Joint Venture Agreement, dated May 1, 2024, by and among Ester Industries Limited and Loop Industries, Inc

1.

Ester Industries Limited, a public limited company incorporated under the Indian Companies Act, 1956, having its head office at Plot No.-11-A, Infocity-1, Sector 33–34, Gurgaon – 122 001, Haryana, India (hereinafter referred to as “Ester”, which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and permitted assigns), of the First Part;

2.

Loop Industries Inc., a company incorporated and existing under the laws of the State of Nevada with its principal offices at 480 Fernand-Poitras Terrebonne, Québec, Canada J6Y 1Y4 (hereinafter referred to as “Loop”, which expression shall, unless repugnant to the context or meaning thereof, be deemed to include its successors and permitted assigns), of the Second Part;

Ester and Loop are hereinafter be referred to, individually as “Shareholder” and collectively as “Shareholders”.

A.

Ester is inter alia engaged in the business of manufacturing PET chips, BOPET film and speciality polymer from virgin and recycled feedstock and is listed on the Recognized Stock Exchanges (as defined hereinafter);

B.

Loop is engaged in the business of conversion of waste PET plastic and polyester fiber into high value materials.

C.

Ester and Loop propose to establish a joint venture entity in India to undertake the Business (as defined hereinafter).

D.

Now, the Parties having reached an understanding are entering into this Agreement to record their understanding and to set out the terms and conditions, which have been agreed between them in relation to their respective participation in the JVCo (as defined hereinafter) and the manner in which the affairs of the JVCo (as defined hereinafter) will be managed, operated, and regulated.

1.

DEFINITIONS AND INTERPRETATION

1.1

Definitions

For the purposes of this Agreement, in addition to the terms defined in the introduction to this Agreement, whenever used in this Agreement, unless repugnant to the meaning or context thereof, the following expressions shall have the following meanings:

1.2

Interpretation

In this Agreement,

1.2.12

references to a person’s representatives shall be to its officers, employees, legal or other professional advisers, sub-contractors, agents, attorneys and other duly authorised representatives;

1.2.13

where a wider construction is possible, the words “other” and “otherwise” shall not be construed ejusdem generis with any foregoing words;

1.2.14

this Agreement is a joint draft product of the Parties and any rule of statutory interpretation interpreting agreements against a party primarily responsible for drafting the agreement shall not be applicable to this Agreement; and

1.2.15

if any approvals are required to be obtained by any Party from any Governmental Authority under Applicable Laws for consummating any Transfers, issuances or other transactions in the manner contemplated in this Agreement, the time required for obtaining such approvals shall be excluded in calculating the time periods within which such Transfer(s), issuances and other transactions are to be completed (or such transactions are to be given effect to) under or pursuant to the provisions of this Agreement.

2.

INCORPORATION OF JVCO

2.1.

Promptly after the Execution Date and in any event no later than 180 (one hundred and eighty) days from the Execution Date, Ester shall undertake all steps that may be necessary and/or required for the purposes of incorporation of a private limited company (hereinafter referred to as the “JVCo”) under the terms of the Act and Loop shall provide all the relevant information and necessary co-operation to Ester in this regard.

2.2.

The name of the JVCo shall be Ester Loop Infinite Technologies Private Limited or such other name as approved by the RoC and acceptable to each of Ester and Loop.

2.3.

The authorised share capital of the JVCo shall be INR 10,00,00,000 (Indian Rupees Ten Crore), consisting of 1,00,00,000 (one crore) Equity Shares. The initial issued, subscribed and paid-up share capital of the JVCo, shall be INR 20,00,000 (Indian Rupees Twenty Lakh) (“Incorporation Capital”), consisting of 2,00,000 (two lakh) Equity Shares (“Incorporation Securities”) all of which shall be held by Ester and its nominee(s) at the time of incorporation of the JVCo.  It is hereby clarified that the cost incurred by Ester for incorporation of the JVCo, which for additional certainty excludes the amount representing the Incorporation Capital, will be reimbursed by JVCo to Ester.

2.4.

The registered office of the JVCo shall be situated in Gurugram, Haryana or such other place as may be mutually agreed amongst Ester and Loop.

2.5.

The first Directors of the JVCo shall be [***], [***], and such other person as may be nominated by Ester.

2.6.

Promptly after incorporation of the JVCo and receipt of the ‘Certificate of Incorporation’, the JVCo and Ester shall take all steps as may be required under Act, including the following:

2.6.1.

Appointing the statutory auditor of the JVCo, as mutually agreed amongst Ester and Loop;

2.6.2.

Authorizing the issuance of a mandate(s) for opening of new bank accounts and name of the proposed authorized signatory(ies) for operating the new bank accounts;

2.6.3.

Remittance of the Incorporation Capital by Ester and allotment of the Incorporation Securities by the JVCo;

2.6.4.

Making of necessary filings by the JVCo in relation to the allotment of the Incorporation Securities.

3.

ACTIONS PRIOR TO INITIAL CLOSING

3.1.

The issuance of the Initial Investment Securities by the JVCo and the subscription to the respective Initial Investment Securities by Loop and Ester shall be subject to the completion of the following to the satisfaction of the Shareholders in the manner provided in this Clause 3.1 (each a “Condition Precedent”, and collectively the “Conditions Precedent”):

3.1.1.

Corporate Authorizations

Each of Loop and Ester shall have received all necessary corporate and statutory authorizations/consents, if any, in connection with the transactions contemplated under this Agreement.

3.1.2.

Representations and Warranties

The representations and warranties of the Shareholders as specified in Clause 12 shall have been true and correct on the Execution Date and remained true and correct as of the Initial Closing Date.

3.1.3.

The JVCo shall provide (or procure the provision) to each Shareholder a valuation report from an independent and suitably qualified and experienced practising Indian chartered accountant and registered valuer as the case may be in accordance with Applicable Law, certifying the fair price of the Initial Investment Securities under FEMA, the Companies Act and the Income Tax Act, 1961.

3.1.4.

The Board shall have, and Ester shall have ensured that the Board shall have, passed the necessary resolutions in Agreed Form for the purposes of: (i) approving the issuance of the Initial Investment Securities to the Shareholders on a private placement basis; (ii) approving the private placement offer letter (in form PAS-4) to be issued to the Shareholders; and (iii) convening an extraordinary general meeting of the Shareholders of the JVCo at a shorter notice for approving the issuance of the Initial Investment Securities to the Shareholders and the private placement offer letter (in form PAS-4) to be issued to the Shareholders.

3.1.5.

The JVCo shall have, and Ester shall have ensured that the JVCo convenes a Board meeting and a shareholders’ meeting to approve the issuance of the Initial Investment Securities to the respective Shareholders.

3.1.6.

The JVCo shall have, and Ester shall have ensured that the JVCo shall have, filed the shareholders resolutions passed under Clause 3.1.5 with the ROC through Form MGT-14;.

3.1.7.

Once the actions set out in Clauses 3.1.3 to 3.1.6 are complete, the JVCo shall have, and Ester shall have ensured, that the JVCo issues the private placement offer letter (in Form PAS-4) to the Shareholders.

3.1.8.

All closing resolutions to be adopted by the JVCo pursuant to Clauses 3.1.3 to 3.1.5 shall be in Agreed Form.

3.1.9.

The amended articles of association of the JVCo reflecting the applicable provisions of this Agreement (the “Amended Articles”) shall be in Agreed Form.

3.1.10.

The JVCo shall have, and Ester shall have ensured that the JVCo shall have, delivered to Loop the Amended Articles duly filed with the ROC (with proof of approval of such form by ROC).

3.1.11.

Forms FC-GPR to be filed by the JVCo under FEMA pursuant to the allotment of the Loop Initial Investment Securities shall be in Agreed Form and acceptable for filing by the JVCo’s bankers.

3.1.12.

Loop shall have opened a demat account in India for subscribing to the Securities proposed to be allotted to it, including the Loop Initial Investment Securities.

3.2.

CP Confirmation

3.2.1.

The Parties shall act reasonably and in good faith and shall co‑operate and provide all reasonable assistance, information and documents required for satisfaction of the Conditions Precedent listed at Clause 3.1.

3.2.2.

Ester and the JVCo shall, within 2 (Two) Business Days from the date on which the last of the Conditions Precedent is fulfilled (except for: (i) approvals applicable to Loop under Clause 3.1.1 above, (ii) representations and warranties applicable to Loop under Clause 3.1.2 above; and (iii) actions to be completed by Loop under Clause 3.1.12 above), furnish a letter to Loop, in the form and manner as set out in SCHEDULE X (the “CP Satisfaction Notice”). Such CP Satisfaction Notice shall be accompanied with duly authenticated or certified copies (as the case may be) of all the necessary documents evidencing such fulfilment.

3.2.3.

In the event that Loop is not satisfied with the status of any Condition Precedent or there is a deficiency in the satisfaction of any Condition Precedent, Loop shall notify Ester and the JVCo of such dissatisfaction or defect (the “CP Dissatisfaction Notice”), within 10 (Ten) Business Days of the receipt of the CP Satisfaction Notice; provided that if in case the CP Dissatisfaction Notice is not received by Ester within the aforesaid period, it shall be deemed that Loop is satisfied with the completion of all of the Conditions Precedent and that the CP Satisfaction Notice would be deemed to have been accepted by Loop. Ester and the JVCo shall remedy or remove the cause of dissatisfaction or the defect within 2 (Two) Business Days from the date of receipt of the CP Dissatisfaction Notice or such other longer period as Ester and Loop may mutually agree. Immediately upon remedying such dissatisfaction, Ester and the JVCo shall jointly issue the CP Satisfaction Notice again to Loop, and this Clause 3.2 shall mutatis mutandis apply to such CP Satisfaction Notice.

