AMENDED AND RESTATED SECURITY AGREEMENT

 

This Amended and Restated Security Agreement (as amended, restated, supplemented
and/or otherwise modified from time to time, this “Agreement”) is dated as of
August 4, 2016 (the “Effective Date”) between the lenders executing this
Agreement and listed on Schedule A attached hereto as amended from time to time
(the “Lenders”), JBI, Inc., a corporation organized under the laws of the State
of Nevada (the “Debtor”), Plastic2Oil of NY #1, LLC, a limited liability company
organized under the laws of the State of New York (“P2O#1”) and JBI RE #1, Inc.,
a corporation organized under the laws of the State of New York (“RE#1”, and
collectively with P2O#1 and the Debtor the “Grantors”), and Christiana Trust, a
division of WSFS Bank, as collateral agent for the Lenders (the “Collateral
Agent”). This Agreement amends and restates that certain Security Agreement,
dated August 29, 2013, by and between the Lenders named therein, the Grantors
and the Collateral Agent (the “Original Agreement”). The Lender parties to the
Original Agreement are sometimes referred to herein as the “Original Lenders”
and the Lender parties hereto thatwere not parties to the Original Agreement are
sometimes referred to herein as the “New Lenders.”

 

1. Grant of Security. The Grantors, to secure the Secured Obligations (as
defined below), pursuant to the Code (each term used in this granting paragraph
that is defined in the Code shall have the meaning specified in the Code), each
hereby collaterally assigns, pledges and grants to the Collateral Agent, for
itself and as agent for the ratable interest of the Lenders, a continuing
security interest, in all of each Grantor’s right, title and interest in and to
the following property of such Grantor, now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interests is collectively referred to as
the “Collateral”;

 

(a) all accounts, as extracted collateral, chattel paper, deposit accounts,
securities accounts and commodity accounts, documents, equipment, general
intangibles, instruments, inventory, investment property and any supporting
obligations related thereto;

 

(b) the commercial tort claims described on Schedule 1 and on any supplement
thereto received by the Collateral Agent;

 

(c) all books and records pertaining to the other property described in this
Section 1;

 

(d) (A) the Equity Interests owned by such Grantor on the date hereof
(including, but not limited to, those listed on Schedule 1) and any other Equity
Interests obtained in the future by and any certificates representing all such
Equity Interests (collectively, the “Pledged Stock”); provided that the Pledged
Stock shall not include (i) more than 65% of the issued and outstanding voting
Equity Interests in any “first tier” Foreign Subsidiary directly owned by such
Grantor, or (ii) any issued and outstanding Equity Interest in any Foreign
Subsidiary that is not a “first tier” Foreign Subsidiary, (B)(i) the debt
obligations owed to such Grantor on the date hereof, (ii) any debt securities in
the future issued to such Grantor, and (iii) the certificates, promissory notes
and any other instruments, if any, evidencing such debt securities; (C) all
payments of principal or interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of, in exchange for or upon the conversion of, and all other proceeds
received in respect of, the securities referred to in clauses (A) and (B) above;
(D) all rights and privileges of such Grantor with respect to the securities and
other property referred to in clauses (A), (B) and (C) above; and (E) all
proceeds of any of the foregoing;

 

(e) all machinery, apparatus, equipment, motor vehicles, fittings, fixtures and
other tangible personal property of every kind and description, together with
all parts, accessories and special tools and all increases and accessions
thereto and substitutions and replacements therefore;

 

(f) all patents and patent applications, tradenames, servicemarks, trademarks
and trademark applications, trade secrets, know-how, copyrights and other
intellectual property, including software license agreements with any other
party (other than commercial off the shelf software), including without
limitation those described on Schedule 1;

 

(g) all other goods and other personal property of such Grantor, whether
tangible or intangible and wherever located; and

 

(h) to the extent not otherwise included in the foregoing, all proceeds of the
foregoing.

 

   

   

 

2. Security for Obligations. This Agreement secures, and the Collateral is
collateral security for (i) the prompt payment in full when due by the Debtor
under the terms of those certain 12% Secured Promissory Notes due August 31,
2018 or November 30, 2019 by Debtor in favor of the Original Lenders in a
private placement of $4 million aggregate principal amount, dated in August or
September, 2013 or November 19, 2014 (as they may be amended, restated,
supplemented, and/or otherwise modified from time to time, the “First Offering
Notes”); (ii) the prompt payment in full when due by the Debtor under the terms
of those certain 12% Secured Promissory Notes due August 31, 2021 by Debtor in
favor of the New Lenders in a private placement of up to $1 million aggregate
principal amount, each dated on or about August 2016 (as they may be amended,
restated, supplemented, and/or otherwise modified from time to time, the “Second
Offering Notes” and collectively with the First Offering Notes, the “Notes”);
and (iii) all amounts owed to Collateral Agent hereunder including without
limitation under Section 7(g) hereof (collectively, the “Secured Obligations”).

