UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported):      May 15, 2012
 
    JBI, Inc.    
   
(Exact name of registrant as specified in its charter)
   
 
         
Nevada
 
000-52444
 
20-4924000
(State or other jurisdiction
 
(Commission
 
(I.R.S. Employer
of incorporation)
 
File Number)
 
Identification No.)
  
       
1783 Allanport Road,
Thorold Ontario
     
L0S 1K0
(Address of principal executive offices)
     
(Zip Code)
 
Registrant’s telephone number, including area code:  (905) 384-4383
 
N/A
Former name or former address, if changed since last report
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
Section 1 – Registrant’s Business and Operations
 
Item 1.01   Entry into a Material Definitive Agreement.

Private Placement
 
On May 15, 2012, JBI, Inc. (the “Company”) entered into Subscription Agreements (the “Purchase Agreements”) with several “accredited investors” (the “Purchasers”) in connection with a private placement of shares (the “Shares”) of the Company’s common stock, $.001 par value per share.  Pursuant to the Purchase Agreements, the Company agreed to issue and sell to the Purchasers an aggregate of 12.5  million Shares at a purchase price of $0.80 per Share for aggregate gross proceeds to the Company of $10  million.  An initial closing took place on May 15, 2012 for the sale of 12,331,250 Shares for gross proceeds of $9,865,000.  No warrants or registration rights were granted to the Purchasers in the transaction.
 
As a condition to the closing of the transaction, the Company agreed to make certain changes to its management, including the changes reported in Item 5 of this report. The Company also agreed to conduct a search for and appoint five qualified independent directors within one year following the closing of the transaction.

On May 15, 2012, the Company issued a press release announcing the execution of Purchase Agreements for the sale of the Shares and certain other events described elsewhere in this report. A copy of the press release is attached hereto as Exhibit 99.1.

The foregoing summary of the private placement, the securities to be issued in connection therewith, the form of Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the definitive transaction documents, a copy of which is attached as an exhibit to this Current Report on Form 8-K.  The Purchase Agreement contains representations and warranties that the parties made solely for the benefit of each other, in the context of all of the terms and conditions of the Purchase Agreement. Accordingly, other investors, holders and stockholders may not rely on such representations and warranties. Furthermore, such representations and warranties are made only as of the date of the Purchase Agreement. Information concerning the subject matter of such representations and warranties may change after the date of the Purchase Agreement, and any such changes may not be fully reflected in the Company’s reports or other filings with the SEC.
 
John Bordynuik Employment Agreement
 
Effective May 15, 2012, John Bordynuik resigned from his positions as the Company’s Chief Executive Officer and President and was appointed Chief of Technology, a non-executive position.  In connection with this new position, on May 15, 2012, the Company entered into a five-year employment agreement with Mr. Bordynuik.. The employment agreement provides that Mr. Bordynuik will receive an annual base salary of $275,000. He will also receive options to purchase up to 4 million shares of the Company’s common stock at an exercise price of $1.50 per share, which options shall vest over a five year period, with 750,000 vesting immediately and the balance vesting in equal installments over a five year period. The Company is required to adopt an option plan within one month under which these options will be granted. Mr. Bordynuik is entitled to receive an annual performance bonus in an amount derived from the following formula: his base salary multiplied by the Company’s stock price divided by ten. The maximum cash amount of such bonus is $100,000. Mr. Bordynuik will also be eligible to participate in employee benefit plans generally available to the Company’s management employees.
   
The employment agreement provides that the Company may terminate Mr. Bordynuik’s employment at any time upon written notice for Cause (as defined therein) or without Cause.  If Mr. Bordynuik is terminated without Cause or if he terminates the agreement with Good Reason (as defined therein), he will be entitled to receive his full base salary through the end of the three year term of the agreement and he shall retain all vested and unvested stock options. The Company will also pay six months’ of insurance premiums for health and dental coverage.  Mr. Bordynuik is not entitled to receive any additional compensation or benefits (other than accrued but unpaid compensation and benefits) if he terminates the agreement for without Good Reason or if the Company terminates the agreement for Cause, however, he will be entitled to retain any vested stock options in such instances.

Mr. Bordynuik has agreed not the sell more than 750,000 shares issued upon exercise of the options granted to him during the first two years of the term of the employment agreement. Additionally, the Company agreed to provide Mr. Bordynuik with certain resources in connection with the performance of his duties, including without limitation, certain budgets and staffing at the Company’s Niagara Falls, NY facility.
 
Upon execution of this agreement, Mr. Bordynuik’s prior employment agreement with the Company, dated May 19, 2010, was terminated.
 
The foregoing summary description of the employment agreement with Mr. Bordynuik is qualified in its entirety by the agreement itself, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.

Section 3 — Securities and Trading Markets

Item 3.02   Unregistered Sales of Equity Securities.

In connection with the transactions described in Item 1.01, the Company agreed to issue the Shares described therein.  Such issuances were made in reliance on the exemption from registration provided by Section 4(2) of the Act, and Regulation D promulgated thereunder on the basis that the issuances did not involve a public offering and  Purchasers made certain representations to the Company in the Purchase Agreements, including without limitation, that the Purchasers were “accredited investors” as defined in Rule 501 under the Act.

SECTION 5 – Corporate Governance And Management

Item 5.02   Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangement of Certain Officers.

In connection with the consummation of the private placement transaction described in Item 1.01 of this report, the Company effected certain changes to its management as described below.
 
 
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Departure of Directors and Officers

John Bordynuik
 
Effective May 15, 2012, Mr. John Bordynuik resigned from his positions as the Company’s Chief Executive Officer and President and from the Company’s board of directors.  He also resigned as an officer and director of each of the Company’s wholly-owned subsidiaries.   Effective upon his resignation, Mr. Bordynuik assumed the newly-created position of Chief of Technology, a non-executive. In connection with his new position, Mr. Bordynuik entered into a new employment agreement with the Company, which is summarized in Item 1.01 of this report.
 
