Exhibit 10.1
 
FORM OF SUBSCRIPTION AGREEMENT
 
This SUBSCRIPTION AGREEMENT (“Agreement”), dated as of _________________, is
made by and among JBI, INC., a corporation organized under the laws of Nevada
(the “Company”) and each of the Persons listed on Schedule I hereto
(collectively, the “Investors,” and individually an “Investor”).  Each of the
Company and Investors are referred to herein individually as a “Party” and
collectively as the “Parties.”
 
RECITALS:
 
WHEREAS, through a Confidential Private Placement Memorandum, dated as of
December 19, 2012, including exhibits attached thereto (the “Memorandum”), the
Company is offering (the “Offering”) to accredited investors (as defined in Rule
501(a) of Regulation D promulgated under the Securities Act) in one or more
Closings up to 2,000,000 shares ( the “Maximum Amount”) of Series B Convertible
Preferred Stock, $0.001 par value per share, of the Company (the “Series B
Preferred Stock”), which shares shall have the rights, preferences and
privileges as set forth in the Certificate of Designation of Series B
Convertible Preferred Stock, attached as Exhibit D to the Memorandum (the
“Series B Designation”);
 
WHEREAS, the Company and each Investor is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), Rule 506 of Regulation D promulgated by the U.S.  Securities and Exchange
Commission (the “SEC”) under the Securities Act (“Regulation D”) and Regulation
S promulgated by the SEC under the Securities Act (“Regulation S”); and
 
WHEREAS, each Investor wishes to purchase, and the Company wishes to sell, upon
the terms and conditions stated in this Agreement, the aggregate number of
shares of Series B Preferred Stock as set forth opposite such Investor’s name in
column (3) on Schedule I at a per share purchase price of $3.50 per Share;
 
NOW, THEREFORE, in consideration of the foregoing premises, and the covenants,
representations and warranties set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
accepted, the Parties, intending to be legally bound, hereby agree as follows:
 
ARTICLE I
DEFINITIONS
 
Section 1.1            Definitions.
 
For all purposes of and under this Agreement, the following terms shall have the
following respective meanings:
 
“8-K Filing” has the meaning set forth in Section 5.2.
 
“Accredited Investor” has the meaning set forth in Rule 501 under the Securities
Act.
 
 
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“Action” means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending
or threatened before or by any court, arbitrator, governmental or administrative
agency, regulatory authority (federal, state, county, local or foreign), stock
market, stock exchange or trading facility.
 
“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
 
“Agreement” has the meaning set forth in the preamble.
 
“Business Day” shall mean any day other than a Saturday, Sunday or a day on
which commercial banks in New York, New York are required or authorized to be
closed.
 
“Closing” has the meaning set forth in Section 2.3.
 
“Closing Date” has the meaning set forth in Section 2.3.
 
“Common Stock” means the shares of common stock, par value $0.001 per share, of
the Company.
 
“Company” has the meaning set forth in the preamble.
 
“Company Organizational Documents” means the Certificate of Incorporation and
Bylaws of the Company and any other organizational documents of the Company and
any of its Subsidiaries, each as amended.
 
“Contract” means any written or oral contract, lease, license, indenture, note,
bond, agreement, arrangement, understanding, permit, concession, franchise or
other instrument.
 
“Conversion Shares” means shares of Common Stock issuable upon conversion of the
Series B Preferred Stock.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the SEC thereunder,
all as the same will then be in effect.
 
“GAAP” means, with respect to any Person, generally accepted accounting
principles in the U.S. applied on a consistent basis with such Person’s past
practices.
 
“Governmental Authority” means any domestic or foreign, federal or national,
state or provincial, municipal or local government, governmental authority,
regulatory or administrative agency, governmental commission, department, board,
bureau, agency or instrumentality, political subdivision, commission, court,
tribunal, official, arbitrator or arbitral body.
 
“Indemnified Liabilities” has the meaning set forth in Section 7.2.
 
“Indemnitees” has the meaning set forth in Section 7.2.
 
 
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“Intellectual Property” means all industrial and intellectual property,
including, without limitation, all U.S. and non-U.S.  patents, patent
applications, patent rights, trademarks, trademark applications, common law
trademarks, Internet domain names, trade names, service marks, service mark
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world.
 
“Investor” and “Investors” have the respective meanings set forth in the
preamble.
 
“Investor Questionnaires” means the investor questionnaires completed by the
Investors substantially in form attached hereto as Exhibit A, and each of the
foregoing, is individually referred to herein as an “Investor Questionnaire.”
 
“Knowledge” shall mean, except as otherwise explicitly provided herein, actual
knowledge after reasonable investigation.  The Company shall be deemed to have
“Knowledge” of a matter if any of its officers or directors has Knowledge of
such matter.  Phrases such as “to the Knowledge of the Company” or the
“Company’s Knowledge” shall be construed accordingly.
 
“Laws” means, with respect to any Person, any U.S.  or non-U.S., federal,
national, state, provincial, local, municipal, international, multinational or
other Law (including common law), constitution, statute, code, ordinance, rule,
regulation or treaty applicable to such Person.
 
“License” means any security clearance, permit, license, variance, franchise,
order, approval, consent, certificate, registration or other authorization of
any Governmental Authority, judicial authority or regulatory body, and other
similar rights.
 
“Lien” means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including, without limitation, any conditional sale or other
title retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction and including any lien or charge arising by Law.
 
“Material Adverse Effect” means, with respect to any Person, a material adverse
effect on the business, financial condition, operations, results of operations,
assets, customer, supplier or employee relations or future prospects of such
Person.
 
“Maximum Amount” has the meaning set forth in the recitals.
 
“Memorandum” has the meaning set forth in the recitals.
 
“Offering” has the meaning set forth in the recitals.
 
 
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“Order” means any order, judgment, ruling, injunction, assessment, award, decree
or writ of any Governmental Authority or regulatory body.
 
“Ordinary Course of Business” means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).
 
“Party” and “Parties” have the meanings set forth in the preamble.
 
“Person” means all natural persons, corporations, business trusts, associations,
companies, partnerships, limited liability companies, joint ventures and other
entities, governments, agencies and political subdivisions.
 
“Principal Market” means the OTCQB.
 
“Purchase Price” has the meaning set forth in Section 2.2.
 
