal terms contemplated by the parties thereto concerning the formation of a joint venture for the development and operation of Approved Projects (as defined below) in Asia and the sale of rPET Products (as defined below) manufactured by such Approved Projects in accordance with the terms of this Agreement and the other JV Transaction Documents (as may be further amended pursuant to Section 7.1, the “Business”);

WHEREAS, in accordance with the terms of the MOU, SKGC and the Loop Parent desire, through Loop in the case of Loop Parent, to establish and operate a joint venture entity (the “JV Company”) which shall conduct the Business through one or more subsidiaries (including the JV Korea (as defined below));

WHEREAS, SKGC and Loop Parent desire to enter into this Agreement to specify their rights and obligations and those of the JV Partners with respect to the operations and management of the Business and affairs of the JV Company and its subsidiaries in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual premises and covenants set forth below, SKGC and Loop Parent hereby agree as follows:

AGREEMENT

ARTICLE 1.

DEFINITIONS AND INTERPRETATION

Section 1.1	Definitions. Capitalized terms used in this Agreement and not otherwise defined in this Agreement shall have the respective meanings given to them in Schedule 1.

Section 1.2	Interpretations. The interpretation principles set forth in Schedule 1 shall apply to the interpretation of this Agreement.

ARTICLE 2.

PURPOSE

Section 2.1

Purpose. The purpose of this Agreement is for the JV Partners to jointly facilitate and promote the Business through the establishment, ownership and operation of the JV Company and its subsidiaries by the JV Partners. Each JV Partner shall cooperate with the other JV Partner to ensure that each JV Entity (and, where applicable, the Management Team, the Board of Directors and the employees of the JV Entities) complies with the terms of this Agreement, and that:

	(a)	each JV Entity and the Business are operated, managed, administered and conducted in accordance with this Agreement, the JV Transaction Documents and applicable Law;

	(b)	each JV Entity is operated in a commercially reasonable manner, to maximize the JV Company’s economic returns and to ensure its efficiency, productivity and competitiveness; and

	(c)	the JV Company conducts its business in cooperation with the JV Partners.

Section 2.2

Formation of Loop. On the terms and subject to the conditions set forth herein, prior to the establishment and incorporation of the JV Company, Loop Parent shall form, or cause to be formed a direct or indirect subsidiary Controlled and majority-owned by Loop Parent to enter into this Agreement and join the JV Company as a JV Partner (such subsidiary, “Loop”), and effect the transactions contemplated to be consummated by Loop pursuant to this Agreement and the JV Transaction Documents to which Loop is a party. Promptly following the formation of Loop in accordance with the foregoing (and Loop providing SKGC with corporate formation and organizational documentation of Loop evidencing the same), Loop Parent shall cause Loop to enter into a joinder agreement in the form and substance attached hereto as Exhibit A, such that Loop shall be bound by, and shall assume all rights and obligations applicable to it as Loop under, this Agreement as if this Agreement were entered into by and among SKGC, Loop Parent and Loop. Upon the execution and delivery of the joinder agreement, the representations and warranties and covenants of Loop shall be deemed for all purposes to be made by Loop as of the date hereof (notwithstanding the actual date of execution and delivery of the joinder agreement). Until such time as the joinder agreement shall have been executed and delivered, all provisions of this Agreement applicable to Loop shall be deemed to apply to Loop Parent, and Loop Parent shall have the rights and obligations of Loop hereunder. Loop Parent and Loop shall be jointly and severally liable for all obligations and liabilities of Loop under this Agreement. For the avoidance of doubt, SKGC and Loop Parent hereby agree that this Agreement shall immediately be valid and effective between them upon the execution of this Agreement by them in accordance with the terms hereof, notwithstanding such time being prior to the execution of the joinder agreement by Loop. Loop Parent hereby covenants that Loop shall remain, directly or indirectly, Controlled and majority-owned by Loop Parent so long as Loop holds any Equity Securities of the JV Company.

Section 2.3	Joinder Agreement of the JV Company. Upon the establishment and incorporation of the JV Company in accordance with the terms and conditions contained herein, the JV Partners shall cause the JV Company to enter into a joinder agreement in the form and substance attached hereto as Exhibit B, such that the JV Company shall be bound by, and shall assume all rights and obligations applicable to it as the JV Company under, this Agreement as if this Agreement were entered into by and among SKGC, Loop Parent, Loop and the JV Company. For the avoidance of doubt, SKGC and Loop Parent hereby agree that this Agreement shall immediately be valid and effective between them upon the execution of this Agreement by them in accordance with the terms hereof, notwithstanding such time being prior to the execution of the joinder agreement by the JV Company.

Section 2.4	No Impairment. Each JV Partner agrees that it shall not take any action to cause or permit any JV Entity, by amendment of the JV Company Constitution, the JV Korea Articles or of any of their other organizational documents or the organizational documents of any other JV Entity, or through any reorganization, recapitalization, transfer of assets, consolidation, merger, distribution, issue or sale of securities, or any other voluntary action, to avoid or seek to avoid the observance or performance of any of the terms of this Agreement, or to impair or seek to impair the rights of the JV Partners or Loop Parent hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Agreement and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the JV Partners and Loop Parent against such impairment.

Section 2.5	Securities Purchase Agreement. SKGC and Loop Parent agree that:

	(a)	the JV Transaction Documents collectively constitute the “Joint Venture Transaction Agreements” as defined under the Securities Purchase Agreement for all purposes therein, and in particular that the Exclusivity Period (as defined in the Securities Purchase Agreement) shall end, pursuant to section 10.3(a)(ii) of the Securities Purchase Agreement, on the Effective Date, except that solely with respect to and for purposes of interpreting the provisions of sections 10.3(b) and 10.3(c)(i) of the Securities Purchase Agreement, such Exclusivity Period shall end on the earlier to occur of (i) the date on which the JV Company has been formed and the Exclusivity Period contemplated in Section 7.3(a) has commenced in accordance with the terms therewith and (ii) the termination of this Agreement in accordance with its terms;

	(b)	the definition of “Asia” as set forth in schedule A to the Securities Purchase Agreement is hereby amended by deleting the references therein to “Saudi Arabia,” and “United Arab Emirates”; and

	(c)	SKGC hereby waives any breach by Loop Parent with respect to its obligations under section 10.3(b) of the Securities Purchase Agreement solely in relation to [***],

	in each case, pursuant to the applicable provisions of sections 12.3 (Waiver) and 12.6 (Amendments) of the Securities Purchase Agreement.

Section 2.6

SKGC’s Right of First Refusal in respect of NA Opportunities. SKGC and Loop Parent acknowledge the value and mutual benefit of the historic and continuing partnership between them, as evidenced by SKGC’s direct investment in Loop Parent and the joint venture arrangement between them as contemplated by this Agreement, and agree as follows.

	(a)	If Loop Parent intends directly or indirectly to develop any manufacturing facility in the United States or Canada for the manufacture of rPET Products using Loop Parent’s technology, whether such opportunities or projects pertain to construction of new facilities (i.e., greenfield) or renovation or repurposing of existing facilities (i.e., brownfield), and whether such opportunity is originated by Loop Parent or proposed by SKGC or any other Person (such plant, an “NA Opportunity”), Loop Parent shall deliver to SKGC a written notice (a “NA Opportunity Collaboration Notice”) stating any bona fide intention by Loop Parent to pursue the relevant NA Opportunity, including all information material to such NA Opportunity that Loop Parent has in its possession at such time. Loop Parent shall use commercially reasonable efforts to provide any information that SKGC reasonably requests in connection with its evaluation of such NA Opportunity.

	(b)	At any time within twenty (20) Business Days after the receipt of the NA Opportunity Collaboration Notice, SKGC shall have the right, but not the obligation, to accept, by delivery of written notice, Loop Parent’s invitation to participate (either directly or through any of its Affiliates) in the NA Opportunity.

	(c)	Upon SKGC’s acceptance of Loop Parent’s invitation to participate in the NA Opportunity in accordance with sub-Section (b) above, Loop Parent shall negotiate exclusively with SKGC regarding, and each of Loop Parent and SKGC shall negotiate in good faith and use commercially reasonable efforts to mutually agree and enter into, a memorandum of understanding or term sheet that will set forth the terms and conditions on which SKGC and Loop Parent shall jointly pursue such NA Opportunity, which terms and conditions shall incorporate, unless otherwise agreed between them, the overarching commercial, strategic principle that SKGC and Loop Parent will have equal ownership in respect of such NA Opportunity as between them and each shall have rights and obligations of a shareholder and joint venture partner in respect of such NA Opportunity that are reasonably proportionate and commensurate to their respective ownership of such NA Opportunity, provided that Loop Parent’s and SKGC’s obligations set forth in this Section 2.6(c) shall expire on the date that is seventy (70) Business Days following the date of SKGC’s acceptance in respect of such invitation by Loop Parent to participate in such NA Opportunity (or such longer period as may be agreed by the mutual consent of SKGC and Loop Parent, each acting reasonably and taking into account the progression of the discussion between them in respect of such NA Opportunity), and further provided that, Loop Parent’s obligations set forth in this Section 2.6(c) shall not restrict or limit participation by a potential third party partner who either, directly or indirectly through one or more of its Affiliates, (x) is reasonably expected to be a material supplier to such NA Opportunity or (y) is a customer or prospective customer of rPET Products with widely recognizable consumer brand so long as SKGC and Loop Parent’s relative ownership percentage (vis-à-vis one another) in respect of such NA Opportunity shall be equal unless otherwise mutually agreed.

	(d)	An NA Opportunity shall constitute a “Shelved NA Opportunity” on the date that is the earliest of: (i) the date on which SKGC declines to accept Loop Parent’s invitation to participate in the NA Opportunity as set forth in the NA Opportunity Collaboration Notice, (ii) the NA Opportunity Collaboration Notice otherwise lapses without being accepted by SKGC, or (iii) the date on which Loop Parent’s and SKGC’s obligations set forth in sub-Section (c) expires without SKGC and Loop Parent having entered into a memorandum of understanding or term sheet as set forth therein.

	(e)	Loop Parent may, without restriction, pursue any Shelved NA Opportunity independently of and without any further obligation to SKGC, except as set forth in sub-Section (f) and (g).

	(f)	If Loop receives, or intends to make or receives, a formal proposal or offer (e.g., a memorandum of understanding or a term sheet) from or to a Person (other than SKGC or any of its Affiliates) with respect to a Shelved NA Opportunity (each, a “Reactivated NA Opportunity”), then, prior to accepting or making such proposal or offer, as applicable, Loop must first deliver to SKGC the proposed terms and conditions of such Reactivated NA Opportunity (the “NA Opportunity ROFR Notice”).

	(g)	SKGC shall have the option, but not the obligation, to participate (either directly or through any of its majority-owned and Controlled subsidiaries) with Loop Parent in the Reactivated NA Opportunity upon the same terms and conditions set forth in, or, if it would be impossible or commercially impracticable for SKGC and/or its applicable majority-owned and Controlled subsidiaries to participate in the Reactivated NA Opportunity on the same terms and conditions, on terms and conditions which are no less favorable to Loop Parent as those as set forth in, such NA Opportunity ROFR Notice, which SKGC may exercise by delivering written notice thereof to Loop Parent (an “SKGC ROFR Acceptance Notice”) at any time within thirty (30) Business Days after its receipt of the NA Opportunity ROFR Notice. An SKGC ROFR Acceptance Notice shall describe in reasonable detail any modifications which are proposed to be made to the terms and conditions set forth in the NA Opportunity ROFR Notice and the basis therefor, which proposed modifications may include equal ownership in respect of such NA Opportunity as between Loop Parent and SKGC (and/or its applicable majority-owned and Controlled subsidiary). If upon Loop Parent’s receipt of the SKGC ROFR Acceptance Notice, the Board of Directors of Loop Parent determines, in its good faith and commercially reasonable judgment, that the terms and conditions in the SKGC ROFR Acceptance Notice are less favorable to Loop Parent, taken as a whole, than those set forth in the NA Opportunity ROFR Notice, Loop Parent shall promptly deliver to SKGC written notice thereof, with such notice to describe in reasonable detail the basis of such determination (a “Loop Rejection Notice”). For fifteen (15) Business Days following delivery of the Loop Rejection Notice, SKGC and Loop Parent shall in good faith discuss and negotiate such proposed modifications to the terms and conditions of the NA Opportunity ROFR Notice in an effort to mutually agree upon terms and conditions of a potential joint participation in such Reactivated NA Opportunity. If SKGC timely delivers an SKGC ROFR Acceptance Notice and either (i) Loop Parent does not deliver a Loop Rejection Notice or (ii) Loop Parent delivers a Loop Rejection Notice but Loop Parent and SKGC timely mutually agree upon the proposed modifications to the terms and conditions pursuant to the immediately preceding sentence, SKGC and/or its applicable majority-owned and Controlled subsidiaries, on the one hand, and Loop Parent and/or its applicable Affiliates, on the other hand, shall be obligated to enter into definitive agreements with respect to the NA Opportunity on the same terms and conditions set forth in the NA Opportunity ROFR Notice (with such modifications which are mutually agreed upon by Loop Parent and SKGC following delivery of a Loop Rejection Notice, as applicable) as soon as is reasonably practicable but in no event later than nine (9) months after the later, if applicable, of (y) SKGC’s delivery of the SKGC ROFR Acceptance Notice or (z) Loop Parent and SKGC’s mutual agreement on any required modifications to the terms and conditions following the delivery of a Loop Rejection Notice. If SKGC does not timely deliver the SKGC ROFR Acceptance Notice or if Loop Parent and SKGC are unable, following the delivery of a Loop Rejection Notice, to timely mutually agree upon any proposed modifications to the terms and conditions set forth in the NA Opportunity ROFR Notice, Loop Parent and/or its Affiliates, upon delivery of written notice thereof to SKGC (a “Loop Termination Notice”), may enter into a term sheet or the definitive agreements with any Person with respect to the NA Opportunity containing terms and conditions, taken as a whole, that are, in the good faith and commercially reasonable judgment of the Board of Directors of Loop Parent, at least as favorable to Loop Parent as the terms and conditions contained in the Loop NA Opportunity ROFR Notice.

(h)

Notwithstanding anything in this Section 2.6 to the contrary, (i) if the signing of the definitive written agreements involving a NA Opportunity ROFR Notice with a Person other than SKGC and/or its applicable majority-owned and Controlled subsidiaries has not occurred within nine (9) months following the delivery of the Loop Termination Notice with respect to such NA Opportunity ROFR Notice, Loop Parent shall be required to comply once again with the procedures set forth in this Section 2.6 as if they had never before complied with such procedures, and (ii) all obligations of Loop Parent and its Affiliates contained in this Section 2.6 shall expire on the date on which the Exclusivity Period expires.

ARTICLE 3.