Dr. Robin Bagai

Effective May 15, 2012, Dr. Robin Bagai resigned from the Company’s board of directors and as a member of its audit committee, compensation committee and nominating and governance committee. Mr. Bagai's resignation was not a result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices.

Appointment of Directors and Officers

Kevin Rauber

Effective May 15, 2012, the Company appointed Mr. Kevin Rauber as its new Chief Executive Officer and President and as a member of the Company’s board of directors.  Certain biographical information regarding Mr. Rauber is set forth below:

Kevin Rauber, age 49, was appointed to serve as the Company’s Chief Executive Officer, President and as a member of the Company’s board of directors in May 2012. From 2008 until he joined the Company, Mr. Rauber served as Vice President and General Manager at RockTenn Company (NYSE: RKT), a leading integrated North American manufacturer of corrugated and consumer packaging and recycling solutions. From 2004 until 2008, he served as Director, Business Development, Sales and Marketing of EnviroSolutions, Inc.  From 1998 until 2004, Mr. Rauber held various positions at Waste Management, Inc. Overall, he has 25 years of waste industry experience. Mr. Rauber earned his bachelor of communications from Benedictine College, Atchison, Kansas.
 
Matthew Ingham

Effective May 15, 2012, Mr. Matthew Ingham, the Company’s Chief Financial Officer was appointed  to the Company’s board of directors.  Mr. Ingham will fill the vacancy that was created as a result of Mr. Bagai’s resignation.  Certain biographical information regarding Mr. Ingham is set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, as amended, which has been filed with the Securities and Exchange Commission.

John Wesson

Effective May 15, 2012, Mr. John Wesson, a director of the Company, was appointed Chairman of the board of directors.
 
 
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Compensation Arrangements

Kevin Rauber Employment Agreement

Effective May 15, 2012, the Company entered into a three-year employment agreement with Kevin Rauber, the Company’s newly appointed Chief Executive Officer and President.  The employment agreement provides that Mr. Rauber will receive an annual base salary of $250,000.  He will also receive options to purchase up to 500,000 shares of the Company’s common stock at an exercise price of $1.50 per share, which options shall vest in equal installments over a five year period. The Company is required to adopt an option plan within one month under which these options will be granted.  Mr. Rauber is entitled to receive an annual performance bonus in an amount derived from the following formula: his base salary multiplied by the Company’s stock price divided by ten.  The maximum cash amount of such bonus is $100,000.  Mr. Rauber will also be eligible to participate in employee benefit plans generally available to the Company’s management employees.
 
The employment agreement provides that the Company may terminate Mr. Rauber’s employment at any time upon written notice for Cause (as defined therein) or without Cause.  If Mr. Rauber is terminated without Cause or if he terminates the agreement with Good Reason (as defined therein), he will be entitled to receive his full base salary through the end of the three year term of the agreement and he shall retain all vested and unvested stock options. The Company will also pay six months’ of insurance premiums for health and dental coverage.  Mr. Rauber is not entitled to receive any additional compensation or benefits (other than accrued but unpaid compensation and benefits) if he terminates the agreement for without Good Reason or if the Company terminates the agreement for Cause, however, he will be entitled to retain any vested stock options in such instances.

Matthew Ingham Employment Agreement

Effective May 15, 2012, the Company entered into a three-year employment agreement with Matthew Ingham, the Company’s Chief Financial Officer.  The employment agreement provides that Mr. Ingham will receive an annual base salary of $175,000.  He will also receive options to purchase up to 300,000 shares of the Company’s common stock at an exercise price of $1.50 per share, which shall vest in equal installments over a three year period. The Company is required to adopt an option plan within one month under which these options will be granted.  Beginning on the first anniversary of the agreement, Mr. Ingham is entitled to receive an annual performance bonus in an amount derived from the following formula: his base salary multiplied by the Company’s stock price divided by ten.  The maximum cash amount of such bonus is $100,000.  Mr. Ingham will also be eligible to participate in employee benefit plans generally available to the Company’s management employees .
 
 
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The employment agreement provides that the Company may terminate Mr. Ingham’s employment at any time upon written notice for Cause (as defined therein) or without Cause.  If Mr. Ingham is terminated without Cause or if he terminates the agreement with Good Reason (as defined therein), he will be entitled to receive his full base salary through the end of the three year term of the agreement and he shall retain all vested and unvested stock options. The Company will also pay six months’ of insurance premiums for health and dental coverage.  Mr. Ingham is not entitled to receive any additional compensation or benefits (other than accrued but unpaid compensation and benefits) if he terminates the agreement for without Good Reason or if the Company terminates the agreement for Cause, however, he will be entitled to retain any vested stock options in such instances.

The foregoing summary descriptions of the employment agreements with Messrs. Rauber and Ingham are qualified in their entirety by the agreements themselves, copies of which is attached hereto as Exhibits 10.3 and 10.4 and incorporated herein by reference.
 
Section 9 — Financial Statements and Exhibits

Item 9.01  Financial Statements and Exhibits.

(d)           Exhibits
 
Exhibit No.
  Description
10.1
 
Form of Subscription Agreement.
10.2
 
Employment Agreement, dated May15, 2012, by and between the Company and John Bordynuik.
10.3
 
Employment Agreement, dated May 15, 2012, by and between the Company and Kevin Rauber.
10.4
 
Employment Agreement, dated May 15, 2012, by and between the Company and Matthew Ingham.
99.1
 
Press Release dated May 15, 2012.
 
 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
  JBI, Inc.
   