“Regulation D” has the meaning set forth in the recitals.
 
“Regulation S” has the meaning set forth in the recitals.
 
“Regulation SHO” has the meaning set forth in Section 3.7(d).
 
“Rule 144” means Rule 144 promulgated by the SEC under the Securities Act, as
such rule may be amended from time to time, or any other similar or successor
rule or regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration.
 
“SEC” has the meaning set forth in the recitals.
 
“SEC Reports” has the meaning set forth in Section 4.9.
 
“Securities” means the Shares.
 
“Securities Act” has the meaning set forth in the recitals.
 
“Series A Preferred Stock” has the meaning set forth in Section 4.6.
 
“Series B Designation” has the meaning set forth in the recitals.
 
“Series B Preferred Stock” has the meaning set forth in the recitals.
 
“Shares” means, collectively, the shares of Series B Preferred Stock purchased
in the Offering.
 
“Short Sales” has the meaning set forth in Section 3.7(d).
 
“Subsidiaries” means any Person in which the Company, directly or indirectly,
(a) owns any of the outstanding capital stock or holds any equity or similar
interest of such Person or (b) controls or operates all or any part of the
business, operations or administration of such Person, and each of the
foregoing, is individually referred to herein as a “Subsidiary.”
 
 
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“Transaction Documents” means, collectively, this Agreement and the Investor
Questionnaires and all agreements, certificates, instruments and other documents
to be executed and delivered in connection with the transactions contemplated by
this Agreement.
 
“U.S.” means the United States of America.
 
“U.S. Person” has the meaning set forth in Regulation S under the Securities
Act.
 
ARTICLE II
PURCHASE AND SALE OF THE SHARES; CLOSING
 
Section 2.1            Purchase and Sale of the Shares.
 
At the Closing, the Company shall issue and sell to each Investor, and each
Investor severally, but not jointly, shall purchase from the Company on the
Closing Date, such aggregate number of Shares as is set forth opposite such
Investor’s name in column (3) on Schedule I.
 
Section 2.2            Purchase Price; Form of Payment.
 
The aggregate purchase price for the Shares to be purchased by each Investor
(the “Purchase Price”) shall be the amount set forth opposite such Investor’s
name in column (2) on Schedule I.  On the Closing Date: (i) each Investor shall
pay its respective Purchase Price  for the Shares to be issued and sold to such
Investor at the Closing, by wire transfer of immediately available funds to the
Company in accordance with the wire instructions provided by the Company, such
funds to be held until Closing; and (ii) immediately upon the Closing, the
Company shall deliver to its transfer agent written instructions for the
issuance to each Investor of one or more certificates representing such
aggregate number of Common Shares as is set forth opposite such Investor’s name
in column (3) of Schedule I, in all cases, duly executed on behalf of the
Company and registered in the name of such Investor or its designee.
 
Section 2.3            Closing.
 
Upon the terms and subject to the conditions of this Agreement, the transactions
contemplated by this Agreement shall take place at a closing (the “Closing”) to
be held at the offices of Pryor Cashman LLP located at 7 Times Square, New York,
NY 10036, at a time and date to be specified by the Parties, which shall be no
later than the second (2nd) Business Day following the satisfaction or, if
permitted pursuant hereto, waiver of the conditions set forth in Article VI, or
at such other location, date and time as Investors and the Company shall
mutually agree.  The date and time of the Closing is referred to herein as the
“Closing Date.”  The Company may hold one or more Closings on the sale of Shares
for an aggregate amount of not more than the Maximum Amount, and at any time
after the initial Closing but not later than termination date specified in the
Memorandum, the Company shall be permitted to sell, in one or more additional
Closings, up to such number of Shares not sold at the initial Closing in an
amount not to exceed the Maximum Amount in the aggregate (which amount shall
include the amount sold in the initial Closing);
 
 
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ARTICLE III
REPRESENTATIONS OF THE INVESTORS
 
The Investors severally, and not jointly, hereby represent and warrant to the
Company that the statements contained in this Article III are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article III) (except
where another date or period of time is specifically stated herein for a
representation or warranty).
 
Section 3.1            Authority.
 
Such Investor has all requisite authority and power to enter into and deliver
this Agreement and any of the other Transaction Documents to which such Investor
is a party, and any other certificate, agreement, document or instrument to be
executed and delivered by such Investor in connection with the transactions
contemplated hereby and thereby and to perform such Investor’s obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.  This Agreement has been, and each of the Transaction Documents to
which such Investor is a party will be, duly and validly authorized and
approved, executed and delivered by such Investor.
 
Section 3.2            Binding Obligations.
 
Assuming this Agreement and the Transaction Documents have been duly and validly
authorized, executed and delivered by the parties hereto and thereto other than
such Investor, this Agreement and each of the Transaction Documents to which
such Investor is a party are duly authorized, executed and delivered by such
Investor, and constitutes the legal, valid and binding obligations of such
Investor, enforceable against such Investor in accordance with their respective
terms, except as such enforcement is limited by general equitable principles, or
by bankruptcy, insolvency and other similar Laws affecting the enforcement of
creditors rights generally.
 
Section 3.3            No Conflicts.
 
Neither the execution or delivery by such Investor of this Agreement or any
Transaction Document to which such Investor is a party, nor the consummation or
performance by such Investor of the transactions contemplated hereby or thereby
will, directly or indirectly, (a) contravene, conflict with, or result in a
violation of any provision of the organizational documents of such Investor (if
such Investor is not a natural person); (b) contravene, conflict with,
constitute a default (or an event or condition which, with notice or lapse of
time or both, would constitute a default) under, or result in the termination or
acceleration of, any agreement or instrument to which such Investor is a party
or by which the properties or assets of such Investor are bound; or (c)
contravene, conflict with, result in any breach of, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, impair the rights of such Investor under, or alter the obligations of any
Person under, or create in any Person the right to terminate, amend, accelerate
or cancel, or require any notice, report or other filing (whether with a
Governmental Authority or any other Person) pursuant to, or result in the
creation of a Lien on any of the assets or properties of the Company under, any
note, bond, mortgage, indenture, Contract, lease, License, permit, franchise or
other instrument or obligation to which such Investor is a party or any of such
Investor’s assets and properties are bound or affected, except, in the case of
clauses (b) or (c) for any such contraventions, conflicts, violations, or other
occurrences as would not have a Material Adverse Effect on such Investor.
 