3.2.4.

Each Shareholder shall submit copies of the relevant documents to the other Shareholder confirming satisfaction of the Conditions Precedent set out in Clause 3.1 required to be satisfied by such Shareholder Entity, to enable the Parties to proceed with the Initial Closing as contemplated in Clause 4.4.

4.5.1.

Each of the Shareholders shall remit their respective Initial Committed Amount to the JVCo by way of a wire transfer into the JVCo Bank Account and provide the JVCo with proof of remittance of their respective Initial Committed Amount.

4.5.2.

Immediately upon the receipt of the entire Initial Committed Amount as set out in Clause 4.5.1 above, the JVCo and Ester shall procure the Board to hold a meeting at which the following business shall be conducted:

(i)

Approve allotment of the Ester Initial Investment Securities and Loop Initial Investment Securities to Ester and  Loop, respectively, free from all Encumbrances, along with delivery of the original letter of allotment in respect of the Ester Initial Investment Securities and Loop Initial Investment Securities and authorizing the entry of the name of Ester and Loop as the holder of the Ester Initial Investment Securities and Loop Initial Investment Securities in the register of members of the JVCo;

(ii)

approve the appointment of [***], [***] and [***] as the directors nominated by Loop (“Loop Nominee Directors”);

(iii)

approve the execution of the Deed of Adherence by the JVCo to this Agreement;

(iv)

approve the adoption of the Business Plan;

(v)

approve the adoption of the Amended Articles incorporating the relevant provisions of this Agreement;

(vi)

approve the execution of the Ancillary Agreements;

(vii)

approve the change of the authorised signatories of the JVCo’s Bank Account(s), if required;

(viii)

direct the convening of an extra-ordinary general meeting of the JVCo at short notice, to pass the resolutions set forth in Clause 4.5.3 below; and

(ix)

take such other actions as may be required in relation to the above or as may be agreed amongst the Shareholders;

4.6.

Subsequent Capital Contribution

4.7.

Subsequent Closing

4.7.1.

In relation to each Subsequent Closing, the events and actions set out in Clause 4.5 shall, to the extent applicable, apply mutatis mutandis in respect of issuance and allotment of the corresponding number of Subsequent Investment Securities to each of Ester and Loop, against the relevant Ester Subsequent Committed Amount and Loop Subsequent Committed Amount, invested by them pursuant to relevant Capital Call Notice.

4.8.

Failure to invest the Committed Capital

4.8.1.

If either Ester or Loop fails to comply with its obligation to invest its respective portion of the Committed Capital in the manner contemplated in this Agreement (“Committed Capital Default”), then:

(i)

such Shareholder shall be deemed the “Committed Capital Defaulting Party”;

(ii)

the other Shareholder shall be deemed the “Committed Capital Non-Defaulting Party”; and

(iii)

the portion of the Committed Capital Defaulting Party’s Committed Capital amount not funded  shall be referred to as the “Committed Shortfall Amount”.

4.8.2.

Each Party agrees that:

(i)

a failure by either Shareholder to invest its portion of the Committed Capital will cause irreparable injury to the Committed Capital Non-Defaulting Party; and

(ii)

there is no adequate remedy at law or in equity in respect of such failure, and, as a consequence, that each and every covenant contained in this Clause 4.8 shall be enforceable against the Committed Capital Defaulting Party, and the Committed Capital Defaulting Party hereby waives and agrees not to assert any defence against an action for specific performance of such covenants except for a defence that no failure to invest its portion of the Committed Capital has occurred and is continuing.

4.8.3.

In the event that the Committed Capital Defaulting Party fails to invest the Committed Shortfall Amount, the Committed Capital Non-Defaulting Party shall have the right (but not an obligation) to either:

(i)

not remit its portion of the Committed Capital, where the Committed Capital Defaulting Party has not issued the Capital Call Acceptance Notice; or

(ii)

procure funding of the Committed Shortfall Amount, either by itself or through an Affiliate by subscription to same Securities as offered to the Committed Capital Defaulting Party (such securities being referred to as “Committed Capital Default Securities”);

4.8.4.

For a period of 1 (one) year commencing from the date of funding of the Committed Shortfall Amount by the Committed Capital Non-Defaulting Party under Clause 4.8.3(ii) above (herein after referred to as “Committed Capital Default Cure Period”), the Committed Capital Defaulting Party shall have the right (but not an obligation) to acquire from the Committed Capital Non-Defaulting Party, the Committed Capital Default Securities, at a price which shall be equivalent to the Fair Market Value at the relevant time provided that such price shall in no event be less than the amount invested by the Committed Capital Non-Defaulting Party to acquire the Committed Capital Default Securities. Further, it is clarified that the purchase price for the Committed Capital Securities shall be grossed up for any tax liabilities that may arise on Committed Capital Non-Defaulting Party. For avoidance of any doubt, it is clarified that the right under this Clause 4.8.4 can be exercised by a Shareholder only once during the tenure of the Agreement.

4.8.5.

Without prejudice to the above, upon  expiry of the Committed Capital Default Cure Period, if the Committed Capital Defaulting Party has not completed the acquisition of the Committed Capital Default Securities in accordance with Clause 4.8.4 above, (to the extent such right is available to the Committed Capital Defaulting Party and has not be exhausted by such Committed Capital Defaulting Party once in terms of Clause 4.8.4 above), then the Committed Capital Non-Defaulting Party shall have a right to appoint an additional director such that the Committed Capital Non-Defaulting Party has majority of Directors on the Board. Accordingly, the Parties shall be obligated to ensure that the Board is immediately reconstituted and the Charter Documents of the JVCo are forthwith amended. For the avoidance of doubt, during the Committed Capital Default Cure Period, the Shareholder’s rights (including, without limitation, any rights to nominate directors of the JVCo) shall remain unchanged as long as the variation in the number of Securities held by each Shareholder is attributable to the Committed Capital Default Securities.

4.9.

Each of Ester and Loop, shall be permitted to exercise its right to invest a Committed Shortfall Amount under Clause 4.8 through an Affiliate, subject to ensuring that: (a) the, Affiliate so nominated agrees and undertakes to be bound by the terms and conditions of this Agreement and executes an deed of adherence in the form and manner attached in SCHEDULE III (“Affiliate Deed of Adherence”); (b) the Shareholder (“Relevant Party”), who has designated an Affiliate, continues to be liable hereunder to the same extent as though the Relevant Party has invested the Committed Shortfall Amount; (c) the Relevant Party shall exercise all rights hereunder on behalf of such Affiliate; and (d) all notices required to be given under this Agreement shall be given to the Relevant Party. Where the Affiliate has invested in the JVCo under this Clause 4.9, the provisions of Clause 10.4 shall apply mutatis mutandis. Other than as permitted in this Clause 4, no Shareholder shall have the right to renounce its entitlement in favour of any Third Party.

5.

BUSINESS OF THE JVCO, NEW OPPORTUNITIES & EXCLUSIVITY

5.1.

The business of the JVCo shall be to:

(i)

the nature and background to the Business Opportunity, the investment proposition any related relevant information (including any investment timetable);

(ii)

the due diligence performed and/or to be performed;

(iii)

the initial and future capital requirements of the Business Opportunity; 

(iv)

the projected internal rate of return of the Business Opportunity;

(v)

any proposed external financing requirements;

(vi)

confirmation that the Business Opportunity can be undertaken solely through the internal accruals of the JVCo and/or through the third-party financing by the JVCo without any recourse to the Shareholders whether by way of guarantee, debt, or equity; and

(vii)

confirmation that the Business Opportunity will not have an adversarial impact on the Business of the JVCo, including the Referring Parties(ies) obligations under the respective Ancillary Agreements.

5.5.4.

While considering the Business Opportunity, the Board shall have the right to seek reasonable clarifications that it may deem fit from the Referring Party. In the event such clarifications are sought, the Referring Party shall make best endeavours to respond fairly and accurately as soon as practically possible.

5.5.5.

Where the Board has approved the pursuance of a Business Opportunity, the JVCo and the Shareholders shall undertake all reasonable endeavors to implement such Business Opportunity (with such modifications as may be approved by the Board) in a timely and efficient manner.

5.5.6.

If the Non-Referring Party disagrees on undertaking the Business Opportunity based on prevalent market conditions, the business case and commercial viability for such Business Opportunity or other commercially reasonable parameters, the JVCo shall appoint a third party consultant of global repute to undertake a feasibility study in relation to the Business Opportunity (“Third Party Business Study”). The Parties agree that the decision of the JVCo with regards to appointment of a third-party consultant identified above shall be binding on all Parties. In case the Third Party Business Study indicates that the Business Opportunity is in the best interests of the JVCo and the Shareholders, but: (i) Ester, does not wish to pursue such Business Opportunity, Loop shall independently i.e. without recourse to the JVCo or Ester, be permitted to implement such Business Opportunity in the Manufacturing Territory or elsewhere, in Loop’s sole discretion; or (ii) Loop, does not wish to pursue such Business Opportunity, then the JVCo shall, subject to Ester’s consent, undertake all reasonable endeavors, to implement such Business Opportunity in a timely and efficient manner.  If the Third Party Business Study concludes negatively in relation to the Business Opportunity, neither the JVCo, nor the Shareholders shall pursue or undertake such Business Opportunity.

