Item 1.01 Entry into a Material Definitive Agreement.
On July 29, 2021, the Loop Industries, Inc. (the
“Company”) announced the closing (the
“Closing”) of its previously announced issuance and
sale in a private offering of the Shares and the Warrants (defined
below) for aggregate gross proceeds of approximately $56.5
million.
Based on 42,445,351 shares of common stock and issued and
outstanding as of July 14, 2021, immediately following the Closing,
the Purchaser (defined below) will hold approximately 10.0% of the
issued and outstanding Common Stock. The Company intends to use the
proceeds toward the funding of its planned Infinite Loop™
manufacturing facility at its recently acquired site in Becancour,
Quebec.
For the sale of the Shares, the Company relied on Section 4(a)(2)
of the Securities Act of 1933, as amended or the private offering
safe harbor provision of Rule 506 of Regulation D promulgated
thereunder based on the following factors: (i) the number of
offerees or purchasers, as applicable, (ii) the absence of general
solicitation, (iii) representations obtained from the purchasers
relative to their accreditation and/or sophistication and/or their
relationship to the company (directors and officers), (iv) the
provision of appropriate disclosure, and (v) the placement of
restrictive legends on the certificates reflecting the securities
coupled with investment representations obtained from the
purchasers.
Amendment to Securities Purchase Agreement
As previously announced, on June 22, 2021, Company entered into
that certain Securities Purchase Agreement (the “Purchase
Agreement”) by and between the Company and SK global chemical
Co., Ltd, an accredited investor (the “Purchaser”). As
previously disclosed and pursuant to the Purchase Agreement, the
Company agreed to issue and sell to the Purchaser the following
securities:
●
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 BDP Date
(as defined in the Second Tranche Warrants), 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.
On July 29, 2021, the parties to the Purchase Agreement entered
into an amendment to such Purchase Agreement (the
“Amendment”). Pursuant to the Amendment, the Purchaser
may only exercise the First Tranche Warrant at any time beginning
on January 29, 2022 and the Second Tranche Warrant at any time on
or after the later to occur of (i) January 29, 2022 and (ii) the
first business day following the First Plant Milestone (as defined
in the Second Tranche Warrant) prior to its expiration date. The
Amendment also amended the form of Investors Rights Agreement (as
defined below) to be executed as of Closing.
Investors Rights Agreement
As previously disclosed on June 22, 2021, on July 29, 2021, the
Company also entered into an Investors Rights Agreement (the
“Investors Rights Agreement”) by and among the Company,
the Purchaser, and Daniel Solomita, in his individual capacity and
solely for the purposes of the voting arrangement in the Purchase
Agreement. Pursuant to the Investors Rights Agreement, effective as
of the July 29, 2021, the Company’s board of directors (the
“Board”) will appoint a designee of the Purchaser to
the Board (the “Investor Designee”), subject to the
terms and conditions of the Investors Rights Agreement. The
Purchaser will have the right to require the Board to nominate its
designee for election to the Board until the earlier to occur of
(i) the date that the Purchaser and its affiliates beneficially own
less than 4,000,000 shares of Common Stock or (ii) the date that
Purchaser and its affiliates beneficially own a number of shares of
the Common Stock equivalent to less than 5.0% of the number of
shares of Common Stock issued and outstanding.
The foregoing descriptions of the Purchase Agreement, the
Amendment, Investors Rights Agreement and form of Warrants are
summaries of each and are qualified in their entirety by the text
of the Purchase Agreement, which was filed with the Company’s
Quarterly Report on Form 10-Q for the period ended May 31, 2021,
and the text of the Amendment, Investors Rights Agreement and form
of Warrants, respectively, copies of which will be filed as
exhibits to the Company’s Quarterly Report on Form 10-Q for
the period ended August 31, 2021.
The foregoing agreements have been included to provide investors
with information regarding its terms. They are not intended to
provide any other factual information about the Company and its
subsidiaries and affiliates. The representations and warranties
contained in the Purchase Agreement were made only for purposes of
the Purchase Agreement (together with the exhibits thereto) and as
of specific dates, are solely for the benefit of the parties to the
Purchase Agreement, may be subject to limitations agreed upon by
the contracting parties, may have been made for the purposes of
allocating contractual risk between the parties to the Purchase
Agreement instead of establishing these matters as facts, and may
be subject to standards of materiality applicable to the
contracting parties that differ from those applicable to investors.
Investors are not third-party beneficiaries to the representations
and warranties contained in the Purchase Agreement and should not
rely on the representations and warranties or any descriptions
thereof as characterizations of the actual state of facts or
condition of the parties thereto or any of their respective
subsidiaries or affiliates. Moreover, information concerning the
subject matter of representations and warranties may change after
the date of the Purchase Agreement, which subsequent information
may or may not be fully reflected in the Company’s public
disclosures.