May 16, 2012  
By:
/s/ Matthew J. Ingham
  Name:   Matthew J. Ingham
  Title:  Chief Financial Officer
     
 
 
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EXHIBIT INDEX
 
Exhibit No.
  Description
10.1
 
Form of Subscription Agreement.
10.2
 
Employment Agreement, dated May15, 2012, by and between the Company and John Bordynuik.
10.3
 
Employment Agreement, dated May 15, 2012, by and between the Company and Kevin Rauber.
10.4
 
Employment Agreement, dated May 15, 2012, by and between the Company and Matthew Ingham.
99.1
 
Press Release dated May 15, 2012.
 
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Exhibit 10.1
 
FORM OF
SUBSCRIPTION AGREEMENT
 
This SUBSCRIPTION AGREEMENT (“ Agreement ”), dated as of May ___, 2012, 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, 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 ”);
 
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 common stock, $0.001 par value per share, of the Company (the “ Common Stock ”) as set forth opposite such Investor’s name in column (3) on Schedule I at a per share purchase price of $0.80 (which aggregate amount for all Investors shall be up to 12,500,000 shares of Common Stock and shall collectively be referred to herein as the “ Shares ; and
 
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 5.3 .
 
“ Accredited Investor ” has the meaning set forth in Rule 501 under the Securities Act.
 
“ 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.
 
 
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“ 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 ” has the meaning set forth in the recitals.
 
“ 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.
 
“ 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.
 
“ Indebtedness ” means without duplication, (a) all indebtedness or other obligation of the Person for borrowed money, whether current, short-term, or long-term, secured or unsecured, (b) all indebtedness of the Person for the deferred purchase price for purchases of property outside the Ordinary Course of Business, (c) all lease obligations of the Person under leases which are capital leases in accordance with GAAP, (d) any off-balance sheet financing of the Person including synthetic leases and project financing, (e) any payment obligations of the Person in respect of banker’s acceptances or letters of credit (other than stand-by letters of credit in support of ordinary course trade payables), (f) any liability of the Person with respect to interest rate swaps, collars, caps and similar hedging obligations, (g) any liability of the Person under deferred compensation plans, phantom stock plans, severance or bonus plans, or similar arrangements made payable as a result of the transactions contemplated herein, (h) any indebtedness referred to in clauses (a) through (g) above of any other Person which is either guaranteed by, or secured by a security interest upon any property owned by, the Person and (i) accrued and unpaid interest of, and prepayment premiums, penalties or similar contractual charges arising as result of the discharge at Closing of, any such foregoing obligation.
 
 
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“ Indemnified Liabilities ” has the meaning set forth in Section 7.2 .
 
“ Indemnitees ” has the meaning set forth in Section 7.2 .
 
“ 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.
 
 
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“ 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.
 
“ 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 .
 
“ Shares ” has the meaning set forth in the recitals.
 
“ 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 Signature Bank NA, as escrow agent for 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 .”
 
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).
 
 
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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.
 
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.
 
 
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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, except in compliance with applicable securities Laws.
 
(b)     Restricted Securities .  Such Investor understands that the Securities are characterized as “restricted securities” under the Securities Act inasmuch as this Agreement contemplates that, if acquired by the Investor pursuant hereto, the Securities would be acquired in a transaction not involving a public offering.  The issuance of the Securities hereunder is being 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 are issued to such Investor in accordance with the provisions of this Agreement, such Securities 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
 
(c)     Acknowledgment of Non-Registration .  Such Investor understands and agrees that the Securities to be issued pursuant to this Agreement 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.
 
(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.
 
 
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(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 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 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, 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 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.
 
(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 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 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.
 
 
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(g)     Opinion .  Such Investor will not transfer any or all of such Investor’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 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, unless such Investor complies with Section 3.7 and any other restrictions on transferability set forth herein.  Such Investor consents to the Company making a notation on its records or giving instructions to any transfer agent of the Company’s Common Stock in order to implement the restrictions on transfer of the Securities
 
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, 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 RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES; PROVIDED THAT IN CONNECTION WITH ANY FORECLOSURE OR TRANSFER OF THE SECURITIES, THE TRANSFEROR SHALL COMPLY WITH THE PROVISIONS HEREIN AND IN THE SUBSCRIPTION AGREEMENT, AND UPON FORECLOSURE OR TRANSFER OF THE SECURITIES, SUCH FORECLOSING PERSON OR TRANSFEREE SHALL COMPLY WITH ALL PROVISIONS CONTAINED HEREIN AND IN THE SUBSCRIPTION AGREEMENT.
 
 
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(b)     The certificates evidencing the Securities issued to those Investors who are not U.S. Persons, and each certificate issued in transfer thereof, will bear the following 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.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES; PROVIDED THAT IN CONNECTION WITH ANY FORECLOSURE OR TRANSFER OF THE SECURITIES, THE TRANSFEROR SHALL COMPLY WITH THE PROVISIONS HEREIN AND IN THE SUBSCRIPTION AGREEMENT, AND UPON FORECLOSURE OR TRANSFER OF THE SECURITIES, SUCH FORECLOSING PERSON OR TRANSFEREE SHALL COMPLY WITH ALL PROVISIONS CONTAINED HEREIN AND IN THE SUBSCRIPTION AGREEMENT.
 
(c)     Other Legends .  The certificates representing such Securities, and each certificate issued in transfer thereof, 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).
 
 
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(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 in compliance with the laws of any jurisdiction outside of the U.S. and the Company makes no representation or warranty that any Securities issued outside of the U.S. have been offered or sold in compliance with the laws of the jurisdiction into which such Securities 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 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.  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, will not violate any applicable securities or other laws of his, her or its jurisdiction.
 
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.
 
 
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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.  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.
 
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.
 
 
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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.
 
Section 4.6     Capitalization .
 