5.6.

Non-Compete & Non-Solicit

5.6.1.

Each of Ester and Loop, undertake and warrant to the other and the JVCo that save as otherwise contemplated under this Agreement, for as long as they beneficially own directly or indirectly any Securities in the JVCo, and for a period of 2 (two) years from cessation thereof they shall not and shall use its reasonable endeavors to procure that their Affiliates shall not:

(i)

either Shareholder and/or its respective Affiliates from collectively acquiring an aggregate of not more than 5% (five percent) of the issued equity share capital of any Entity, the shares or other equity interests of which are listed on a nationally or an internationally recognized stock exchange;

(ii)

Loop or any of its Affiliates from continuing to conduct its business as currently being conducted as of the Execution Date and, for the avoidance of doubt, any future business of Loop and/or its Affiliates and/or any joint venture in which it may have an interest, so long as such business does not compete with the Business or any material part  of the Business in the Manufacturing Territory;

(iii)

Ester and its Affiliates from continuing to conduct its business as currently being conducted as of the Execution Date and for the avoidance of doubt any future business of Ester and/or its Affiliates (including expansion of Ester’s batch polymerization business) so long as such business is not the business of manufacturing of rDMT and rMEG;

(iv)

any Shareholder from hiring any person engaged by or with the JVCo or Ester Group/Loop Group, as the case may be, who responds to a general advertisement or recruiting campaign of any relevant Shareholder not specifically directed at employees, officers, representatives or agents of the JVCo or Ester Group/Loop Group, as the case may be; and

(v)

Loop or any of its Affiliates from  independently (i.e. without recourse to the JVCo or Ester), implementing such Business Opportunity in the Manufacturing Territory in accordance with the provisions of Clause 5.5.6 of this Agreement.

5.6.5.

Notwithstanding the provisions of this Clause 5.6, Loop shall not be, directly or indirectly, in breach of this Clause 5.6 in the event that it, directly or indirectly, offers for sale, sells, imports or distributes JV Products in the Manufacturing Territory, or licenses any third party to do so (which for the avoidance of doubt shall exclude the right/license to manufacture the JV Products in the Manufacturing Territory), (in each case, a “Foreign Sale”) if:

(i)

(a) there is no commercial production manufacturing facility built or operated by JVCo (a “JVCo Facility”) producing JV Products within the Manufacturing Territory, or (b) Ester or an affiliate thereof is unable to meet its obligations under any tolling agreement entered into with JVCo;

(ii)

once a JVCo Facility is operational in the Manufacturing Territory and able to supply JV Products to the market, the JVCo Facility will have priority for sales volumes in the Manufacturing Territory, unless the Shareholders agree to such Foreign Sale contracts to be performed, directly or indirectly, by Loop, and subject to Clause 5.6.5(iii), in the absence of such agreement between the Shareholders, Loop will no longer be authorized to conduct, directly or indirectly, any Foreign Sale in the Manufacturing Territory; or

(iii)

the JVCo Facilities within the Manufacturing Territory reach, in aggregate, 100% (one hundred percent) sales capacity under contract for the 12 (twelve) months period following the applicable annual review date (the “Threshold”), such sales capacity being reviewed annually.

For the avoidance of doubt, if the JVCo Facilities within the Manufacturing Territory sales volume fall under the Threshold, JVCo shall provide a 60 (sixty) Business Days written notice informing Loop of such event. After the expiration of the foregoing 60 (sixty) Business Days’ notice period, Loop will no longer be authorized to conduct, directly or indirectly, any Foreign Sale until the Threshold is met again or unless otherwise agreed upon between the Shareholders. In such event, the Shareholders shall negotiate in good faith to reduce any disruptions on any Loop’s clients or customers, which were purchasing JV Products from within the Manufacturing Territory pursuant to Foreign Sales.

6.

CONDUCT OF BUSINESS

6.1.

General

6.1.1.

The Shareholders agree that their respective rights and obligations in relation to the JVCo and the Business shall be regulated by this Agreement, Applicable Law and the Charter Documents. The Shareholders agree to comply with the provisions of this Agreement, the Applicable Laws and all provisions of the Charter Documents which relate to them.

6.1.2.

The Shareholders shall (so far as they lawfully can) ensure that the JVCo shall comply with all of its obligations under this Agreement, the Applicable Laws and the Charter Documents.

6.1.3.

The JVCo shall ensure, and the Shareholders shall exercise their vote in relation to the JVCo in the best interest of the JVCo and otherwise act within their power (so far as they lawfully can) to ensure, the following:

(i)

that the Project shall be built and constructed in accordance with and within the timelines stipulated under the Business Plan;

(ii)

that the Business shall be conducted in accordance with the Business Plan;

(iii)

that the JVCo shall (a) not act otherwise than in accordance with Applicable Laws and Charter Documents; (b) not act in a way which might reasonably be likely to expose any officer, Director or executive manager of the JVCo or any member of the relevant Shareholder Group or the Shareholders to any civil or criminal liability under Applicable Laws; (c) not act in any way contrary to the policies of the JVCo adopted by the Board; (d) perform its obligations under any agreements, contracts or arrangements that the JVCo (and each Shareholder Group entity) enters into from time to time; and (e) comply with all decisions taken at the Board meetings and the Shareholders.

6.2.

Business Plan

6.2.1.

On the Initial Closing Date, the Board of JVCo shall adopt the Business Plan. The JVCo shall conduct its Business as per the Business Plan.

6.2.2.

The CEO shall, not less than 90 (ninety) days before the end of each Financial Year, submit to the Board an updated draft of the then existing Business Plan for review and approval. If the Board fails to approve an update to Business Plan for any Financial Year as contemplated in this Clause 6.2, the approved elements of the draft annual Business Plan will apply and any relevant elements of the existing Business Plan including on the cost side and revenue side (as amended in order to reflect the previous’ Financial Year inflation rate, which for the purposes of this Agreement, shall be computed on the basis of the ‘All India Consumer Price Index (CPI)’ released by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), Government of India), and shall continue to apply to the extent of such disagreement until the new Business Plan is approved.

6.3.

Dividend Policy

6.3.1.

The Shareholders shall approve the distribution of dividends in accordance with the Act, and in a manner that is in the best interests of the JVCo and the Shareholders.

6.3.2.

The Parties shall cause the JVCo to make commercially reasonable efforts to distribute dividends to the reasonable extent subject to the Applicable Law and the capital requirements of the JVCo in line with the current and future Business Plans. To achieve this objective, the Board shall adopt a dividend policy through a resolution, formulated on sound commercial principles so as to both reward the Shareholders and retain earnings for future expansion of the JVCo. Such dividend policy shall also be approved by a resolution of the Shareholders of the JVCo in accordance with the provisions of Clause 9.5. Each of Ester and Loop shall endeavour to cause the JVCo to draft a dividend policy and present the same for approval of the Board and Shareholders within 90 (ninety) days of the Initial Closing Date.

6.4.

License, Marketing and other Services Agreement

6.4.1.

On the Initial Closing Date, the JVCo shall enter into the Loop Technology License Agreement with Loop to inter alia procure an exclusive license to use and exploit the Loop Technology and all associated intellectual property rights in the Manufacturing Territory including the know-how with respect to construction and operation of the Project which license shall be valid in perpetuity at a royalty rate as set out in the Loop Technology License Agreemment (“Royalty”). Any Tax to be incurred on receipt of Royalty will be borne solely by Loop.

6.4.2.

Loop shall have the sole right to market and sell the JV Products in accordance with the Loop Marketing Agreement which shall be executed on the Initial Closing Date and shall amongst other things set out in detail the rights, responsibilities and obligations of the JVCo and Loop in relation to the sales and marketing of the JV Products. The service fee payable by the JVCo to Loop for the Loop Marketing Agreement shall be as set out in the Loop Marketing Agreement. Any Tax on such service fee will be borne by Loop.

6.4.3.

On the Initial Closing Date, the JVCo shall execute the Ester Services Agreement for provisions of services set out therein including assisting the JVCo in relation to the Project like obtaining permits and registrations, identifying and purchasing land parcel, assisting the JVCo with obtaining funding for the Project Cost in terms of Clause 4.2 above. The Parties agree that the aggregate service fee payable by the JVCo to Ester under the Ester Services Agreement for a financial year shall be as set out in the Ester Services Agreement.

6.5.

Financial and Other Information

6.5.1.

At all times during the term of this Agreement, and subject to Applicable Law, the JVCo shall:

(i)

supply to Ester and Loop, in English, with respect to the JVCo:

(a)

the financial statements and any other operating information, as may be requested from time to time (including, but not limited to, profitability and returns statement, a balance sheet and comparisons of actual expenditure to budget) and un-audited quarterly financial statements and information, within 45 (forty five) days of the end of each fiscal quarter, prepared in accordance with the generally accepted accounting standards and principles;

(b)

the audited financial statements within 60 (sixty) days after the end of the relevant financial year end, together with notes thereto, in accordance with the generally accepted accounting standards and principles, along-with the reports by auditors or Directors in respect of such statements;

(c)

an annual budget within 30 (thirty) days prior to the end of each financial year;

(d)

the Board’s compliance certificates in respect of the reports, if any, filed by the JVCo with any regulatory authority or Governmental agency or any other Governmental Authority;

(e)

any internal and external audit reports; and

(f)

information with respect to the commencement of any material claim, litigation or proceedings within 10 (ten) days of the request;

(g)

provide to Ester and Loop within 30 (thirty) days, such other additional information, as may be reasonably requested by Ester and Loop, from time to time.