 

3. Rights of Collateral Agent.

 

(a) The Collateral Agent, at the direction of the Required Lenders, shall at all
times be entitled to exercise, in respect of the Collateral, all of the rights
available to a secured party under applicable law, including the Code or as in
effect in any relevant jurisdiction and all legal, equitable, administrative and
self-help rights and remedies. Upon the occurrence and during the continuance of
an Event of Default (as defined in the Note), the Collateral Agent, at the
direction of the Required Lenders, may exercise in respect of the Collateral,
(i) all the rights and remedies of a secured party on default under the Code
(whether or not the Code applies to the affected Collateral); (ii) all of the
rights and remedies provided for in this Agreement; and (iii) such other rights
and remedies as may be provided by law or otherwise (such rights and remedies of
the Collateral Agent to be cumulative and non-exclusive).

 

(b) Without limiting the generality of the foregoing, the Collateral Agent may,
at the direction of the Required Lenders, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon Grantors or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), during the continuance of any Event of Default (personally or
through its agents or attorneys) enter upon the premises where any Collateral is
located, without any obligation to pay rent, through self-help, without judicial
process, without first obtaining a final judgment or giving any Grantor or any
other Person notice and opportunity for a hearing on the Collateral Agent’s
claim or action, may collect, receive, appropriate and realize upon any
Collateral, and may sell, transfer or otherwise dispose, grant option or options
to purchase and deliver any Collateral (enter into contracts to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of Collateral Agent or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Collateral Agent shall have the right, to be exercised at the
direction of the Required Lenders, upon any such public sale or sales, and, to
the extent permitted by the Code and other applicable law, upon any such private
sale, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption of any Grantor, which right or equity is hereby
waived and released. 

 

(c) Following the receipt of any proceeds of Collateral by the Collateral Agent,
such proceeds shall be distributed first, to the accrued but unpaid fees and
expenses (to the extent outstanding and otherwise reimbursable by the Grantors
hereunder) of the Collateral Agent in connection with the performance of its
duties under this Agreement, including without limitation all reasonable and
documented out-of-pocket expenses of retaking, holding, preparing for sale and
selling the Collateral, all reasonable and documented attorneys’ fees,
out-of-pocket travel and all other reasonable and documented out-of-pocket
expenses which may be incurred by the Collateral Agent in realizing or
attempting to realize upon the Collateral and/or to enforcing this Agreement or
in the prosecution or defense of any action or proceeding related to the subject
matter of this Agreement, in each case, until paid in full, and second, ratably
among the Lenders. The Collateral Agent shall be entitled to rely upon the
holdings referenced in Schedule A (or any amendments thereto which the
Collateral Agent received by the date of such distribution) for purposes of
making such ratable distribution.

 

(d) If at any time no Collateral Agent is designated under this Agreement (as a
result of resignation or otherwise) or any designated Collateral Agent, after
notice from the Required Lenders, fails to act in accordance with this Agreement
or in accordance with the proper instructions of the Required Lenders, the
Required Lenders may remove the Collateral Agent and, on behalf of all of the
Lenders, directly exercise all rights granted to the Collateral Agent under this
Agreement.

 

4. Representations and Warranties. Each Grantor represents and warrants that:

 

(a) this Agreement creates a valid security interest in the Collateral of
Grantor;

 

(b) the office where it keeps its records is 20 Iroquois Street, Niagara Falls,
NY 14303;

 

   

   

 

(c) the correct name and jurisdiction or organization of such Grantor is set
forth in the first paragraph hereto, and such Grantor has not, during the
immediately preceding five (5) years, been known under or used any other
corporate name, other than “310 Holdings, Inc.” in the case of Debtor;

 

(d) Except for the Lien (as defined below) granted to the Collateral Agent
pursuant to this Agreement, such Grantor owns each item of the Collateral free
and clear of any and all Liens or claims of others, other than Existing Liens.
Such Grantor (a) is the record and beneficial owner of the Collateral pledged by
it hereunder constituting instruments or evidenced by certificates and (b) has
rights in or the power to transfer each other item of Collateral in which a Lien
is granted by it hereunder, free and clear of any other Lien, other than
Existing Liens.

 

(e) The security interest granted pursuant to this Agreement constitutes a valid
and continuing perfected security interest in favor of the Collateral Agent in
all Collateral (i) in which a security interest may be perfected by filing a
financing statement under the Code with the Secretary of State of Nevada, in
case of the Debtor, and (ii) in which a security interest may be perfected by
filing a financing statement under the Code with the Secretary of State of New
York, in case of P2O#1 and RE#1 (which financing statements have been delivered
to the Collateral Agent in completed and duly authorized form).