(a)     The authorized capital stock of the Company consists of 150,000,000 shares of Company Common Stock and 5,000,000 shares of preferred stock, $0.001 par value per share of which (i) 73,177,216 shares of Company Common Stock are issued and outstanding; (ii)  1,513,000 shares of Company Common Stock are issuable upon the exercise of outstanding warrants; and (iii) 1,000,000 of preferred stock are issued and outstanding (the “Series A Preferred Stock”).  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. 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.
 
 
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(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.
 
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.  The issuance and sale of the Securities under this Agreement does not 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     Reserved. Disclosure of Transactions and Other Material Information. (a) Press Release. On the first Business Day following the Closing, the Company shall issue a press release to announce the transactions contemplated by this Agreement and shall give a representative designated by the Investors the opportunity to review and comment on such press release prior to its release. (b) Form 8-K. 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), the form of the Warrants) (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.  From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided to any of the Investors by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents.
 
 
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Section 5.4     Qualified Independent Directors.
 
If fewer than five Qualified Independent Directors shall have been appointed by the one year anniversary of the Closing Date, the Company shall retain, at its own cost and expense, a highly qualified independent expert recruitment firm to develop a list of candidates satisfying the criteria for Qualified Independent Directors.  The Company shall use commercially reasonable efforts to obtain  such list no later than ninety  days after  expiration of  the twelve month anniversary of the Closing Date or as soon as practicable thereafter. For purposes of the foregoing, (a) a “ Qualified Independent Director ” means an individual who (i) is an Independent Director (as defined below), (ii) has served for at least three years on the board of directors of at least two separate publicly-traded companies in the United States with market capitalization of at least US$700,000,000 (a “ Relevant Company ”), (iii) is currently serving on the board of directors of at least one such Relevant Company and (iv) has not been the defendant in (or an officer or director of an entity that has been a defendant in) any criminal or civil complaint of the SEC or any other material action brought by any Person alleging the violation of any state or Federal securities laws unless such action has been adjudicated pursuant to a non-appealable judgment absolving such Person (or such entity, as applicable) of all wrongdoing and (b) an “ Independent Director ” mean an individual  who (i) the Board of Directors or nominating committee thereof has determined is “independent” within the meaning of Listing Rule 5605(a)(2) of The Nasdaq Stock Market.
 
Section 5.5     Transfer/Legend.
 
The Company shall notify the Transfer Agent that the transfer of the Series A Preferred Stock is subject to certain transfer restrictions set forth in a letter agreement among the Investors and Mr. John Bordynuik and shall instruct the Transfer Agent to require a legal opinion of reputable counsel satisfactory to the Transfer Agent in its reasonable discretion prior to effecting any transfer of the Series A Preferred Stock.
 
Section 5.6     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:
 
(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
 
 
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(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;
 
(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;
 
 
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(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 Company 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 Company Common Stock shall have been at all times since such date listed for trading on a trading market;
 
(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 duly executed and delivered 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 and the related Warrants (initially for such aggregate number of shares of Warrant Shares as is set forth across from such Investor’s name in columns (4) of Schedule I ) being purchased by such Investor at the Closing pursuant to this Agreement;
 
(j)       John Bordynuik shall have tendered his resignation as a member of the Board and as Chief Executive Officer and President and Robin Bagai shall have tendered his resignation as a member of the Board, to be effective immediately upon the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, which is due on May 10, 2012, and such resignations shall have been accepted by the Board;
 
(k)      Kevin Rauber and Matthew Ingham shall have been appointed as members of the Board;
 
(l)       Kevin Rauber shall have been appointed as President;
 
(m)     John Bordynuik shall have been appointed Chief of Technology of the Company;
 
(n)      Kevin Rauber and the Company shall have duly executed an employment agreement in substantively the same form as is set forth in Exhibit B hereto;
 
(o)      John Bordynuik and the Company shall have duly executed an employment agreement in substantively the same form as set forth in Exhibit C hereto;
 
(p)      John Bordynuik shall have executed a letter agreement with the Investors with respect to certain stockholder voting matters in form and substance to be mutually agreed upon by the parties thereto;
 
 
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(q)      The Board shall have adopted a resolution to cause the name of the Company to be amended to “Plastic2Oil” and shall have directed that the proposed amendment be considered at the next annual meeting of the stockholders entitled to vote on the amendment; and
 
(r)       The Company shall have filed with the SEC its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.
 
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;
 
(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.
 
 
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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.
 
ARTICLE IX
MISCELLANEOUS PROVISIONS
 
Section 9.1     Expenses . (a) The Company shall promptly reimburse one Investor (designated in writing by a majority of the Investors) for such Investor’s reasonable expenses incurred (i) through and including the Closing Date in connection with the preparation, negotiation and execution of the letter agreement referred to in Section 6.2(p) and this Agreement and the transactions contemplated herein and (ii) following the Closing Date in connection with the initial filing of the forms required to be filed by a single Investor or group of Investors pursuant to Rule 13d-1 and Section 16 of the Exchange Act as a result of the transactions contemplated herein and in the letter agreement referred to in Section 6.2(p), in each case including the reasonable fees and expenses of such Investor’s legal counsel upon presentation of an invoice or invoices in reasonable detail; provided , however , that the Company’s maximum reimbursement obligation hereunder shall be $50,000 (b) 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.
 
 
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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.
1783 Allanport Road
Thorold Ontario L0S 1K0
Attention: John Bordynuik
Telephone: (905) 384-4383
     
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.
 
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.
 
 
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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, (i)  the Investors holding a majority of the Shares may waive the Company’s obligation to comply with the covenants in Section 5.4 with such waiver to be effective as to, and binding on, all Investors and (ii) prior to Closing, the Investors who have subscribed to purchase  at least 75% of the Units 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.
 
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.
 
 
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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.
 
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.
 
 
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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:
Matthew Ingham
 
 
Title:
Chief Financial Officer
 
       
 
 
[Signatures Continue 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.
 
