Wan Kai New Materials and the French company Carbios have established a joint venture to develop a project for the biological enzymatic depolymerization of PET waste, with an annual processing capacity of 50,000 tons

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On December 2, Wan Kai New Materials issued a announcement stating that the company had signed an agreement with the French company Carbios to establish a joint venture in China aimed at building a facility for the biological enzymatic depolymerization of PET waste, with a capacity to process 50,000 tons of waste per year. The total investment for this project is approximately 922 million yuan. Wan Kai New Materials contributes 70%, while Carbios contributes 30%. As one of the most innovative biomaterial technology companies in France, Carbios is a pioneer and leader in global bio-enzymatic plastic recycling technologies. In addition, Wan Kai New Materials also plans to increase its investment in Carbios in order to secure a seat on its board of directors. This project aims to promote the industrialization of post-consumer PET recycling and establish the company’s competitive leadership in the field of recycled PET. Basic Information on the Construction Project (I) Project Name: The First Bio-enzymatic Depolymerization PET Recycling Plant with an Annual Processing Capacity of 50,000 Tons of Waste (II) Location of Construction: Haining Jianshan Industrial Zone (provisional) (III) Contents of the Project Construction and Introduction to Carbios’ Bio-enzymatic Technology 1. The company and Carbios will jointly build and operate the first bio-enzymatic depolymerization PET recycling plant capable of processing 50,000 tons of PET-containing waste per year, through a joint venture. 2. Introduction to Carbios’ bioenzyme technology: The joint venture factory utilizes Carbios’ bioenzyme technology, which does not require any solvents and features a mild processing method. This technology enables the treatment of complex PET waste that is currently difficult to recycle, and it can also convert such waste directly into its basic components – terephthalic acid (PTA) and ethylene glycol (MEG). It addresses the issue of the difficulty in recycling PET 100% in order to produce new products, allowing for 100% recyclability and infinite recycling cycles, thereby creating significant value in the field of recycling post-consumer PET. (IV) Project investment budget and source of funds: The total estimated investment for the project is 115 million euros (approximately 922 million RMB), with the funds coming from registered capital and bank financing. Key terms of the agreement (the parties to the agreement are Carbios and Wan Kai New Materials): 2. The sole purpose and activity of the joint venture is to use Carbios’ technology to build and operate factories, as well as to sell the products produced through such operations; in all cases, it is necessary to comply with the terms of the technology licensing agreement ； 3. The registered capital of the joint venture totals 276.6 million RMB. Wan Kai New Materials contributes 193.6 million yuan in cash, and holds a 70% stake in the company ； Carbios contributes 82.98837 million RMB in cash, holding a 30% stake. The amount of capital contribution for the joint venture shall be in RMB, with Carbios contributing an equivalent amount in euros ； 4. Shareholders may transfer all or part of their shares to one another, with the transfer price to be determined through negotiation between the parties. Within three years of the company’s establishment, shareholders shall not transfer any of their shares to any party other than the related parties of both sides (except in cases of deadlock or shareholder breach of contract). Unless explicitly approved by the other party, a shareholder intending to transfer all or part of its shares to a third-party transferee must ensure that such transferee clearly agrees to be bound by this agreement and the company’s articles of association, and formally undertakes to comply with all obligations set out in them; furthermore, in the case of a partial transfer, the transferee must assume responsibilities jointly or separately with the transferring party, or – in the case of a full transfer – assume those responsibilities in place of the transferring party. Otherwise, such transfer shall not be validly completed ； 5. The capital expenditures required for factory construction amount to approximately 115 million euros (which is about 922 million RMB; this figure does not include startup costs. The exchange rate used here is 1€ = 8.0182 RMB). The funding will come from registered capital (30%) and bank financing (70%). 