 

(f) All Pledged Stock and other Equity Interest owned by such Grantor hereunder
(a) is listed on Schedule 1 and constitutes that percentage of the issued and
outstanding equity of all classes of each issuer thereof as set forth on such
Schedule 1 and (b) has been duly authorized, validly issued and is fully paid
and non-assessable (other than Pledged Stock in respect of Equity Interests in
limited liability companies and partnerships).

 

(g) Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent, at the direction of the Required Lenders, shall be entitled to
exercise all of the rights of such Grantor granting the security interest in any
Pledged Stock, and a transferee or assignee of the applicable Equity Interests
of such Person shall become a holder of such Pledged Stock to the same extent as
such Grantor in such Person and be entitled to participate in the management of
such Person and, upon the transfer of the entire interest of such Grantor, such
Grantor shall, by operation of law, cease to be a holder of such Pledged Stock.

 

(h) No amount payable to such Grantor under or in connection with any account is
evidenced by any instrument or tangible chattel paper that has not been
delivered to the Collateral Agent, properly endorsed for transfer.

 

(i) Any intellectual property owned by such Grantor (or in which such Grantor
has rights) is listed on Schedule 1.

 

(j) The only commercial tort claims of such Grantor existing on the date hereof
(regardless of whether the amount, defendant or other material facts can be
determined and regardless of whether such commercial tort claim has been
asserted, threatened or has otherwise been made known to the obligee thereof or
whether litigation has been commenced for such claims) are those listed on
Schedule 1, which sets forth such information separately for such Grantor.

 

5. Covenants of the Grantors. Each Grantor hereby covenants and agrees with the
Collateral Agent that it shall (i) promptly give the Collateral Agent written
notice of any change in such Grantor’s name or jurisdiction of formation; (ii)
promptly give the Collateral Agent written notice of any change in such
Grantor’s office where it keeps its records; (iii) preserve and maintain the
lien created by this Agreement and will protect and defend its title to the
Collateral of such Grantor; and (iv) maintain books and records pertaining to
the Collateral of such Grantor in such detail, form and scope as the Collateral
Agent may reasonably require. Not later than seven days after the Effective
Date, Debtor will deliver to the Collateral Agent in suitable form for transfer
all Pledged Stock consisting of instruments and Equity Interests evidenced by
certificates.

 

6. Further Assurances. Each Grantor agrees that from time to time, it will
promptly execute and deliver all further instruments and documents, and take all
further action, that the Collateral Agent may reasonably request, in order to
perfect, protect, evidence, renew and/or continue the security interest granted
or purported to be granted hereby or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral of
such Grantor or otherwise effectuate the purposes and intents of this Agreement.

 

   

   

 

7. The Collateral Agent. (a) Each of the Lenders hereby designates Christiana
Trust to act on behalf of the Lenders as the Collateral Agent and appoints the
Collateral Agent to hold the Collateral on behalf of and for the benefit and
security of the Lenders pursuant to the terms of this Agreement, and the
Collateral Agent hereby accepts such designation and appointment. Each Lender
authorizes the Collateral Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Collateral Agent by the terms
hereof, together with such actions and powers as are reasonably incidental
thereto. It is understood and agreed that the use of the term “Collateral Agent”
herein is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable Law. Instead such
term is used as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting parties.
Notwithstanding any other provisions set forth herein, the Collateral Agent
shall hold or dispose of the Collateral solely in accordance with the
instructions of Lenders holding Notes the outstanding principal amount of which
is greater than fifty percent (50%) of the aggregate outstanding principal
amount of all the Notes, as set forth opposite each Lenders’ name on Schedule A
as amended from time to time (the “Required Lenders”), which instructions the
Collateral Agent shall be entitled to rely on conclusively. As to any matters
not expressly provided for hereby, the enforcement or collection of any Secured
Obligation or any matter requiring the Collateral Agent to exercise discretion,
the Collateral Agent shall not be required to act, enforce or collect upon any
such Secured Obligation or exercise any discretion, but shall only be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders; provided,
however, that the Collateral Agent shall not be required to take any action that
exposes the Collateral Agent to personal liability or that is contrary to this
Agreement or applicable law. 

 

(b) In acting hereunder, the Collateral Agent shall have only such duties as are
specified herein and no implied duties shall be read into this Agreement, and
the Collateral Agent shall not be liable for any act done, or omitted to be
done, by it in the absence of its gross negligence or willful misconduct.

 

(c) The Collateral Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine, and may assume the
validity and accuracy of any statement or assertion contained in such a writing
or instrument and may assume that any Person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has been
duly authorized to do so.