FORMATION OF THE JV COMPANY

Section 3.1

Incorporation. The establishment and incorporation of the JV Company shall be effected in accordance with the following:

	(a)	the establishment and incorporation of the JV Company shall commence upon, and shall be completed as soon as practicable following, the satisfaction (or waiver) of the JV Korea Conditions in accordance with Section 4.2, provided that the establishment and incorporation of the JV Company shall precede the establishment and incorporation of the JV Korea as set forth in Section 4.1;

	(b)	the JV Partners shall jointly prepare or procure any proposed filing and any other submission required to effect the incorporation of the JV Company and incorporate the JV Company on the terms set forth below in this Section 3.1;

	(c)	the registered share capital of the JV Company at the time of its incorporation shall be such amount as the JV Partners determine to be sufficient to cover the costs and expenses associated with the incorporation and initial organization of the Company comprising ordinary shares(each such ordinary share, a “Share” and in aggregate the “Initial Registered Capital”) and the Initial Registered Capital shall be subscribed for and paid up in full by each of the JV Partners in accordance with their respective Contribution Percentage;

	(d)	in consideration for the Initial Registered Capital, the JV Partners shall procure that the JV Company will (i) issue to each JV Partner the relevant ordinary Shares which have been subscribed for and paid up in full by such JV Partner in accordance with its Contribution Percentage, free of any Encumbrances (save for any Encumbrances under applicable Law, the JV Company Constitution or this Agreement) and (ii) enter the name of the respective JV Partner into the electronic register of members registered with the Accounting and Corporate Regulatory Authority of Singapore;

	(e)	the JV Company’s constitution on incorporation shall be substantially in the form and substance consistent with the terms and conditions of this Agreement and otherwise as agreed between the JV Partners (as may be amended from time to time, the “JV Company Constitution”);

	(f)	the accounting and tax year of the JV Company shall end on December 31 of each year; and

	(g)	the initial Board of Directors shall be comprised of three (3) SKGC Directors and two (2) Loop Directors to be identified by SKGC and Loop, respectively, prior to the establishment and incorporation of the JV Company.

Section 3.2

Corporate Name.

	(a)	The name of the JV Company shall be mutually agreed upon by the JV Partners as soon as practicable and, in any case, prior to its incorporation.

	(b)	If any JV Partner no longer holds or owns any Equity Securities in the JV Company, then:

	(i)	such JV Partner shall have the right, in its sole discretion, to require each JV Entity to immediately: (a) omit such JV Partner’s name from the corporate name of such JV Entity; and (b) cease using such JV Partner’s name, trademarks or trade names in any manner whatsoever, and such JV Partner may exercise the foregoing right by providing written instructions to the JV Company and the other JV Partner; and

	(ii)	the other JV Partner (being the JV Partner who continues to hold or own Equity Securities in the JV Company) shall have the right, in its sole discretion, to require each JV Entity to immediately change the corporate name of such JV Entity, provided that the new corporate name of such JV Entity shall not incorporate the exiting JV Partner’s name, trademarks or trade names in any manner whatsoever, and such other JV Partner may exercise the foregoing right by providing written instructions to the JV Company and the exiting JV Partner.

(c)

In either case contemplated in Section 3.2(b) above, the JV Company and the JV Partners hereby agree to take all necessary action in order to implement the foregoing, including exercising their rights in the JV Company to cause each such JV Entity to convene a general meeting of shareholders and/or other relevant corporate proceedings to approve the name change of such JV Entity to comply with this Section 3.2.

Section 3.3	Place of Business. The registered and principal place of business of the JV Company shall be located in Singapore. Subject to the approval by the Board of Directors in accordance with this Agreement, the JV Company may establish from time to time branches and other business offices.

Section 3.4	Shares. The Shares issued by the JV Company shall be in registered form.

ARTICLE 4.

FORMATION OF THE JV KOREA

Section 4.1

Incorporation. The JV Partners agree that:

	(a)	in addition to the incorporation and establishment of the JV Company in accordance with the terms of this Agreement, the JV Partners and the JV Company shall work together to establish a wholly-owned subsidiary of the JV Company (the “JV Korea”);

	(b)	subject to Section 4.2, JV Company shall establish and incorporate the JV Korea as a limited liability company (yuhan hoesa in Korean) under the Laws of Korea, and shall contribute capital into the JV Korea, all in accordance with Article 5;

	(c)	the JV Korea Articles shall be substantially in the form and substance consistent with the terms and conditions of this Agreement and otherwise as agreed between the JV Partners; and

	(d)	the JV Korea Articles shall be in both Korean and in English and the English version shall prevail in the event of conflict or inconsistency between the Korean and English versions (in such case with the Korean version being amended to correspond to the English version).

Section 4.2

Final Investment Decision and other Conditions Precedent to Formation of JV Korea.

(a)

Without limiting the other provisions of this Agreement, the JV Partners agree that the JV Company shall proceed with the establishment and formation of the JV Korea only upon the satisfaction, or waiver in writing by the JV Partners, of the following conditions (each a “JV Korea Condition”):

(i)

the incorporation, establishment and continuing existence of the JV Company in accordance with Section 3.1;

	(ii)	each JV Transaction Document having been executed and delivered by each party thereto;

	(iii)	the procurement of all Governmental Approvals required for the formation of the JV Korea;

	(iv)	Loop having procured its Final Investment Decision which, for the avoidance of doubt, shall be predicated upon consideration to its satisfaction of, among other things:

	(1)	the procurement of all Governmental Approvals required in relation to the construction of the First Plant (or, in respect of any such Governmental Approval the procurement of which first requires the formation of the JV Korea, the likelihood that such Governmental Approval will be procured in a timely manner following the formation of the JV Korea);

	(2)	the JV Partners having mutually agreed in writing on the initial total investment cost for the JV Company and the JV Korea, to be funded in accordance with Section 5.1 by the JV Partners and Debt Financing, including, but not limited to, the capital expenditure, initial operating cost, costs incurred in connection with acquisition of the First Plant Site in accordance with Section 7.2(d), feasibility study cost, and licensing and permit cost (the “Initial TIC”);

	(3)	the BDP Date having occurred;

	(4)	SKGC having demonstrated, to Loop’s reasonable satisfaction, the availability of adequate Debt Financing to complete the development of the First Plant, the terms of which shall comply with the provisions of Section 5.5; and

	(5)	SKGC having demonstrated, to Loop’s reasonable satisfaction, the availability of adequate equity financing (or immediately available funds) to enable SKGC to perform its obligations under Section 5.1(a) in full; and

(v)

SKGC having procured its Final Investment Decision which, for the avoidance of doubt, shall be predicated upon consideration to its satisfaction of, among other things:

	(1)	the procurement of all Governmental Approvals required in relation to the construction of the First Plant (or, in respect of any such Governmental Approval the procurement of which first requires the formation of the JV Korea, the likelihood that such Governmental Approval will be procured in a timely manner following the formation of the JV Korea);

	(2)	the JV Partners having mutually agreed in writing on the Initial TIC;

	(3)	the BDP Date having occurred;

	(4)	the availability of adequate Debt Financing to complete the development of the First Plant, the terms of which shall comply with the provisions of Section 5.5; and

	(5)	Loop Parent having demonstrated, to SKGC’s reasonable satisfaction, the availability of adequate equity financing to enable Loop to perform its obligations under Section 5.1(a) in full.

	(b)	With respect to the JV Korea Condition set forth in Section 4.2(a)(iii), each JV Partner shall use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the JV Company and the other JV Partner in doing, all things necessary, proper, or advisable to satisfy such JV Korea Condition as promptly as reasonably practicable.

	(c)	With respect to the JV Korea Condition set forth in Section 4.2(a)(iv), Loop shall use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper, or advisable to satisfy such JV Korea Condition as promptly as reasonably practicable. SKGC shall use commercially reasonable efforts to provide Loop with any information or documents reasonably required by Loop for the purposes of satisfying such JV Korea Condition.

	(d)	With respect to the JV Korea Condition set forth in Section 4.2(a)(v), SKGC shall use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper, or advisable to satisfy such JV Korea Condition as promptly as reasonably practicable. Loop shall use commercially reasonable efforts to provide SKGC with any information or documents reasonably required by SKGC for the purposes of satisfying such JV Korea Condition.

Section 4.3	Corporate Name. Subject to Section 3.2(b), the name of the JV Korea shall be “SK Geo Centric Loop Co., Ltd.” or another name that the JV Partners may mutually agree upon in writing.

Section 4.4	Place of Business. The registered and principal place of business of the JV Korea shall be located in Ulsan, Korea.

Section 4.5	Shares. The shares issued by the JV Korea shall be in registered form.

ARTICLE 5.

CAPITAL CONTRIBUTIONS; DEBT FINANCING

Section 5.1

Initial Capital Contributions.

(a)

Subject to Section 5.4, each JV Partner shall contribute to the capital of the JV Company its Contribution Percentage of the Equity Portion of the Initial TIC pursuant to the following schedule:

	(i)	20% on the same date on which the JV Korea is established (such date, the “JV Korea Establishment Date”);

	(ii)	40% within six (6) months after the JV Korea Establishment Date; and

	(iii)	40% within twelve (12) months after the JV Korea Establishment Date.

(b)

In respect of each Initial Capital Contribution, the Board shall, no later than twenty (20) Business Days prior to the proposed date of funding (which date shall fall on the last date of the relevant funding window set out in Section 5.1(a), unless the JV Partners mutually agree otherwise), notify each JV Partner in writing of the date of funding of such Initial Capital Contribution, each JV Partner’s Contribution Percentage of such Initial Capital Contribution, and the wiring instructions to the JV Company.

Section 5.2

Additional Capital Contributions.

	(a)	The JV Partners agree and acknowledge that the JV Company may require additional funding (including by way of increasing the capital of the JV Company) based on the operational needs and business plans of the Business and to fund any Equity Portion of the TIC of an Approved Project. Any future funding of the JV Company (including the timing thereof) shall be determined unanimously by the Board and each such future funding so determined by the Board shall be referred to herein as an “Approved Additional Funding”.

	(b)	If the Board unanimously determines that an Approved Additional Funding is to be funded by way of Capital Contributions, then the Board shall, no later than twenty (20) Business Days prior to the proposed date of funding (which date shall be determined unanimously by the Board), deliver a capital call (an “Additional Funding Capital Call”) for such Approved Additional Funding, which shall include the amount required to be funded by each JV Partner (being equal to such JV Partner’s Contribution Percentage, multiplied by the aggregate amount of the relevant Approved Additional Funding), the date of funding of such Approved Additional Funding, and the wiring instructions to the JV Company.

	(c)	Subject to Section 5.4, each JV Partner shall comply with the terms of the Additional Funding Capital Call and fund its Contribution Percentage of the relevant Approved Additional Funding.

Section 5.3

Breach of Capital Contribution Obligations.

(a)

If either JV Partner fails to comply with its obligations to make any of the Capital Contributions as set forth in Section 5.1(a)(ii), Section 5.1(a)(iii) or Section 5.2 above, then:

	(i)	a “Funding Default” shall have occurred;

	(ii)	such JV Partner shall be deemed a “Funding Defaulting Party”;

	(iii)	the other JV Partner shall be deemed a “Funding Non-Defaulting Party”; and

	(iv)	the portion of the Funding Defaulting Party’s Capital Contribution amount that the Funding Defaulting Party has not funded (together with any accrued interest thereon) shall be referred to as the “Contribution Shortfall.”

(b)

Each Party acknowledges and agrees that:

	(i)	a Funding Default will cause irreparable injury to the Funding Non-Defaulting Party and the JV Entities; and

	(ii)	the Funding Non-Defaulting Party and the JV Entities have no adequate remedy at law or in equity in respect of a Funding Default,

	and, as a consequence, that each and every covenant contained in this Section 5.3 shall be enforceable against the Funding Defaulting Party, and the Funding Defaulting Party hereby waives and agrees not to assert any defense against an action for specific performance of such covenants except for a defense that no Funding Default has occurred and is continuing.

	(c)	A Funding Default shall be continuing and remain uncured as long any amount in respect of the Contribution Shortfall remains outstanding.

	(d)	Upon the occurrence of a Funding Default, the Funding Non-Defaulting Party shall have the right, but not the obligation, to fund the Contribution Shortfall (in whole or in part and in a single tranche or in multiple tranches) in lieu of the Funding Defaulting Party, and if the Funding Non-Defaulting Party exercises such right to fund such portion of the Contribution Shortfall, then the Funding Non-Defaulting Party shall be issued by the JV Company the same number and type of Shares and other Equity Securities that the Funding Defaulting Party would have been issued had there been no Funding Default in respect of such portion of the Contribution Shortfall so funded by the Funding Non-Defaulting Party (the “Funding Default Securities”).

	(e)	If the Funding Non-Defaulting Party is issued Funding Default Securities in accordance with sub-Section (d) above, the Funding Defaulting Party shall have the right, but not the obligation, to purchase the Funding Default Securities issued to the Funding Non-Defaulting Party (in whole or in part and in a single tranche or in multiple tranches) (the “Funding Default Call Option”) for aggregate consideration equal to the fair market value of the Funding Default Securities, as to be agreed between the JV Partners at such time, provided that, if the JV Partners are not able to agree on the fair market value of the Funding Default Securities, then the fair market value of the Funding Default Securities shall be deemed to be equivalent to the portion of the equity value of the JV Company attributable to such Funding Default Securities, calculated on the consolidated basis of projected enterprise value of each Approved Project assuming an annual growth rate of [***]. The Funding Defaulting Party shall, no later than ten (10) days prior to the date of closing of any purchase of Funding Default Securities pursuant to the Funding Default Call Option, notify the Funding Non-Defaulting Party in writing of its exercise of the Funding Default Call Option, the date of closing, and the purchase price calculated in accordance with this sub-Section (e); and on such date of closing, the Funding Non-Defaulting Party shall deliver to the Funding Defaulting Party against payment of such purchase price, the Funding Default Securities free and clear of any and all Liens. The Funding Default Call Option shall be exercisable at any time and from time to time on or before the second anniversary of such Funding Default.

(f)

Following the expiry of the exercise period of the Funding Default Call Option set forth in the last sentence of Section 5.3(e), the Funding Non-Defaulting Party may Transfer any or all of the Funding Default Securities that are subject matter of such expired Funding Default Call Option to any Person who is not a Competitor of any JV Entity or the other JV Partner in accordance with Section 9.1. The Funding Defaulting Party agrees not to raise or otherwise assert any objections to the Transfer of Funding Default Securities if such Transfer is made in accordance with this Section 5.3(f) and Section 9.1.

Section 5.4

Conditions Precedent to Capital Contributions. The obligation of each JV Partner to consummate the contribution of its respective portion of the Initial Capital Contributions and/or any other applicable Capital Contributions, shall be subject to the satisfaction (or waiver by the JV Partner entitled to the benefit thereof) of the following conditions:

	(a)	the incorporation, establishment and continuing existence of the JV Company in accordance with Section 3.1;

	(b)	solely in respect of the JV Partners’ obligations to contribute the Initial Capital Contributions (other than the Initial Capital Contribution set forth in Section 5.1(a)(i), which shall be effected concurrently with the incorporation and establishment of the JV Korea), the incorporation, establishment and continuing existence of the JV Korea in accordance with Section 4.1 and Section 4.2;

	(c)	in respect of the JV Partners’ obligations to contribute any Capital Contributions following the contribution of the Initial Capital Contributions, the Board having issued the relevant Additional Funding Capital Call in accordance with Section 5.2(b);

	(d)	each of the representations and warranties of the other JV Partner contained herein shall be true and correct in all material respects on and as of the date of the applicable Capital Contribution;

	(e)	the substantially concurrent consummation of the contribution by each other JV Partner of its respective portion of the applicable Capital Contribution and, immediately following such contributions, the funding of the financing transactions contemplated under the applicable Debt Financing, the terms of which shall comply with the provisions of Section 5.5 (or, in lieu thereof for tranches of applicable Debt Financing that are contemplated to be funded at a later date, definitive agreements executed and delivered by the financing sources of the applicable Debt Financing with respect to such tranches of Debt Financing, the terms of which definitive agreements shall comply with the provisions of Section 5.5), provided that, this condition shall not be applicable in respect of the Initial Capital Contributions set forth in Section 5.1(a)(i);

	(f)	all Governmental Approvals and corporate authorizations, consents, and approvals required for the applicable Capital Contribution shall have been obtained and remain in effect; and

	(g)	no decision, injunction, judgment, settlement or order (whether oral or written) rendered by any governmental entity shall be pending or threatened which (i) challenges or seeks to prohibit, delay or restrict the consummation of the applicable Capital Contribution or (ii) questions the validity or legality of any of the transactions contemplated under this Agreement.