 
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Section 3.4            Certain Proceedings.
 
There is no Action pending against, or to the Knowledge of such Investor,
threatened against or affecting, such Investor by any Governmental Authority or
other Person with respect to such Investor that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the transactions contemplated by this Agreement.
 
Section 3.5            No Brokers or Finders.
 
No Person has, or as a result of the transactions contemplated herein will have,
any right or valid claim against such Investor for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, based upon
arrangements made by or on behalf of such Investor, and such Investor will
indemnify and hold the Company and its Affiliates harmless against any liability
or expense arising out of, or in connection with, any such claim.
 
Section 3.6            Investment Representations.
 
Each Investor severally, and not jointly, hereby represents and warrants, solely
with respect to itself and not any other Investor, to the Company as follows:
 
(a)           Purchase Entirely for Own Account.  Such Investor is acquiring the
Securities proposed to be acquired hereunder for investment for its own account
and not with a view to the resale or distribution of any part thereof, and such
Investor has no present intention of selling or otherwise distributing such
Securities, or the Conversion Shares, except in compliance with applicable
securities Laws.
 
(b)           Restricted Securities.  Such Investor understands that the
Securities and the Conversion Shares are characterized as “restricted
securities” under the Securities Act inasmuch as this Agreement contemplates
that, if acquired by the Investor pursuant hereto, the Securities and the
Conversion Shares would be acquired in a transaction not involving a public
offering.  The issuance of the Securities hereunder is being effected, and the
issuance of the Conversion Shares upon conversion of the Securities will be
effected, in reliance upon an exemption from registration afforded under Section
4(2) of the Securities Act, Rule 506 of Regulation D and Regulation S.  Such
Investor further acknowledges that if the Securities (or upon conversion, the
Conversion Shares) are issued to such Investor in accordance with the provisions
of this Agreement, such Securities (and upon conversion, such Conversion Shares)
may not be resold without registration under the Securities Act or the existence
of an exemption therefrom.  Such Investor represents that he is familiar with
Rule 144, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act
 
 
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(c)           Acknowledgment of Non-Registration.  Such Investor understands and
agrees that the Securities to be issued pursuant to this Agreement, and the
Conversion Shares issuable upon conversion of the Securities, have not been
registered under the Securities Act or the securities Laws of any state of the
U.S. and that the Company has no obligation hereunder, nor does such Investor
have any right(s) under any of the Transaction Documents to registration of such
Securities or such Conversion Shares.
 
(d)           Status.  By its execution of this Agreement, such Investor
represents and warrants to the Company as indicated on its signature page to
this Agreement, either that: (i) such Investor is an Accredited Investor; or
(ii) such Investor is not a U.S. Person.  Such Investor understands that the
Securities are being offered and sold to such Investor in reliance upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of such Investor set forth in this Agreement,
in order that the Company may determine the applicability and availability of
the exemptions from registration of the Securities on which the Company is
relying.
 
(e)           Additional Representations and Warranties.  Such Investor,
severally and not jointly, further represents and warrants to the Company as
follows: (i) such Person qualifies as an Accredited Investor; (ii) such Person
consents to the placement of a legend on any certificate or other document
evidencing the Securities or the Conversion Shares substantially in the form set
forth in Section 3.7(a); (iii) such Person has sufficient knowledge and
experience in finance, securities, investments and other business matters to be
able to protect such Person’s or entity’s interests in connection with the
transactions contemplated by this Agreement; (iv) such Person has consulted, to
the extent that it has deemed necessary, with its tax, legal, accounting and
financial advisors concerning its investment in the Securities and can afford to
bear such risks for an indefinite period of time, including, without limitation,
the risk of losing its entire investment in the Securities; (v) such Person has
received and reviewed the Memorandum and had access to the SEC Reports; (vi)
such Person has been furnished during the course of the transactions
contemplated by this Agreement with all other public information regarding the
Company that such Person has requested and all such public information is
sufficient for such Person to evaluate the risks of investing in the Securities;
(vii) such Person has been afforded the opportunity to ask questions of and
receive answers concerning the Company and the terms and conditions of the
issuance of the Securities; (viii) such Person is not relying on any
representations and warranties concerning the Company made by the Company or any
officer, employee or agent of the Company, other than those contained in this
Agreement or the SEC Reports; (ix) such Person will not sell or otherwise
transfer the Securities, or the Conversion Shares, unless either (A) the
transfer of such securities is registered under the Securities Act or (B) an
exemption from registration of such securities is available; (x) such Person
understands and acknowledges that the Company is under no obligation to register
the Securities or the Conversion Shares for sale under the Securities Act; (xi)
such Person represents that the address furnished in Schedule I is the principal
residence if he is an individual or its principal business address if it is a
corporation or other entity; (xii) such Person understands and acknowledges that
the Securities have not been recommended by any federal or state securities
commission or regulatory authority, that the foregoing authorities have not
confirmed the accuracy or determined the adequacy of any information concerning
the Company that has been supplied to such Person and that any representation to
the contrary is a criminal offense; and (xiii) such Person acknowledges that the
representations, warranties and agreements made by such Person herein shall
survive the execution and delivery of this Agreement and the purchase of the
Securities.
 
 
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(f)           Additional Representations and Warranties of Non-U.S.
Persons.  Each Investor that is not a U.S. Person, 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 or any
Conversion Shares 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 or any Conversion Shares in the U.S. or
to a U.S. Person at any predetermined time, has made no predetermined
arrangements to sell the Securities or any Conversion Shares 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 or any Conversion Shares at any time after the Closing Date through
the one year anniversary of the Closing Date 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 substantially in the
form set forth in  Section 3.7(b) and (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.
 
(g)           Opinion.  Such Investor will not transfer any or all of such
Investor’s Securities, or any Conversion Shares issued upon conversion of such
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 Investor’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
 
(h)           Consent.  Such Investor understands and acknowledges that the
Company may refuse to transfer the Securities or any Conversion Shares, unless
such Investor complies with Section 3.7 and any other restrictions on
transferability set forth herein or in the Series B Designation.  Such Investor
consents to the Company making a notation on its records or giving instructions
to any transfer agent of the Securities or the Company’s Common Stock in order
to implement the restrictions on transfer of the Securities.
 