 

(d) The Collateral Agent shall be entitled to consult with legal counsel in the
event that a question or dispute arises with regard to the construction of any
of the provisions hereof, and shall incur no liability and shall be fully
protected in acting in accordance with the advice or opinion of such counsel.

 

(e) The Collateral Agent shall not be required to use its own funds in the
performance of any of its obligations or duties or the exercise of any of its
rights or powers, and shall not be required to take any action which, in the
Collateral Agent’s sole and absolute judgment, could involve it in expense or
liability unless furnished with security and indemnity which it deems, in its
sole and absolute discretion, to be satisfactory.

 

(f) Debtor shall pay to the Collateral Agent compensation for its services
hereunder in accordance with the terms of a separate fee agreement between the
Debtor and the Collateral Agent. In the event the Collateral Agent renders any
extraordinary services in connection its role as Collateral Agent at the request
of the parties, the Collateral Agent shall be entitled to additional
compensation therefor. The terms of this paragraph shall survive termination of
this Agreement.

 

(g) Grantors hereby agree, jointly and severally, to indemnify the Collateral
Agent, its directors, officers, employees, agents, affiliates and their
respective successors and assigns (collectively, the “Indemnified Parties”), and
reimburse and hold the Indemnified Parties harmless from any and against all
damages, claims, penalties, liabilities, losses, actions, suits, judgments, or
proceedings at law or in equity, and any other expenses, fees, costs or charges
of any character or nature, including, without limitation, attorney’s fees and
expenses, which an Indemnified Party may incur or with which it may be
threatened by reason of acting as or on behalf of the Collateral Agent under
this Agreement, except to the extent the same shall be caused by the Collateral
Agent’s gross negligence or willful misconduct as determined by a court of
competent jurisdiction in a final and non-appealable decision (such
indemnification obligations, the “Indemnification Obligations”). All
Indemnification Obligations shall be due on demand. The terms of this paragraph
shall survive termination of this Agreement and the resignation or removal of
the Collateral Agent. If and to the extent that the obligations of a Grantor
under this clause (g) are unenforceable for any reason, such Grantor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.

 

   

   

 

(h) In the event the Collateral Agent receives conflicting instructions
hereunder, the Collateral Agent shall be fully protected in refraining from
acting until such conflict is resolved to the satisfaction of the Collateral
Agent.

 

(i) The Collateral Agent may resign as the Collateral Agent, and, upon its
resignation, shall thereupon be discharged from any and all further duties and
obligations under this Agreement by giving notice in writing of such resignation
to Grantors and Lenders, which notice shall specify a date upon which such
resignation shall take effect. Upon the resignation of the Collateral Agent,
Grantors and Lenders shall, within thirty (30) business days after receiving the
foregoing notice from the Collateral Agent, designate a substitute collateral
agent (the “Substitute Collateral Agent”), which Substitute Collateral Agent
shall, upon its designation (and acceptance of such designation) and notice of
such designation to the Collateral Agent, succeed to all of the rights, duties
and obligations of the Collateral Agent hereunder. In the event Grantors and
Lenders shall not have delivered to the Collateral Agent a written designation
of Substitute Collateral Agent within the aforementioned thirty (30) day period,
together with the consent to such designation by the Substitute Collateral
Agent, the Collateral Agent may (i) appoint a financial institution to act as
the Substitute Collateral Agent hereunder, subject to the reasonable
satisfaction of the Required Lenders and Grantors, in which case, the Collateral
Agent’s resignation shall become effective upon the acceptance, in writing, of
such Substitute Collateral Agent by the Required Lenders and Grantors and such
Substitute Collateral Agent’s acceptance of such appointment and the
documentation thereof or (ii) apply to a court of competent jurisdiction to
appoint a Substitute Collateral Agent, and the costs of obtaining such
appointment shall be reimbursable from Grantors and Lenders and from the
Collateral. After any resigning Collateral Agent’s resignation hereunder as the
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was the Collateral
Agent hereunder.

 