6.6.

Accounting Principles

The JVCo shall prepare its accounts and other financial statements and the quarterly financial statements in accordance with the applicable generally accepted accounting standards and principles in India as well as  generally accepted accounting standards and principles in the United States of America.

6.7.

Accounting Year

All financial records of the JVCo shall be maintained in the English language and the accounting year of the JVCo shall begin on 1^st April each year and end on 31^st March of the following year.

6.8.

Auditors and Advisors

The statutory auditors for the JVCo shall be such firm of chartered accountants which is appointed by the Board from time to time in accordance with Applicable Law.

6.9.

Books and Records

The JVCo shall at all times maintain proper books of account and records, which shall contain accurate and complete records of all transactions, receipts, expenses, assets and liabilities of the JVCo. Such books and records shall be open for inspection by any member of the Board.

6.10.

Inspection and Information

Each of Ester and Loop may examine the books of accounts, records and accounts to be kept by the JVCo, at their respective costs and during normal business hours upon giving a prior written notice of 2 (two) Business Days to the JVCo. Such an inspection may be conducted through an employee of, or consultant or advisor to Ester or Loop, as the case may be. 

6.11.

Other Covenants

6.11.1.

Related Party Transactions: The Parties hereby agree and undertake that all agreements and arrangements to be entered and/ or executed by the JVCo, and/ or Ester, and/ or Loop, with any Person in connection with the JVCo, shall be entered into subject to the unanimous approval of the Shareholders and in compliance with the Applicable Law. The Parties recognize that the related party agreements expressly enumerated below, will be entered into by the JVCo and each of the Parties shall exercise all necessary powers and authority available with them to cause the JVCo to duly execute the said agreements: (i) Loop License Agreement; (ii) the Loop Marketing Agreement; and (iii) Ester Services Agreement. Further, the JVCo and Ester shall enter into a tolling agreement in relation to the Ester Tolling Arrangement on such terms as may be agreed amongst the Parties.

6.11.2.

Branding: The Parties have agreed that the JV Products will be sold under Loop’s brand or any other brand as suggested or recommended by Loop in accordance with the provisions of the Loop License Agreement; provided that the name of the JVCo shall appear as the manufacturer of the JV Products on product bags, containers, or other bulk packaging materials.

6.11.3.

Project Scope Enlargement:  The Parties agree that the Parties may enlarge the scope of the Project, subject to mutual agreement in writing.

6.11.4.

Taxes:  The JVCo must pay all Taxes due and payable by it, unless:

(i)

payment of those Taxes is being contested in good faith; and

(ii)

adequate reserves are being maintained by the JVCo for the payment and discharge of those Taxes.

6.12.

Utilization of Cash Flows

6.12.1.

The Parties agree that the cash flow of the JVCo shall be utilized for the following purposes:

(i)

for the ordinary business of the JVCo;

(ii)

for payment of statutory dues including applicable Taxes;

(iii)

for meeting the JVCo’s expenses, including but not limited to those in connection with construction, development and administration of the Project, and establishment cost;

(iv)

for payment of interest and instalment on the Third-Party Debt and working capital loans and repayment thereof;

(v)

For future capex plan (maintenance and expansion); and/or

(vi)

Any Business Opportunity, subject to the provisions of Clause 5.5 above.

7.

FUTURE FUNDING

7.1.

At any time after infusion of the Committed Capital into the JVCo, if the Board in exercise of its reasonable judgment, determines that the JVCo requires financing including to meet its working capital requirements (including, without limitation, the requirements of the Business Plan) excluding any Project Cost Overruns (“Future Funding”), then the manner and quantum of such Future Funding shall be determined based on good faith discussions amongst Shareholders and the Shareholders shall cause such Future Funding through one or a combination of the following or such other method as may be agreed amongst the Shareholders:

7.1.1.

loans from Financial Institutions, if and to the extent, in the determination of the Board, the terms of such borrowings are fair and reasonable, in light of then existing market conditions;

7.1.2.

contributions from Ester and /or Loop, by way of subscription to such types of Securities, as permissible under Applicable Law such that each of Ester and Loop continue to hold the same proportion of Equity Shares, as held by them immediately prior to the Future Funding. The procedure at Clauses 4.6 and 4.8 shall apply mutatis mutandis with respect to such Future Funding, if applicable.

7.2.

To the extent permitted under Applicable Law, each of Ester and Loop shall be permitted to exercise its rights to invest under this Clause 7 through an Affiliate and if such rights are exercised then the provision of Clause 10.4 shall apply mutatis mutandis.

7.3.

Other than as permitted in this Clause 7, no Shareholder shall have the right to renounce its entitlement in favour of any Third Party.

8.

CORPORATE GOVERNANCE OF THE JVCO

8.1.

Management of the JVCo with the Board of Directors

Subject to the rights of the Parties contained in the Charter Documents and this Agreement, the management of the JVCo shall rest with the Board, and the Board shall be responsible for the overall direction and supervision of the management of the JVCo. The officers of the JVCo shall have the authority and responsibilities delegated by the Board, consistent with the Charter Documents and this Agreement.

8.2.

Number of Directors

8.2.1.

Subject to Clause 18.17 (Fall Away of Right) and Clause 4.8.5, the Board shall comprise of 6 (six) Directors, one half of which shall be Ester Directors and the other half shall be Loop Directors. Further, subject to the finalization of the Board, the Parties may mutually agree to increase the number of Directors in future, as and when required by the JVCo.

8.2.2.

The Directors shall not be liable to retire by rotation.

8.3.

Appointment and Removal of Directors

8.3.1.

The Parties agree to use their respective voting power in the JVCo to ensure that the Board is constituted by persons in the manner set out in this Agreement and in accordance with the recommendations made by the Parties pursuant to Clause 8.2 above.

8.3.2.

Except where a Director is required by Applicable Law or the Charter Documents to vacate office, no Director shall be removed, during the term for which such Director was elected, without the consent of the Shareholder which recommended the appointment of such Director on the Board. Notwithstanding the foregoing, a Shareholder may ask for removal, substitution or recall for any reason, of any of the Directors recommended by such Shareholder. Each Shareholder agrees to co-operate with the other Shareholder in convening a meeting of the Shareholders of the JVCo to effect such removal and to vote in favor thereof, if so required.

8.4.

Vacancy

In the event a vacancy shall occur for any reason on the Board, each Shareholder agrees to cause the JVCo to immediately convene a meeting of the Board and endeavor to cause its representatives to exercise their voting rights so as to appoint a replacement to hold office until the date of the next Annual General Meeting. The failure to do so shall not constitute a waiver of such right nor shall it prevent the exercise of such right prospectively. Such vacancy shall be filled by an individual, who shall be recommended for appointment by the Shareholder that recommended the appointment of the Person to be replaced. The new appointee shall hold office up to the date on which the Director in whose place he is appointed would have held office, if such Director had not been vacated and the new appointee shall be eligible for reappointment on the expiry of his office.

8.5.

Alternate Directors

In the event of any Director (“Original Director”) being likely to be absent for a period of at least 3 (three) months from the state in which meetings of the Board are ordinarily held, the Board may at a meeting or by way of a circular resolution appoint an alternate Director for such Original Director in the manner specified herein. The Original Director in whose place such alternate Director is to be appointed or the Shareholder who appoints such Original Director shall designate the Person to be appointed as an alternate Director to the Board and the Board shall only appoint such person as the alternate Director.

8.6.

Appointment of Chairman

8.6.1.

The Board shall have a non-executive chairman (the “Chairman”). The Chairman shall not have a casting or second vote.

8.6.2.

The first Chairman of the JVCo shall be nominated from amongst the Ester Directors and thereafter be appointed on a rotational basis between Loop and Ester. In the event that the Chairman is absent in a meeting of the Board, the Board shall elect 1 (one) of the Directors present at such meeting to be the Chairman of the meeting.

8.6.3.

The term of office of the Chairman shall be 2 (two) years from the date of his/ her appointment.

8.7.

Committees of the Board 

8.7.1.

The Board shall have the power to constitute, if necessary, committees or sub-committees of the Board and delegate such of the Board’s powers to the aforesaid committees as the Board may deem fit.

8.7.2.

Any committee or sub-committee shall consist of the same proportion of Ester and Loop representatives as the Board at any given time, except if waived by Ester/Loop (as the case may be).

8.7.3.

Unless agreed in writing by the Parties or otherwise permitted under this Agreement, all provisions of this Agreement relating to the Board and its meetings shall be applicable to the committees mentioned in this Clause 8.7. Any permanent invitee to such committees or sub-committees, if any, shall be determined by the Board of Directors.

8.8. 

Proceedings of the Board

8.8.1.