 
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Section 3.7            Stock Legends.  Such Investor hereby agrees with the
Company as follows:
 
(a)           The certificates evidencing the Securities issued to those
Investors who are Accredited Investors, the Conversion Shares issued upon
conversion thereof, and each certificate issued in transfer thereof, will bear
the following or similar legend:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TOWARD RESALE
AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL WHICH IS SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT SUCH REGISTRATIONS ARE NOT REQUIRED.
 
The certificates evidencing the Securities, and each certificate issued in
transfer thereof, will bear the following or similar additional legend:
 
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS A
COMPLETE STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATION, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF SHARES OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OR SUCH
PREFERENCES AND/OR RIGHTS.  ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE
SECRETARY OF THE COMPANY.
 
(b)           The certificates evidencing the Securities issued to those
Investors who are not U.S. Persons, the Conversion Shares issued upon conversion
thereof, and each certificate issued in transfer thereof, will bear the
following or similar legend:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO
THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR
ELIGIBLE TO BE SOLD PURSUANT TO THE PROVISIONS OF REGULATION S UNDER SAID ACT.
 
 
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The certificates evidencing the Securities, and each certificate issued in
transfer thereof, will bear the following or similar additional legend:
 
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS A
COMPLETE STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATION, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF SHARES OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OR SUCH
PREFERENCES AND/OR RIGHTS.  ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE
SECRETARY OF THE COMPANY.
 
(c)           Other Legends.  The certificates representing such Securities, and
each certificate issued in transfer thereof, and the certificates representing
any Conversion Shares, will also bear any other legend required under any
applicable Law, including, without limitation, any state corporate and state
securities law, or contract.
 
(d)           Certain Trading Activities.  Such Investor has not directly or
indirectly, nor has any person acting on behalf of or pursuant to any
understanding with such Investor, engaged in any transactions in the securities
of the Company (including, without limitation, Short Sales involving the
Company’s securities) since the time that such Investor was first contacted by
the Company regarding the investment in the Company contemplated herein.  “Short
Sales” include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act (“Regulation SHO”) and
all types of direct and indirect stock pledges, forward sales contracts,
options, puts, calls, swaps and similar arrangements (including on a total
return basis), and sales and other transactions through non-U.S.  broker dealers
or foreign regulated brokers (but shall not be deemed to include the location
and/or reservation of borrowable shares of Common Stock).
 
(e)            Residency; Foreign Securities Laws.  Unless such Investor
resides, in the case of individuals, or is headquartered or formed, in the case
of entities, in the U.S., such Investor acknowledges that the Company will not
issue any Securities or Conversion Shares in compliance with the laws of any
jurisdiction outside of the U.S. and the Company makes no representation or
warranty that any Securities or any Conversion Shares issued outside of the U.S.
have been offered or sold in compliance with the laws of the jurisdiction into
which such Securities or Conversion Shares were issued.  Any Investor not a
resident of or formed in the U.S. warrants to the Company that no filing is
required by the Company with any governmental authority in such Investor’s
jurisdiction in connection with the transactions contemplated hereby.  If such
Investor is domiciled or was formed outside of the U.S., such Investor has
satisfied itself as to the full observance of the laws of its jurisdiction in
connection with the acquisition of the Securities or any Conversion Shares or
any use of this Agreement, including (i) the legal requirements within its
jurisdiction for the purchase of the Securities, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Securities or the Conversion Shares.  If such Investor
is domiciled or was formed outside the U.S., such Investor’s acquisition of and
payment for, and its continued ownership of the Securities  or the Conversion
Shares, will not violate any applicable securities or other laws of his, her or
its jurisdiction.
 
 
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Section 3.8            Disclosure.
 
No representation or warranty of such Investor contained in this Agreement or
any other Transaction Document and no statement or disclosure made by or on
behalf of such Investor to the Company or any of its Subsidiaries pursuant to
this Agreement or any other Transaction Document herein contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company represents and warrants to the Investors that, except as otherwise
disclosed in the SEC Reports filed prior to the date hereof, the statements
contained in this Article IV,  are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article IV) (except where another date or period of
time is specifically stated herein for a representation or warranty).
 
Section 4.1            Organization and Qualification.
 
Each of the Company and its Subsidiaries is an entity duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
organization, has all requisite corporate authority and power, governmental
Licenses, authorizations, consents and approvals to carry on its business as
presently conducted and to own, hold and operate its properties and assets as
now owned, held and operated by it, and is duly qualified to do business and in
good standing in each jurisdiction in which the failure to be so qualified would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company.
 
Section 4.2            Authority.
 
The Company and each of its Subsidiaries has all requisite authority and power,
Licenses, authorizations, consents and approvals to enter into and deliver this
Agreement and any of the other Transaction Documents to which the Company and
such Subsidiary is a party and any other certificate, agreement, document or
instrument to be executed and delivered by the Company or such Subsidiary in
connection with the transactions contemplated hereby and thereby and to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  The execution and delivery of this Agreement
and the other Transaction Documents by the Company and any of its Subsidiaries
and the performance by the Company and any of its Subsidiaries of their
respective obligations hereunder and thereunder and the consummation by the
Company and any of its Subsidiaries of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of the
Company and such Subsidiary.  Except for the filing of the Series B Designation
prior to the first Closing, and any consents that will be obtained by the
Company prior to the first Closing, neither the Company nor any of its
Subsidiaries needs to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any Person or Governmental Authority in
order for the Parties to execute, deliver or perform this Agreement or the
transactions contemplated hereby.  This Agreement has been, and each of the
Transaction Documents to which the Company and any of its Subsidiaries is a
party will be, duly and validly authorized and approved, executed and delivered
by the Company and such Subsidiary.
 
 
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Section 4.3            Binding Obligations.
 
Assuming this Agreement and the Transaction Documents have been duly and validly
authorized, executed and delivered by the parties hereto and thereto other than
the Company and its Subsidiaries, this Agreement and each of the Transaction
Documents to which the Company and any of its Subsidiaries is a party are duly
authorized, executed and delivered by the Company and such Subsidiary and
constitutes the legal, valid and binding obligations of the Company and such
Subsidiary enforceable against the Company and such Subsidiary in accordance
with their respective terms, except as such enforcement is limited by general
equitable principles, or by bankruptcy, insolvency and other similar Laws
affecting the enforcement of creditors rights generally.
 