(j) The Collateral Agent may execute any of its duties under this Agreement by
or through agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel and other consultants or experts concerning all matters
pertaining to such duties. The Collateral Agent shall not be liable for anything
done, suffered or omitted in good faith by it in accordance with the opinion or
advice of any such counsel, consultants or experts selected by the Collateral
Agent in good faith. Notwithstanding any other provision of this Agreement to
the contrary, at any time or times, in the event that the Collateral Agent or
Required Lenders shall deem it necessary or prudent in order to conform to the
legal requirements of any jurisdiction in which any part of the Collateral may
at such time or times be located to make any claim or bring any suit with
respect to the Collateral or any Loan Document, or the Collateral Agent or
Required Lenders shall be advised by counsel satisfactory to it that it is so
necessary or prudent, the Collateral Agent shall execute and deliver an
agreement supplemental hereto and all other instruments and agreements, in each
case, reasonably acceptable to Collateral Agent, and shall take all other action
necessary or proper to constitute one or more persons, who need not meet any
requirements of the Collateral Agent contained herein (and the Collateral Agent
may appoint one or more of its officers), either as co-collateral agent or
co-collateral agents jointly with the Collateral Agent of all or any part of the
Collateral, or as separate collateral agent or separate collateral agents of all
or any part of the Collateral (each, a “Supplemental Collateral Agent”), and to
vest in such persons, in such capacity, such title to the Collateral or any part
thereof and such rights powers, privileges or duties as may be necessary or
desirable, all for such period and under such terms and conditions as are
satisfactory to the Collateral Agent and Required Lenders. In case any
Supplemental Collateral Agent shall die, become incapable of acting, resign or
be removed, the title to the Collateral and all rights powers, privileges and
duties of such Supplemental Collateral Agent, so far as permitted by law, vest
in and be exercised by the Collateral Agent, without the appointment of a
successor to such Supplemental Collateral Agent. Should any instrument in
writing from any Grantor be required by any Supplemental Collateral Agent so
appointed by the Collateral Agent to more fully or certainly vest in and confirm
to such Supplemental Collateral Agent such rights, powers, privileges and
duties, the Grantors shall execute, acknowledge and deliver any and all such
instruments promptly upon request by the Collateral Agent. No Collateral Agent
shall be responsible for the negligence (or gross negligence), misconduct or any
liability of any agent, attorney-in-fact or Supplemental Collateral Agent that
it selects in accordance with the foregoing provisions of this Section 7(j) in
the absence of such Collateral Agent’s gross negligence or willful misconduct.

 

(k) Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to preservation of rights against prior parties or any other
rights pertaining thereto and the Collateral Agent shall not be responsible for
filing any financing or continuation statements or recording any documents or
instruments in any public office at any time or times or otherwise perfecting or
maintaining the perfection of any security interest in the Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property and
shall not be liable or responsible for any loss or diminution in the value of
any of the Collateral, including without limitation, by reason of the act or
omission of any carrier, forwarding agency or other agent or bailee selected by
the Collateral Agent in good faith.

 

   

   

 

(l) The Collateral Agent shall not be responsible for the existence, genuineness
or value of any of the Collateral or for the validity, perfection, priority or
enforceability of the Liens in any of the Collateral (whether impaired by
operation of law, by reason of any of any action or omission to act on its part
hereunder or otherwise, except to the extent such action or omission by
Collateral Agent constitutes gross negligence, bad faith or willful misconduct
on the part of the Collateral Agent), for the accuracy of any of the Grantors’
representations or warranties, for the validity or sufficiency of the Collateral
or any agreement or assignment contained therein, for the validity of the title
of any Grantor to the Collateral, for insuring the Collateral or for the payment
of taxes, charges, assessments or Liens upon the Collateral or otherwise as to
the maintenance of the Collateral. The Collateral Agent shall be under no duty
or responsibility to any Lender to ascertain or to inquire into the performance
or observance by any Grantor of any of the provisions of this Agreement. 

 

(m) In any circumstance where the Collateral Agent exercises discretion (though
it shall have no obligation to do so), approves documentation or distributes
proceeds, the Collateral Agent may, at its option, seek to obtain instructions
or directions from the Required Lenders with respect to such action. If the
Collateral Agent so elects, then it may refrain from taking such action until
such directions or instructions are received and shall have no liability to
anyone for so refraining.

 

(n) NEITHER CHRISTIANA TRUST NOR THE COLLATERAL AGENT (I) WILL MAKE AN
INSPECTION OF THE COLLATERAL OR ANY PART THEREOF, (II) MAKES OR SHALL BE DEEMED
TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO
THE TITLE, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR
USE FOR ANY PARTICULAR PURPOSE OF THE COLLATERAL OR ANY PART THEREOF, AS TO THE
QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE COLLATERAL OR ANY
PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR
AS TO TITLE OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE COLLATERAL OR ANY PART THEREOF, OR (III) MAKES OR
SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY AS TO THE VALIDITY,
LEGALITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT TO
WHICH THE COLLATERAL AGENT IS A PARTY, OR ANY OTHER DOCUMENT OR INSTRUMENT, OR
AS TO THE CORRECTNESS OF ANY STATEMENT CONTAINED IN ANY THEREOF.

 

(o) Except as otherwise expressly provided herein, monies received by the
Collateral Agent hereunder need not be segregated in any manner, except to the
extent required by law, and may be deposited under such general conditions as
may be prescribed by law, and neither Christiana Trust nor the Collateral Agent
shall be liable for any interest thereon, except as may be expressly agreed to
by Christiana Trust or the Collateral Agent in writing.