Meetings of the Board:

(i)

A meeting of the Board of Directors shall be held at least once in every quarter to transact business and at least 4 (four) such meetings shall be held in every calendar year. The gap between any of the two meetings shall not be more than 90 (ninety) days, unless otherwise agreed amongst the Shareholders. The Directors may adjourn or otherwise regulate their meetings and proceedings as they may deem fit. The meetings of the Board shall be called by the Company Secretary of the JVCo or by the Chairman. Any member of the Board may request, in writing, the secretary of the JVCo or the Chairman to call a meeting of the Board, and upon being so requested the Company Secretary of the JVCo or the Chairman shall call a meeting of the Board. If such meeting of the Board is not called within 5 (five) days of the written request, such member of the Board, who has made the written request shall have the right to call a meeting of the Board. The Directors may attend a Board meeting through telephone or any other means of communication, including, but not limited to videoconferencing, as may be allowed under the Companies Act.

(ii)

The Board shall only transact the business that is set out in the agenda accompanying the notice of the meeting of the Board of Directors that is served on the Directors, unless such other matter/ business (which is not contained in the agenda accompanying the notice that is served on the Directors) is agreed to be taken up in the same meeting, in writing by at least 1 (one) Ester Director and 1 (one) Loop Director.

(iii)

The JVCo shall not directly or indirectly resolve, consider or take any action in relation to any Reserved Matter at a Board Meeting (including an adjourned Board Meeting), a meeting of any committee of any Directors or by way of a circular resolution unless the relevant Reserved Matter has received the affirmative written consent of Ester and Loop in accordance with Clause 9.5. 

8.8.2.

Agenda and Place of Meetings:

At least 10 (ten) Business Days’ notice of any meeting of the Board (such notice being also deliverable through e-mail transmission) shall be given to each of the members of the Board. Any such notice shall contain an agenda identifying in reasonable detail the matters to be discussed at the meeting, and shall be accompanied by relevant papers or documents with respect to the items to be discussed at the meeting. Notwithstanding the above, the Parties agree that a meeting of the Board may be convened at shorter notice subject to at least 1 (one), Ester Director and 1 (one) Loop Director approving the proposal to convene such meeting at short notice. In case, a Board meeting is convened at shorter notice, the JVCo shall be entitled to present the agenda and accompanying papers in such form and manner as may be expedient in the circumstances.

8.8.3.

Quorum – Board Meeting:

(i)

Subject to this Clause 8.8.3, no quorum for a meeting of the Board shall be validly constituted unless all of the Ester Directors and all of the Loop Directors are present or represented by his/ her alternate at any meeting of the Board.

(ii)

In the event any Ester Director or an Loop Director, or their respective alternate, is unable to attend Board’s meeting, the Board meeting shall automatically stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day, which is not a public holiday, at the same time and place, for the consideration of items on the agenda of the original meeting.

(iii)

In the event, any Ester Director or Loop Director, or their respective alternates, is/ are absent at such adjourned meeting the Directors present (being at least 2 (two) individuals) shall constitute a valid quorum and the Board may proceed to pass a resolution on any matter on the agenda to be considered at such Board meeting, subject to such matter not being a Reserved Matter.

8.8.4.

Directors Expenses and Remuneration:

The Directors shall not be entitled to sitting fees or any other remuneration for attending meetings of the Board and/or meetings of the committee thereof, unless otherwise determined by the Board. The JVCo shall be liable for and bear all the other out of pocket costs and expenses, including travel and hotel, incurred by the Ester Directors and the Loop Directors, as the case may be, for attending any meeting of the Board and/or meetings of the committee thereof.

8.9.

Board Voting

The decisions by the Board shall be decided by a simple majority vote other than in relation to a Reserved Matter. Each Director shall have 1 (one) vote.

8.10.

Resolutions by Circulation

Save as required by Applicable Law, a resolution by circulation, or a resolution passed at a video/ audio conference, which has been confirmed subsequently as a resolution by circulation, shall be as valid and effectual as a resolution duly passed at a meeting of the Directors called and held in accordance with the provisions of the Applicable Law and the Charter Documents, provided it has been circulated in draft form, together with the relevant papers, if any, to all the Directors and has been approved by the affirmative vote of a majority of the Directors, provided that if such matter is a Reserved Matter, the affirmative consent of at least 1 (one) Loop Director and 1 (one) Ester Director shall be required.

8.11.

Minutes

8.11.1.

The draft minutes of each Board meeting shall be circulated to all the Directors within 10 (ten) days of the Board meeting.

8.11.2.

The minutes of a meeting shall be discussed and approved by the Directors including an affirmative vote of at least 1 (one) Ester Director and 1 (one) Loop Director, at the succeeding Board meeting.

8.11.3.

The minutes of each meeting of the Board shall be valid upon signature by the Chairman of the meeting.

8.12.

Appointment of CEO, CFO, Company Secretary and Directors’ & Officers’ Insurance

8.12.1.

The Parties agree that the Chief Executive Officer (“CEO”) of the JVCo shall be nominated by the Shareholders in accordance with Clause 9.5. The CEO shall have the powers and responsibilities, as the Board may, from time to time, delegate to the CEO. Unless otherwise agreed, the CEO shall not be a director of the JVCo.

8.12.2.

The Parties agree that the Chief Financial Officer (“CFO”) of the JVCo shall be nominated by the Shareholders in accordance with Clause 9.5. The CFO shall have the powers and responsibilities, as the Board may, from time to time, delegate to the CFO.

8.12.3.

The JVCo shall obtain and maintain a directors’ and officers’ liability insurance with commercially reasonable coverage, which shall be procured by the JVCo within 60 (sixty) Business Days of the Initial Closing Date.

8.12.4.

The Charter Documents shall at all times specifically provide for indemnification for the Directors of the JVCo.

8.12.5.

One of the Directors shall be the ‘occupier’ under Applicable Law for the purposes of each factory owned and operated by the JVCo. The initial ‘occupier’ shall be an Ester Director and subject to Applicable Law, shall be alternated between an Ester Director and a Loop Director every 3 (three) years from the date of obtaining the necessary licenses for each such factory.

8.13.

Custody of Documents

The JVCo shall keep custody of all the original title documents and approvals relating to Project, unless the same is deposited with the lender(s) to the JVCo or its trustee(s) in future.

9.

SHAREHOLDERS’ MEETINGS

9.1.

Meetings

9.1.1.

Meetings of the Shareholders shall be in accordance with the Applicable Law and the Charter Documents, and if not provided therein, as otherwise determined pursuant to Applicable Law, and shall be held at the registered office of the JVCo or at the place designated in the notice issued by the JVCo to the Shareholders.

9.1.2.

The JVCo shall not directly or indirectly resolve, consider or take any action in relation to any Reserved Matter at a Shareholders meeting (including an adjourned Annual General Meeting), unless the relevant Reserved Matter has received the affirmative written consent of Ester and the Loop in accordance with Clause 9.5.

9.1.3.

Subject to Applicable Law and the provision of proper facilities by the JVCo, the Shareholders, representatives of the Shareholders or proxies of the Shareholders, as the case may be, may participate in the relevant general meetings of the JVCo via electronic mode or such other contemporaneous communication as permitted under Applicable Law. The Chairman (appointed in accordance with this Agreement) and the Company Secretary (if appointed) shall be responsible for the matters specified under Applicable Law in relation to the conduct of the general meeting of the JVCo through video-conference.

9.2.

Quorum – Shareholders’ Meeting

The quorum for a meeting of the Shareholders shall be in accordance with the Applicable Law, provided that no meeting of the Shareholders shall be validly quorate unless 1 (one) authorized representative of each of Ester and Loop is present at such meeting of the Shareholders, and in absence of the quorum, the Shareholders’ meeting shall automatically stand adjourned till the same day in the next week, at the same time and place, or to such other day and at such other time and place, as the Board may determine, for the consideration of items on the agenda of the original meeting.

9.3.

Chairman

The Chairman of the Board shall be the chairman of meetings of the Shareholders. The Chairman shall not have a casting or second vote.

9.4.

Shareholder Resolutions

9.4.1.

A resolution of the Shareholders, considered at a meeting of the Shareholders, either by show of hands or by way of a vote on a secret poll, shall be adopted upon receipt of the requisite majority under Applicable Law.

9.4.2.

Each Shareholder agrees to exercise its voting rights as a Shareholder to fully and effectually implement the spirit, intent and specific provisions of this Agreement. The Shareholders expressly agree and undertake to cooperate with each other in the management, administration and affairs of the JVCo and the operation of the business and at all times to exercise their voting rights, or to cause their separate representatives or proxies, who may exercise such voting rights on their behalf, at any Shareholder meeting hereunder in a manner that shall give effect to and comply with the provisions of this Agreement. Each Shareholder (as applicable) shall endeavour to ensure that every Director or representative of such Shareholder (as the case may be), while serving as Director or representative shall, in the performance of such duties, exercise good faith and the standard of diligence, skill and care required under Applicable Law.

9.4.3.

In addition to its obligations under Clause 9.4.2, each Shareholder shall exercise its rights as a Shareholder in the JVCo in such manner as could reasonably be expected to prevent, and shall not exercise those rights in any manner which could reasonably be expected to result in a breach by the JVCo of any of its obligations under this Agreement or any restrictions imposed upon it under the Charter Documents (whether or not enforceable against the JVCo itself).

9.5.

Reserved Matters

9.5.1.

