SUBSCRIPTION AGREEMENT

 

in connection with

 

PLASTIC2OIL, INC.

 

12% Secured Promissory Notes

(together with Warrants to Purchase shares of Common Stock)

 

 

 

November 19, 2014

 

 

 

 

SUBSCRIPTION AGREEMENT

 

This Subscription Agreement (the “Agreement”), is executed by the undersigned
(the “Subscriber”) in connection with the offering (the “Offering”) by
Plastic2Oil, Inc., a Nevada corporation (the “Company”), of five-year 12%
Secured Promissory Notes (the “Notes”) and Warrants (the “Warrants”) to purchase
shares of Common Stock, par value $.001 per share, of the Company (the “Shares”)
(the Notes and the Warrants are collectively referred to as the “Offered
Securities” and the Offered Securities and the Shares issuable upon the exercise
of the Warrants are collectively referred to herein as the “Securities”). For
every $100,000 principal amount of Notes purchased, the Subscriber shall receive
Warrants to purchase 100,000 shares of Common Stock. The Notes shall be
substantially in the form attached hereto as Exhibit A. The Warrants shall be
substantially in the form attached hereto as Exhibit B. The obligations under
the Note will be secured pursuant to a Security Agreement substantially in the
form attached hereto as Exhibit C.

 

SECTION 1

 

Section 1.1 Subscription. The Subscriber, intending to be legally bound, hereby
irrevocably subscribes for and agrees to purchase the principal amount of Notes
indicated on Page 10 hereof, on the terms and conditions described herein.

 

Section 1.2 Purchase. The Subscriber understands and acknowledges that the
purchase price to be remitted to the Company in exchange for the Offered
Securities shall be equal to the principal amount of Notes purchased.

 

Section 1.3 Payment for Purchase. PAYMENT FOR THE SECURITIES SHALL BE BY WIRE
TRANSFER OR CHECK PAYABLE TO: “PLASTIC2OIL” and delivered to the Company,
together with an original executed copy of this Agreement. Wire transfer
instructions are available upon request from Mr. Rahoul Banerjea at (716)
278-0015; Extension 257.

 

Section 1.4 Closings. The Company may schedule any number of closings to
consummate the sale and issuance of the Notes subscribed for by the Investors in
connection with the Offering (the “Closing”).

 

 

 

 

SECTION 2

 

Section 2.1 Acceptance or Rejection.

 

  (a) The Subscriber understands and agrees that the Company reserves the right
to reject this subscription for the Offered Securities in whole or in part in
any order, if, in its reasonable judgment, it deems such action in the best
interest of the Company, notwithstanding prior receipt by the Subscriber of
notice of acceptance of the Subscriber’s subscription.

 

  (b) In the event of rejection of this subscription, or in the event the sale
of the Offered Securities is not consummated by the Company for any reason (in
which event this Agreement shall be deemed to be rejected), this Agreement and
any other agreement entered into between the Subscriber and the Company relating
to this subscription shall thereafter have no force or effect and the Company
shall promptly return or cause to be returned to the Subscriber the purchase
price remitted to the Company by the Subscriber in exchange for the Offered
Securities.

 

SECTION 3

 

Section 3.1 Subscriber Representations and Warranties. The Subscriber hereby
acknowledges, represents and warrants to, and agrees with, the Company and its
affiliates as follows:

 

  (a) The Subscriber is acquiring the Offered Securities for the Subscriber’s
own account as principal, not as a nominee or agent, for investment purposes
only, and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part and no other person has a direct or indirect
beneficial interest in such Offered Securities. Further, the Subscriber does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities.

 

  (b) The Subscriber acknowledges the Subscriber’s understanding that the
offering and sale of the Offered Securities is intended to be exempt from
registration under the Securities Act of 1933, as amended (the “Securities Act”)
by virtue of Section 4(a)(2) of the Securities Act, the provisions of Rule 506
of Regulation D promulgated under the Securities Act (“Regulation D”) and
Regulation S promulgated under the Securities Act (“Regulation S”). In
furtherance thereof, the Subscriber represents and warrants to and agrees with
the Company and its affiliates as follows:

 

  (i) The Subscriber realizes that the basis for the foregoing exemptions may
not be present, if, notwithstanding such representations, the Subscriber has in
mind merely acquiring Securities for a fixed or determinable period in the
future, or for a market rise, or for sale if the market does not rise. The
Subscriber does not have any such intentions;

 

  (ii) The Subscriber has the financial ability to bear the economic risk of the
Subscriber’s investment, has adequate means for providing for the Subscriber’s
current needs and personal contingencies and has no need for liquidity with
respect to the Subscriber’s investment in the Company; and

 

  (iii) The Subscriber has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
prospective investment. If other than an individual, the Subscriber also
represents it has not been organized for the purpose of acquiring the Offered
Securities.