Section 5.5

Debt Financing. The JV Partners agree that SKGC shall be responsible for facilitating the procurement of Debt Financing for each Approved Project (including for the First Plant) on behalf of the relevant JV Entity, in each case, on terms and conditions satisfactory to SKGC (acting reasonably). Notwithstanding the foregoing, the Debt Financing for each Approved Project (including for the First Plant) shall contain the following terms and conditions (the “Debt Financing Key Terms”):

	(a)	unless the JV Partners mutually agree otherwise in writing (each acting in a commercially reasonable manner and taking into consideration the prevailing market conditions at the relevant time), the Debt Financing for each Approved Project will comprise not less than sixty percent (60%) of the TIC for the applicable Approved Project;

	(b)	the Debt Financing shall not vary or otherwise alter any JV Partner’s ownership percentage in any Equity Securities held by such JV Partner in any JV Entity or any JV Partner’s Contribution Percentage; and

	(c)	the Debt Financing shall in all circumstances be structured in a manner such that the Person(s) to whom such indebtedness is or may be owed has no direct recourse against any JV Partner and/or their Affiliates, including the imposition of any security interest over any asset of any JV Partner and/or their Affiliates, except as provided in sub-Section (d) below with respect to SKGC; and

	(d)	if required by the third party lenders (without agreeing upon alternative arrangements that would be inconsistent with the foregoing Debt Financing Key Terms), in each case for the provision of Debt Financing consistent with the commercial principles in sub-Sections (a), (b) and (c) above, SKGC shall provide, or arrange for the provision of, a guarantee of such Debt Financing, provided that as a condition for providing such guarantee on behalf of the relevant JV Entity(ies), SKGC shall be entitled to charge a fee to such JV Entity(ies) or to the JV Company in an amount between [***] of the total amount of the debt that is being guaranteed under such guarantee (as determined by SKGC in its sole discretion).

	Each Party acknowledges and agrees that, except for the Debt Financing Key Terms (x) SKGC does not expressly, constructively, or otherwise, guarantee, or provide any assurance of any kind in respect of, procurement of any specific terms or conditions related to the Debt Financing for any Approved Project; (y) the procurement of any specific terms or conditions related to the Debt Financing will be dependent on various factors outside of SKGC’s control, including prevailing market conditions; and (z) SKGC shall not be found in breach of its obligations under this Section 5.5 on the basis of availability of alternative Debt Financing options that may contain more favorable terms and conditions for the Approved Project than the terms and conditions of the Debt Financing procured by SKGC in respect of such Approved Project.

ARTICLE 6.

CONSTITUTIONAL DOCUMENTS

Section 6.1	Inconsistency with JV Company Constitution. In the case of any discrepancy or conflict between this Agreement and the JV Company Constitution, the terms of this Agreement shall prevail and the JV Partners agree to amend, as necessary, the JV Company Constitution so that the JV Company Constitution reflect the terms and conditions of this Agreement. If such amendment is necessary, the JV Partners shall cause the JV Company to prepare amendments or restatements of the JV Company Constitution reflecting the terms and conditions of this Agreement, and shall cause the JV Company to convene a General Meeting and/or other relevant corporate proceedings/meetings in order to officially adopt the same.

Section 6.2	Inconsistency with JV Korea Articles. Subject to Section 6.1, in the case of any discrepancy or conflict between (x) this Agreement and the JV Company Constitution, on the one hand, and (y) the JV Korea Articles, on the other hand, the terms of this Agreement and the JV Company Constitution shall prevail and the JV Partners agree to amend, as necessary, the JV Korea Articles so that the JV Korea Articles reflect the terms and conditions of this Agreement and the JV Company Constitution. If such amendment is necessary, the JV Partners shall cause the JV Company to prepare amendments or restatements of the JV Korea Articles reflecting the terms and conditions of this Agreement and the JV Company Constitution, and the JV Partners shall exercise their rights in the JV Company to cause the JV Korea to convene a general meeting of shareholders and/or other relevant corporate proceedings in order to officially adopt the same.

ARTICLE 7.

THE BUSINESS; EXCLUSIVITY AND OTHER ARRANGEMENTS

Section 7.1	Business. The JV Partners agree that the Business, as conducted through the JV Company and the other JV Entities in accordance with this Agreement, may be further amended, updated, varied or modified from time to time either by the mutual agreement of the JV Partners in writing or by the unanimous decision of the Board.

Section 7.2	Approval of Projects.

	(a)	The Board shall from time to time present to the JV Partners, and a JV Partner may from time to time present to the other JV Partner and the Board, all opportunities it deems appropriate to construct a plant to produce rPET Products using Loop Parent’s technology in Asia (each, a “Proposed Project”).

	(b)	In connection with any Proposed Project, the Board shall provide the JV Partners, or the presenting JV Partner shall provide to the other JV Partner and the Board (as the case may be), information relating to such Proposed Project that the receiving party would reasonably require to make a preliminary investment decision about the Proposed Project, which shall be in the format of a typical business plan presentation and include a checklist and supporting documentation detailing, at a minimum, the following information:

	(i)	the projected cost of the Proposed Project (including TIC cost estimate with ±30% scenarios) with a breakdown of the portion to be funded via Capital Contributions and Debt Financing (which shall comply with the provisions of Section 5.5);

	(ii)	the market (including target market, customer profile, customer demand, price level, product quality, promotion strategy);

	(iii)	feedstock (availability, sources, price level, quality, supplier base);

	(iv)	competitive landscape;

	(v)	energy/utilities and local price levels;

	(vi)	regulatory landscape (country or product specific);

	(vii)	site locations (location options, merits and challenges, key decision factors);

	(viii)	preliminary financial model;

	(ix)	project structure (engineering, operations & maintenance, purchasing); and

	(x)	incentives and subsidies (e.g., taxes on virgin PET, grants, governmental or regional support).

	(c)	Each JV Partner shall, and shall cause the Board to, consider each Proposed Project in good faith. If each JV Partner whose Contribution Percentage is no less than 20% and the Board (whose decision shall be required to be unanimous for so long as each JV Partner’s Contribution Percentage is no less than 20%) approve a Proposed Project, such Proposed Project shall constitute an “Approved Project” and the Board shall be entitled to issue Additional Funding Capital Calls in connection with the funding of such Approved Project in accordance with Section 5.2 and to cause the JV Company (itself or through any JV Entity) to commence execution of such Approved Project in accordance with this Agreement.

	(d)	The JV Partners acknowledge and agree that the First Plant shall be mutually designated and agreed between the JV Partners as the first Proposed Project and also the first Approved Project upon the satisfaction (or waiver) of the JV Korea Conditions in accordance with Section 4.2, and subject thereto, the JV Company shall, and the JV Partners shall (including by way of complying with their respective obligations to fund the Initial Capital Contributions) use commercially reasonable efforts to cause the JV Company to (itself or through the JV Korea), purchase and acquire from SKGC, on terms and conditions mutually acceptable to the JV Partners (acting in a commercially reasonable manner), SKGC’s title, rights and interest to and in the real estate that will form the site of the First Plant, situated on Lot 1-3, Yong-yeon District, Bugok-dong, Nam-gu, Ulsan (the “First Plant Site”) promptly upon the Initial Capital Contribution set forth in Section 5.1(a)(i) having been made by the JV Partners and in any case no later than by December 31, 2023. The JV Partners acknowledge and agree that the acquisition of the First Plant Site by the JV Company is a critical and material part of the initial implementation of the First Plant.

(e)

If a JV Partner (provided that such JV Partner’s Contribution Percentage is no less than 20% and therefore is entitled to approve the Proposed Project) notifies the other JV Partner and the Board that it does not believe in good faith that the Proposed Project should be approved, then such Proposed Project shall constitute a “Carved-out Project”, and the other JV Partner shall be entitled to pursue such Carved-out Project independently and without being subject to the terms of this Agreement applicable to Approved Projects, provided that:

	(i)	the other JV Partner’s pursuit of such Carved-out Project shall not prejudice or be deemed to supersede or override any JV Entity’s rights under the JV Transaction Documents;

	(ii)	if the Carved-out Project is undertaken by SKGC, SKGC and Loop Parent shall enter into (1) a separate license agreement covering such Carved-out Project, on terms and conditions that are substantially the same as those set forth in the Loop Technology License Agreement (including as to the duration of the Exclusivity Period as set forth in Section 7.3 and the rights of exclusivity as set forth in the Loop Technology License Agreement, applying mutatis mutandis), except that (A) the royalty rate for (I) the first Carved-out Project undertaken by SKGC shall be between [***], as mutually determined between SKGC and Loop Parent and (II) all other Carved-out Projects undertaken by SKGC shall be mutually determined in good faith between SKGC and Loop Parent that shall be (x) based on market rates at the time such Carved-out Project is undertaken, and (y) not be subject to any EBIT Margin requirement, (B) the geographic limits of the license rights and exclusivities granted in favor of such Carved-out Project in the Loop Technology License Agreement shall be deemed to be further limited to the Asian country whose feedstock the Carved-out Project was reasonably intended to cover at the Proposed Project stage (the “Proposed Territory”), rather than all of Asia (and, for the avoidance of doubt, all such exclusivities shall not apply after the Exclusivity Period), (C) the Proposed Territory shall be removed from the geography in which the JV Entities have license rights and exclusivity under the Loop Technology License Agreement, and (D) Loop Parent shall be entitled to terminate such license agreement with respect to any Carved-out Project that ceases to be both (I) owned by SKGC or one of its majority-owned and Controlled subsidiaries (or any other Person who is accepted in writing by Loop Parent (in its sole discretion) as the new Controlling Person of such Carved-out Project) and (II) covered by the marketing agreement described in the following sub-Section (2); and (2) a separate marketing agreement covering such Carved-out Project, on terms and conditions that are substantially the same as those set forth in the Marketing Agreement; and

(iii)

for the avoidance of doubt, if the Carved-out Project is undertaken by Loop, (1) the relevant Proposed Territory shall be removed from the geography in which the JV Entities have license rights and exclusivity under the Loop Technology License Agreement; and (2) nothing in the Loop Technology License Agreement shall prevent the Loop Parties from using or licensing, or otherwise commercializing, the Loop Parent technology in connection with the Carved-out Project in the relevant Proposed Territory.

Section 7.3

Exclusivity Period; Right of First Refusal.

	(a)	Except as otherwise provided in Section 7.2(e) or Section 7.3(e), the JV Entities shall be entitled to enjoy the licenses granted to the JV Company under the Loop Technology License Agreement on an exclusive basis as set forth therein for a period of six (6) years from the BDP Date (such period, as amended by the following provisions of this Section 7.3, the “Exclusivity Period”), provided that, if the First Plant Milestone is not achieved by the third anniversary of the BDP Date (the “First Plant Milestone Deadline”), then the Exclusivity Period shall terminate automatically without further action on the third anniversary of the BDP Date.

	(b)	If:

	(i)	the First Plant Milestone is achieved prior to the expiry of the First Plant Milestone Deadline; and

	(ii)	following the achievement of the First Plant Milestone and prior to the expiry of the original Exclusivity Period, the Commencement of Construction of at least one (1) Approved Project by any JV Entity (or at least one (1) Carved-out Project by SKGC or its Affiliate) designed to produce at least sixty (60) kilotons of rPET in Asia is achieved,

	then the Exclusivity Period shall be deemed to have been extended for an additional six (6) years from the date on which the Exclusivity Period was to originally expire (the “Second Exclusivity Period”).

(c)

If, during the Second Exclusivity Period:

	(i)	Commencement of Construction is achieved by any of the JV Entities, the JV Partners and any of their Affiliates, individually or in the aggregate, on at least two (2) Qualifying Projects (whether such Qualifying Projects constitute Approved Projects or Carved-out Projects, unless there are only two (2) Qualifying Projects on which Commencement of Construction is achieved at such time and both are by Loop or its Affiliates);

	(ii)	the Board does not or is unable to unanimously approve any of the Proposed Projects; or

	(iii)	after the Commencement of Construction on one (1) Qualifying Project (whether such Qualifying Project constitutes an Approved Project or a Carved-out Project), the Board does not or is unable to unanimously approve any other Proposed Projects,

		then the Exclusivity Period shall be deemed to have been further extended for an additional six (6) years from the date on which the Second Exclusivity Period was to expire, unless the JV Partners mutually agree otherwise after good faith discussions before the end of the Second Exclusivity Period.

	(d)	Except in the case that the Exclusivity Period is terminated at the First Plant Milestone Deadline in accordance with the proviso of Section 7.3(a), for two (2) years following the expiry of the Exclusivity Period, the JV Company shall be entitled to exercise a right of first refusal in favor of the JV Entities with respect to the development and operation of plants in Asia for the manufacture and sale of rPET Products that Loop Parent intends to explore, whether such opportunities or projects pertain to construction of new plants (i.e., greenfield) or renovation of existing plants (i.e., brownfield) (each such plant, a “Relevant Opportunity”) as set forth in this Section 7.3(d).

	(i)	Loop Parent shall deliver to the JV Company and SKGC a written notice (a “ROFR Notice”) stating any bona fide intention by Loop Parent to pursue a Relevant Opportunity, including such information relating to such Relevant Opportunity that the receiving party would reasonably require to make a preliminary investment decision about such Relevant Opportunity. Loop Parent shall use commercially reasonable efforts to provide any such information that SKGC may reasonably request that would be reasonably necessary for the JV Company to evaluate such Relevant Opportunity.

	(ii)	At any time within thirty (30) Business Days after the receipt of the ROFR Notice, upon the approval of such Relevant Opportunity by SKGC, the Board (whether acting unanimously or solely with the approval of the SKGC Directors) may instruct the JV Company to accept Loop Parent’s invitation to take on (directly or through any other JV Entity) such Relevant Opportunity, and upon such acceptance by the JV Company, the Relevant Opportunity that is the subject matter of the ROFR Notice shall constitute an “Approved Project” for purposes of this Agreement, and the JV Company shall use commercially reasonable efforts to develop such Approved Project (either through the JV Company or through any other JV Entity as JV Company may see fit) in accordance with the project proposal as presented to the Board, including the timeline contemplated in such project proposal.

	(iii)	If the JV Company declines the terms of the ROFR Notice or the ROFR Notice otherwise lapses without being accepted by the JV Company, then the JV Company shall be deemed to have waived all of its rights to pursue the applicable Relevant Opportunity (whether through the JV Company or through any other JV Entity) under this Agreement, and Loop Parent shall be free and entitled to pursue the Relevant Opportunity independently of and without any further obligation to any JV Entity pursuant to this Section 7.3(d).

