Exhibit 10.1
 

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SUBSCRIPTION AGREEMENT
 
in connection with
 
JBI, INC.
 
A Minimum of $1 Million and up to a Maximum of $10 Million
of Aggregate Principal Amount of 12% Secured Promissory Notes
(together with Warrants to Purchase Shares of Common Stock)
 

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August 14, 2013
 
 
 

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INSTRUCTIONS TO SUBSCRIPTION AGREEMENT
 
NAME OF SUBSCRIBER: Richard Heddle
 
SECURITIES OFFERED:  A minimum of $1 million and up to a maximum of $10 million
aggregate principal amount of 12% Secured Promissory Notes due August 31, 2018
and Warrants to purchase three million shares (assuming the minimum offering)
and up to 10 million shares (assuming the maximum offering) of Common Stock at
an exercise price of $0.54 per share.  For every $100,000 principal amount of
Promissory Notes purchased, the Subscriber shall receive Warrants to purchase
100,000 shares of Common Stock.
 
To:       
JBI, Inc.
20 Iroquois Street
Niagara Falls, NY 14303
Attention:  Mr. Nicholas J. Terranova
Chief Financial Officer
Telephone:  (716) 278-0015
   

IMPORTANT INSTRUCTIONS FOR COMPLETION:
 
1.
COMPLETE YOUR NAME ABOVE; and

 
2.
PROVIDE THE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED AND ALL INFORMATION
REQUESTED ON PAGES 10 AND 11, AND COMPLETE THE INVESTOR QUESTIONNAIRE ATTACHED
AS ANNEX A AND ANNEX B (FOR CANADIAN SUBSCRIBERS ONLY); and

 
3.
SIGN THE AGREEMENT IN THE APPROPRIATE PLACE ON PAGE 11 AND ANNEX A AND ANNEX B,
AS APPLICABLE, IN THE APPROPRIATE PLACE;  and

 
4.
MAKE YOUR CHECK PAYABLE TO “JBI, INC.” OR REQUEST WIRING INSTRUCTIONS PURSUANT
TO SECTION 1.3 BELOW; and

 
5.
DELIVER THE ORIGINAL SUBSCRIPTION AGREEMENT WITH CHECK (IF WIRE INSTRUCTIONS ARE
NOT REQUESTED) TO AT THE ADDRESS ABOVE:

 
 
 

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SUBSCRIPTION AGREEMENT
 
This Subscription Agreement (the “Agreement”), is executed by the undersigned
(the “Subscriber”) in connection with the offering (the “Offering”) by JBI,
Inc., a Nevada corporation (the “Company”), of a minimum of $1 million and up to
a maximum of $10 million aggregate principal amount of 12% Secured Promissory
Notes due August 31, 2018 (the “Notes”) and Warrants (the “Warrants”) to
purchase one million shares (assuming the minimum offering) and up to 10 million
shares (assuming the maximum offering) 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”).  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: “JBI” and delivered to the Company, together with an original
executed copy of this Agreement.  Wire transfer instructions are available upon
request from Mr. Nicholas J. Terranova at (716) 278-0015.

 
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”); provided that the initial Closing shall be
for the sale of Notes equal to or greater than the minimum amount set forth
above.  The closings shall take place at the offices of the Company at any time
designated by the Company, but in no event later than September 30, 2013,
subject to extension for up to 15 days at the discretion of the Company.

 
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.

 
 
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(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

 
 
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 (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

 
 
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 (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.

 
 
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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
 
 
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(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.
 
 
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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

 
 
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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.

 
 
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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.

 
 
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A.
SUBSCRIPTION:

 
Principal Amounts of Notes    =    $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.
o
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.
 
 
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D.
TITLE:

 
PLEASE GIVE THE EXACT AND COMPLETE NAME IN WHICH TITLE TO THE SECURITIES ARE TO
BE HELD: Richard Heddle

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IN WITNESS WHEREOF, the Subscriber has executed this Agreement on
the   29th   day of August, 2013.
 
Signature: /s/ Richard Heddle                                               
 
Signature:                                                                    
Name: Richard Heddle                                                           
 
Name:                                                                           
Title (if
applicable)                                                                                                                                                                                                                                                        
 
Address On File with JBI, Inc.

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

   
ACCEPTED ON BEHALF OF THE COMPANY:
 
JBI, INC.
 
By:  /s/ Nicholas J. Terranova
Name:               Nicholas J. Terranova
Title:                 Chief Financial Officer
 
Principal Amount of Notes:
$1,000,000                      
No. of
Warrants:1,000,000                                                                  

 

 

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