 

  (c) The Subscriber represents and warrants to the Company as follows:

 

  (i) The Subscriber has been given the opportunity for a reasonable time prior
to the date hereof to ask questions of, and receive answers from the Company or
its representatives concerning the terms and conditions of the Offering, and
other matters pertaining to this investment, and has been given the opportunity
for a reasonable time prior to the date hereof to obtain such additional
information in connection with the Company in order for the Subscriber to
evaluate the merits and risks of purchase of the Offered Securities, to the
extent the Company possesses such information or can acquire it without
unreasonable effort or expense; and

 

  (ii) The Subscriber has not been furnished with any oral representation or
oral information in connection with the offering of the Offered Securities; and

 

  (iii) The Subscriber has determined that the Offered Securities are a suitable
investment for the Subscriber and that at this time the Subscriber could bear a
complete loss of the Subscriber’s investment; and

 

  (iv) The Subscriber is not relying on the Company, or its affiliates with
respect to economic considerations involved in this investment; and

 

  (v) The Subscriber realizes that it may not be able to resell readily any of
the Securities purchased hereunder because (A) there may only be a limited
public market for any Securities and (B) none of the Securities have been
registered under the “blue sky” laws; and

 

  (vi) The Subscriber understands that the Company has the absolute right to
refuse to consent to the transfer or assignment of the Securities if such
transfer or assignment does not comply with applicable state and federal
securities laws; and

 

  (vii) No representations or warranties have been made to the Subscriber by the
Company, or any officer, employee, agent, affiliate or subsidiary of any of it,
other than the representations of the Company in this Agreement; and

 

  (viii) Any information which the Subscriber has heretofore furnished to the
Company with respect to the Subscriber’s financial position and business
experience is correct and complete as of the date of this Agreement and if there
should be any material change in such information the Subscriber will
immediately furnish such revised or corrected information to the Company; and

 

  (ix) The Subscriber has received and reviewed the Company’s Confidential
Private Placement Memorandum dated as of August 9, 2013, as amended, and has had
access to the reports of the Company filed pursuant to the Securities Exchange
Act of 1934, as amended; and

 

  (x) The foregoing representations, warranties and agreements shall survive the
sale of the Securities and acceptance by the Company of the Subscriber’s
subscription.

 

 

 

 

SECTION 4

 

The Company represents and warrants to the Subscriber as follows:

 

Section 4.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the business or properties of the Company and its subsidiaries taken
as a whole.

 

Section 4.2 Authorization. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company hereunder and the authorization, issuance (or reservation for issuance)
and delivery of the Securities being sold hereunder have been taken, and this
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable in accordance with its terms.

 

Section 4.3 Valid Issuance of Securities. The Securities, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, will be validly issued, and, based in part upon the representations of
the Subscriber in this Agreement, will be issued in compliance with all
applicable U.S. federal and state securities laws.

 

 

Section 4.4 No Conflicts. The execution and delivery of this Agreement and the
consummation of the issuance of the Securities and the transactions contemplated
by this Agreement do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under, the
certificate of incorporation or bylaws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
or any existing applicable decree, judgment or order of any court, Federal or
State regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets.

 

Section 4.5 Compliance with Laws. As of the date hereof, the conduct of the
business of the Company complies in all material respects with all material
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto. The Company shall comply with all applicable securities laws
with respect to the sale of the Securities.

 

 

 

 

SECTION 5 (CANADIAN SECURITIES REQUIREMENTS)

 

If the Subscriber is a resident of Alberta, Ontario or British Columbia, such
Subscriber’s subscription for Offered Securities is subject to the terms and
conditions of this Section 5.

 

Section 5.1 Offering Exemption.

 

If the Subscriber is a resident of Alberta, Ontario or British Columbia, the
sale of the Offered Securities by the Company to the Subscriber is conditional
upon such sale being exempt from the requirements as to the filing of a
prospectus and as to the preparation of an offering memorandum contained in any
statute, regulation, instrument, rule or policy applicable to the sale of the
Offered Securities or upon the issue of such orders, consents or approvals as
may be required to permit such sale without the requirement of filing a
prospectus or delivering an offering memorandum.

 

Section 5.2 Representations and Warranties.