 

(p) Action upon Instructions. (i) The Required Lenders may by joint written
instruction direct the Collateral Agent in the administration of the Collateral
and any matter affecting the Collateral.

 

(ii) Notwithstanding the foregoing, the Collateral Agent shall not be required
to take any action hereunder or under any other related document at the request
of the Required Lenders or otherwise if the Collateral Agent shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Collateral Agent or is
contrary to the terms hereof or of any other document relating to the Notes or
is otherwise contrary to law; provided, however, that the Collateral Agent shall
have no obligation to make any such determination. 

 

(iii) Whenever the Collateral Agent is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any other related document, or in the event that the Collateral Agent is unsure
as to the application of any provision of this Agreement or any other related
document, or believes any such provision is ambiguous as to its application, or
is, or appears to be, in conflict with any other applicable provision, or in the
event that this Agreement or any other related document permits any
determination or discretion by the Collateral Agent or is silent or is
incomplete as to the course of action that the Collateral Agent is required to
take with respect to a particular set of facts, the Collateral Agent shall
promptly give notice (in such form as shall be appropriate under the
circumstances) to each Lender requesting instruction as to the course of action
to be adopted, and to the extent the Collateral Agent acts in good faith in
accordance with any written instructions received from the Required Lenders, the
Collateral Agent shall not be liable on account of such action to any Person. If
the Collateral Agent shall not have received appropriate instruction within 10
days of such notice (or such shorter period as reasonably may be specified in
such notice or as may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action as it shall deem to be
in the best interests of the Lenders; and the Collateral Agent shall have no
liability to any Person for such action or inaction.

 

   

   

 

(q) Notwithstanding anything contained herein or elsewhere to the contrary,
neither Christiana Trust nor the Collateral Agent shall be required to take any
action in any jurisdiction other than in the State of Delaware if the taking of
such action will, even after the appointment of a Supplemental Collateral Agent,
(i) require Christiana Trust in its individual capacity to obtain the consent,
approval, authorization or order of or the giving of notice to, or the
registration with, or taking of any action in respect of, any state or other
governmental authority or agency other than the State of Delaware; (ii) result
in any fee, tax or other governmental charge under the laws of any jurisdiction
other than the State of Delaware becoming payable by Christiana Trust in its
individual capacity, or (iii) subject Christiana Trust in its individual
capacity to personal jurisdiction in any jurisdiction other than the State of
Delaware for causes of action arising from acts unrelated to the consummation of
the transactions by the Collateral Agent contemplated hereby.

 

(r) The Collateral Agent shall be under no obligation to exercise any right or
power vested in it or duty imposed upon it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement, either at the request, order or direction of the
Required Lenders or otherwise, unless the Required Lenders shall have offered
the Collateral Agent security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Collateral Agent therein or
thereby. The right of the Collateral Agent to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Collateral Agent shall not be answerable to any Lender or other Person for other
than its gross negligence, bad faith or willful misconduct in the performance of
any such act as determined by a court of competent jurisdiction in a final and
non-appealable decision. 

 

(s) In no event shall the Collateral Agent be responsible or liable for special,
indirect, or consequential loss or damage of any kind whatsoever (including, but
not limited to, loss of profit) irrespective of whether the Collateral Agent has
been advised of the likelihood of such loss or damage and regardless of the form
of action.

 

(t) Christiana Trust, in its individual capacity, and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
any Grantor and any of their respective subsidiaries as though Christiana Trust
were not the Collateral Agent hereunder.

 

(u) The Collateral Agent shall be entitled to assume that no Event of Default
exists unless the officers of the Collateral Agent immediately responsible for
matters concerning this Agreement shall have been notified in writing by any
Grantor or the Required Lenders that it considers that an Event of Default
exists and specifying the general nature thereof.

 

(v) The Collateral Agent shall not be responsible or liable for any failure or
delay in the performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including without limitation: acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; act of terrorism, epidemics;
riots; interruptions, loss or malfunctions of utilities, computer hardware,
software or communications service; accidents; labor disputes; or acts of civil
or military authority or governmental actions; it being understood that the
Collateral Agent shall use reasonable efforts which are consistent with accepted
practices in the banking industry to resume performance as soon as practicable
under the circumstances.

 

(w) Any corporation or other entity into which the Collateral Agent may be
merged or converted or with which it may be consolidated, or any corporation or
other entity resulting from any merger, conversion or consolidation to which the
Collateral Agent shall be a party, or any corporation or other entity to which
substantially all the corporate trust business of the Collateral Agent may be
transferred, shall be the collateral agent under this Agreement without further
act.

 

(x) Each Lender, upon its execution of a counterpart to this Agreement, agrees
to be bound by the terms and provisions herein and shall promptly provide the
Collateral Agent with a copy of such executed counterpart.