 
INVESTOR:
 
       
     
 
Name:
 
 
 
27

Exhibit 10.2
 
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement ("Agreement") is made and entered into, effective May 14, 2012 (the “Effective Date”), by and between JBI, Inc., (the “Company"), and John Bordynuik (the “Employee”).
 
RECITALS
 
A.           Employee is currently the CEO of Company
 
B.           Company and Employee agree that it is in the best interests of Company and Employee, that Employee resign as CEO of Company and enter into this new Employment Agreement to be employed as Chief of Technology of Company.
 
ARTICLE I - EMPLOYMENT
 
1.1     Employment .  The Company hereby employs the Employee, and the Employee hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement.
 
1.2     Term .  The term of this Agreement shall begin on the Effective Date and shall continue for a period of five (5) years after the Effective Date, unless this Agreement is terminated as provided for herein.
 
1.3     Title .  Employee shall be the Chief of Technology of the Company.
 
1.4     Employee Duties
 
(a)     General Duties .  The Employee shall do and perform all services, acts or things necessary or advisable to manage, supervise and where available, enhance the P2O® processor and technology of the Company in connection with the Company’s operations at 20 Iroquois St., Niagara Falls, New York (“Iroquois Facility”).  The employee will present the technology to the public, shareholders, and clients. The Employee shall report to the Board of Directors.  Employee shall loyally, conscientiously, and professionally perform all of his duties and responsibilities, which may be revised from time to time, as Company deems appropriate or necessary.  At all times during his employment, Employee shall adhere to all rules, policies, and guidelines of Company that are now in effect or as they may be modified by the Company's management, in its sole discretion, from time to time.
 
(b)     Protection of Plastic2Oil Trade Secrets .  The Company has certain extremely valuable and confidential information in the nature of trade secrets relating to its Plastic2Oil processor (“Plastic2Oil Trade Secrets”).  The Plastic2Oil Trade Secrets consist of know-how, formulas, designs and catalyst compositions.  Currently, Employee is the only person with knowledge of these Plastic2Oil Trade Secrets.  Company and Employee agree that within three months of the execution of this Agreement, these Plastic2Oil Trade Secrets shall be known to Employee and one other employee of P2O.  Such employee will remain nameless and only be known to Matthew Ingham, the Chief Financial Officer of the Company.  Due to the sensitive nature of these Trade Secrets, no member of the Company’s Board of Directors or Executive Management shall be privy to this information.  Any writings reflecting or relating to these Plastic2Oil Trade Secrets are now and shall in the future be kept locked in a bank vault.  That bank vault shall not be opened, except in the event of the death or incapacity of Employee or the other employee and only then upon a resolution of the Company’s Board of Directors.  To the extent that this provision is inconsistent with or contrary to anything in the more general provisions of Article IV of this Agreement, this paragraph 1.4 (b) shall govern.
 
 
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(c)            Iroquois Facility Permits, Management and Budget
 
(i)            Permits .  The Company’s operations at the Iroquois Facility depend upon certain operational/site permits and environmental permits (“Permits”). Those Permits require that an individual assume personal responsibility for the Company’s compliance, and the failure of the Company to comply can result in potential liability for the individual that has assumed that responsibility.  Historically, Employee has been the person at the Company that has assumed the personal responsibility for the Company’s compliance.  Company and Employee agree that if Employee is to perform the General Duties in paragraph 1.4(a) hereof, and for the sake of the Company’s ongoing relationships with the Iroquois Facility permitting authorities, Employee should continue to assume personal responsibility for the Company’s compliance with the Permits.
 
(ii)            Management and Budget Employee is willing to continue to assume personal responsibility for the Company’s compliance with the Permits, provided that, in the performance of his General Duties set forth in paragraph 1.4 hereof, Employee is given control over the staff and operations at the Iroquois Facility that comprise fabrication personnel, engineers, a plant manager, and IT and R&D administrative personnel (“Iroquois Facility Technology Staff”) and the Company agrees to budget sufficient staff and capital funds devoted to the operations at the Iroquois Facility that are reasonably required by such facility, subject  to reasonable availability of funding, including necessary and customary budgetary reserves.  Accordingly, it is agreed between Company and Employee that Employee will continue to assume personal responsibility for the Company’s compliance with the Permits that have been issued at the Iroquois Facility, and that Employee shall have full management authority over the Iroquois Facility Technology Staff and technology operations at the Iroquois Facility, including research and development, product enhancement, maintenance procedures, permit support and add-on development (e.g., processing waste oils).    For the avoidance of doubt, excluded from the Iroquois Facility Technology Staff are the Executive and Administrative Staff located at the Iroquois Facility, including Head Office, Finance and Accounting, Legal, Human Resources, and other employees that would generally be considered administrative or corporate functions.  Subject to reasonable availability of funding, including necessary and customary budgetary reserves: (i) for the year 2012 the Iroquois Facility will have a staff budget of $350,000 per month; (ii) for the year 2013 the Iroquois Facility will have a staff budget of $450,000 per month. These amounts can be amended due to growth or otherwise of the Iroquois Facility. Subject to reasonable availability of funding, including necessary and customary reserves, at no time during the term of this Agreement will the monthly staff budget be less than that of 2013, except for 2012.  This budget shall be examined annually, to ensure that this budget is not excessively burdensome to the Company.  Additionally, Employee will be provided with the authority to allocate2,000,000 options among Iroquois Facility Technology Staff (excluding the Employee) to purchase the Company’s common stock, as part of the employees’ compensation at the Iroquois Facility. The strike price and other terms of such options shall be determined by the Board and shall be consistent with customary practices.  The Iroquois Facility will also retain for its budget 30% of the gross revenue from all Plastic2Oil processors operating at the Iroquois Facility which will be used in short order to build additional processors at the Iroquois Facility (subject to availability of permits, availability of land, etc.).  Until the time when there are six processors running at the Iroquois Facility, at least one-third of all processors will be located at the Iroquois Facility.
 