6. The joint venture shall have a board of directors composed of three (3) directors. Two (2) of the directors are nominated by Wan Kai New Materials and elected by the shareholders’ meeting, while one (1) director is nominated by Carbios and elected by the general meeting of shareholders. The election and removal of directors are determined by a resolution of the general meeting of shareholders. The term of office for each director is three (3) years, and they may be re-elected upon the expiration of their term, provided that the rights of nomination granted to the parties under this agreement are respected ； 7. Wan Kai New Materials commits to completing the investment in Carbios and making the full payment of its corresponding contribution within six (6) months after the entry into force of this agreement. To complete the investment in Wan Kai New Materials, Carbios shall provide all commercially reasonable assistance to Wan Kai New Materials, including the documents required for administrative approvals and registrations by authorities such as the National Development and Reform Commission, the Ministry of Commerce, and the State Administration of Foreign Exchange. 8. Wan Kai New Materials confirms and agrees that Carbios is a listed company; therefore, the terms and conditions of the investment in Carbios shall be governed by French law and comply with the corporate governance requirements applicable to Carbios. Upon completing the investment, Wan Kai New Materials shall comply fully with Carbios’ articles of association and shareholder agreement as they stand. Carbios declares and warrants that Wankai New Materials shall enjoy the same rights and assume the same obligations as Carbios’ other shareholders with regard to its investment in Carbios (taking into account the nature of such investment and the shareholding ratio). For clarity, it is hereby stated that Wankai New Materials is entitled to one (1) seat on Carbios’ board of directors ； 9. Both parties agree that, once the joint venture is established, it shall sign a Technology License Agreement with Carbios as soon as possible, with Carbios and the joint venture fulfilling their obligations in accordance with the terms stipulated in the agreement ； 10. Carbios’ technical licensing and exclusivity obligations: Within the agreed entire Asia** region, Carbios grants the joint venture an exclusive license to its PET depolymerization technology; this license is exclusive, and the initial licensing period is three years from the effective date of this agreement (“the first exclusivity period”) ； If an additional PET waste processing capacity of not less than 100,000 tons per year is added by the date of expiration of the first exclusivity period, the authorization period shall be automatically extended for five (5) years (“second exclusivity period”) ； If a PET waste processing capacity of not less than 200,000 tons per year is added before the expiration date of the second exclusivity period, the authorization period shall be automatically extended for five (5) years (“third exclusivity period”) ； Carbios’ exclusive obligations for any renewal after the expiration of the third exclusivity period shall be subject to the same terms and conditions as those of the third exclusivity period ； Once the cumulative rated permitted capacity reaches and remains at least 1 million tons per year in terms of PET waste processing capacity, and the agreed conditions are met, the exclusive license shall remain valid thereafter (the “permanent exclusivity period”) ； 11. Factory raw material supply: Wan Kai New Materials is responsible for finding and securing the raw materials needed for factory operations, and negotiates the necessary contracts on behalf of the joint venture ； 12. Procurement of enzyme preparations at the factory: Carbios pledges to provide full support to Wan Kai New Materials, the joint venture company, and Nuoxin Xinyuan in the negotiations regarding the enzyme supply agreement. The goal is to enable the joint venture company to obtain commitments from Nuoxin Xinyuan to deliver, during the validity period of the enzyme supply agreement, enzyme preparations produced using Carbios’ latest technology, while ensuring a stable supply ； 13. Carbios further commits to continuously working to improve the activity of its proprietary enzyme preparations for use by the joint venture, in order to reduce enzyme costs and ultimately lower the production costs of the joint venture ； Carbios will always supply NovoGeny with the latest and best enzyme preparations it has developed for use in production, for use by the joint venture ； Carbios will utilize the rights granted to it under the partnership agreement signed with Novozymes to have Novozymes produce and deliver the latest available enzyme preparations for the joint venture ； 14. Plant Purchase Agreement: Carbios commits to arranging, within fourteen (14) months from the date of signing this agreement, the transfer of the sales contracts it has entered into with its partner brands to the joint venture (or for the joint venture to sign such contracts directly). Carbios will prioritize signing the purchase agreement for the plant in this location, rather than the plant it plans to build in Longlaville, France.