Section 4.4            No Conflicts.
 
Neither the execution nor the delivery by the Company or any of its Subsidiaries
of this Agreement or any Transaction Document to which the Company or any of its
Subsidiaries is a party, nor the consummation or performance by the Company or
any of its Subsidiaries of the transactions contemplated hereby or thereby will,
directly or indirectly, (a) contravene, conflict with, or result in a violation
of any provision of the Company Organizational Documents, (b) contravene,
conflict with or result in a violation of any Law, Order, charge or other
restriction or decree of any Governmental Authority or any rule or regulation of
the Principal Market applicable to the Company or any of its Subsidiaries, or by
which the Company or any of its Subsidiaries or any of their respective assets
and properties are bound or affected, (c) contravene, conflict with, result in
any breach of, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, impair the rights of the Company
under, or alter the obligations of any Person under, or create in any Person the
right to terminate, amend, accelerate or cancel, or require any notice, report
or other filing (whether with a Governmental Authority or any other Person)
pursuant to, or result in the creation of a Lien on any of the assets or
properties of the Company or any of its Subsidiaries under, any note, bond,
mortgage, indenture, Contract, License, permit, franchise or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
and properties are bound or affected; or (d) contravene, conflict with, or
result in a violation of, the terms or requirements of, or give any Governmental
Authority the right to revoke, withdraw, suspend, cancel, terminate or modify,
any Licenses, permits, authorizations, approvals, franchises or other rights
held by the Company or any of its Subsidiaries or that otherwise relate to the
business of, or any of the properties or assets owned or used by, the Company or
any of its Subsidiaries, except, in the case of clauses (b), (c), or (d), for
any such contraventions, conflicts, violations, or other occurrences as would
not have a Material Adverse Effect on the Company as a whole.
 
Section 4.5            Subsidiaries.
 
Except as set forth in the SEC Reports filed prior to the date hereof, the
Company does not own, directly or indirectly, any equity or other ownership
interest in any corporation, partnership, joint venture or other entity or
enterprise.  There are no Contracts or other obligations (contingent or
otherwise) of the Company to retire, repurchase, redeem or otherwise acquire any
outstanding shares of capital stock of, or other ownership interests in, any
other Person or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any other Person.
 
 
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Section 4.6            Capitalization.
 
(a)           The authorized capital stock of the Company consists of
150,000,000 shares of Common Stock and 5,000,000 shares of preferred stock,
$0.001 par value per share of which (i) 89,855,816 shares of Common Stock are
issued and outstanding; (ii) 1,997,500 shares of Common Stock are issuable upon
the exercise of outstanding warrants; (iii) 5,240,000 shares of the Company’s
Common Stock are issuable upon the exercise of unvested options granted under
the Company’s 2012 Long-Term Incentive Plan; (iv) 1,000,000 of preferred stock
are issued and outstanding (the “Series A Preferred Stock”), and (v) upon the
filing of the Series B Designation with the Secretary of State of the State of
Nevada prior to the first Closing, 2,000,000 shares of Series B Preferred
Stock.  In addition, there are 4,685,000 shares of Common Stock reserved for
issuance under the Company’s 2012 Long-Term Incentive Plan.  Except as set forth
above, no shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding.  All outstanding shares of the
capital stock of the Company are, and all such shares that may be issued prior
to the Closing Date will be when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the Laws of the jurisdiction
of the Company’s organization, the Company Organizational Documents or any
Contract to which the Company is a party or otherwise bound. Except as set forth
above, there are no options, warrants, rights, convertible or exchangeable
securities, “phantom” stock rights, stock appreciation rights, stock-based
performance units, commitments, Contracts, arrangements or undertakings of any
kind to which the Company is a party or by which it is bound (x) obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity interests in, or any security
convertible or exercisable for or exchangeable into any capital stock of or
other equity interest in, the Company, (y) obligating the Company to issue,
grant, extend or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking or (z) that give any Person the
right to receive any economic benefit or right similar to or derived from the
economic benefits and rights occurring to holders of the capital stock of the
Company.  There are no outstanding Contracts or obligations of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company.  There are no registration rights, proxies, voting trust agreements or
other agreements or understandings with respect to any class or series of any
capital stock or other security of the Company to which the Company is a
party.  Notwithstanding the foregoing sentence, the Company is aware that Mr.
John Bordynuik entered into a letter agreement dated May 15, 2012 with the
investors in the Company’s May 2012 private placement with respect to, among
other things, Mr. Bordynuik’s voting and ownership of certain securities of the
Company.
 
(b)           The issuance of the Securities to the Investors has been duly
authorized and, upon delivery to the Investors of certificates therefor in
accordance with the terms of this Agreement, the Securities will have been
validly issued and fully paid, and will be nonassessable, have the rights,
preferences and privileges specified, will be free of preemptive rights and will
be free and clear of all Liens and restrictions, other than Liens created by the
Investors and restrictions on transfer imposed by this Agreement and the
Securities Act.  The Conversion Shares have been duly authorized, reserved for
issuance and, upon issuance in accordance with the Series B Designation, will
have been validly issued and fully paid, and will be nonassessable, have the
rights, preferences and privileges specified, will be free of preemptive rights
and will be free and clear of all Liens and restrictions, other than Liens
created by the Investors and restrictions on transfer imposed by this Agreement
and the Securities Act
 
 
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Section 4.7            Title to Assets.
 
The Company and each Subsidiary has sufficient title to, or valid leasehold
interests in, all of its properties and assets used in the conduct of their
respective businesses.  All such assets and properties, other than assets and
properties in which the Company or any of its Subsidiaries has leasehold
interests, are free and clear of all Liens, except for Liens that, in the
aggregate, do not and will not materially interfere with the ability of the
Company or such Subsidiary to conduct business as currently conducted.
 
Section 4.8            Intellectual Property.
 
The Company and its Subsidiaries own or possess adequate rights or licenses to
use all Intellectual Property necessary to conduct their respective businesses
as now conducted and as presently proposed to be conducted.  None of the
Company’s or any of its Subsidiaries’ Intellectual Property has expired,
terminated or been abandoned, or is expected to expire, terminate or be
abandoned, within two years from the date of this Agreement.  Neither the
Company nor any of its Subsidiaries has Knowledge of any infringement by the
Company or any of its Subsidiaries of Intellectual Property of other
Persons.  There is no claim, action or proceeding being made or brought, or to
the Knowledge of the Company or any of its Subsidiaries, being threatened,
against the Company or any of its Subsidiaries regarding its Intellectual
Property.  To the Knowledge of the Company or any of its Subsidiaries, there are
no facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings.  The Company and each
Subsidiary has taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their respective Intellectual Property.
 