 
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ARTICLE II – COMPENSATION
 
2.1     Base Salary .  Company shall pay Employee, and Employee shall accept an annual base salary of Two Hundred Seventy Five Thousand Dollars ($275,000.00), payable bi-weekly in 26 equal installments, subject to standard withholding and other deductions required by law.  Employee’s Base Salary shall never be less than that of any other employee of the Company during the term hereof.
 
2.2            Signing Bonus .  On the Effective Date of this Agreement, Employee shall receive Four Million (4,000,000) options to purchase shares of the Company’s common stock, vesting in equal annual installments beginning one year from the Effective Date for five years as follows.
 
●     Vesting immediately upon execution of this Agreement; 750,000 options to purchase common stock at $1.50 per share
 
●     Vesting one (1) year from the Effective Date; 650,000 options to purchase common stock at $1.50 per share
 
●     Vesting two (2) years from the Effective Date; 650,000 options to purchase common stock at $1.50 per share
 
●     Vesting three (3) years from the Effective Date; 650,000 options to purchase common stock at $1.50 per share
 
●     Vesting four (4) years from the Effective Date; 650,000 options to purchase common stock at $1.50 per share
 
      Vesting five (5) years from the Effective Date; 650,000 options to purchase common stock at $1.50 per share
 
●     The term of the options will be seven (7) years from the date of vesting;
 
 
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●     All options, vested and unvested, will immediately vest upon a change in control of the Company other than the redemption or purchase of such Series A Super Voting Preferred Stock by the Company.  Specifically,  any change in voting control of the Company resulting from the transfer of the Series A Super Voting Preferred Stock of the Company from the Employee to any of the other parties signatory to a letter agreement dated May 14, 2012 between the Employee and the other parties signatory thereto will be deemed a change in control of the Company.
 
●     Employee will not sell more than 750,000 shares he received from the exercise of the aforementioned options for two (2) years from the Effective Date of this Agreement, unless a change in control of the Company occurs, at which time, this clause if voided.
 
●     At the time of exercise, the Employee will have the option to issue payment to the Company for the option price times the number of options being exercised.  For example, if the Employee exercises 100,000 options, Employee would provide cash in the amount of $150,000 to the Company and in turn receive 100,000 shares of JBI Common Stock.
 
●     Additionally, the Employee can perform a cashless exercise, in which the total number of shares to be issued will be offset by the amount the Employee would be required to remit to the Company.  For example, if 100,000 shares are exercised when the price of the Company’s common stock is $5.00, then the Employee would receive Common Stock in the amount of the options exercised multiplied by the market price less the number of options exercised multiplied by the $1.50 per option (100,000x$5.00) - (100,000x1.50) = $350,000 of shares of JBI Common Stock (valued at the market price on the date of exercise).
 
●     The Company will have a formal stock and stock option compensation plan in place within one month of the Effective Date of this Agreement under which these options will be formally issued.
 
2.3     Performance Bonus .  Beginning one year after the Effective Date of this Agreement and annually thereafter while employed, Employee shall receive a performance bonus equal to the Base Salary multiplied by the JBI Share Price divided by $10. For these purposes, the JBI Share Price shall be the weighted average share price in the month prior to the annual bonus date. The bonus shall be payable in JBI stock, with the value of the each JBI share equal to the JBI Share Price for the purposes of calculating the number of JBI shares.  Employee will have the option to receive up to $100,000 of the Performance Bonus in cash, if the Company’s consolidated cash balances are greater than $5 million at the time of the Performance Bonus payment.
 
2.4            Employee Benefits .  In addition to the compensation specified above, Employee shall be entitled to the benefits generally made available by the Company to management employees, including but not limited to health insurance and dental insurance, subject to the terms, conditions, and limitations governing those programs.   In addition, Employee shall be provided with a computer and cell phone at company expense. Employee will be entitled to continue to use the Company car he has used as CEO (i.e., an Acura MDX) until the end of the Company’s lease term on the vehicle.
 
 
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2.5            Vacation .  Employee shall be entitled to four weeks paid vacation during the term of this Agreement.
 
2.6            Expenses .  The Company shall reimburse Employee for all reasonable expenses incurred by Employee in the course of performing Employee’s duties under this Agreement and which are sought in accordance with the Company’s reimbursement policies in effect from time to time. Additionally, the Company will pay all expenses required for Employee to maintain his current working ability in the United States (i.e. all legal and filing fees for working visa, additionally commuting costs to work in the United States).  The Company will continue to supply an American Express card or other credit card for corporate use.
 
ARTICLE III – TERMINATION OF EMPLOYMENT
 
3.1     Grounds for Termination .
 
3.1.1     Termination by the Company .  Employee’s employment with the Company is not at will but may be terminated by the Company either for “Cause” (as defined below), or without Cause.  In either event, Employee’s compensation upon such termination is limited to the compensation expressly provided for in this Agreement.  The Company may terminate Employee’s employment under this Agreement by delivery of written notice to the Employee specifying the nature of the termination and, if applicable, the Cause or Causes relied upon for such termination.  Any such notice of termination shall effect termination as of the date specified in the notice, except as otherwise extended to the last day of any applicable cure period(s) provided below.  If Employee’s employment hereunder is terminated at any time by Company, with or without Cause, Company agrees that it will take all steps necessary to insure that Employee is relieved of any personal responsibility for the Company’s compliance with its Permits.
 
3.1.2     Termination for Death or Disability .  Employee’s employment with the Company shall automatically terminate effective upon the date of Employee’s death or Complete Disability as defined in this Agreement; provided , however , that this Section 3.1.2 shall in no way limit the Company’s obligation to provide such reasonable accommodations to the Employee as may be required by law.
 