Notwithstanding anything contained elsewhere in this Agreement and subject to Applicable Law, the Parties agree that no decision shall be made and no action shall be taken with respect to JVCo or any of its subsidiaries, whether in general meetings, meetings of the Board or otherwise, in relation to:

(i)

any of the matters set forth in PART A OF SCHEDULE II, without the written consent of each of the Shareholders holding at least 50% (fifty percent) of the total share capital of the JVCo; and 

(ii)

any of the matters set forth in PART B OF SCHEDULE II, without the written consent of each of the Shareholders holding at least 26% (twenty six percent) of the total share capital of the JVCo.

10.

TRANSFER AND EXIT

10.1.

Restrictions on Transfer

10.1.1.

Subject to Clause 10.2 below, Ester covenants and agrees with Loop, that it shall not (directly or indirectly) Transfer, any of the Securities or voting interests therein owned by it to any Person or create any Encumbrance over the Securities owned by Ester, except as expressly required or permitted under Clauses 10.4 and 10.5 below.

10.1.2.

Subject to Clause 10.2, Loop covenant and agrees with Ester that Loop shall not (directly or indirectly) Transfer, any of the Securities or voting interests therein owned by it to any Person or create any Encumbrance over the Securities owned by Loop, except as expressly required or permitted under Clauses 10.4 and 10.5 below.

10.1.3.

The Transfer of any of the Securities by Ester and Loop in accordance with the terms of this Agreement shall only be in compliance with Applicable Law.

10.1.4.

Any Transfer of Securities by a Shareholder, which is not in compliance with this Clause 10, shall be considered to be a material breach of this Agreement by such Shareholder and shall be void ab initio. The JVCo shall not record or register any such attempted Transfer/agreement or arrangement to Transfer on its books, and shall not recognize and shall reject, any equitable or other claim to, or any interest in, such Securities which have been attempted to be Transferred in any manner otherwise than in accordance with the terms of this Agreement. The Parties agree that all such Transfers in violation of this Agreement shall be deemed to be a breach of this Agreement and shall form “sufficient cause” within the meaning of the Act for the Board to refuse the registration of such transfer by the JVCo.

10.2.

Lock in Period

The Parties acknowledge and agree that, subject to Applicable Law, each of Ester and Loop shall not Transfer or attempt to Transfer any of the Securities held by them until a period of 5 (five) years from the Commercialization Date (hereinafter be referred to as the “Lock-In Period”).

10.3.

Procedures with respect to Transfer of Securities

Any Transfer or attempted Transfer of Securities made by any Shareholder in violation of this Agreement shall be null and void. Neither the Board nor the Parties shall approve or ratify any Transfer of Securities made in contravention of this Agreement and the JVCo shall be caused not to record any such Transfer on the statutory registers maintained by the JVCo in respect of the Securities and shall reject and reverse such erroneous Transfer made or attempted, suo moto, and the Board may institute proceedings for this purpose, if required by Applicable Law.

10.4.

Transfers to Affiliates

10.4.1.

Notwithstanding any other provision of this Clause 10 (except this Clause 10.4) subject to the provisions of this Agreement, each of Ester and Loop may, at any time, and in compliance with the Applicable Law, Transfer all or any of the Securities respectively owned by it, to one or more of their respective Affiliates, provided that such Affiliate, prior to such Securities being Transferred in its (the Affiliate’s) name, agrees and undertakes to be bound by the terms and conditions of this Agreement and executes an Affiliate Deed of Adherence in the form and manner attached in SCHEDULE III. Such Transfer of Securities shall be permitted subject to the condition that the relevant Shareholder shall, at all times, be responsible and liable to discharge all its obligations to the other Shareholder and JVCo and subject to compliance with this Agreement.

10.4.2.

If a Person holding Securities in accordance with the provisions of this Agreement by virtue of being an Affiliate of Ester or Loop (Ester and Loop in such context being hereinafter called the “Parent Party”), ceases to be such an Affiliate, the Parent Party shall, prior to the Affiliate ceasing to be an Affiliate of the Parent Party, acquire or cause any of its other Affiliates to acquire, full and unconditional title in and to all of the Securities then held by such Person ceasing to qualify as an Affiliate. Further, the relevant Parent Party shall cause such of its other respective Affiliate to comply with the terms and conditions of this Agreement to the extent applicable.

10.4.3.

It is hereby clarified that, each of Ester and its Affiliates and Loop and its Affiliates shall act jointly as a block with respect to all rights, covenants or obligations of each of Ester and its Affiliates and Loop and its Affiliates, that is/ are exercised, made or undertaken under this Agreement under the Applicable Law and there shall be no duplication of rights among the Affiliates of Ester and Loop.

10.5.

Right of First Offer

10.6.

Tag Along Right

10.6.1.

If: (i) the Non-Selling Shareholder does not exercise its Shareholder ROFO (pursuant to Clause 10.5), or (ii) the Selling Shareholder does not accept the Shareholder ROFO Offer Price and the Shareholder ROFO Offer Terms from the Non-Selling Shareholder within the Shareholder ROFO Acceptance Period, then the Non-Selling Shareholder shall have the right (the “Tag‑Along Sale Right”), but not the obligation, to participate in the proposed Transfer of Shares to the Third Party Transferee by selling to the proposed Third Party Transferee, at the Third Party Price and Third Party Terms, such proportion of Securities held by the Non-Selling Shareholder which shall be equal to or less than the proportion of the Shareholder Shares ROFO Shares and the total Securities held by the Selling Shareholder (“Tag-Along Shares”).

10.6.2.

The Tag-Along Sale Right may be exercised by the Non-Selling Shareholder by delivering a written notice to the Selling Shareholder (“Tag-Along Sale Notice”) no later than the expiration of the Shareholder ROFO Transfer Notice Period (in case the Shareholder ROFO is not excised by the Non-Selling Shareholder) or 30 (thirty) days of the expiry of the Shareholder ROFO Acceptance Period (in case the Shareholder ROFO is exercised by the Non-Selling Shareholder) as the case may be.

10.6.3.

If the Non-Selling exercises its Tag-Along Sale Right pursuant to Clauses 10.6.1 and 10.6.2 the Transfer of the Shares by the Selling Shareholder to the proposed Third Party Transferee shall be conditional upon such proposed Third Party Transferee acquiring the Tag-Along Shares that the Non-Selling Shareholder wishes to sell (“Tag-Along Sale Shares”) on the same price and terms as the Shareholder ROFO Shares, prior to or concurrently with the acquisition of any Shareholder ROFO Shares of the Selling Shareholder.

10.6.4.

Where the Shareholder ROFO Shares and Tag-Along Sale Shares comprise of all of the Securities held by the Shareholders, the Third-Party Transferee shall be required to acquire or appropriately substitute all debt owed by the JVCo to the Shareholders, from the Shareholders, along with the Shareholder ROFO Shares and the Tag-Along Shares and replacing all guarantees and/or other securities that may have been issued/granted by the Shareholders in relation to the JVCo, subject to Applicable Law.

10.7.

Initial Public Offering

10.7.1.

The Parties may use commercially reasonable efforts to initiate and complete an initial public offering of the JVCo (“IPO”) within 24 (twenty-four) months from the Commercialization Date. The IPO shall be conducted such that:

(i)

The Equity Shares are listed or quoted on any one of the Recognized Stock Exchange;

(ii)

The proportion of primary and secondary Equity Shares being offered are approved by the Board of the JVCo. Each Shareholder shall be entitled, at their sole and absolute discretion, to sell the Equity Shares held by them in an IPO up to their pro rata entitlement based on the Shareholders inter se shareholding in the JVCo; and

(iii)

The IPO complies with all Applicable Laws and the Shareholders shall on a commercially reasonable basis comply with all requirements in relation to the IPO.

10.8.

Put and Call Option  

10.8.1.

Following the Initial Closing Date, in the event there is a change in Control of either of Ester or Loop (“CoC Party”; accordingly, the other Party shall be referred to as the Non-CoC Party for the purposes of this Clause 10.8), the following provisions shall apply:

(i)

If Loop is the CoC Party, Ester shall have an option to call upon Loop to purchase all the Securities (“Put Option Right”) held by Ester (“Put Shares”) at a Fair Market Value of the Securities (“Put Option Exercise Price”).

(ii)

If Ester is the CoC Party, Loop shall have an option to call upon Ester to sell all the Securities (“Call Option Right”) held by Ester (“Call Shares”) to Loop at a Fair Market Value of the Securities (“Call Option Exercise Price”).

11.

DEADLOCK

11.1.

For the purpose of this Clause “Deadlock” shall mean:

11.1.1.

the failure to pass any resolution or resolve any matter which is required to be passed or resolved by the Board or the Shareholders in a general meeting and which, if not passed or resolved, is likely to materially and adversely affect the continued existence or financial viability of a material portion of the business of the JVCo;

11.1.2.

the failure to pass any resolution or to resolve any matter which is required to be passed or resolved by the Board or by the Shareholders in a general meeting and which, if not passed or resolved, will render it extremely difficult or impossible to continue carrying on the material business of the JVCo; or

11.1.3.

an irretrievable breakdown of the relationship between the Shareholders that is materially undermining the day-to-day operations of the JVCo.

11.2.