 

8. Governing Law. This Agreement shall be governed by the internal laws of the
State of New York, without reference to principles of conflicts of law.

 

9. Amendments; Etc. No amendment or waiver of any provision of this Agreement,
and no consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Collateral
Agent, Grantors and Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. This agreement represents the entire understanding of the parties with
respect to the subject matter described herein and supersedes any and all prior
agreements and understandings with respect to such matters. Notwithstanding the
foregoing, from time to time as necessary to update Lender information and other
relevant information, the Debtor shall have the authority to amend Schedule A.
The Debtor shall provide the Collateral Agent with any such amendments on a
timely basis and the Collateral Agent shall conclusively rely on the most recent
version of Schedule A provided to it by the Debtor.

 

   

   

 

10. Successors and Assigns. This Agreement shall inure to the benefit of and
shall be binding upon the successors and permitted assigns of the parties
hereto. For the avoidance of doubt, the Collateral Agent may assign its rights
or delegate its duties or obligations as Collateral Agent hereunder to any other
Lender.

 

11. Severability. The provisions of this Agreement are severable. If any clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision or part thereof in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction or any
other clause or provision in this Agreement in any jurisdiction.

 

12. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which shall constitute one document.

 

13. Authorization. Without obligating Collateral Agent to make any of such
filings, each Grantor hereby authorizes the Collateral Agent to file financing
and/or continuation statements, intellectual property security agreements and
amendments to any of the foregoing, in any jurisdictions and with any filing
offices, in each case, in the United States as the Required Lenders may
determine, in their sole discretion, are necessary or advisable to perfect or
otherwise protect the security interest granted to the Collateral Agent herein.
Such financing statements may describe the Collateral in the same manner as
described herein or may contain an indication or description of collateral that
describes such property in any other manner as the Required Lenders may
determine, in their sole discretion, is necessary, advisable or prudent to
ensure the perfection of the security interest in the Collateral granted to the
Collateral Agent herein, including, without limitation, describing such property
as “all assets, whether now owned or hereafter acquired, developed or created”
or words of similar effect. Each Grantor shall furnish to the Collateral Agent
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.

 

14. Grantors’ Duties. It is expressly agreed, anything herein contained to the
contrary notwithstanding, that each Grantor shall remain liable to perform all
of its obligations, if any, assumed by it with respect to the Collateral and
neither the Collateral Agent nor any Lender shall have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement or otherwise, except as set forth herein, nor shall the Collateral
Agent nor any Lender be required or obligated in any manner to perform or
fulfill any of the obligations of any Grantor under or with respect to any
Collateral.

 

15. Release; Termination.

 

(a) Upon the payment in full in cash of the Secured Obligations, the pledge and
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantor. Upon any such termination,
the Collateral Agent will, at the applicable Grantor’s expense, execute and
deliver to such Grantor such documents as such Grantor shall reasonably request
to evidence such termination provided that (i) the Collateral Agent has received
written instructions from the Required Lenders notifying the Collateral Agent
that all Secured Obligations have been paid in full in cash and directing
Collateral Agent to so execute and deliver such documents (which instructions
the Collateral Agent shall be entitled to rely on conclusively) and (ii) such
documents are in form and substance reasonably satisfactory to Collateral Agent.

 

(b) Upon any sale, lease, transfer or other disposition of any item of
Collateral of any Grantor (other than sales of inventory in the ordinary course
of business, which Liens will be deemed to be released automatically in
connection with such sale with no further action required by the Collateral
Agent), the Collateral Agent will, upon receipt of written instructions from the
Required Lenders and at such Grantor’s expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted hereby provided that such documents are in form and substance reasonably
satisfactory to Collateral Agent.

 

16. Additional Definitions.

 

(b) Each of the following terms has at any time the meaning given it at such
time for purposes of the Code: account, as-extracted collateral, chattel paper,
commercial tort claim, commodity account, deposit account, document, equipment,
financing statement, fixtures, general intangible, goods, instrument, inventory,
investment property, issuer, letter-of-credit right, proceeds, products, record,
securities account, security, software, supporting obligation, uncertificated
security.

 

   

   

 

(c) As used in this Agreement, the following terms shall have the meanings
specified in this Section 16 unless the context otherwise requires.

 

(i) “Code” shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York; provided, however, that in the event that, by reason
of mandatory provisions of law, any or all of the perfection or priority of, or
remedies with respect to, any Collateral is governed by the Uniform Commercial
Code as enacted and in effect in a jurisdiction other than the State of New
York, the term “Code” shall mean the Uniform Commercial Code as enacted and in
effect in such other jurisdiction solely for purposes of the provisions hereof
relating to such perfection, priority or remedies.

 

(ii) “Equity Interests” in any Person means any and all shares, interests,
rights to purchase, warrants, options, participation or other equivalents of or
interests in (however designated) equity in such Person, including any preferred
stock, any limited or general partnership interest and any limited liability
company membership interest. 