3.1.3     Termination by the Employee for Good Reason .  The Employee may terminate his employment under this Agreement at any time upon the giving of adequate notice of termination to the Company as provided below.  If during the Initial Term Employee terminates this Agreement and his employment hereunder for “Good Reason” (as defined below), he shall do so in accordance with the procedures specified in Section 3.3.3 below.  If Employee terminates his employment for any other reason or no reason, he shall provide the Company with at least 30 days written notice.
 
 
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3.1.4     Termination by Mutual Agreement of the Parties .  The Employee’s employment pursuant to this Agreement may be terminated at any time upon a mutual agreement in writing of the Parties.
 
3.2     Compensation Upon Termination.
 
3.2.1     Termination for Cause or Without Good Reason .  If during the Initial Term Employee’s employment is terminated by the Company for Cause, or if during the Initial Term Employee terminates his employment hereunder without Good Reason, or if either Party terminates Employee’s employment after the Initial Term, the Company shall pay or provide to Employee the Base Salary accrued through the date of termination, and any applicable benefits as provided under the corresponding plans, including accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings.  Employee shall be entitled to retain any vested options.  Employee will forfeit any unvested options.  Employee will be entitled to continued health and dental coverage under COBRA.
 
3.2.2     Death or Complete Disability .  If Employee’s employment is terminated by death or Complete Disability as provided in Section 3.1.2, the Company shall pay or provide to Employee, or to Employee’s heirs, the Base Salary accrued through the date of termination for death or Complete Disability, and any applicable benefits as provided under the corresponding plans, including accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings.  Employee shall be entitled to retain any vested options.  Employee will forfeit any unvested options. For the purpose of determining the number of vested options, the date of termination under this 3.2.2 shall be assumed to be 12 months after the actual date of termination (i.e. there shall be a 12 month acceleration of vesting).  Employee will be entitled to six (6) months continued health and dental coverage paid for by the Company and then will be eligible to continue coverage through COBRA.
 
3.2.3     Without Cause or With Good Reason .  If the Company terminates Employee’s employment without Cause or Employee terminates his employment for Good Reason, the Company shall pay or provide to the Employee: (a) (i) the Base Salary accrued through the date of termination, and (ii) any applicable benefits as provided under the corresponding plans, including accrued and unused vacation earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings; plus (b) an amount equal to the Base Salary to which Employee would be eligible to receive in the event he had remained employed through the end of the Term; less standard deductions and withholdings, such payments to be made at the times and in the amounts that the Base Salary would have been paid had this Agreement not been so terminated.  In the case of termination without Cause, Employee shall be entitled to retain all vested and unvested options. In the case of termination for Good Reason Employee shall be entitled to retain all vested options. For the purpose of determining the number of vested options, the date of termination under this 3.2.3 shall be assumed to be 12 months after the actual date of termination (i.e. there shall be a 12 month acceleration of vesting). For the purposes of this 3.2.3, the JBI Share Price shall equal the weighted average share price in the six months prior to the termination.  Employee will be entitled to six (6) months continued health and dental coverage paid for by the Company and then will be eligible to continue coverage through COBRA.
 
 
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3.2.4     Should employee be terminated, the clause within Section 2.2 limiting sales of stock options and Common Stock becomes voided and all restrictions on sale of Employee’s Common Stock and options are removed.
 
3.3     Definitions .  For purposes of this Agreement, the following terms shall have the following meanings:
 
3.3.1     Complete Disability .   “Complete Disability” shall mean the inability of the Employee to perform the Employee’s essential duties under this Agreement, whether with or without reasonable accommodation, because the Employee has become permanently disabled within the meaning of any policy of disability income insurance covering employees of the Company then in force.  In the event the Company has no policy of disability income insurance covering employees of the Company in force when the Employee becomes disabled, the term “Complete Disability” shall mean the inability of the Employee to perform the Employee’s essential duties under this Agreement, whether with or without reasonable accommodation, by reason of any incapacity, physical or mental, which the Board, based upon medical advice or an opinion provided by a licensed physician reasonably acceptable to the Board, determines to have incapacitated the Employee from satisfactorily performing all of the Employee’s usual services for the Company, with or without reasonable accommodation, for a period of at least one hundred twenty (120) days during any twelve (12) month period (whether or not consecutive).
 
3.3.2     Cause .   “Cause” for the Company to terminate the Employee’s employment hereunder shall mean the occurrence of any of the following events:
 
(a)
the Employee’s conviction of any felony or crime involving moral turpitude;
 
(b)
the Employee’s engaging or in any manner participating in any material act of intentional misconduct against the Company, or its employees, agents or customers, including but not limited to fraud or the use or appropriation for his personal use or benefit of any funds or properties of the Company not authorized by the Company’s Board of Directors to be so used or appropriated; or,
 
(c)
the Employee’s refusal to implement or follow a lawful policy or directive of the Company following a written request or order to do so.
 
 
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But will exclude any events relating to prior conduct as CEO of the Company, “310 Holdings Inc”, “John Bordynuik Inc”, “JBI, Inc”, and its wholly owned subsidiaries consistent with section 6.1
 
3.3.3     Good Reason .   “Good Reason” shall mean the Employee’s termination of his employment upon the occurrence of a material reduction in the Employee’s duties, authority, or responsibilities relative to the duties, authority, or responsibilities in effect immediately prior to such reduction.   Provided, however that, such termination by the Employee shall only be deemed for Good Reason pursuant to the foregoing definition if: (a) the Employee gives the Company written notice of the intent to terminate for Good Reason within thirty (30) days following the first notice to the Employee of the occurrence of the condition(s) that the Employee believes constitutes Good Reason, which notice shall describe such condition(s);and (b) the Company fails to remedy such condition(s) within thirty (30) days following receipt of the written notice.
 