 

By the Subscriber’s acceptance of this Agreement, the Subscriber represents and
warrants to the Company (which representations and warranties shall survive the
Closing) that:

 

  · the Subscriber is a resident of Alberta, Ontario or British Columbia and the
Subscriber complies with one of the following:

 

(i) the Subscriber is purchasing as principal or is deemed to be purchasing as
principal in accordance with applicable Canadian securities legislation and
meets the definition of “accredited Subscriber” as such term is defined under NI
45-106 and has completed and signed the Subscriber questionnaire set forth on
Annex B; or

 

(ii) the Subscriber is purchasing as principal and has purchased that number of
Offered Securities having an acquisition cost to the Subscriber of not less than
$150,000 to be paid in cash on the date of Closing;

 

  · The Subscriber is not a person created or used solely to purchase or hold
securities in order to comply with an exemption from the prospectus requirements
of applicable Canadian securities legislation; and

 

  · The Subscriber and any beneficial purchaser for whom it is acting is
resident in the jurisdiction set out in column (1) on Schedule I, such address
was not created and is not used solely for the purpose of acquiring the Offered
Securities and the Subscriber was solicited to purchase in such jurisdiction.

 

Section 5.3 Anti-Money Laundering.

 

The Subscriber represents and warrants that the funds representing the Purchase
Price for the Offered Securities being subscribed for herein which will be
advanced by the Subscriber to the Company hereunder will not represent proceeds
of crime for the purposes of the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act (Canada)(the “PCMLTFA”) and the Subscriber acknowledges
that the Company may in the future be required by law to disclose the
Subscriber’s name and other information relating to this Agreement and the
Subscriber’s subscription hereunder, on a confidential basis, pursuant to
PCMLTFA. To the best of the Subscriber’s knowledge: (a) none of the subscription
funds to be provided by the Subscriber (i) have been or will be derived from or
related to any activity that is deemed criminal under the laws of Canada or the
United States of America or any other jurisdiction, or (ii) are being tendered
on behalf of a person or entity who has not been identified to the Subscriber;
and (b) it shall promptly notify the Company if the Subscriber discovers that
any of such representations ceases to be true, and to provide the Company with
appropriate information in connection therewith.

 

Section 5.4 Ontario Securities Commission Disclosure.

 

If the Subscriber is resident in Ontario, it acknowledges it has been notified
by the Company: (i) of the delivery to the Ontario Securities Commission (the
“OSC”) of the Subscriber’s personal information; (ii) that the Subscriber’s
personal information is being collected indirectly by the OSC under the
authority granted to it in the securities legislation; (iii) the Subscriber’s
personal information is being collected for the purposes of the administration
and enforcement of the securities legislation of Ontario; and (iv) the contact
information of the public official in Ontario who can answer questions about the
OSC’s indirect collection of personal information is, Administrative Assistant
to the Director of Corporate Finance, Ontario Securities Commission, Suite 1903,
Box 5520 Queen Street West, Toronto, Ontario, M5H 3S8, telephone (416) 593-8086,
facsimile (416) 593-8252.

 

Section 5.5 Stock Legends. If the Subscriber is a resident of Alberta, Ontario
or British Columbia, in addition to the securities legends set forth in Section
3.7, such Subscriber hereby agrees with the Company as follows: the certificates
evidencing the Securities issued to such Subscriber, and each certificate issued
in transfer thereof within the four month period after issuance of the
Securities, will bear the following or similar legend:

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE
LATER OF (I) [INSERT THE DISTRIBUTION DATE], AND (II) THE DATE THE ISSUER BECAME
A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA.

 

 

 

 

SECTION 6

 

Section 6.1 Additional Representations and Warranties of Non-U.S. Persons. Each
Subscriber that is not a U.S. Person (as defined under Regulation S), severally
and not jointly, further represents and warrants to the Company as follows: (i)
at the time of (A) the offer by the Company and (B) the acceptance of the offer
by such Person, of the Securities, such Person was outside the U.S; (ii) no
offer to acquire the Securities or otherwise to participate in the transactions
contemplated by this Agreement was made to such Person or its representatives
inside the U.S.; (iii) such Person is not purchasing the Securities for the
account or benefit of any U.S. Person, or with a view towards distribution to
any U.S. Person, in violation of the registration requirements of the Securities
Act; (iv) such Person will make all subsequent offers and sales of the
Securities either (A) outside of the U.S. in compliance with Regulation S; (B)
pursuant to a registration under the Securities Act; or (C) pursuant to an
available exemption from registration under the Securities Act; (v) such Person
is acquiring the Securities for such Person’s own account, for investment and
not for distribution or resale to others; (vi) such Person has no present plan
or intention to sell the Securities in the U.S. or to a U.S. Person at any
predetermined time, has made no predetermined arrangements to sell the
Securities and is not acting as an underwriter or dealer with respect to such
securities or otherwise participating in the distribution of such securities;
(vii) neither such Person, its Affiliates nor any Person acting on behalf of
such Person, has entered into, has the intention of entering into, or will enter
into any put option, short position or other similar instrument or position in
the U.S. with respect to the Securities at any time after the date of Closing
through the one year anniversary of the date of Closing except in compliance
with the Securities Act; (viii) such Person consents to the placement of a
legend on any certificate or other document evidencing the Securities as
required under applicable law (ix) such Person is not acquiring the Securities
in a transaction (or an element of a series of transactions) that is part of any
plan or scheme to evade the registration provisions of the Securities Act.