	(e)	Notwithstanding the termination of this Agreement or the dissolution of any JV Entity, except in the case that such termination or dissolution is the result of the termination by Loop Parent of the Loop Technology License Agreement or Marketing Agreement for breach by any other party thereto, the JV Partners and Loop Parent agree that, upon such termination or dissolution, with respect to any Approved Project that is assigned by the relevant JV Entity to one of the JV Partners, the owner of such Approved Project shall be deemed to have been assigned the rights of the relevant JV Entity under the Loop Technology License Agreement and the Marketing Agreement, provided that, if such owner is SKGC, SKGC continues to make royalty payments to Loop Parent in accordance with the relevant terms of the Loop Technology License Agreement and is not otherwise in breach thereof, and, if requested by SKGC, Loop Parent and SKGC shall enter into (1) a new technology license agreement on the same terms and conditions as those that are set forth in the Loop Technology License Agreement (including as to the duration of the Exclusivity Period as set forth in this Section 7.3 and the rights of exclusivity as set forth in the Loop Technology License Agreement, applying mutatis mutandis), except that (A) such license shall be solely for the relevant Approved Projects being assigned; (B) the geographic limits of the license rights and exclusivities granted in favor of such Approved Project in the Loop Technology License Agreement shall be deemed to be further limited to the Proposed Territory for the relevant Approved Project, rather than all of Asia (and such exclusivities shall not apply after the Exclusivity Period); (C) the Proposed Territory shall be removed from the geographies in which the other JV Partner or any JV Entity has license rights and exclusivity under the Loop Technology License Agreement; and (D) Loop Parent shall be entitled to terminate such license agreement with respect to any Approved Project that is not or ceases to be both (I) owned by SKGC or one of its majority-owned and Controlled subsidiaries (or any other Person who is otherwise accepted in writing by Loop Parent (in its sole discretion) as the new Controlling Person of such Carved-out Project) and (II) covered by the marketing agreement described in the following sub-Section (2); and (2) a new marketing agreement on the same terms and conditions as those that are set forth in the Marketing Agreement;

	(f)	Notwithstanding anything to the contrary in this Agreement or any other JV Transaction Document, during the Exclusivity Period, SKGC shall be prohibited from developing, licensing, marketing, commercializing or manufacturing (i) manufacturing technology based on methanolysis [***], or (ii) rDMT/rMEG Products produced using such technology; provided that the foregoing shall not prohibit SKGC from developing, licensing, marketing, commercializing or manufacturing the technology or products contemplated in (i) and (ii) respectively where such activities are conducted solely in connection with (A) any Carved-out Project undertaken by SKGC or (B) any Approved Project as provided for in the joint development agreement memorandum of understanding (the “JD MOU”), as mutually agreed to by SKGC and Loop Parent.

Section 7.4	Joint Ventures with Local Partners. From time to time, as determined by the JV Company, any JV Entity may enter into joint ventures with local partners in various jurisdictions within Asia, provided that, as a matter of a primary commercial principle, the JV Company shall require a majority, Controlling stake in such joint venture with local partners.

Section 7.5	Operation of the JV Entities.

(a)

SKGC shall be responsible for the following aspects relating to the operation of the JV Entities:

	(i)	subject to the terms of the JV Transaction Documents, the business and commercial operation of JV Entities on a general as well as on a day-to-day basis; and

	(ii)	facilitating appropriate Debt Financing for the JV Entities in accordance with Section 5.5.

	(b)	Loop Parent shall make available its production and demonstration facility in Québec, Canada (the “Production and Demonstration Facility”) to the JV Company for demonstration purposes for the JV Company’s proposed and actual customers. The Production and Demonstration Facility shall also be made available to the JV Company for research and development, on terms and conditions mutually agreed upon by SKGC and Loop Parent. Loop Parent acknowledges the significance of operating and maintaining its Production and Demonstration Facility and agrees that prior to the First Plant becoming operational, unless with the unanimous approval of its board of directors, Loop Parent shall continue to own, operate and maintain its Production and Demonstration Facility in the ordinary course of business.

	(c)	Except as otherwise provided in this Agreement or provided or agreed in the BDP (or in respect of any Approved Project other than the First Plant, the respective front end loading (FEL 3) feasibility basic engineering package), or any documents provided to the JV Partners in accordance with Section 7.2(b) in respect of the relevant Approved Project (including the relevant Debt Financing), the JV Entities shall consult with the JV Partners and procure the written approval of the JV Partners (not to be unreasonably withheld, conditioned, or delayed), in each case, prior to making any material decision or entering into any material agreement regarding:

	(i)	the engineering, procurement or construction of the First Plant or any Approved Project;

	(ii)	any change in the design or implementation timeline of the First Plant or any Approved Project;

	(iii)	any change in the Debt Financing Key Terms or the amortization schedule for any Debt Financing for the First Plant or any subsequent Approved Project, or any other change in the Debt Financing for the First Plant or any subsequent Approved Project that would materially adversely impact a JV Partner in a manner different than the other JV Partner;

	(iv)	any material deviation from the final project proposal forming the basis of the final investment decision by the board of directors (or equivalent body) of each JV Partner with respect to the First Plant or any Approved Project;

	(v)	operation and/or maintenance of the First Plant or any Approved Project by any person or entity not party to this Agreement; and

	(vi)	supply of any feedstock used to produce rPET Products at the First Plant or any Approved Project;

		provided that, the written approval of a JV Partner whose Contribution Percentage is no less than 20% shall not be required in respect of any of the foregoing matters other than in respect of sub-Section (iii) above.

	(d)	From and after the Effective Date, SKGC and the JV Entities, shall (a) upon reasonable advance notice, provide Loop and its representatives with such access (during normal business hours and in a manner that would not cause any material disruption) as Loop may reasonably require to (I) all of the JV Entities’ properties, assets, contracts, books and records and other documents, data and information, (II) all employees of the JV Entities; and (III) any other information relating to the business, properties, assets and personnel of the JV Entities, and (b) provide Loop with reasonably detailed periodic reports, no less than once quarterly, regarding the project development and construction of the First Plant and any Approved Project.

	(e)	SKGC may provide, or may cause its Affiliates to provide, in each case, at SKGC’s sole discretion, consulting services to the JV Entities on such terms and conditions as may be unanimously agreed by the Board.

	(f)	The JV Entities shall adopt customary anti-bribery, anti-corruption, anti-money laundering, and environmental, social and governance (ESG) policies.

Section 7.6

Loop Technology License Agreement; Service Agreements; and Marketing Agreement. Concurrently with the execution of the Joinder Agreement by the JV Company:

	(a)	Loop Parent and the JV Company shall enter into a license agreement on terms to be mutually agreed between Loop Parent and the JV Company (the “Loop Technology License Agreement”), provided that, the Loop Technology License Agreement shall incorporate and give effect to the Performance Target Protocols Appendices substantially in the form and substance attached hereto as Exhibit D;

	(b)	JV Company shall enter into such service agreement(s) with SKGC and/or certain other service providers as are required for the operation of the First Plant and other Approved Projects, on terms to be mutually agreed between the JV Partners each acting in a commercially reasonable manner (the “Service Agreements”); and

	(c)	Loop Parent, SKGC and the JV Company shall enter into a sales and marketing agreement on terms to be mutually agreed between Loop Parent, SKGC and the JV Company (the “Marketing Agreement”).

Section 7.7

SK Licensing and Technical Support.

	(a)	SKGC may, at its sole discretion, enter into, or cause one (1) or more of its Affiliates to enter into, agreement(s) from time to time concerning licensing of technology to one or more JV Entities on terms and conditions unanimously agreed by the Board.

	(b)	SKGC may, at its sole discretion, enter into, or cause one (1) or more of its Affiliates to enter into, agreement(s) from time to time concerning provision of technical support to one or more JV Entities on terms and conditions unanimously agreed by the Board.

Section 7.8	R&D Services. Loop Parent and SKGC shall provide research and development services through shared services arrangements to be agreed by Loop Parent and SKGC. If the CTO determines an area or scope for research and development, then the appropriate JV Entity(s) may enter into a joint development agreement with Loop Parent and SKGC on terms and conditions to be unanimously agreed by the Board. Loop Parent and SKGC agree that the operation methodology of the JV Entities’ research and development function shall be re-visited and re-evaluated by Loop Parent and SKGC upon the earlier of (a) establishment of a second plant across the JV Entities; and (b) the establishment of the JV Korea.

Section 7.9	Package Branding of JV Entities. The JV Entities’ corporate branding shall consist of new corporate branding (the “JV Brand”) either specifically designed for use by the JV Entities or that synthesizes and combines the corporate branding of each JV Partner that consents in writing to use of its corporate branding as part of the JV Brand. The JV Entities shall:

	(a)	with respect to any retail package branding for customers doing business only in Asia whose products are only intended for sale to end customers in Asia, use the JV Brand that incorporates the Loop corporate branding (the use of which will be subject to a royalty-free license granted by Loop Parent);

	(b)	with respect to retail package branding for any other brands or customers [***] or products intended for sale to end customers outside of Asia, use the Loop corporate branding (the use of which will be subject to a royalty-free license granted by Loop Parent); and

	(c)	with respect to not-for-retail package branding, use the JV Brand.

ARTICLE 8.

PREEMPTIVE RIGHTS

Section 8.1

In the event the JV Company, subject to the unanimous approval of the Board, proposes to issue any new Equity Securities in the JV Company (outside of the Approved Additional Funding process), the JV Company shall first offer such Equity Securities (the “New Equity Securities”) to each JV Partner as follows:

(a)

The Board shall give notice (the “Offer Notice”) to each JV Partner, stating (i) its bona fide intention to offer the New Equity Securities, (ii) the number of the New Equity Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer the New Equity Securities.

	(b)	By notification to the JV Company within twenty (20) days after the Offer Notice is given, each JV Partner may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of the New Equity Securities which equals the proportion that the number of Shares then held by such JV Partner (including all Shares then issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of any other Equity Securities in the JV Company then held by such JV Partner) bears to the total number of Shares then outstanding (assuming full conversion and/or exercise, as applicable, of all other Equity Securities in the JV Company then outstanding). At the expiration of such twenty (20) day period, the JV Company shall promptly notify each JV Partner that elects to purchase or acquire all the New Equity Securities available to it (each, a “Fully Exercising Partner”) of any other JV Partner’s failure to do likewise (if at all) (each such notice, an “Excess Offer Notice”). During the ten (10) day period commencing after the JV Company has given any Excess Offer Notice, each Fully Exercising Partner may, by giving notice to the JV Company, elect to purchase or acquire, in addition to the number of the New Equity Securities specified above, up to the full amount of the New Equity Securities in JV Company that were not subscribed for by the other JV Partners. The closing of any sale pursuant to this Section 8.1(b) shall occur by the later of forty (40) days following the date that the Offer Notice is given and the date of consummation of any initial sale of any New Equity Securities in JV Company pursuant to Section 8.1(c).

	(c)	If all the New Equity Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 8.1(b), the JV Company may, during the ninety (90) day period following the expiration of the periods provided in Section 8.1(b), offer and sell the remaining unsubscribed portion of such the New Equity Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the JV Company does not enter into an agreement for the sale of the New Equity Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the preemptive right provided in favor of the JV Partners under this Article 8 shall be deemed to be revived and the New Equity Securities shall not be offered unless first reoffered to the JV Partners in accordance with this Section 8.1.

	(d)	The right of first offer in this Section 8.1 shall not be applicable to the extent the New Equity Securities are to be issued:

	(i)	by reason of a stock dividend, stock split or other distribution on Shares, which in each case does not vary or otherwise alter any JV Partner’s ownership percentage in the Equity Securities in the JV Company;

	(ii)	as part of employee stock option plan or other similar incentive plan or package; or

	(iii)	upon the conversion or exchange of convertible securities, in each case provided such issuance was previously made in accordance with this Article 8.

ARTICLE 9.

SHARE TRANSFER RESTRICTIONS

Section 9.1

No restrictions on Section 5.3(f)Transfer. Each Party acknowledges and agrees that that a Transfer of the relevant Funding Default Securities pursuant to Section 5.3(f) shall not be subject to any restrictions on Transfer set forth in any JV Transaction Document, including the restrictions on Transfer set forth in Article 9, except the restrictions contained in Section 9.6 and Section 9.7, which shall apply to such Transfers.

Section 9.2	Lock-up Period. Each JV Partner covenants and agrees not to Transfer all or any portion of its Equity Securities in the JV Company for a period of ten (10) years from the formation of the JV Company (the “Lock-up Period”), except to the extent such Transfer is expressly permitted under and made in accordance with Section 9.4, Section 9.5 and Section 9.6, as applicable. The failure of a JV Partner to comply with this Article 9 shall constitute a material breach of this Agreement.

Section 9.3	Following the Lock-up Period. Upon the expiry of the Lock-up Period, either JV Partner may Transfer any of its Equity Securities in the JV Company (i) to any Person who is not a Competitor of any JV Entity or the other JV Partner or (ii) otherwise with the prior written consent of the other JV Partner, which consent may be granted or withheld in the sole discretion of the other JV Partner.

Section 9.4	Affiliate Transfer. The provisions of Section 9.2 shall not apply to any Transfer by a JV Partner of all of its Equity Securities in the JV Company to an Affiliate of such JV Partner; provided, however, that: (i) the obligations of the transferor JV Partner under this Agreement shall be unaffected by such Transfer and remain in full force and effect; (ii) the transferee Affiliate shall have executed and delivered a Joinder Agreement in accordance with Section 9.6 below; (iii) the transferor JV Partner shall have guaranteed in a writing delivered to the JV Company and the other JV Partner the performance by the transferee Affiliate of all of such transferor JV Partner’s obligations under this Agreement, and all of its and its Affiliates’ obligations under any JV Transaction Document to which such transferor JV Partner or its Affiliate is a party or otherwise bound, including the Joinder Agreement; (iv) if at any time such transferee Affiliate ceases to be an Affiliate of such transferor JV Partner, the JV Company, such transferor JV Partner and such transferee Affiliate shall take such action as is necessary to cause there to be an immediate and unconditional reconveyance of the Equity Securities in the JV Company back to the transferor JV Partner, it being understood and agreed that any failure to effect such reconveyance of such Equity Securities in the JV Company within sixty (60) Business Days of such transferee Affiliate ceasing to be an Affiliate of such transferor JV Partner shall be deemed to be a material breach of this Agreement by such transferor JV Partner and such transferee Affiliate; and (v) such Transfer is permitted only to a majority-owned and Controlled subsidiary of the JV Partner.

Section 9.5	Permitted Lien Transfer. Notwithstanding anything to the contrary in this Agreement, the following shall be permitted without approval of the other JV Partner: (i) the direct or indirect grant of any Lien on any Equity Securities in the JV Company pursuant to a bona fide pledge or security agreement any JV Partner may enter into with lenders as part of a bona fide security interest, (ii) other Lien being created over other material assets of such JV Partner; and (iii) any Transfer in connection with any foreclosure or other exercise of remedies in respect of any Equity Securities in the JV Company subject to a Lien referred to in the foregoing clauses (i) and (ii).

Section 9.6	Joinder. In order for any JV Partner to Transfer any Equity Securities in the JV Company to a Person not already a party to this Agreement, such transferor JV Partner shall require such transferee, as a condition of the Transfer, to execute and deliver to the JV Company and the other JV Partner a joinder agreement substantially in the form and substance attached hereto as Exhibit C and made a part hereof (the “Joinder Agreement”), confirming that such transferee shall be bound by this Agreement as a JV Partner in respect of such Equity Securities in the JV Company Transferred thereto; provided that, in the case of a Transfer of any Funding Default Securities pursuant to Section 5.3(f) and Section 9.1, such Transferee shall be required to be bound only to Article 6, Article 9, Article 14, Article 15, Article 16, Article 17, Article 18, Article 19, Article 20 and related definitions as if it were a JV Partner.