Section 4.9            SEC Reports.  The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC, pursuant to the Exchange Act (the “SEC Reports”).
 
Section 4.10          Listing and Maintenance Requirements.
 
The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with the listing and maintenance
requirements for continued listing or quotation of the Common Stock on the
trading market on which the Common Stock is currently listed or quoted.  Neither
the issuance and sale of the Securities under this Agreement, nor the issuance
of any Conversion Shares upon conversion of the Securities, contravene the rules
and regulations of the trading market on which the Common Stock is currently
listed or quoted, and no approval of the stockholders of the Company is required
for the Company to issue and deliver to the Investors the Securities
contemplated by this Agreement.
 
 
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Section 4.11          No General Solicitation.
 
Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with
the offer or sale of the Securities.  No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Company for the payment of any placement agent’s fees, financial advisory fees,
or brokers’ commissions relating to or arising out of the transactions
contemplated hereby.
 
Section 4.12          Disclosure.
 
All documents and other papers delivered or made available by or on behalf of
the Company or any of its Subsidiaries in connection with this Agreement are
true, complete, correct and authentic in all material respects.  No
representation or warranty of the Company or any of its Subsidiaries contained
in this Agreement and no statement or disclosure made by or on behalf of the
Company or any of its Subsidiaries to any Investor pursuant to this Agreement or
any other agreement contemplated herein contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
 
ARTICLE V
COVENANTS
 
Section 5.1            Form D; Blue Sky.
 
The Company shall file a Form D with respect to the Securities as required under
Regulation D.  The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to, qualify the Securities for sale to the Investors at the
Closing pursuant to this Agreement under applicable securities or “blue sky”
laws of the states of the United States (or to obtain an exemption from such
qualification).  Without limiting any other obligation of the Company under this
Agreement, the Company shall timely make all filings and reports relating to the
offer and sale of the Securities required under all applicable securities laws
(including, without limitation, all applicable federal securities laws and all
applicable “blue sky” laws), and the Company shall comply with all applicable
federal, state and local laws, statutes, rules, regulations and the like
relating to the offering and sale of the Securities to the Investors.
 
Section 5.2            Disclosure of Transactions and Other Material
Information.
 
On or before the fourth (4th) Business Day after the date of this Agreement, the
Company shall file a Current Report on Form 8-K describing all the material
terms of the transactions contemplated by the Transaction Documents in the form
required by the Exchange Act and attaching all the material Transaction
Documents (including, without limitation, this Agreement (and all schedules to
this Agreement) (including all attachments, the “8-K Filing”), which such 8-K
Filing may disclose the identity of the Investors that are party to this
Agreement.
 
Section 5.3            Rule 144.
 
With a view to making available to the Investors the benefits of Rule 144 and
any other rule or regulation of the SEC that may at any time permit an Investor
to sell securities of the Company to the public without registration, the
Company shall:
 
 
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(i)            make and keep available adequate current public information, as
those terms are understood and defined in Rule 144, at all times;
 
(ii)           use commercially reasonable efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
 
(iii)           furnish to any Investor forthwith upon
request  such  information as may be reasonably requested in availing any
Investor of any rule or regulation of the SEC that permits the selling of any
such securities without registration.
 
ARTICLE VI
CONDITIONS TO CLOSING
 
Section 6.1            Conditions to Obligation of the Parties Generally.
 
The Parties shall not be obligated to consummate the transactions to be
performed by each of them in connection with the Closing if, on the Closing
Date, (i) any Action shall be pending or threatened before any Governmental
Authority wherein an Order or charge would (A) prevent consummation of any of
the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (ii) any Law or Order which would have any of the foregoing
effects shall have been enacted or promulgated by any Governmental Authority.
 
Section 6.2            Conditions to Obligation of the Investors.
 
The obligations of the Investors to enter into and perform their respective
obligations under this Agreement are subject, at the option of the Investors, to
the fulfillment on or prior to the Closing Date of the following conditions, any
one or more of which may be waived by the Investors in writing:
 
(a)           The representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date (except to the extent such representations and warranties are
specifically made as of a particular date, in which case such representations
and warranties shall be true and correct as of such date);
 
(b)           Company shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing, except to the
extent that such covenants are qualified by terms such as “material” and
“Material Adverse Effect,” in which case the Company shall have performed and
complied with all of such covenants in all respects through the Closing;
 
(c)           No action, suit, or proceeding shall be pending or, to the
Knowledge of the Company, threatened before any Governmental Authority wherein
an Order or charge would (A) affect adversely the right of the Investors to own
the Securities, or (B) affect adversely the right of the Company to own its
assets or to operate its business (and no such Order or charge shall be in
effect), nor shall any Law or Order which would have any of the foregoing
effects have been enacted or promulgated by any Governmental Authority;
 
 
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(d)           No event, change or development shall exist or shall have occurred
since the date of this Agreement that has had or is reasonably likely to have a
Material Adverse Effect on the Company;
 
(e)           All consents, waivers, approvals, authorizations or orders
required to be obtained, and all filings required to be made, by the Company for
the authorization, execution and delivery of this Agreement and the consummation
by it of the transactions contemplated by this Agreement, shall have been
obtained and made by the Company and Company shall have delivered proof of same
to the Investors;
 
(f)           Company shall have filed all reports and other documents required
to be filed by it under the U.S. federal securities laws through the Closing
Date;
 
(g)           Company shall have maintained its status as a company whose common
stock is quoted on the Principal Market and no reason shall exist as to why such
status shall not continue immediately following the Closing;
 
(h)           Trading in the Common Stock shall not have been suspended by the
SEC or any trading market (except for any suspensions of trading of not more
than one trading day solely to permit dissemination of material information
regarding the Company) at any time since the date of execution of this
Agreement, and the Common Stock shall have been at all times since such date
listed for trading on a trading market; and
 
(i)           The Company and each Subsidiary (as the case may be) shall have
duly executed and delivered to each Investor each of the Transaction Documents
to which it is a party and the Company shall have delivered instructions to its
transfer agent to issue to such Investor the Shares in such aggregate number of
Shares as is set forth across from such Investor’s name in column (3) of
Schedule I.
 