 

Section 6.2 Opinion. Such Subscriber will not transfer any or all of such
Subscriber’s Securities pursuant to Regulation S or absent an effective
registration statement under the Securities Act and applicable state securities
law covering the disposition of such Subscriber’s Securities, without first
providing the Company with an opinion of counsel (which counsel and opinion are
reasonably satisfactory to the Company) to the effect that such transfer will be
made in compliance with Regulation S or will be exempt from the registration and
the prospectus delivery requirements of the Securities Act and the registration
or qualification requirements of any applicable U.S. state securities laws.

 

 

 

 

SECTION 7

 

 

Section 7.1 Indemnity. The Subscriber agrees to indemnify and hold harmless the
Company, its officers and directors, employees and its affiliates and each other
person, if any, who controls any thereof, against any loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any litigation commenced or threatened or any claim whatsoever) arising
out of or based upon any false representation or warranty or breach or failure
by the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber to any of
the foregoing in connection with this transaction.

 

Section 7.2 Modification. Neither this Agreement nor any provisions hereof shall
be waived, amended, modified, discharged or terminated except by an instrument
in writing signed by the party against whom any waiver, amendment, modification,
discharge or termination is sought.

 

Section 7.3 Notices. Any notice, demand or other communication which any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be in writing and shall be deemed given when (a) deposited, postage
prepaid, in a United States mail letter box, registered or certified mail,
return receipt requested, addressed to such address as may be given herein, or
(b) delivered personally, to the other party hereto at their address set forth
in this Agreement or such other address as a party hereto may request by
notifying the other party hereto.

 

Section 7.4 Counterparts. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart.

 

Section 7.5 Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and assigns. If the
Subscriber is more than one person, the obligation of the Subscriber shall be
joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators and successors.

 

 Section 7.6 Entire Agreement. The Exhibits attached hereto are hereby
incorporated herein by reference. This Agreement together with the Annex and
Exhibits contains the entire agreement of the parties and there are no
representations, covenants or other agreements except as stated or referred to
herein.

 

Section 7.7 Assignability. This Agreement is not transferable or assignable by
the Subscriber except as may be provided herein.

 

Section 7.8 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

 

Section 7.9 Amendments. The provisions of this Agreement may be amended at any
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and by the Subscribers currently holding fifty percent (50%) of the
aggregate principal amount of the outstanding Notes as of the date of such
amendment or waiver.

 

Section 7.10 Neutral Gender. The use in this Agreement of words in the male,
female or neutral gender are for convenience only and shall not affect or
control any provisions of this Agreement.

 

Section 7.11 Captions. The Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

[Subscription signature pages follow]

 

 

 

  

A. SUBSCRIPTION:

 

 

Principal Amount of Note = $1,000,000.

 

 

B. MANNER IN WHICH TITLE IS TO BE HELD (Please check One):

 

              1. o Individual   7. o

Trust/Estate/Pension or Profit Sharing Plan, and

Date Opened: _______________

                            2. o Joint Tenants with Rights of Survivorship   8.
o

As a Custodian for ___________

___________________________

UGMA ____________ (State)

                            3. o Community Property                            
        4. o Tenants in Common   9. o Married with Separate Property            
                5. ☒ Corporation/Partnership   10. o Keogh                      
      6. o IRA   11. o Tenants by the Entirety                             12.
Other         C. ACCREDITED INVESTOR REPRESENTATION:                

 

Subscriber must complete and sign the Accredited Investor Questionnaire attached
as Annex A and Annex B (for Canadian Subscribers only) to this Agreement.

 

 

 

 

 

D. TITLE:

 

PLEASE GIVE THE EXACT AND COMPLETE NAME IN WHICH TITLE TO THE SECURITIES ARE TO
BE HELD: Heddle Marine Service Inc.

 

 

 

IN WITNESS WHEREOF, the Subscriber has executed this Agreement on the 19th day
of November , 2014.

 

Heddle Marine Service Inc.

 

Signature: /S/ Richard Heddle   Signature: Name: Richard Heddle    Name: Title
President     Address On File with Plastic2Oil, Inc.

 

***DO NOT WRITE BELOW DOTTED LINE***

    ACCEPTED ON BEHALF OF THE COMPANY:   PLASTIC2OIL, INC.  

By: /S/ Rahoul Banerjea

Name: Rahoul Banerjea

Title: Chief Financial Officer

  Principal Amount of Notes: $1,000,000   No. of Warrants:                    
      1,000,000