Section 9.7

Contravention and Damages. Without prejudice to any other remedies available under applicable Law against the transferor JV Partner, any Transfer or attempted Transfer of Equity Securities in the JV Company not made in conformance with this Agreement (i) shall be null and void ab initio, (ii) shall not be recorded in the books of the JV Company and shall not be recognized by the JV Company without the prior written consent of all the JV Partners, and the purported transferee in any such Transfer shall not be treated as the owner of such Equity Securities in the JV Company for any purposes of this Agreement (and the purported transferee shall continue to be treated as the owner of such Equity Securities in the JV Company).

ARTICLE 10.

GENERAL MEETING

Section 10.1	The General Meetings. The JV Company shall hold ordinary General Meetings and extraordinary General Meetings. The JV Company shall hold ordinary General Meetings within three (3) months after the end of each fiscal year of the JV Company. The date, time and place of such General Meetings shall be determined by the Board (with the time beginning no earlier than 8:00 a.m. and ending no later than 10:00 p.m. Eastern time). The JV Partners shall permit the JV Company to hold extraordinary General Meetings from time to time as determined by the Board, provided that all necessary requirements (including the proper and timely notice of the meeting) have been duly satisfied.

Section 10.2	Notice. In convening a General Meeting, a written notice thereof (the “General Meeting Notice”) shall be given in English to all JV Partners and other Persons entitled to receive such notice not less than fourteen (14) days nor more than sixty (60) days prior to the date set for the applicable General Meeting. The above period may be shortened or omitted with the written consent of all of the JV Partners of the JV Company before any such meeting. The General Meeting Notice shall state the agenda, date, time and place for the General Meeting. The General Meeting shall resolve only those matters stated in the General Meeting Notice, unless all the JV Partners of the JV Company, whether present or not, unanimously agree otherwise.

Section 10.3	Quorum. Except as otherwise required by applicable Law, the JV Company Constitution or this Agreement, a quorum at any General Meeting shall consist of each JV Partner whose Contribution Percentage is no less than 20% present, either in person or by proxy. No General Meeting shall be validly convened or constituted unless the foregoing quorum is present at such meeting. Notwithstanding the foregoing, if such quorum is not present, the applicable General Meeting shall be adjourned and the JV Company shall send a notice of convocation of the adjourned General Meeting on the immediately following Business Day and (unless the JV Partners mutually agree otherwise) the adjourned General Meeting shall be held at the same time and place on the fourteenth (14th) calendar day following the date of such convocation notice. If such quorum is still not present at the adjourned General Meeting, one JV Partner present at such adjourned General Meeting shall be deemed to satisfy the quorum and the adjourned General Meeting shall be deemed to have been validly held. The JV Company shall provide a Korean-English interpreter at its own expense at the request of Loop.

Section 10.4	Resolution. Except as otherwise provided in this Agreement or where a greater majority is required by applicable Law, the JV Company Constitution or this Agreement, all resolutions at a General Meeting shall be adopted by the affirmative vote of a simple majority of the Shares represented, in person or by proxy, at such General Meeting. The Board Chairperson shall serve as the chairperson of all General Meetings. For the avoidance of doubt, the chairperson of the General Meeting shall not have a second or casting vote.

Section 10.5	Matters Requiring Unanimous Consent. Notwithstanding anything to the contrary contained in this Agreement, the consent of each JV Partner is required for all actions of the JV Company listed in Schedule 2, provided that if a JV Partner’s Contribution Percentage is less than 20%, then their consent shall not be required for items (a), (b), (d) (other than in respect of the JV Transaction Documents), (g), (i) or (j) in Schedule 2. Without limiting the generality of the foregoing, the JV Partners and the JV Company shall take all necessary actions to implement the foregoing, including but not limited to, effecting any amendments to the JV Company Constitution and any other organizational documents of the JV Company, to ensure that the affirmative vote of each JV Partner is required for all actions of the JV Company listed in Schedule 2, provided that if a JV Partner’s Contribution Percentage is less than 20%, then their consent shall not be required for items (a), (b), (d) (other than in respect of the JV Transaction Documents), (g), (i) or (j) in Schedule 2. If such JV Partners cannot come to a unanimous decision at a General Meeting with regard to any of the items set out in Schedule 2, the Board Chairperson shall promptly refer such matter to such JV Partners, who shall attempt to resolve such matter within a period of thirty (30) days following the referral to them of such matter. If such deadlock is not resolved during such period, the Board Chairperson shall promptly refer such matter in writing to the senior management of each such JV Partner for resolution in good faith. If the senior management of such JV Partners cannot reach an agreement with respect to such matter within a period of thirty (30) days following the referral to them of the issue subject to a deadlock, such deadlocked matter will not be approved. Any written referrals to the JV Partners (or their senior management, as applicable) in accordance with this Section 10.5 shall include a statement that a deadlock has been reached under this Section 10.5, a brief description of the matter in dispute, each such JV Partner’s position with respect thereto and the period set forth for resolving such deadlock under this Section 10.5.

Section 10.6	Minutes. The proceedings of General Meetings and the results thereof shall be recorded in meeting minutes which shall be signed by the Board Chairperson (as chairperson of the General Meeting) and the Directors present, and kept at the registered head office of the JV Company. All minutes of General Meetings shall be prepared in both Korean and English. In the event of any conflict or discrepancy, the English version shall prevail over the Korean version.

ARTICLE 11.

THE BOARD OF DIRECTORS

Section 11.1

Board of Directors. Except as otherwise required by applicable Law, the JV Company Constitution or this Agreement, the responsibility for the direction and supervision of the Business and affairs of the JV Company and the other JV Entities shall be vested in the Board of Directors. The Board may delegate its authorities to certain appropriate Directors and officers of the JV Company in accordance with this Agreement, applicable Law and/or the JV Company Constitution, as may be applicable.

Section 11.2

Directors. Each JV Partner shall exercise its respective voting rights in the JV Company and shall take all other necessary or desirable actions within such JV Partner’s control to ensure the following:

	(a)	The Board of Directors shall consist of five (5) directors (each, a “Director”).

	(b)	Of the members of the Board, so long as neither SKGC’s nor Loop’s respective Contribution Percentage is less than 20%, SKGC shall be entitled to designate, nominate and have elected three (3) Directors (the “SKGC Directors”) and Loop shall be entitled to designate, nominate and have elected two (2) Directors (the “Loop Directors”). In the event that the Contribution Percentages of the JV Partners is altered in a manner that results in either of the JV Partner’s Contribution Percentage being less than 20%, then until such point in time and unless such JV Partner (whose Contribution Percentage has become less than 20%) causes its Contribution Percentage to be equal to or greater than 20%, such JV Partner shall no longer be entitled to designate, nominate and have elected any Director and, in lieu of such number of Directors that such JV Partner was originally entitled to designate, nominate and have elected, such JV Partner shall have the right to nominate the equivalent number of non-voting observers to attend meetings of the Board and to be provided with the same information pertaining to the JV Company that a Director would receive in its capacity as a Director. In furtherance of the foregoing provisions, each JV Partner acknowledges and agrees that it shall promptly cause the resignation of its incumbent Director appointees as contemplated above and, if applicable, to cooperate with the other JV Partner with respect to appointment or replacement of their Director nominees, as applicable and in each case, as contemplated above.

	(c)	The term for each Director shall be three (3) years; provided, however, that such term may be extended until the close of the ordinary General Meeting concerning the last fiscal year that ended during the term of the applicable Director. Subject to sub-Section (b) above, after the end of the term of any Director, the JV Partner who designated such individual shall have the right to designate, nominate and have elected the same individual or a different individual as a Director. In the event of any vacancy created on the Board at any time and for any reason (whether as a result of death, disability, retirement, resignation, or removal pursuant to this Section 11.2), the JV Partner who designated such individual shall have the right to designate, nominate and have elected a different individual to replace such Director for the remainder of the replaced Director’s term.

	(d)	SKGC shall appoint one (1) of the SKGC Directors to act as the chairperson of the Board (the “Board Chairperson”). The Board Chairperson shall serve as the chairperson of all meetings of the Board. For the avoidance of doubt, the Board Chairperson shall not have a second or casting vote at any meetings of the Board.

	(e)	At the time of the completion of any Transfer of all of the Shares held by a JV Partner, unless for the Transfer to Affiliate(s) pursuant to Section 9.4 such JV Partner shall procure the resignation of each Director nominated by it.

	(f)	Subject to sub-Section (b) above, each JV Partner shall have the right at any time to remove (with or without cause) or cause the resignation of any Director designated by such JV Partner for election to the Board. If a Director fails to resign from his or her office at the request of the JV Partner that designated such Director for election to the Board (or if there is a failure to procure the resignation of a Director where such resignation is required under Section 11.2(e)), each JV Partner shall exercise its respective voting rights in the JV Company to adopt a resolution to remove and dismiss the relevant Director from the Board. A JV Partner exercising its right pursuant to this Section 11.2(f) to remove a Director designated by such JV Partner shall fully indemnify and hold harmless the other JV Partner (and its successors, permitted assigns, employees, directors and officers) and the JV Company from and against any and all losses suffered, sustained or incurred by or imposed upon any of them as a result of, relating to or arising out of or in connection with such removal.

Section 11.3	Meeting of the Board of Directors. Meetings of the Board may be called by the Board Chairperson or any other Director upon sufficient notice pursuant to Section 11.4 below. The Board of Directors shall meet no less than once a quarter at such times (which shall begin no earlier than 8:00 a.m. and end no later than 10:00 p.m. Eastern time) and in such places as the Board shall designate from time to time, whether inside or outside of Singapore. Without limiting the generality of the foregoing, any Director may participate in any meeting of the Board by means of video conference, teleconference, or other similar communications equipment by means of which all individuals participating in the meeting can hear each other (“Audio Conferencing”) in lieu of physical attendance at such meeting, and a Director’s such participation by Audio Conferencing shall constitute such Director’s presence in person at the meeting. The JV Company shall provide a Korean-English interpreter at its own expense at the request of one (1) or more Loop Directors.

Section 11.4	Notice. In convening a meeting of the Board of Directors, a written notice in English stating the agenda, date, time and place of such meeting shall be given by the Board Chairperson or other Director convening such meeting, at least fourteen (14) calendar days prior to the date set for the applicable meeting of the Board. The above notice period may be shortened or waived upon the written consent of all the Directors prior to any such meeting of the Board. Unless all incumbent Directors waive such restriction, no matter may be voted upon at any meeting of the Board if such matter was not included in the agenda of the written notice.

Section 11.5	Quorum. A quorum for a meeting of the Board of Directors shall be the presence of at least a majority of Directors then in office, provided that at least one (1) SKGC Director and at least one (1) Loop Director (in each case, to the extent appointed) is present at such meeting. No meeting of the Board of Directors shall be validly convened or constituted unless the foregoing quorum is present at such meeting.

Section 11.6	Resolutions. Unless otherwise required by applicable Law, the JV Company Constitution or this Agreement, all actions and resolutions of the Board of Directors shall be adopted by the affirmative vote of a simple majority of the Directors present at a meeting of the Board duly convened and constituted in accordance with this Article 11; provided, however, that the matters specified in Schedule 3 hereto shall require the approval or affirmative vote of the Board acting unanimously for so long as each JV Partner’s Contribution Percentage is no less than 20%, and otherwise by the approval or affirmative vote of a simple majority of the Directors.

Section 11.7	Voting by Directors. Subject to applicable Law, each SKGC Director and Loop Director shall have the right to multiple votes in the event that not all SKGC Directors or Loop Directors, as applicable, are present at a meeting such that one (1) SKGC Director and/or Loop Director present at such meeting shall be entitled, respectively to vote on behalf of each SKGC Director and/or Loop Director, as the case may be, who is absent from such meeting (e.g., if only one (1) SKGC Director is present at a meeting of the Board, such SKGC Director shall have a number of votes equal to the total number of SKGC Directors on any matter voted on at such meeting). For the avoidance of doubt, the chairperson of the meeting of the Board of Directors shall not have a second or casting vote.

Section 11.8	Deadlock Resolution. If the Board is unable to come to a unanimous decision at a meeting of the Board with regard to any of the items set out in Schedule 3, the Board Chairperson shall promptly refer such matter to the JV Partners, who shall attempt to resolve such matter within a period of thirty (30) days following the referral to them of such matter. If such deadlock is not resolved during such period, the Board Chairperson shall promptly refer such matter in writing to the senior management of each JV Partner for resolution in good faith. If the senior management of the JV Partners cannot reach an agreement with respect to such matter within a period of thirty (30) days following the referral to them of the issue subject to a deadlock, such deadlocked matter will not be approved. Any written referrals to the JV Partners (or their senior management, as applicable) in accordance with this Section 11.8 shall include a statement that a deadlock has been reached under this Section 11.8, a brief description of the matter in dispute, each JV Partner’s position with respect thereto and the period set forth for resolving such deadlock under this Section 11.8.

Section 11.9	Minutes. Minutes of each meeting of the Board shall be signed by all of the Directors present at the meeting, and shall be kept at the JV Company’s registered head office. All minutes of the meetings of the Board shall be prepared in both Korean and English, and in the event of any conflict or discrepancy, the English version shall prevail over the Korean version.

Section 11.10	Committees of the Board of Directors. The Board of Directors may establish such committees as it deems appropriate from time to time, so long as each committee includes at least one (1) Director from each JV Partner.

Section 11.11	Indemnification of Directors. To the maximum extent permitted by applicable Law and other than in the case of gross negligence, willful misconduct and/or fraud, the JV Company shall indemnify each Director against all claims, judgments, liabilities (including liabilities to the JV Company), damages, expenses and costs (including attorneys’ fees and disbursements) for which such Director has been held liable or which such Director has incurred in connection with or arising out of the performance of his or her duties in his or her official capacity as a Director, if such Director, acted in good faith and for a purpose and in a manner that such Director reasonably believed to be in the best interests of the JV Company. The JV Company shall obtain and maintain a Directors’ liability insurance policy with commercially reasonable coverage.

ARTICLE 12.

MANAGEMENT TEAM; OTHER PERSONNEL

Section 12.1

Chief Financial Officer; Chief Technology Officer.

	(a)	The JV Company shall have one (1) chief financial officer (the “CFO”), and one (1) chief technology officer (the “CTO”), who shall be appointed by the approval or affirmative vote of the Board acting unanimously for so long as each JV Partner’s Contribution Percentage is no less than 20%, and otherwise by the approval or affirmative vote of a simple majority of the Directors.

	(b)	The JV Partners agree that the primary responsibilities and duties of the CTO shall include:

	(i)	management and overseeing of technical and operational upgrades to the technology adopted and utilized by the JV Entities;

	(ii)	nomination of the chief technology officer or equivalent technological lead at each JV Entity other than the JV Company;

	(iii)	supervision and decision-making on core issues presented to the Board;

	(iv)	assistance to ongoing projects of the JV Entities;

	(v)	daily supervision on the operation and adoption or development of new technology;

	(vi)	coordinating the engineering team; and

	(vii)	meeting and conferring regularly with the JV Partners (upon request and via attending the technology committee of the Board) to share information on technology improvements, upgrades, operational improvements and key performance indicator information.

(c)

The JV Partners agree that the primary responsibilities and duties of the CFO shall include:

	(i)	the finance, accounting, tax, and treasury functions of the JV Entities, including the nomination of the chief financial officer or equivalent functional lead at each JV Entity other than the JV Company; and

	(ii)	the JV Entities’ internal controls related to financial reporting.

Section 12.2

Other Management. Except in respect of the appointment of the CFO and the CTO, and the nomination of their equivalent functional leads at each JV Entity in accordance with Section 12.1 or as otherwise required pursuant to Section 11.6, all senior management and officers of the JV Company (including, for the avoidance of doubt, the chief executive officer), including their positions, designations and appointment methods, shall be determined by the Board of Directors acting by a simple majority.