Section 6.3            Conditions to Obligation of the Company.
 
The obligations of the Company to enter into and perform its obligations under
this Agreement are subject, at the option of the Company, to the fulfillment on
or prior to the Closing Date of the following conditions, any one or more of
which may be waived by the Company:
 
(a)           The representations and warranties of the Investors set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date (except to the extent such representations and warranties are
specifically made as of a particular date, in which case such representations
and warranties shall be true and correct as of such date);
 
(b)           The Investors shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing, except to the
extent that such covenants are qualified by terms such as “material” and
“Material Adverse Effect,” in which case the Investors shall have performed and
complied with all of such covenants in all respects through the Closing;
 
(c)           Each Investor shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Company;
 
 
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(d)           Each Investor shall have delivered to the Company the Purchase
Price for the Shares being purchased by such Investor at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions
provided by the Company; and
 
(e)           All actions to be taken by the Investors in connection with
consummation of the transactions contemplated hereby and all payments,
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to the Company.
 
ARTICLE VII
SURVIVAL; INDEMNIFICATION
 
Section 7.1            Survival.
 
All representations, warranties, covenants, and obligations in this Agreement
shall survive the Closing.
 
Section 7.2            Indemnification.
 
In consideration of each Investor’s execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Investor and each holder of
any Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons’ agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company or any of its Subsidiaries in any
of the Transaction Documents, (b) any breach of any covenant, agreement or
obligation of the Company or any of its Subsidiaries contained in any of the
Transaction Documents or (c) any cause of action, suit or claim brought or made
against such Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Company or any of its Subsidiaries)
and arising out of or resulting from the execution, delivery, performance or
enforcement of any of the Transaction Documents other than due to such
Investor’s misconduct or gross negligence.
 
ARTICLE VIII
TERMINATION
 
Section 8.1            Termination.
 
In the event that the Closing shall not have occurred with respect to an
Investor within five (5) days of the date hereof, then such Investor shall have
the right to terminate its obligations under this Agreement with respect to
itself at any time on or after the close of business on such date without
liability of such Investor to any other party; provided, however, (i) the right
to terminate this Agreement under this Section 8.1 shall not be available to
such Investor if the failure of the transactions contemplated by this Agreement
to have been consummated by such date is the result of such Investor’s breach of
this Agreement and (ii) the abandonment of the sale and purchase of the Shares
shall be applicable only to such Investor providing such written
notice.  Nothing contained in this Section 8.1 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents.
 
 
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ARTICLE IX
MISCELLANEOUS PROVISIONS
 
Section 9.1            Expenses.
 
Except as otherwise expressly provided in this Agreement, each Party will bear
its respective expenses incurred in connection with the preparation, execution,
and performance of this Agreement and the transactions contemplated by this
Agreement, including all fees and expenses of agents, representatives, counsel,
and accountants.  In the event of termination of this Agreement, the obligation
of each Party to pay its own expenses will be subject to any rights of such
Party arising from a breach of this Agreement by another Party.
 
Section 9.2            Confidentiality.
 
The Parties will maintain in confidence, and will cause their respective
directors, officers, employees, agents, and advisors to maintain in confidence,
any written, oral, or other information obtained in confidence from another
Person in connection with this Agreement or the transactions contemplated by
this Agreement, unless (i) such information is already known to such Party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such Party, (ii) the use of such
information is necessary or appropriate in making any required filing with the
SEC, or obtaining any consent or approval required for the consummation of the
transactions contemplated by this Agreement, or (iii) the furnishing or use of
such information is required by or necessary or appropriate in connection with
legal proceedings. If the transactions contemplated by this Agreement are not
consummated, each Party will return or destroy all of such written information
each party has regarding the other Parties.
 
Section 9.3            Independent Nature of Investors’ Obligations and Rights.
 
The obligations of each Investor under the Transaction Documents are several and
not joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document.  Nothing contained herein or in any
other Transaction Document, and no action taken by any Investor pursuant hereto
or thereto, shall be deemed to constitute the Investors as, and the Company
acknowledges that the Investors do not so constitute, a partnership, an
association, a joint venture or any other kind of group or entity, or create a
presumption that the Investors are in any way acting in concert or as a group or
entity with respect to such obligations or the transactions contemplated by the
Transaction Documents or any matters, and the Company acknowledges that the
Investors are not acting in concert or as a group, and the Company shall not
assert any such claim, with respect to such obligations or the transactions
contemplated by the Transaction Documents.  The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor.  Each Investor acknowledges that
no other Investor has acted as agent for such Investor in connection with such
Investor making its investment hereunder and that no other Investor will be
acting as agent of such Investor in connection with monitoring such Investor’s
investment in the Securities or enforcing its rights under the Transaction
Documents.  The Company and each Investor confirms that each Investor has
independently participated with the Company and its Subsidiaries in the
negotiation of the transaction contemplated hereby with the advice of its own
counsel and advisors.  Each Investor shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose.  The use of a single agreement to effectuate the
purchase and sale of the Securities contemplated hereby was solely in the
control of the Company, not the action or decision of any Investor, and was done
solely for the convenience of the Company and its Subsidiaries and not because
it was required or requested to do so by any Investor.  It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company, each Subsidiary and an
Investor, solely, and not between the Company, its Subsidiaries and the
Investors collectively and not between and among the Investors.
 
 
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Section 9.4            Notices.
 