In the event any Deadlock arises, Ester or Loop (as the case may be) may provide a written notice to the other and the Board describing the Deadlock (“Deadlock Notice”). Such Deadlock shall thereafter be escalated for resolution and mediation to the Chairman & Managing Director of Ester and the CEO of Loop (“Senior Executive Panel”). The said mediation shall take place for a period of 12 (twelve) Business Days or such other period as may be agreed by the Senior Executive Panel from the date of referral to the Senior Executive Panel (“Internal Mediation Period”) and the members of the Senior Executive Panel shall meet at-least once in every 4 (four) Business Days to resolve such Deadlock during the Senior Executive Mediation Period. Any resolution to a Deadlock shall be in writing and shall be implemented in terms of the resolution of the Deadlock.

11.3.

In the event that the Deadlock is not resolved within the Internal Mediation Period, the Deadlock may be referred by either Shareholder to the Singapore International Mediation Centre for mediation in accordance with the Singapore International Mediation Centre Mediation Rules for the time being in force. If the Deadlock cannot be resolved through such mediation within 30 (thirty) calendar days after commencement of mediation at the Singapore International Mediation Centre, or within such extended period as may be agreed by the parties (“SIMC Mediation Period”), either Shareholder may submit the Deadlock for arbitration in accordance with Clause 17 provided that: (i) the provisions of this Agreement shall continue to apply as if no Deadlock has taken place, (ii) the JVCo shall continue to comply with all Applicable Laws, irrespective of the Deadlock, within the timelines prescribed thereunder.

12.

REPRESENTATIONS AND WARRANTIES

12.1.

Each Party represents and warrants to the other Parties that:

12.1.1

it has full power and authority to enter into this Agreement and to perform its obligations under this Agreement;

12.1.2

it is duly incorporated under the Applicable Laws of its incorporation, is validly existing, and is duly registered and authorised to do and conduct its business;

12.1.3

the execution and delivery of this Agreement and the performance by it of its obligations under this Agreement has been duly and validly authorised by all necessary actions on its part;

12.1.4

it has obtained all applicable approvals of the Governmental Authorities and any third-party approvals required to empower it to: (i) enter into this Agreement; and (ii) perform its obligations under this Agreement;

12.1.5

the execution and delivery of this Agreement, and the consummation of the transactions contemplated hereby, and the fulfilment of and compliance with the terms and conditions hereof, do not: (i) violate any Applicable Laws, judicial or administrative order, award, judgment or decree applicable to such Party; or (ii) conflict with the terms, conditions or provisions of its constitution documents or any other contractual obligations or regulations;

12.1.6

there has been no proceeding, order, injunction, or other action issued, pending or threatened in writing, which prohibits, prevents, restrains, restricts, delays, makes illegal or otherwise interferes with the consummation of any of the transaction hereunder;

12.1.7

there are no pending claims, investigations, injunctions, proceedings or any other actions before any court, tribunal or Governmental Authority to which it is a party, or which prohibits, prevents, restrains, restricts, delays, makes illegal or otherwise interferes with the consummation of the transactions hereunder;

12.1.8

this Agreement constitutes the valid and legally binding obligations of the Party and shall be enforceable against it in accordance with its terms; and

12.1.9

it is not subject to any Insolvency Event.

13.6.1.

Direct Claims: An Indemnified Party shall have the liberty to act against the Indemnifying Party and/or may release in whole or in part the liability of the Indemnifying Party under this Agreement, or grant any time, or any other indulgence to the Indemnifying Party without affecting the liability of the Indemnifying Party.

13.6.2.

Third Party Claims:

(i)

Upon issuance of the notice of commencement of any Third Party Claim, the Indemnified Party shall, at the request of the Indemnifying Party, make available to the Indemnifying Party a copy of the documents/ information/ correspondence available with the Indemnified Party relating to and substantiating any such Third Party Claim. The Indemnifying Party shall, with prior written notice to the Indemnified Party (“Indemnifying Party Notice”), be entitled to undertake, conduct and control the defense proceedings of such Third Party Claim, with counsel of its (Indemnifying Party’s) choice, so long as the defense proceedings are undertaken, conducted and controlled in a reasonable manner and in good faith.

(ii)

If, the Indemnifying Party elects to undertake, conduct and control the defense proceedings in connection with a Third Party Claim (as provided for under Clause 13.6.2(i) above):

(a)

the Indemnifying Party shall remain responsible for any and all Losses that the Indemnified Party may suffer resulting from or arising out of or relating to or in the nature of or caused by the Third Party Claim to the fullest extent and as provided in this Clause 13;

(b)

the Indemnified Party, at its own cost and expense (which shall not be subject to indemnification by the Indemnifying Party) participate in the defense proceedings (as aforesaid) in connection with the said Third Party Claim so long as such participation does not prejudice the defense proceedings being undertaken by the Indemnifying Party;

(c)

so long as the Indemnifying Party is defending a Third Party Claim in a reasonable manner and in good faith, the Indemnified Party shall not, on its sole discretion and initiative, and without prior written consent of the Indemnifying Party (which consent shall not to be unreasonably withheld by the Indemnifying Party), settle or compromise such Third Party Claim;

(d)

notwithstanding the foregoing, in the event: (x) the Indemnifying Party does not within 30 (thirty) days from the date of the Indemnifying Party Notice, undertake, conduct and control the defense proceedings in connection with a Third Party Claim after electing to control the same; or (y) upon having assumed the conduct and control of the defense proceedings, the Indemnifying Party is not defending the Third Party Claim in a reasonable manner and in good faith and this fact has been demonstrated by the Indemnified Party, the Indemnified Party may, on its own accord and in its sole discretion and interest, choose to defend the Third Party Claim. In such an event, the Indemnified Party shall also be entitled to settle or compromise such Third Party Claim;

(e)

For avoidance of doubt, it is clarified that in the event the Indemnified Party proceeds to the settle or compromise any Third Party Claim, without prior written consent of the Indemnifying Party, where the Indemnifying Party having assumed the conduct and control of the defense proceedings in connection with any such Third Party Claim, is defending the said Third Party Claim in a reasonable manner and in good faith, the Indemnified Party shall be deemed to have waived its (Indemnified Party’s) right to be indemnified;

13.7.

Ester or Loop shall not make any Claim, whatsoever, against the JVCo towards compensation for any indemnification made by either of them as an Indemnifying Party to other (as an Indemnified Party), in accordance with the terms of this Agreement.

13.8.

Limitations on Indemnification

13.8.1.

Notwithstanding anything to the contrary in this Agreement, the aggregate liability of Ester for a claim under this Clause 13 in relation to any breach of the representations and warranties of Ester shall be limited to 100% (one hundred percent) of the United States Dollar amount of its respective Shareholders Capital Contribution (“Ester Liability Cap”).

13.8.2.

Notwithstanding anything to the contrary in this Agreement the aggregate liability of Loop for a claim under this Clause 13 in relation to breach of any of the representations and warranties of Loop shall be limited to 100% (one hundred percent) of the United States Dollar amount of its respective Shareholders Capital Contribution (“Loop Liability Cap”).

13.8.3.

The limitation of liabilities set out in Clause 13.8.1 and Clause 13.8.2 shall not apply to instances of fraud in relation to Claims.

13.9.

Exclusive Remedy

The indemnification provided in this Clause 13 shall be the sole and exclusive monetary remedy available to an Indemnified Party. Provided that nothing in this Clause 13.9 shall limit either Shareholder’s right to seek specific performance of any covenants, undertakings or other agreements in this Agreement and under Applicable Law.

14.

CONFIDENTIALITY

14.1.

Confidential Information

14.1.1.

The Parties acknowledge that in the course of performing their obligations under the Agreement each of the Parties may get access to confidential information. For the purposes of this Clause 14, “Confidential Information” shall mean all such information, of any kind whatsoever (including, but not limited to, technical, commercial, financial, accounting and legal information), pertaining to the Parties, transactions contemplated herein, the Business of the JVCo (including, methods of operation, customers, customer lists, products, prices, fees, costs, technology, inventions, trade secrets, know-how, software, marketing methods, plans, personnel, suppliers, competitors, markets or other specialized information or proprietary matters) as may have been provided in writing or verbally (provided that any information which has been provided verbally shall be communicated in writing within 15 (fifteen) days from the verbal communication for it be considered as Confidential Information) in relation to this Agreement and shall include the contents of this Agreement, the fact that the Parties have been involved in the transactions contemplated herein, any analysis and review of meetings or negotiations related to such transactions, the contents, time and status of such negotiations, and generally any and all facts in relation to or concerning such transactions”.

14.1.2.

Either of the Party (the “Receiving Party”) agrees not to disclose Confidential Information received (whether in writing, verbally or by any other means and whether directly or indirectly) by the other Party (the “Disclosing Party”) including in relation to matters contemplated by this Agreement or its performance or in any agreement in furtherance of the performance of this Agreement, to any Third Party without the prior written consent of the Disclosing Party or use the Confidential Information other than for carrying out the purposes of this Agreement.

14.1.3.

The Receiving Party shall keep confidential any Confidential Information it receives from the Disclosing Party and shall employ all such reasonable steps that it would have taken to protect its own Confidential Information. The Receiving Party shall disclose Confidential Information received from the Disclosing Party to its officers, employees, agents or representatives only for the purposes of carrying out its obligations under this Agreement and strictly on a “need to know” basis only. The Parties shall also cause their respective directors, employees, officers and any other Persons to whom the above mentioned information is disclosed to be bound by confidentiality obligations similar to those provided in this Clause.

14.1.4.