Section 12.3

Statutory Auditor. The JV Company shall have one (1) statutory auditor to be appointed by the Board (acting unanimously). The statutory auditor shall be non-standing and shall not be entitled to any remuneration.

ARTICLE 13.

ACCOUNTING, FINANCIAL POLICIES & BUSINESS PLAN

Section 13.1	Fiscal Year. The fiscal year of the JV Company shall begin on January 1 of each year and end on December 31 of the same year; provided, however, that the first fiscal year of the JV Company shall begin on the applicable date of formation of the JV Company and end on the first December 31 occurring thereafter.

Section 13.2	Accounting Consolidation. The JV Partners agree that the JV Company and the other JV Entities are each intended to be, and shall be treated as, a consolidated subsidiary of SKGC under K-IFRS. If following the Effective Date any of the JV Company and the other JV Entities is no longer able to be treated as a consolidated subsidiary of SKGC under K-IFRS due to a change in the applicable accounting standards, as confirmed in writing by notice from SKGC delivered to Loop and the JV Company, then, the JV Partners shall, each using best efforts and acting reasonably, discuss and attempt to agree upon such amendments to this Agreement as shall be reasonably necessary both to result in the JV Company and the other JV Entities each being able to be treated as a consolidated subsidiary of SKGC under K-IFRS and to preserve the material rights of and benefits to the Loop Parties and their Affiliates reflected in this Agreement and the Transaction Documents prior to such change in the applicable accounting standards.

Section 13.3	Financial Statements. The JV Partners shall cause the JV Company to provide to each JV Partner the information and materials set forth in sub-Sections (a) through (c) below (in the case of Loop, together with an English version or translation thereof):

	(a)	within fifty (50) days after the end of each fiscal year, draft audited financial statements (including footnotes thereto) consisting of at least a balance sheet as of the end of such fiscal year and the related statements of income (including earnings per share) for the fiscal year then ended, prepared in accordance with accounting principles and practices generally accepted in Singapore (including the SFRS);

	(b)	within seventy-five (75) days after the end of each fiscal year, (i) annual management reports and (ii) audited financial statements (including footnotes thereto) consisting of a balance sheet as of the end of such fiscal year and the related statements of income (including earnings per share), JV Partners’ equity and cash flows for the fiscal year then ended, prepared in accordance with accounting principles and practices generally accepted in Singapore (including the SFRS); and

	(c)	within thirty-five (35) days after the end of each fiscal quarter, unaudited financial statements (including footnotes thereto) consisting of a balance sheet as of the end of such fiscal quarter and the related statements of income (including earnings per share), JV Partners’ equity and cash flows for the fiscal quarter then ended, prepared in accordance with accounting principles and practices generally accepted in Singapore (including the SFRS), and certified by the CFO of the JV Company.

Section 13.4	Books and Records. The books and records of the JV Company shall be maintained in accordance with applicable Law and accounting principles and practices generally accepted in Singapore and shall accurately reflect the JV Company’s financial position and results of operations. A JV Partner and its authorized representatives shall be allowed access to examine the books and records of the JV Company, including remotely by electronic means where practicable, at any reasonable time following reasonable notice in accordance with applicable Law.

Section 13.5	Business Plans. The business plan for each fiscal year of the JV Company shall be prepared by the senior management of the JV Company and approved by the Board as soon as practicable after the end of the preceding fiscal year, and such business plan shall be reported to the Board for their review and comment during the first quarter following the end of the preceding fiscal year.

Section 13.6	Dividends; Distributions, Return of Capital. To the extent permitted by applicable Law and subject to the balance of this Section 13.6, in respect of any fiscal year, the JV Partners may, solely in accordance with Section 10.5, cause the JV Company to declare and pay dividends, make any capital distributions, or otherwise return capital to the JV Partners in compliance with applicable Laws.

ARTICLE 14.

TERM AND TERMINATION

Section 14.1	Term. This Agreement shall become effective on the Effective Date and shall continue in full force and effect in perpetuity until this Agreement is terminated in accordance with this Article 14 or other applicable provisions hereof (the “Term”).

Section 14.2	Automatic Termination. This Agreement shall automatically terminate with immediate effect upon the occurrence of one (1) or more of the following events:

	(a)	upon only one (1) JV Partner remaining as a JV Partner of the JV Company; or

	(b)	by mutual written agreement between the JV Partners.

Section 14.3

Other Termination Events. This Agreement may be terminated by the relevant JV Partner specified below in this Section 14.3, with immediate effect by providing written notice thereof to the other JV Partner upon the occurrence of one (1) or more of the following events:

	(a)	by a JV Partner (so long as the following event is not attributable to such JV Partner exercising the right to terminate this Agreement), if the other JV Partner (i) becomes the subject of a voluntary petition in bankruptcy or (ii) becomes the subject of an involuntary petition in bankruptcy which is not dismissed within ninety (90) days; or

	(b)	either JV Partner (so long, in the case of SKGC, as the basis for the following event is not a breach of the Loop Technology License Agreement by the JV Company) in the event that the Loop Technology License Agreement is terminated in accordance with the terms thereof without Loop and the JV Company (and, if applicable, SKGC) having entered into one or more agreements that expressly provide for the replacement or substitution of the Loop Technology License Agreement.

ARTICLE 15.

CONSEQUENCE OF TERMINATION

Section 15.1	No Prejudice. The termination of this Agreement shall be without prejudice to the accrued rights and liabilities of the JV Partners and Loop Parent as of the date of such termination. The waiver of the right of termination under this Agreement shall not constitute a waiver of the right to claim damages or the right to terminate for any subsequent cause.

Section 15.2	Effect on the Loop Technology License Agreement. Following the termination of this Agreement, no additional Approved Projects or Carved-Out Projects shall be developed, and the Licensed Facilities shall be limited to those JV Facilities that, on the date such termination is effective, (a) are producing commercial quantities of Licensed Products for sale under Approved Contracts, or (b) for which each JV Partner has procured its Final Investment Decision; where the terms “Licensed Facilities,” “JV Facilities,” “Licensed Products,” and “Approved Contracts” have the meanings given to them in the Loop Technology License Agreement. Notwithstanding the foregoing, if SKGC wishes to enter into a license agreement and a marketing agreement after termination of this Agreement, Loop Parent agrees that it shall do so on substantially the same terms as those of the Loop Technology License Agreement and the Marketing Agreement, except with respect to royalty rates and the geographic territories of the applicable license rights and exclusivities, which would be subject to mutual agreement by Loop Parent and SKGC.

Section 15.3	Effect of Termination. Upon the termination of this Agreement, all rights and obligations under this Agreement shall become null, void and ineffective, except that the rights and obligations of any JV Partner and Loop Parent that have accrued prior to such termination shall not be affected thereby, the rights contained herein which by their terms are intended to survive the termination of this Agreement shall so survive, and Sections 2.5, 2.6, 7.3(e), 14, 15, 17, 18, 19 and 20 shall survive the termination of this Agreement.

Section 15.4	Remedies. The right of the JV Partners to terminate this Agreement is not an exclusive remedy, and upon breach of this Agreement, SKGC and the Loop Parties, respectively, shall be entitled alternatively or cumulatively to any available remedy against the Loop Parties and SKGC, respectively, at law or in equity.

ARTICLE 16.

REPRESENTATIONS AND WARRANTIES

Section 16.1

Representations and Warranties. Each Party represents and warrants to each other Party that: (a) it has the full power and authority to enter into and to perform its obligations under this Agreement and to consummate the transactions contemplated hereby, and this Agreement shall constitute the legally valid and binding obligation of such Party, enforceable against such Party in accordance with its terms; (b) the entry into and performance of its obligations under this Agreement, and the consummation of the transactions contemplated hereby have been duly authorized and approved by all required corporate action; (c) the execution, delivery and performance by such Party of this Agreement and any other agreements and documents to which such Party is a party and the execution of which is contemplated hereunder shall not: (i) violate any applicable Law or Governmental Approval applicable to such Party, (ii) violate or conflict with, or constitute (with due notice or lapse of time or both) a default under, any agreement or instrument to which such Party is a party or by which such Party is bound, (iii) require any consent or other action by any Person under any provision of any material agreement or other instrument to which such Party is a party or by which such Party is bound, or (iv) violate any term of the constitutional documents of such Party; (d) as of the Effective Date, no Governmental Approval or action of, filing with or notice to any governmental authority on the part of such Party is required in connection with the execution, delivery and performance of this Agreement; and (e) that as of the Effective Date, it is not involved in any action, claim, litigation, suit or other legal proceeding before or investigation by any governmental authority, or to its knowledge, threatened against it that, if adversely determined, shall, or is expected to have a material adverse impact on the Business, except, in the case of Loop Parent, as may have been disclosed in its reports filed with the U.S. Securities and Exchange Commission. Each JV Partner further represents and warrants to each other JV Partner that: upon issuance of the Shares and other Equity Securities as contemplated under this Agreement, it shall own the Shares and other Equity Securities for its own account, free and clear of any and all Liens, other than in accordance with Section 9.5.

ARTICLE 17.

CONFIDENTIALITY

Section 17.1	Definition of Confidential Information. In this Article 17, “Confidential Information” means all trade secrets, proprietary information and confidential information, which is stated as confidential (whether in writing, orally or by another means and whether directly or indirectly), or known or considered as known to be confidential, and disclosed by SKGC to a Loop Party or any JV Entity(ies), by a Loop Party to SKGC or any JV Entity(ies), or by a JV Entity to SKGC or a Loop Party (the party disclosing such information being the “Disclosing Party” and the party receiving such information being the “Receiving Party”), whether before or after the Effective Date, including information relating to the Disclosing Party’s products, operations, processes, plans or intentions, product information, know‑how, design rights, trade secrets, proprietary information, market opportunities and business affairs, the contents of this Agreement and all confidential proprietary information about any JV Entity and the Business. For the avoidance of doubt, this Article 17 shall apply to each JV Entity (as both a Disclosing Party and a Receiving Party) and the Confidential Information of the JV Entities.

Section 17.2	Confidentiality. During the Term and for a period of three (3) years after the termination or expiration of this Agreement, the Receiving Party:

	(a)	may not use Confidential Information for any purpose other than the performance of its obligations under this Agreement;

	(b)	may not disclose the Confidential Information to any third party (including Affiliates) except with the prior written consent of the Disclosing Party; and

	(c)	shall make all reasonable efforts to prevent the unauthorized use or disclosure of the Confidential Information.

Section 17.3	Disclosure to Directors, Officers and Employees. During the Term, the Receiving Party may disclose Confidential Information to any of its directors, officers or employees (a “Recipient”) on a need to know basis and only to the extent that such disclosure is reasonably necessary for the purposes of this Agreement; provided that such Receiving Party ensures that each such Recipient is made aware of and complies with the Receiving Party’s obligations of confidentiality under this Agreement as if the Recipient was a party to this Agreement.

Section 17.4	Return or Destruction. In the event of the termination of this Agreement, or at any time at the request of the Disclosing Party, the Receiving Party shall as soon as reasonably practicable thereafter, at the Disclosing Party’s option, destroy or return to the Disclosing Party all Confidential Information on any media received by the Receiving Party hereunder, together with all partial or complete copies thereof, and the Receiving Party shall confirm in writing to the Disclosing Party that it has complied in all respects with this Article 17 if requested to do so by the Disclosing Party.

Section 17.5	Exceptions to Confidentiality. Sections 17.1 through 17.4 above shall not apply to Confidential Information that:

	(a)	is at the Effective Date, or at any time thereafter becomes, generally known to the public other than as a result of a disclosure by the Receiving Party’s or Recipient’s breach of this Agreement;

	(b)	can be shown by the Receiving Party to the Disclosing Party’s satisfaction to have been known by the Receiving Party with written records before disclosure by the Disclosing Party to the Receiving Party;

	(c)	is received by the Receiving Party on a non-confidential basis without restrictions from a third-party source not in breach or violation of any obligation of non-disclosure; or

	(d)	is independently developed by the Receiving Party without use of Confidential Information as shown to the satisfaction of the Disclosing Party by written records.

	Further, nothing contained in this Article 17 shall prevent any Receiving Party from disclosing Confidential Information to the extent compelled by Law or applicable rules of a stock exchange, provided, that in such case, the Receiving Party shall inform the Disclosing Party of the proposed disclosure, including the scope of Confidential Information that is required to be disclosed and the necessity of such disclosure, reasonably in advance of disclosure and the Parties shall cooperate with each other, using reasonable efforts, to minimize the disclosure to the extent possible and to ensure that any Confidential Information so disclosed is accorded confidential treatment satisfactory to the Disclosing Party, when and if available.

ARTICLE 18.

NOTICE

Section 18.1

Each notice, demand or other communication to be given or made under this Agreement shall be in writing and delivered by hand, by registered mail or internationally recognized overnight air courier or transmitted by e-mail to the relevant party at its address or e-mail address set out in Schedule 4 hereto (or such other address or e-mail address as the addressee has by five (5) Business Days’ prior written notice specified to the other parties in accordance with this Article 18). Any notice, demand or other communication so addressed to the relevant party shall be deemed to have been duly given (a) if delivered by hand or internationally recognized overnight air courier, when actually delivered to the relevant address, (b) if delivered by registered mail, upon the fifth (5th) calendar day following the dispatch and (c) if transmitted by e-mail, upon the receiving party’s confirmation of transmission; provided that if such day is not a Business Day in the place to which it is sent, such notice, demand or other communication shall be deemed delivered on the next following Business Day at such place.

ARTICLE 19.

GOVERNING LAW AND DISPUTE RESOLUTION

Section 19.1	Governing Law. This Agreement shall be governed by and construed in all respects in accordance with the Laws of the State of New York, without giving effect to the choice of Law rules or Laws thereof.

Section 19.2	Dispute Resolution. In the event of any dispute or claim arising out of or in connection with or relating to this Agreement or the breach hereof, the parties agree to negotiate in good faith to resolve any dispute between them. If the negotiations do not resolve the dispute, claim or breach to the reasonable satisfaction of the parties within thirty (30) calendar days, then a party may submit to arbitration. In such case, all disputes arising out of or in connection with this Agreement contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce in accordance with the said Rules. Any such arbitration shall be conducted in English in Singapore. For the purpose of such arbitration, there shall be three (3) arbitrators appointed, and each of the claimant and the respondent shall appoint one (1) arbitrator and each such appointed arbitrator shall agree upon and appoint the third arbitrator. If the two (2) appointed arbitrators are unable to agree on a third arbitrator, the third arbitrator shall be appointed in accordance with the Rules of Arbitration of the International Chamber of Commerce. No party shall disclose or permit the disclosure of any information about the evidence adduced or the documents produced by another party in the arbitration proceedings or about the existence, contents or results of the proceeding except as may be required by a governmental authority or as required in an action in aid of arbitration or for enforcement of an arbitral award.

ARTICLE 20.