All notices, demands, consents, requests, instructions and other communications
to be given or delivered or permitted under or by reason of the provisions of
this Agreement or in connection with the transactions contemplated hereby shall
be in writing and shall be deemed to be delivered and received by the intended
recipient as follows: (i) if personally delivered, on the Business Day of such
delivery (as evidenced by the receipt of the personal delivery service), (ii) if
mailed certified or registered mail return receipt requested, two (2) Business
Days after being mailed, (iii) if delivered by overnight courier (with all
charges having been prepaid), on the Business Day of such delivery (as evidenced
by the receipt of the overnight courier service of recognized standing), or (iv)
if delivered by facsimile transmission or other electronic means, including
email, on the Business Day of such delivery if sent by 6:00 p.m. in the time
zone of the recipient, or if sent after that time, on the next succeeding
Business Day.  If any notice, demand, consent, request, instruction or other
communication cannot be delivered because of a changed address of which no
notice was given (in accordance with this Section 9.4), or the refusal to accept
same, the notice, demand, consent, request, instruction or other communication
shall be deemed received on the second business day the notice is sent (as
evidenced by a sworn affidavit of the sender).  All such notices, demands,
consents, requests, instructions and other communications will be sent to the
following addresses or facsimile numbers as applicable:
 
If to the Company, to:
 
JBI, Inc.
20 Iroquois Street
Niagara Falls, NY 14303
Attention: Matthew Ingham, CFO
Telephone: (716) 278-0015
     
If to the Investors, to:
 
The applicable address set forth in column (1) on Schedule I.

 
or such other addresses as shall be furnished in writing by any Party in the
manner for giving notices hereunder.
 
 
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Section 9.5            Further Assurances.
 
The Parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other Parties may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
 
Section 9.6            Amendment and Waivers.
 
The provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, or waived unless the same shall be in
writing and signed by the Company, provided that any Party may give a waiver as
to itself.  The rights and remedies of the Parties are cumulative and not
alternative.  Neither the failure nor any delay by any Party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.  To the maximum extent
permitted by applicable Law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one Party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other Parties; (b) no waiver that may be given by a Party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one Party will be deemed to be a waiver of any
obligation of such Party or of the right of the Party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement. Notwithstanding
anything to the contrary contained in this Agreement, prior to Closing, the
Investors who have subscribed to purchase  at least 75% of the Shares may waive
the Company’s obligation to comply with any closing condition in Section 6.2
hereof.
 
Section 9.7            Entire Agreement.
 
This Agreement, the other Transaction Documents, the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
constitute the entire agreement among the parties hereto and thereto solely with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the other Transaction Documents, the
schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein supersede all prior agreements and understandings
among the parties hereto solely with respect to the subject matter hereof and
thereof; provided, however, nothing contained in this Agreement or any other
Transaction Document shall (or shall be deemed to) (i) have any effect on any
agreements any Investor has entered into with the Company or any of its
Subsidiaries prior to the date hereof with respect to any prior investment made
by such Investor in the Company, (ii) waive, alter, modify or amend in any
respect any obligations of the Company or any of its Subsidiaries or any rights
of or benefits to any Investor or any other Person in any agreement entered into
prior to the date hereof between or among the Company and/or any of its
Subsidiaries and any Investor and all such agreements shall continue in full
force and effect, or (iii) limit any obligations of the Company under any of the
other Transaction Documents.
 
 
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Section 9.8            Assignments, Successors, and No Third-Party Rights.
 
No Party may assign any of its rights under this Agreement without the prior
consent of the other Parties.  Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of and
be enforceable by the respective successors and permitted assigns of the
Parties.  Except as set forth in Article VII hereof, nothing expressed or
referred to in this Agreement will be construed to give any Person other than
the Parties any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement.
 
Section 9.9            Severability.
 
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect.  Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
 
Section 9.10          Section Headings.
 
The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation.  All
references to “Article” or “Articles” or “Section” or “Sections” refer to the
corresponding Article or Articles or Section or Sections of this Agreement,
unless the context indicates otherwise.
 
Section 9.11          Construction.
 
The Parties have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this
Agreement.  Any reference to any federal, state, local, or foreign statute or
Law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.  Unless otherwise expressly
provided, the word “including” shall mean including without limitation.  The
Parties intend that each representation, warranty, and covenant contained herein
shall have independent significance.  If any Party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of such representation, warranty, or covenant.  All words
used in this Agreement will be construed to be of such gender or number as the
circumstances require.
 
 
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Section 9.12          Counterparts.
 
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.  In the event
that any signature is delivered by facsimile transmission or by e-mail delivery
of a “.pdf” format data file, such signature shall create a valid and binding
obligation of the Party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
 
Section 9.13          Specific Performance.
 
Each of the Parties acknowledges and agrees that the other Parties would be
damaged irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are
breached.  Accordingly, each of the Parties agrees that the other Parties shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the U.S. or
any state thereof having jurisdiction over the Parties and the matter (subject
to the provisions set forth in Section 9.14 below), in addition to any other
remedy to which they may be entitled, at Law or in equity.
 
Section 9.14          Governing Law; Submission to Jurisdiction.
 
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without reference to the conflicts of law principles
thereof that would result in the application of any law other than the law of
the State of New York.  The United States District Courts located in New York
City or the Commercial Division of the New York Supreme Court Branch, New York
County, shall have exclusive jurisdiction over any and all disputes among the
parties hereto, whether in law or equity, arising out of or relating to this
Agreement.  Each of the Parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other Party with respect
thereto.  Any Party may make service on any other Party by sending or delivering
a copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in Section 9.4 above.  Nothing in this
Section 9.14, however, shall affect the right of any Party to serve legal
process in any other manner permitted by Law or at equity.  Each Party agrees
that a final judgment in any action or proceeding so brought shall be conclusive
and may be enforced by suit on the judgment or in any other manner provided by
Law or at equity.
 
Section 9.15          Waiver of Jury Trial.
 
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
 
[Signatures follow on next page]
 
 
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IN WITNESS WHEREOF, the Company and the Investors have caused their respective
signature pages to this Subscription Agreement to be duly executed as of the
date first written above.
 
COMPANY:
 
JBI, INC.
 
By:
 
Name:
Kevin P. Rauber
Title:
President and Chief Executive Officer

 
[Signatures Continue on Next Page]
 
[Company Signature Page to Subscription Agreement]
 
 
 

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IN WITNESS WHEREOF, the Company and the Investors have caused their respective
signature pages to this Subscription Agreement to be duly executed as of the
date first written above.
 
INDIVIDUAL INVESTOR:
 

     
(Print Name)
 
(Signature)

 

     
(Print Name of Joint Investor)
 
(Signature of Joint Investor)

 
PARTNERSHIP, CORPORATION, TRUST, LLC OR OTHER ENTITY:
 

     
(Print Name of Entity)
 
(Signature)
               
(Print Name and Title of Person Signing)

 
[Investor Signature Page to Subscription Agreement]
 
 
 

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