 

(iii) “Existing Liens” shall have the meaning set forth on Schedule 2 attached
hereto.

 

(iv) “Foreign Subsidiary” means any subsidiary that is incorporated or organized
under the laws of the jurisdiction other than the United States of America, any
State thereof or the District of Columbia.

 

(v) “Lien” means with respect to any asset, any mortgage, lien, pledge, adverse
claim, charge, security interest or other encumbrance, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset.

 

(vi) “Loan Document” means each any of this Agreement, the Note, or the
Subscription Agreement pursuant to which the Lender acquired the Note,

 

(vii) “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

   

   

 

IN WITNESS WHEREOF, the Grantors and the Collateral Agent have executed and
delivered this Amended and Restated Security Agreement as of the date first
above written.

 

  “GRANTORS”         PLASTIC2OIL, INC.         By: /s/ Rahoul Banerjea   Name:
Rahoul Banerjea   Title: Chief Financial Officer         PLASTIC2OIL OF NY #1,
LLC         By: /s/ Rahoul Banerjea   Name: Rahoul Banerjea   Title: Chief
Financial Officer         JBI RE#1, INC.         By: /s/ Rahoul Banerjea   Name:
Rahoul Banerjea   Title: Chief Financial Officer         “COLLATERAL AGENT”    
    CHRISTIANA TRUST, a division of WSFS Bank         By: /s/ S. Amanda Wilson  
Name: S. Amanda Wilson   Title: Trust Officer

 

The undersigned hereby consent (pursuant to Section 9 of the Original Agreement)
to this Amended and Restated Security Agreement as of the date first above
written:

 

REQUIRED LENDERS           /s/ Rick Heddle     Rick Heddle         Heddle
Marine, Inc.         By: /s/ Rick Heddle     Rick Heddle, President  

 

   

   

 

PLASTIC2OIL, INC.

SECURITY AGREEMENT

LENDER SIGNATURE PAGE

 

Acknowledged and agreed to as of the date first above written:

 

“LENDER”       /s/ Lawrence Leahy   [Signature]       Lawrence Leahy   [Print
Name/Title]  

 

   

   

 

SCHEDULE A

 

LENDER  

PROMISSORY NOTE

PRINCIPAL AMOUNT

Richard Heddle   $1,000,000 (August 2013) Richard Heddle   $2,000,000 (September
2013) Heddle Marine Services Inc.   $1,000,000 (November 2014)

 

   

   

 

SCHEDULE 1

 

PLEDGED STOCK

 

JBI, Inc. is the registered owner of 100% of the outstanding equity interests of
the following companies:

 

  1. Plastic2Oil (Canada), Inc., an Ontario, Canada Corporation   2. Plastic2Oil
RE ONE, Inc., and Ontario, Canada, Corporation   3. Plastic2Oil of NY #1, LLC, a
New York limited liability company   4. Plastic2Oil Land, Inc., a Nevada
Corporation   5. Plastic2Oil Marine, Inc., a Nevada Corporation   6. PAK-IT,
LLC, a Florida Corporation   7. Javaco, Inc., an Ohio Corporation   8. JBI RE
#1, Inc., a New York Corporation

 

INTELLECTUAL PROPERTY

 

  1. Patent-pending P2O conversion process/processor 

 

  a. U.S. Patent Application No., 61/512,733, titled “SYSTEM AND PROCESS FOR
CONVERTING PLASTICS TO PETROLEUM PRODUCTS,” filed with the United States Patent
and Trademark Office filed on July 28, 2011.         b. International
Publication No. WO 2013/015819, titled “SYSTEM AND PROCESS FOR CONVERTING
PLASTICS TO PETROLEUM PRODUCTS”.

 

  2. Patent relating to our Data Business for the recovery of tape information.

 

  a. U.S. Patent Application No., 13/884,075, titled “SYSTEM AND METHOD FOR
READING A MAGNETIC TAPE” filed with the United States Patent and Trademark
Office filed on May 8, 2013.          b. International Publication No. WO
2012/064691, titled “SYSTEM AND METHOD FOR READING A MAGNETIC TAPE”. 

 

  3. Registered trademark for Plastic2Oil™ 

 

  a. U.S. Reg. No. 3,960,050 

 

  4. Registered trademark for P2O™ 

 

  a. U.S. Reg. No. 4,102,871

 

COMMERCIAL TORT CLAIMS

 

None.

 

   

   

 

SCHEDULE 2

 

EXISTING LIENS

 

  1. Mechanic’s lien against JBI, Inc. and Plastic2Oil of NY #1, LLC in favor of
National Mechanic’s Contracting Corp. in the amount of approximately $10,000.