MISCELLANEOUS

Section 20.1

Taxes and Expenses. Except as otherwise specifically set forth in this Agreement:

(a)

each JV Partner and Loop Parent shall pay its own costs, charges and expenses, including, without limitation, any taxes and any fees and expenses of legal counsel, accountants, brokers, consultants, and other representatives used or hired by it, incurred in connection with the preparation, execution and implementation of this Agreement and the transactions contemplated hereby; provided that any agreed costs and expenses initially incurred by a JV Partner or Loop Parent shall be reimbursed by the JV Company; and provided, further, that in the event that the JV Company is not established or otherwise fails to be established as a result of a breach on the part of either JV Partner or Loop Parent, reimbursement of costs and expenses that were to be reimbursed by the JV Company in accordance with the foregoing provisions of this Section 20.1 shall be borne by the JV Partners proportionate to each JV Partner’s respective Contribution Percentage; and

	(b)	the term “agreed costs and expenses” in Section 20.1(a) shall refer to any costs and expenses (i) relating to the BDP, purchase cost of long-lead delivery items, or (ii) other costs or expenses incurred for the benefit of the JV Company, in each case with the mutual consent of the JV Partners, such consent not to be unreasonably withheld, conditioned or delayed.

	If required by applicable Law, with regard to the operation of the First Plant Site and any Approved Project, the JV Company shall use its best efforts to establish an account on behalf of each JV Partner for the payment of any applicable incomes taxes due by such JV Partner as a result of any income earned from sales of rPET Product by any JV Entity.

Section 20.2	Severability. Should any provision of this Agreement be invalid or unenforceable, then such provision shall be given no effect and shall be deemed not to be included within the terms of this Agreement, but without invalidating any of the remaining terms of this Agreement as if the invalid or unenforceable portion was never a part of this Agreement when it was executed. The parties shall then endeavor to replace the invalid or unenforceable provision by a valid or enforceable clause, which is closest to the original intent of the invalid or unenforceable provision.

Section 20.3	Enforcement of Rights by JV Entities. Any right of action which any JV Entity may have in respect of any breach or purported breach of any obligation owed to it by a JV Partner or any of such JV Partner’s Affiliates, and any right of action which a JV Partner or its Affiliates may have in respect of any breach or purported breach of any obligation owed to it by such JV Entity, may be prosecuted or defended by the Directors other than those appointed by the JV Partner in question, and such non-disqualified Directors shall have full authority to elect to pursue, not to pursue or to defend any such claim or to negotiate, litigate and settle any claim, or to exercise any right of termination, arising out of such breach or purported breach.

Section 20.4	Entire Agreement. This Agreement, together with the Schedules and Exhibits hereto, shall, as of the date set forth above, constitute the entire agreement and understanding of the parties with respect to the subject matter hereof and supersede all previous representations, understandings or agreements, oral or written, between the parties with respect to the subject matter hereof, including the MOU.

Section 20.5	Waiver. No waiver by any party of any breach or failure to comply with any provision of this Agreement shall be construed as, or constitute, a continuing waiver of such provision or a waiver of any other breach of, or failure to comply with, any other provision of this Agreement.

Section 20.6	Further Assurance. Upon the terms and subject to the conditions contained in this Agreement, each party agrees: (a) to take or perform, or to use all reasonable efforts to be taken or performed, measures and matters necessary to consummate or effectuate the transactions contemplated under this Agreement, (b) to prepare all the documents and certificates necessary or proper for the consummation of the transactions contemplated by this Agreement, and (c) to cooperate with each other in connection with the foregoing in good faith.

Section 20.7	Amendment. This Agreement may be amended, modified or superseded, and any of the terms, covenants or conditions hereof may be waived, only by a written instrument expressly referencing this Agreement as being amended, modified, superseded or waived, executed by all of the parties, or, in the case of a waiver, by the party waiving compliance.

Section 20.8	Assignment. This Agreement shall be binding on and inure to the benefit of the successors and assigns of each of the Parties. Except as permitted in relation to a Transfer of Equity Securities consummated in accordance with the terms of this Agreement, neither this Agreement nor any rights and obligations hereunder shall be assignable by SKGC or the Loop Parties without the prior written consent, respectively, of the Loop Parties and SKGC. Any assignment or transfer of this Agreement by SKGC or the Loop Parties in contravention of this clause shall be deemed null and void.

Section 20.9	Time of the Essence. Time shall be of the essence in respect of any dates, times and periods specified in this Agreement, and in respect of any dates, times and periods which may be substituted for them in accordance with this Agreement or by a separate agreement in writing between SKGC and the Loop Parties.

Section 20.10	Specific Performance. The Parties hereby agree that the obligations imposed on them in this Agreement are special, unique and of an extraordinary character, and that in the event of a breach by any Party, damages would not be an adequate remedy, and each JV Partner and Loop Parent shall be entitled to specific performance and injunctive and other equitable relief in addition to any other remedy to which it may be entitled.

Section 20.11	No Partnership or Agency. Except as otherwise specifically set forth in this Agreement, nothing in this Agreement shall be deemed to constitute a partnership between the Parties nor, save as expressly set out herein, constitute either Party the agent of another Party for any purpose.

Section 20.12	Language/Counterparts. This Agreement is executed in the English language and may be executed in any number of counterparts, each of which shall be deemed an original. Unless it is prohibited under the applicable mandatory provisions of Law, the English language text of this Agreement shall prevail over any other language version or any translation thereof.

Signature Page to the Joint Venture Agreement

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed by its duly authorized officer or representative as of the Effective Date.

SK GEO CENTRIC CO., LTD.

By:

/s/ Na Kyung-soo

Name: Na, Kyung-soo

Title: President

[Signature Page to Joint Venture Agreement]

Signature Page to the Joint Venture Agreement

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed by its duly authorized officer or representative as of the Effective Date.

LOOP INDUSTRIES, INC.

By:

/s/ Daniel Solomita

Name: Daniel Solomita

Title: Chairman / CEO

[Signature Page to Joint Venture Agreement]

Schedule 1

Definitions

Definitions and Interpretation

1.1	Definitions. For purposes of the Agreement the following capitalized terms shall have the respective meanings set forth below:

“Affiliate” means, with respect to any JV Partner, any Person that, directly or indirectly, Controls, is Controlled by, or is under common Control with such JV Partner at any time during the period for which the determination of affiliation is being made, which, in respect of SKGC, shall include the following:

(a)	SK Innovation Co., Ltd.;

(b)	SK Energy Co., Ltd.;

(c)	SK IE Technology Co., Ltd.;

(d)	SK Lubricants Co., Ltd.;

(e)	SK On Co., Ltd.;

(f)	SK earthon Co., Ltd.;

(g)	SK Incheon Petrochem Co., Ltd.; and

(h)	SK Trading International Co., Ltd.,

and their respective subsidiaries.

“Asia” means, collectively, the following states and special areas of internal sovereignty: Afghanistan, Armenia, Azerbaijan, Bahrain, Bangladesh, Bhutan, Brunei, Cambodia, China, Cyprus, Georgia, Hong Kong, India, Indonesia, Iran, Iraq, Israel, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Laos, Lebanon, Macau, Malaysia, Maldives, Mongolia, Myanmar, Nepal, North Korea, Oman, Pakistan, Palestine, Philippines, Qatar, Singapore, South Korea, Sri Lanka, Syria, Taiwan, Tajikistan, Thailand, Timor Leste/East Timor, Turkmenistan, Uzbekistan, Vietnam, and Yemen.

“BDP” means a front end loading (FEL 3) feasibility basic engineering package for the First Plant, to be mutually agreed in writing between the JV Partners.

“BDP Date” means the date on which the BDP is issued (i.e., the date on which a front end loading (FEL 3) feasibility basic engineering package for the First Plant is mutually agreed in writing between the JV Partners).

“Board” or “Board of Directors” means the board of Directors of the JV Company in office at the applicable time, as appointed in accordance with the terms and conditions of this Agreement.

“Business Day” means any day other than a Saturday, a Sunday or a national holiday on which banks are required or authorized by law to be closed in Singapore, Montreal, Canada or Seoul, Korea.

Sch. 1-1

“Capital Contributions” means any capital contributions made to the JV Company by any JV Partner, including the Initial Capital Contributions.

“Commencement of Construction” means, in respect of an Approved Project or a Carved-out Project, the occurrence of the date on which the relevant construction contractor issues a notice to proceed with the construction under and in accordance with the applicable construction contract.

“Competitor” means, in respect of a subject Person:

(a)	any other Person (other than the subject Person’s Affiliates) that is engaged, directly or indirectly, in the same industry as the subject Person or which provides products or services that are similar to those provided by the subject Person; or

(b)	any other Person (other than the subject Person’s Affiliates) who, directly or indirectly, owns a significant interest in any Person falling under sub-Section (a) above by holding 5% or more ownership or voting interest in such Person falling under sub-Section (a) above, having a representation in the board of directors and/or similar supervisory body of or in respect of such Person falling under sub-Section (a) above or possessing the ability to influence the management or operation of such Person falling under sub-Section (a) above by contractual means or otherwise.

“Contribution Percentage” means, in respect of each JV Partner and at the time of computation, the shareholding proportion in respect of the JV Company allocated to, and to be held by, such JV Partner. The table below sets forth the initial Contribution Percentage of each Party upon the establishment and formation of the JV Company in accordance with the terms of this Agreement:

JV Partner Name

Contribution Percentage

SKGC

51%

Loop

49%

“Control” (including the terms “Controlled by” and “under common Control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or affairs of a Person, whether through ownership of voting securities or general partnership or managing member interests, by contract or otherwise.

“Debt Financing” means any indebtedness incurred to finance the development of an Approved Project or the restructuring or expansion of an existing project (which shall, for the avoidance of doubt, be subject to Section 5.5), which may, for the avoidance of doubt, take the form of project financing.

“Equity Portion” means, in respect of each TIC, the aggregate amount of such TIC, minus of the amount or portion of such TIC that is to be funded by the relevant Debt Financing.

Sch. 1-2

“Equity Securities” means, in relation to any company, any shares or capital stock of or other ownership interests in, such company or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, such shares or capital stock of or other ownership interests in such company.

“Final Investment Decision” means, with respect to the First Plant, the decision by the board of directors (or equivalent body of competent authority) of a JV Partner to proceed with development of the First Plant as demonstrated by the approval to fund the equity required of such JV Partner to develop the First Plant.

“First Plant” means the first rPET Product plant to be constructed in Ulsan, Korea and to be developed, constructed, owned and operated by the JV Company (itself or through any JV Entity).

“First Plant Milestone” means the Commencement of Construction of the first Approved Project by a JV Entity (or a Carved-out Project by SKGC or its majority-owned and Controlled subsidiary) designed to produce at least sixty (60) kilotons of rPET in Asia.

“General Meeting” means either an annual or extraordinary general meeting of the JV Partners, in their capacity as shareholders of the JV Company.

“Governmental Approval” means, with respect to an action or transaction, any approval, license (manufacturing, export, import or otherwise), certificate, authorization, consent, order, report, permit, qualification, exemption, waiver or other authorization, or registration or filing, in each case issued, granted, given, filed or otherwise made available by or under the authority of all relevant national, local or administrative authorities of the USA, the states thereof, Korea or Singapore, as applicable, and any other applicable jurisdiction with respect to such action or transaction.

“Initial Capital Contributions” means the Capital Contributions to be made by each JV Partner in accordance with Section 5.1(a).

“JV Entities” means as the context may require (a) the JV Company, (b) once formed, the JV Korea and (c) once formed, each other subsidiary of the JV Company.

“JV Korea Articles” means the articles of incorporation to be adopted by the JV Korea in accordance with Section 4.1 of this Agreement, as such may be amended from time to time.

“JV Partners” means, collectively, SKGC and Loop, and “JV Partner” means each of SKGC and Loop.

“JV Transaction Documents” means, collectively, this Agreement, the JV Company Constitution, the Loop Technology License Agreement, the Service Agreements, the Marketing Agreement, the JD MOU and such other documents as are customarily entered into concurrently with the formation of an entity similar to the JV Company and/or any other JV Entity.

“K-IFRS” means international financial reporting standards as adopted by and in effect from time to time in Korea.

“Korean Won” or “KRW” means the lawful currency of Korea.

“Law” means any law, statute, regulation, decree, ordinance, guideline, directive, or other legally binding requirement enacted, adopted or applied by any national, local or administrative governmental authority, or any holding, decision or order of a court having competent jurisdiction.

“Lien” means any mortgage, pledge, lien, encumbrance, security interest, claim, voting agreement, conditional sale agreement, title retention agreement, option, power of attorneys, authorizations, and restriction or limitation of any kind, nature, character or description whatsoever.

Sch. 1-3

“Management Team” means, collectively, the senior management personnel and officers of the JV Company, including the chief executive officer, the CFO, and the CTO, in each case, as nominated, approved, and determined in accordance with the terms of this Agreement.

“Person” means any individual, partnership, limited liability company, corporation, association, joint stock company, trust, entity, joint venture, labor organization, unincorporated organization, or governmental authority.

“Qualifying Project” means a plant that is designed to produce at least sixty (60) kilotons of rPET in Asia using Loop Parent’s technology.

“rDMT/rMEG Product” means any product that is formed or derived from recycled dimethyl terephthalate (DMT) and/or recycled monoethylene glycol (MEG).

“rPET” means recycled polyethylene terephthalate resin.

“rPET Products” means any polyester product or by-product manufactured using as a raw resource, or otherwise derived from, rPET recovered from post-consumer or post-industrial sources.

“SFRS” means international financial reporting standards as adopted by and in effect from time to time in Singapore.

“Transfer” or “Transferring” (or any correlative term) with respect to any Equity Securities means, (i) when used as a verb, to sell, assign, dispose of, exchange, pledge, encumber, subject to a Lien, hypothecate or otherwise transfer such Equity Securities or any participation or interest therein, whether directly or indirectly and whether or not voluntarily, or agree or commit to do any of the foregoing and (ii) when used as a noun, a direct or indirect sale, assignment, disposition, exchange, pledge, Lien, hypothecation, or other transfer of such Equity Securities or any participation or interest therein or any agreement or commitment to do any of the foregoing.

“TIC” means:

(a)	in respect of the First Plant, the Initial TIC; and

(b)	in respect of each Approved Project (other than the First Plant), the initial total investment cost, including, but not limited to, the capital expenditure, initial operating cost (including working capital requirements), land acquisition costs, feasibility study cost and licensing and permit cost associated with such Approved Project.

1.2	Index of Other Defined Terms. In addition to the terms defined above, the following capitalized terms shall have the respective meanings given thereto in the Articles indicated below.

