Subsequent Events
 3 Months Ended
May 31, 2021
Subsequent Events [Abstract]  
Subsequent Events

Strategic Partnership

 

On June 22, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) by and between the Company and SK global chemical Co., Ltd, an accredited investor (the “Purchaser”). Pursuant to the Purchase Agreement, the Company has agreed to issue and sell to the Purchaser the following securities for an aggregate purchase price of approximately $56.5 million (collectively, the “Investment”):

 

● an aggregate of 4,714,813 shares (the “Shares”) of the Company’s common stock (the “Common Stock”);

 

● warrants to purchase 4,714,813 shares of Common Stock for an exercise price of $15.00 (the “First Tranche Warrants”), with an expiration date of the third anniversary of the issue date;

 

● warrants to purchase 2,357,407 shares of Common Stock for an exercise price of $20.00 (the “Second Tranche Warrants”), with an expiration date of the earlier of (A) the date that is the third anniversary of the First Plant Milestone (as defined in the Second Tranche Warrants), (B) the expiration of the JV Negotiation Period (as defined in the Second Tranche Warrants), provided that the Joint Venture Transaction Agreements (as defined in the Second Tranche Warrants) have not been executed by the expiration of the JV Negotiation Period and (C) the third anniversary of the Date of approval of the basic engineering package for the facilities constructed by the JV, provided that the First Plant Milestone has not occurred as of such date; and

 

● warrants to purchase 461,298 shares of Common Stock for an exercise price of $11.00 (the “Third Tranche Warrants,” and together with First Tranche Warrants and the Second Tranche Warrants, the “Warrants”), with an expiration date of June 14, 2022.

 

The Purchaser may exercise the First Tranche Warrant and the Third Tranche Warrant at any time prior to their applicable expiration dates. The Purchaser may exercise the Second Tranche Warrant at any time on or after the first business day following the First Plant Milestone (as defined in the Second Tranche Warrant) prior to its expiration date.

 

After the closing of the Investment, the Purchaser is expected to own approximately 10.0% of the issued and outstanding Common Stock as of that date.

 

Simultaneous with the execution of the Purchase Agreement, the Company and the Purchaser entered into a Joint Venture Memorandum of Understanding (“JV MOU”) with respect to a potential joint venture to commercialize the Company’s plastic recycling technology in Asia (“Proposed Asia JV”). The JV MOU, which is non-binding, outlines certain principal terms for the Proposed Asia JV. The Purchase Agreement provides that the parties will negotiate exclusively with one another from the date of the Purchase Agreement until the date which is six months from the BDP Date (as defined in the Purchase Agreement) with respect to the Proposed Asia JV (subject to extension in accordance with the terms and conditions of the Purchase Agreement), with the objective of executing definitive agreements for the Proposed Asia JV.

 

Joint Venture Amendment

 

In conjunction with the SK strategic partnership described above, on June 18, 2021, the Company, Loop Innovations, LLC, a wholly-owned subsidiary of the Company (“Loop Innovations”), Indorama Ventures Holdings LP (“Indorama”) and Indorama Loop Technologies, LLC (the “Indorama Joint Venture Company”) amended (i) the Limited Liability Company Agreement between Loop Innovations, LLC and Indorama Ventures Holdings LP (the “LLC Agreement”), (ii) the Marketing Agreement between the Company and Indorama Loop Technologies, LLC (the “Marketing Agreement”) and (iii) the License Agreement between the Company and the Indorama Joint Venture Company (the “License Agreement”), each dated September 24, 2018 (collectively such amendments, the “Indorama Joint Venture Amendments”).

 

Under the Indorama Joint Venture Amendments, the Company, Indorama and the Indorama Joint Venture Company agreed to:

 

● terminate Indorama’s right of first refusal under the LLC Agreement over any facility to produce products utilizing any waste-to-resin technology applying the PET depolymerization process of the Company;

 

● amend the non-compete obligations under the LLC Agreement to solely apply to the Company;

 

● limit the scope of the Company’s grant of intellectual property rights and the scope of the exclusivity rights of the Indorama Joint Venture Company for the retrofit of existing facilities under the License Agreement to North America and Europe; and

 

● limit the scope of the Indorama Joint Venture Company’s permitted marketing rights under the Marketing Agreement to North America and Europe.