Notwithstanding anything contained in Clauses 14.1.1, 14.1.2 and 14.1.3, a Receiving Party’s obligation of confidentiality shall not extend to any Confidential Information:

(i)

to the extent that the Confidential Information received is in the public domain other than by breach of this Agreement;

(ii)

to the extent that the Confidential Information is lawfully acquired by the Receiving Party from a Third Party who owes the Disclosing Party no obligation of confidence in respect of such Confidential Information;

(iii)

to the extent that the Confidential Information was previously known or already in the lawful possession of the Receiving Party prior to receipt from the Disclosing Party;

(iv)

to the extent that the Confidential Information received is required to be disclosed by any Applicable Law or by any Governmental Authority to whose jurisdiction the Receiving Party is subject or with whose instructions it is customary to comply under notice to the Disclosing Party provided that in the event of such disclosure being mandated, the Receiving Party shall, if legally permissible, provide prior written notice to the Disclosing Party and shall take all reasonable actions to limit the extent of such disclosure;

(v)

in so far as it is disclosed to the employees, directors or professional advisers of the Receiving Party, provided that the Receiving Party shall procure that such persons treat the Confidential Information received as confidential; or

(vi)

to the extent that information, materially similar to the Confidential Information received, has been independently developed by the Receiving Party without reference to any Confidential Information furnished by the Disclosing Party.

14.1.5. 

The provisions of this Clause 14 shall survive the termination of this Agreement.

15.

EVENT OF DEFAULT

15.1.

An event of default (the “Event of Default”) on the part of a Shareholder shall occur if:

15.1.1.

such Shareholder is in material breach of any terms and conditions contained in this Agreement; or

15.1.2.

such Shareholder is subject to an Insolvency Event.

15.2.

Within a period of 30 (thirty) days from the occurrence of an Event of Default, the non-defaulting Party (“Non-Defaulting Party”) shall have the right (but not the obligation) to give a notice in writing (the “Default Notice”) to the defaulting Party (the “Defaulting Party”), with a copy to the JVCo specifying the Event of Default in reasonable detail and calling upon the Defaulting Party to cure the Event of Default (if it is capable of being cured); provided, however, that, any delay in giving such notice shall not affect the right of the Non-Defaulting Party hereunder. The Defaulting Party shall have a period of 30 (thirty) days from the date of issue of the Default Notice to cure the Event of Default (if curable) (the “Cure Period”) to the satisfaction of the Non-Defaulting Party.

15.3.

In case of an Event of Default occurring prior to Initial Closing, if such Event of Default has not been cured (if capable of being cured) by the Defaulting Party within the Cure Period to the satisfaction of the Non-Defaulting Party or is not capable of being cured, then notwithstanding anything contained in this Agreement, the Non-Defaulting Party shall have the right to terminate this Agreement immediately upon provision of written notice of the same to the Defaulting Party and JVCo and in that event, none of the Parties shall have any rights, obligations or claims against the others, except for those provisions which expressly survive termination of this Agreement.

16.

TERM AND TERMINATION

16.1.

Term

This Agreement shall come into force on the Execution Date and shall be valid and binding unless terminated in accordance with the provisions of the Agreement (“Term”).

16.2.

Expiry and Termination

16.2.1.

Ester and Loop may agree to terminate this Agreement based on mutual discussions;

16.2.2.

This Agreement shall terminate automatically upon the Securities being admitted to trading on a Recognized Stock Exchange in connection with an IPO;

16.2.3.

This Agreement shall terminate with respect to any Shareholder when such Shareholder ceases to hold any Securities in the JVCo.

16.2.4.

Without prejudice to the above, either of Ester and Loop may terminate this Agreement in accordance with Clause 3.3 and/or Clause 15.3 above.

16.3.

Notwithstanding anything contained in Clause 16.2 herein above, the Parties shall be entitled to all the rights and remedies which are available under Applicable Law, equity or otherwise, including such other rights and remedies as may be mutually agreed between the Parties in this Agreement. The rights specified in this Clause 16 shall be in addition to and not in substitution for any other remedies, including a claim for damages that may be available to the Parties under this Agreement and the Applicable Law.

16.4.

Consequences of Termination

16.4.1

The rights and obligations of the Parties under this Agreement, which either expressly or by their nature survive the termination of this Agreement, shall not be extinguished by termination of this Agreement. Without prejudice to the generality of the foregoing, Clause 1 (Definitions and Interpretation), Clause 12 (Representations and Warranties), Clause 13 (Indemnification), Clause 14 (Confidentiality), this Clause 16.4, Clause 17 (Arbitration), and Clause 18 (Miscellaneous) shall survive the termination of this Agreement.

16.4.2

The termination of this Agreement in any of the circumstances aforesaid shall not in any way affect or prejudice any right accrued to any Party against the other Parties, prior to such termination under this Agreement and or Ancillary Agreements.

18.9.1.

In the case of notices to Ester, to:

Attention:

[***] and cc to Company Secretary

Address:

Plot No.-11-A, Infocity-1, Sector 33–34, Gurgaon-122001, Haryana, India

E-mail:

[***]

With cc to [***]

18.9.2.

In the case of notices to Loop, to:

Loop Industries, Inc.

480 rue Fernand-Poitras

Terrebonne, Quebec  J6Y 1Y4, Canada

E-mail: [***]

Attention:  [***]

With a copy to (which does not constitute notice to Loop):

Norton Rose Fulbright Canada LLP

1 Place Ville Marie, Suite 2500

Montreal (Quebec) H3B 1R1, Canada

Email: [***]

Attention: [***]

18.9.3.

In the case of notices to JVCo, to such address and e-mail ID as may be provided in the Deed of Adherence;

or at such other address as the Party to whom such notices, requests, demands or other communication is to be given shall have last notified the Party giving the same in the manner provided in this Clause, but no such change of address shall be deemed to have been given until it is actually received by the Party sought to be charged with the knowledge of its contents. Any notice, request, demand or other communication delivered to the Party to whom it is addressed as provided in this Clause 18.9 shall be deemed (unless there is evidence that it has been received earlier) to have been given and received, if:

(i)

sent by mail, except air mail, 10 (ten) Business Days after posting it;

(ii)

sent by air mail or courier, 6 (six) Business Days after posting it; and

(iii)

sent by email, when confirmation of its transmission has been recorded by the sender’s e-mail account.

18.10.

Entire Agreement

This Agreement read with the respective Ancillary Agreement constitutes and represents the entire agreement between the Parties with regard to the rights and obligations of each of the Parties and cancels and supersedes all prior arrangements, agreements or understandings, if any, whether oral or in writing, between the Parties on the subject matter hereof or in respect of matters dealt with herein.

18.11.

Third Party Benefit

Nothing herein expressed or implied is intended, nor shall it be construed to confer upon or give to any Third Party any right, remedy or Claim under or by reason of this Agreement or any part hereof.

18.12.

Successors and Assigns

The provisions of this Agreement shall inure to the benefit of and be binding on the Parties and permitted assignees.

18.13.

Assignment

Except as otherwise agreed between the Parties, this Agreement shall inure to the benefit of and be binding upon the Parties and their successors-in-interest. Save as otherwise provided in this Agreement, no Party may assign and transfer any of its rights under this Agreement, in whole or in part, without the written consent of the other Parties.

18.14.

Specific Performance of Obligations

The Parties to this Agreement agree that, to the extent permitted by Applicable Law, the rights and obligations of the Parties under this Agreement shall be subject to the right of specific performance and may be specifically enforced against a defaulting Party.

18.15.

Independence of the Parties with respect of each other

Each Party is and shall remain an independent Party. None of the Party or any of its Affiliates shall be considered an agent of the other, nor shall it have authority to enter into any contract or any obligation for or make any warranty or representation on behalf of the other.

18.16.

Counterparts

This Agreement may be executed by the Parties in separate counterparts each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

18.17.

Fall Away of Right

18.17.1.

Notwithstanding Clause 8 (Corporate Governance of the JVCo) and Clause 9.5 (Reserved Matters), but subject to Clause 4.8.4 and 4.8.5 above, in the event the aggregate shareholding of either Ester (along with its Affiliates) or Loop (along with their Affiliates) (as the case maybe) falls below 50% (fifty percent) of the issued and paid-up equity share capital of the JVCo calculated on a fully diluted basis (“Below 50% Shareholder”), then:

(i)

the Board and any committee of the Board shall be reconstituted such that the number of Directors on the Board or the committee of the Board (as the case may be) are proportionate to the shareholding of Ester and Loop, along with their respective Affiliates, in the JVCo, whereby the Shareholder which is not the Below 50% Shareholder shall have the majority on the Board; and

(ii)

the Below 50% Shareholder shall forthwith cease to have the rights provided for under Clause 8.6 (Appointment of Chairman).

SIGNED AND DELIVERED:

For and on behalf of ESTER INDUSTRIES LIMITED:

Witness:

By:

/s/Arvind Singhania

/s/Rahul Guscuami

Name: Arvind Singhania

Title: Chairman & CEO

Name: Rahul Guscuami

Address: [***]

SIGNED AND DELIVERED:

For and on behalf of LOOP INDUSTRIES INC.:                             

Witness:

By: 

/s/Daniel Solomita

/s/Adel Essaddam

Name:  Daniel Solomita

Name: Adel Essaddam   

Title: Chairman & CEO 

Address:  [***]