“Accounting Change Amendments”

Section 13.2

“Additional Funding Capital Call”

Section 5.2(b)

“Agreement”

Preamble

“Approved Additional Funding”

Section 5.2(a)

Sch. 1-4

“Approved Project”

Section 7.2(c)

“Audio Conferencing”

Section 11.3

“Board Chairperson”

Section 11.2(d)

“Business”

Recitals

“Carved-out Project”

Section 7.2(e)

“CFO”

Section 12.1

“Confidential Information”

Section 17.1

“Contribution Shortfall”

Section 5.3(a)(iv)

“CTO”

Section 12.1

“Debt Financing Key Terms”

Section 5.5

“Director”

Section 11.2(a)

“Disclosing Party”

Section 17.1

“Dividend Payable Income”

Section 13.6

“Effective Date”

Preamble

“Excess Offer Notice”

Section 8.1(b)

“Exclusivity Period”

Section 7.3(a)

“Financing Documents”

Section 5.5

“First Plant Milestone Deadline”

Section 7.3(a)

“First Plant Site”

Section 7.2(d)

“Fully Exercising Partner”

Section 8.1(b)

“Funding Default”

Section 5.3(a)(i)

“Funding Default Call Option”

Section 5.3(e)

“Funding Default Securities”

Section 5.3(d)

“Funding Defaulting Party”

Section 5.3(a)(ii)

“Funding Non-Defaulting Party”

Section 5.3(a)(iii)

Sch. 1-5

“General Meeting Notice”

Section 10.2

“Initial Registered Capital”

Section 3.1(c)

“Initial TIC”

Section 4.2(a)(iv)(2)

“JD MOU”

Section 7.3(f)

“Joinder Agreement”

Section 9.6

“Joint Venture Agreement”

Exhibit A – Recitals; and

Exhibit C – Preamble

“JV Brand”

Section 7.9

“JV Company Constitution”

Section 3.1(e)

“JV Company”

Recitals

“JV Korea Condition”

Section 4.2(a)

“JV Korea Establishment Date”

Section 5.1(a)(i)

“JV Korea”

Recitals

“Korea”

Preamble

“Lock-up Period”

Section 9.2

“Loop”

Section 2.2

“Loop Directors”

Section 11.2(b)

“Loop Parent”

Preamble

“Loop Party”

Preamble

“Loop Rejection Notice”

Section 2.6(g)

“Loop Technology License Agreement”

Section 7.6(a)

“Loop Termination Notice”

Section 2.6(g)

“Marketing Agreement”

Section 7.6(c)

“MOU”

Recitals

“NA Opportunity”

Section 2.6(a)

“NA Opportunity Collaboration Notice”

Section 2.6(a)

Sch. 1-6

“NA Opportunity ROFR Notice”

Section 2.6(f)

“New Equity Securities”

Section 8.1

“Non-Consolidation Event”

Section 13.2

“Offer Notice”

Section 8.1(a)

“Party”

Preamble

“Proposed Project”

Section 7.2(a)

“Proposed Territory”

Section 7.2(e)(ii)

“Reactivated NA Opportunity”

Section 2.6(f)

“Receiving Party”

Section 17.1

“Recipient”

Section 17.3

“Relevant Opportunity”

Section 7.3(d)

“ROFR Notice”

Section 7.3(d)(i)

“Second Exclusivity Period”

Section 7.3(b)

“Securities Purchase Agreement”

Recitals

“Service Agreements”

Section 7.6(b)

“Share”

Section 3.1(c)

“Shelved NA Opportunity”

Section 2.6(d)

“SKGC Directors”

Section 11.2(b)

“SKGC”

Preamble

“SKGC Acceptance Notice”

Section 2.6(g)

“Term”

Section 14.1

“USA”

Preamble

Sch. 1-7

1.3	Rules of Interpretation.

(a)	Every part of this Agreement shall be deemed to be supplementary and complementary with every other part of this Agreement and shall be read with and construed as a whole as much as practical. This Agreement has been fully reviewed and negotiated by the Parties and in interpreting this Agreement, no weight shall be placed upon which Party or its legal advisor drafted the provision being interpreted.

(b)	Headings in this Agreement are for reference purposes only and are not intended to be used to interpret this Agreement.

(c)	References in this Agreement to Articles, Sections, Preamble, Recitals, Schedules or Exhibits are to Articles, Sections, Preamble, Recitals, Schedules or Exhibits of this Agreement. All Appendices shall be deemed to be incorporated in this Agreement as if set forth in full herein. All Schedules and Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.

(d)	Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders.

(e)	General references to this Agreement and to other agreements shall be deemed to cover all valid amendments, modifications and supplements, and to include any and all exhibits, schedules, and other attachments hereto and thereto, as the same may be in effect at the time such reference becomes operative.

(f)	The words, “hereto,” “hereof,” “herein,” “hereunder,” “hereby” and other words of similar import shall be deemed to refer to this Agreement as a whole and not to any particular provision of this Agreement.

(g)	The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” and the word “or” is not exclusive.

(h)	Save where the context otherwise requires, the word “agree” shall require the parties to agree in writing.

(i)	The term “Affiliate” as used in relation to the JV Korea, the JV Company or any other JV Entity shall not include either JV Partner or any of its Affiliates (other than the JV Company and its subsidiaries).

Sch. 1-8

Schedule 2

Matters Requiring Unanimous Shareholders’ Consent

Notwithstanding anything to the contrary contained in this Agreement, the consent of both JV Partners shall be required for each of the following actions:

(a)	any change in the size of the Board, or the establishment and composition of any committee of the Board, including the adoption of, and any amendments to, any charter or other governing policies of such committee;

(b)	any declaration, making and payment of dividends or other distributions of cash or other assets by the JV Company, or any Capital Contributions or loans to any JV Entity by any JV Partner;

(c)	any change in the nature of Business or purpose or jurisdiction of the JV Company or any other JV Entity;

(d)	any amendments to any JV Transaction Documents or any other organizational documents of the JV Company or any other JV Entity;

(e)	any agreement, arrangement or transaction, or any material amendment thereto, between any JV Entity, on the one hand, and any JV Partner or any of its Affiliates, on the other hand (except for transactions made in accordance with the terms of any existing agreement, arrangement or transaction);

(f)	any bankruptcy, dissolution, liquidation, or winding up of the JV Company or any other JV Entity;

(g)	any public offering of securities by any JV Entity;

(h)	any change of Control transaction in respect of any JV Entity;

(i)	any merger, spin-off, split-off, strategic alliance, joint venture or partnership involving, any material acquisition, investment or disposition (including any sale, exclusive license or other transfer or disposition of any significant technology or intellectual property) by, or other corporate reorganization or recapitalization of, any JV Entity; and

(j)	any making, change or revocation of any income tax election or refrainment from making any material tax election, or the institution or settlement of any legal action.

Sch. 2-1

Schedule 3

Matters Requiring Unanimous Board Approval

Notwithstanding anything to the contrary contained in this Agreement, the unanimous approval of the Board shall be required for each of the following actions:

(a)	the remuneration, bonuses and severance pay of Directors;

(b)	any compensation or benefits that, in the aggregate (and on an annual basis), to any of the chief executive officer, the CTO, the CFO or any other executive officer of the JV Company or any other JV Entity that, in each aggregated case, exceeds such sum as may be agreed between the JV Partners prior to the incorporation of the JV Korea in accordance with the terms of this Agreement;

(c)	the adoption of any equity incentive plan or other equity based awards, including the material terms thereof; and any change in the material terms thereof (including the size of the option pool) in respect of the JV Company or any other JV Entity;

(d)	any issuance or sale of Equity Securities of any JV Entity (other than to the JV Company or any other JV Entity), including the material terms of such issuance or sale; or any redemption or repurchase of such Equity Securities of any JV Entity, including the material terms of such redemption or repurchase;

(e)	the entry into any consulting services agreement with SKGC or its Affiliate(s) in accordance with Section 7.5(e); and

(f)	the entry into any joint development agreement with the JV Partners in accordance with Section 7.8.

Sch. 3-1

Schedule 4

Contact Information for Notices

SKGC

SK Geo Centric Co., Ltd.

Address:	51 Jong-ro, Jongno-gu
Attn.:	Park Sang Hyun, Vice President; Baek Sung Young, Legal Team Leader
Phone:	[***]
Email:	[***]

with a copy to (which shall not constitute valid notice):

Milbank LLP

Address:	Level 33, Three IFC, 10 Gukjegeumyung-ro, Yeongdeungpo-gu, Seoul, South Korea
Attn.:	David Cho, Partner
Phone:	[***]
Email:	[***]

Loop Parent

Loop Industries, Inc.

Address:	480 Fernand-Poitras, Terrebonne Québec, Canada J6Y 1Y4
Attn.:	Daniel Solomita
Phone:	[***]
Email:	[***]

with a copy to (which shall not constitute valid notice):

Covington & Burling LLP

Address:	Salesforce Tower, 415 Mission Street, Suite 5400, San Francisco, CA 94105, U.S.A.
Attn.:	Denny Kwon, Partner
Phone:	[***]
Email:	[***]

Sch. 4-1

Exhibit A

Form of Joinder Agreement (Loop)

JOINDER AGREEMENT

THIS JOINDER AGREEMENT (this “Agreement”) is entered into this ____ day of ______, 202[ ] by and among:

(1)	SK Geo Centric Co., Ltd.(formerly known as SK Global Chemical Co., Ltd.), a joint stock company (chusik hoesa in Korean) duly organized and validly existing under the laws of the Republic of Korea (“Korea”) with its principal offices at 51, Jong-ro, Jongno-gu, Seoul, Korea 03161 (“SKGC”); and

(2)	Loop Industries, Inc., a corporation duly organized and validly existing under the laws of the State of Nevada, United States of America (“USA”) with its principal offices at 480 Fernand-Poitras Terrebonne, Québec, Canada J6Y 1Y4 (“Loop Parent”); and

(3)	[Insert the name of the Loop entity], a private company limited by shares incorporated, duly organized and validly existing under the laws of Singapore with its registered office at [*] (the “JV Company”).

Each of SKGC and Loop are referred to herein individually as a “JV Partner” and collectively as the “JV Partners.” Each of the JV Partners and Loop Parent are referred to herein individually as “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, SKGC and Loop Parent entered into that certain Joint Venture Agreement dated April 27, 2023 (the “Joint Venture Agreement”) to set forth the terms and conditions regarding the establishment, management and operation of the JV Company and the JV Partners’ respective rights and obligations as JV Partners of the JV Company; and

WHEREAS, pursuant to Section 2.2 of the Joint Venture Agreement, Loop Parent agreed to cause Loop to enter into this Agreement as set forth herein below.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained below, the Parties hereby agree as follows:

1.	Definitions

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Joint Venture Agreement.

Joinder

Loop hereby confirms and acknowledges that it has been supplied with a copy of the Joint Venture Agreement. By executing this Agreement, Loop shall become a party to the Joint Venture Agreement, as of the date hereof, and Loop hereby agrees to be bound by the terms and conditions set forth in the Joint Venture Agreement applicable to Loop, and shall assume all rights and obligations applicable to it as Loop under the Joint Venture Agreement, with the same force and effect as if originally named therein.

A-1

Except as amended pursuant to this Agreement, all of the provisions in the Joint Venture Agreement shall remain in full force and effect as set forth therein.

3.	Governing Law

This Agreement shall be governed as to all matters, including validity, construction and performance, by and construed in accordance with the Laws of the State of New York.

4.	Effective Date

This Agreement shall become effective upon execution hereof.

Notice

Any notices given to Loop under the Joint Venture Agreement pursuant to Article 18 of the Joint Venture Agreement shall be made to:

Address:	[*]
Attn.:	[*]
Phone:	[*]
Email:	[*]

6.	Language/Counterparts

This Agreement is executed in the English language and may be executed in any number of counterparts, each of which shall be deemed an original. Unless it is prohibited under the applicable mandatory provisions of law, the English language text of this Agreement shall prevail over any other language version or any translation thereof.

(Signature Page Follows)

A-2

Signature Page to the Loop Joinder Agreement

IN WITNESS WHEREOF, the authorized representatives of the Parties have executed this Agreement as of the date first written above.

SK Geo Centric Co., Ltd.

By:

Name:

Title:

Loop Industries, Inc.

By:

Name:

Title:

[Insert the name of the Loop entity]

By:

Name:

Title:

A-3

Exhibit B

Form of Joinder Agreement (JV Company)

JOINDER AGREEMENT

THIS JOINDER AGREEMENT (this “Agreement”) is entered into this ____ day of ______, 202[ ] by and among:

(1)	SK Geo Centric Co., Ltd.(formerly known as SK Global Chemical Co., Ltd.), a joint stock company (chusik hoesa in Korean) duly organized and validly existing under the laws of the Republic of Korea (“Korea”) with its principal offices at 51, Jong-ro, Jongno-gu, Seoul, Korea 03161 (“SKGC”); and

(2)	Loop Industries, Inc., a corporation duly organized and validly existing under the laws of the State of Nevada, United States of America (“USA”) with its principal offices at 480 Fernand-Poitras Terrebonne, Québec, Canada J6Y 1Y4 (“Loop”);

(3)	[Insert the name of the Loop entity], a private company limited by shares incorporated, duly organized and validly existing under the laws of Singapore with its registered office at [*] (“Loop”); and

(4)	[Insert the name of the JV Company], a private company limited by shares incorporated, duly organized and validly existing under the laws of Singapore with its registered office at [*] (the “JV Company”).

Each of SKGC and Loop are referred to herein individually as a “JV Partner” and collectively as the “JV Partners.” Each of the JV Partners, Loop Parent and the JV Company are referred to herein individually as “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, Loop became a party to the Joint Venture Agreement as a JV Partner though the execution of a joinder agreement dated [·], 2023, by which it agreed to be bound by the terms and conditions set forth in the Joint Venture Agreement applicable to Loop, and assumed all rights and obligations applicable to it as Loop under the Joint Venture Agreement, with the same force and effect as if originally named therein; and

WHEREAS, pursuant to Section 2.3 of the Joint Venture Agreement, the JV Partners agreed to cause the JV Company to enter into this Agreement as set forth herein below.

B-1

NOW, THEREFORE, in consideration of the mutual promises and covenants contained below, the Parties hereby agree as follows:

1.	Definitions

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Joint Venture Agreement.

Joinder

The JV Company hereby confirms and acknowledges that it has been supplied with a copy of the Joint Venture Agreement. By executing this Agreement, the JV Company shall become a party to the Joint Venture Agreement, as of the date hereof, and the JV Company hereby agrees to be bound by the terms and conditions set forth in the Joint Venture Agreement applicable to the JV Company, and shall assume all rights and obligations applicable to it as the JV Company under the Joint Venture Agreement, with the same force and effect as if originally named therein.

Except as amended pursuant to this Agreement, all of the provisions in the Joint Venture Agreement shall remain in full force and effect as set forth therein.

3.	Governing Law

This Agreement shall be governed as to all matters, including validity, construction and performance, by and construed in accordance with the Laws of the State of New York.

4.	Effective Date

This Agreement shall become effective upon execution hereof.

Notice

Any notices given to the JV Company under the Joint Venture Agreement pursuant to Article 18 of the Joint Venture Agreement shall be made to:

Address:	[*]
Attn.:	[*]
Phone:	[*]
Email:	[*]

6.	Language/Counterparts

(Signature Page Follows)

B-2

Signature Page to the JV Company Joinder Agreement

IN WITNESS WHEREOF, the authorized representatives of the Parties have executed this Agreement as of the date first written above.

SK Geo Centric Co., Ltd.

By:

Name:

Title:

Loop Industries, Inc.

By:

Name:

Title:

[Insert the name of the Loop entity]

By:

Name:

Title:

[Insert the name of the JV Company]

By:

Name:

Title:

B-3

Exhibit C

Form of Joinder Agreement (Permitted Transferee)

JOINDER AGREEMENT

The undersigned, [name of transferee], is acquiring, simultaneously with the execution of the relevant share purchase agreement concerned, _______ shares (the “Shares”) at the purchase price of ___________ per share from [name of transferring JV Partner] (the “Transferring JV Partner”).

As a condition to the acquisition of the Shares, the undersigned has agreed to join in a certain Joint Venture Agreement originally dated as of April 27, 2023 by and between, among others, SK Geo Centric Co., Ltd. and Loop Industries, Inc. (the “Joint Venture Agreement”) in respect of [name of the JV Company] by means of this Joinder Agreement.

The undersigned acknowledges and agrees that execution of this Joinder Agreement is a condition precedent to the acquisition of the Shares pursuant to the share purchase agreement concerned.

In all respects, the undersigned agrees to become a party to the Joint Venture Agreement and agrees to be bound by all of the terms and conditions thereof relating to the Transferring JV Partner to the fullest extent.

IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement this _______th day of ____________, 20 ____.

[_________________________]

By:

Name:

Title:

C-1

Exhibit D

Form of Performance Target Appendices

[***]

D-1