ARTICLE IV – CONFIDENTIAL INFORMATION;
NON-INTERFERENCE; NON-COMPETITION
 
4.1     Trade Secrets .  During the course of Employee's employment, Employee may receive, develop, otherwise acquire, have access to or become acquainted with trade secrets or other confidential information relating to the business of Company (collectively called "Confidential Information").  In this regard, Employee understands and agrees that the term "Confidential Information" shall include, but not be limited to:  names and addresses of members, customers, employees or applicants for employment; methods of operation; all manuals, books, and notes regarding Company's products and services; all drawings, designs, patterns, devices, methods, techniques, compilations, processes, product specifications, future plans, financial information, cost and pricing information, computer programs, formulas, and equations; the names, buying habits or practices and preferences of any of Company's members or customers; the cost to Company of supplying its products and services; written business records, files, documents, specifications, plans, and compilations of information concerning the business of Company; reports, correspondence, records, account lists, price lists, budgets, indexes, invoices, and telephone records.
 
4.2     Non-Disclosure .  Employee shall not, at any time whatsoever, either during the term of this Agreement or after its termination, disclose to others, either directly or indirectly, or take or use for Employee's own competitive purposes or the competitive purposes of others, either directly or indirectly, any Confidential Information, knowledge or data of Company.
 
4.3     Special Relief .  Employee understands and acknowledges that the Confidential Information of Company is a special, unique, unusual, extraordinary, and intellectual in character, which gives it a particular value, the loss of which cannot be reasonably compensated in damages in an action at law.  Employee understands and acknowledges that in addition to any other rights or remedies that Company may possess, Company shall be entitled to injunctive and other equitable relief to prevent a breach of any provision of this Article IV of this Agreement by Employee.
 
 
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4.4     Non-Interference .  Employee shall not now or in the future disrupt, damage, impair, interfere with, or otherwise harm Company, its business or other interests in any way, including, without limit, doing any of the following: (i) inducing an employee to leave the Company's employ; (ii) inducing a consultant, sales representative or independent contractor to sever that person's relationship with the Company; (iii) disrupt the Company's relationship with a customer, vendor or anyone else.
 
ARTICLE V – ARBITRATION OF DISPUTES
 
5.1     Arbitration .  Any dispute over the validity, enforcement, scope, breach or interpretation of this Agreement and any dispute of any kind whatsoever between Employee and Company, if any, shall be submitted and resolved in final and binding arbitration before a single arbitrator through the American Arbitration Association ("AAA") pursuant to the provisions of the AAA Employment Arbitration Rules or successor rules then in effect, applicable to individually negotiated agreements; except, no arbitrator shall have jurisdiction to grant any remedy or relief that would have been unavailable to the parties had the matter been heard in court in accordance with applicable law, including, but not limited to, awards of attorney's fees and costs.
 
ARTICLE VI – INDEMNIFICATION
 
6.1     Indemnification.   The Company agrees to indemnify and hold Employee harmless from any and all loss, cost or damage, whether past, present or future, of whatsoever kind or nature, including, without limitation, attorneys fees and costs, arising out of or relating to Employee’s performance of his duties as CEO of the company, whether such loss, cost or damage is sustained by the Company or by Employee individually.  The Company’s agreement to indemnify in this paragraph extends to all loss, cost or damage, fine, penalty or disgorgement, whether past, present or future, of whatsoever kind or nature, including without limitation, attorneys fees and costs, whether such loss, cost or damage is sustained by the Company or by Employee individually, in relation to the following: (i) a class action lawsuit filed in the United States District Court for the District of Nevada (Reno), entitled Pancoe v. JBI, Inc., et al.; (ii) a shareholder derivative lawsuit filed in the United States District Court for the District of Massachusetts entitled, Grampp v. John Bordynuik et al.; (iii) an or any action filed by the Securities Exchange Commission or other securities regulator relating to the Companies (“John Bordynuik Inc” , ”310 Holdings” , ”JBI Inc”, Plastic2Oil”) and its wholly owned subsidiaries.; and (iv) any future potential environmental-related proceedings (NYSDEC, etc.) relating to the operations of the Company. The Company agrees to continue and hold Employee harmless from any and all loss, cost or damage, whether past, present or future, of whatsoever kind or nature, including, without limitation, attorneys fees and costs, arising out of or relating to Employee’s performance of his duties as Chief of Technology of the company, whether such loss, cost or damage is sustained by the Company or by Employee individually.
 
 
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ARTICLE VII – MISCELLANEOUS PROVISIONS
 
7.1     Intellectual Property .  Plastic2Oil Intellectual Property  “P2O Work Product”.  Employee’s employment duties may include creating, developing and/or inventing in areas directly or indirectly related to the Plastic2Oil business of the Company. If ownership of all right, title and interest to the legal rights in and to the P2O Work Product has not vested exclusively in the Company or will not vest exclusively in the Company, then, without further consideration, Employee assigns all presently-existing P2O Work Product to the Company and agrees to assign, and automatically assigns, all future P2O Work Product to the Company.  The Company will have the right to obtain, and hold in its own name, copyrights, patents, design registrations, proprietary database rights, trademarks, rights of publicity and any other protection available in the P2O Work Product. At the Company’s request, Employee agrees to perform, during or after Employee’s employment with the Company, any acts to transfer, perfect and defend the Company’s ownership of the P2O Work Product for no additional compensation.  Employee will be compensated for any out-of-pocket expenses incurred with performing these duties.
 
7.2             Interpretation .  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be valid and effective under applicable law.  If any provision of this Agreement is found to be invalid or unenforceable, the validity and enforceability of the remaining parts, terms and provisions shall not be affected thereby, and a suitable and equitable provision shall be substituted to carry out, so far as may be enforceable and valid, the intent and purpose of the invalid or unenforceable provision.  This Agreement shall be construed whenever possible to comply with all applicable laws, and the rights and obligations of the parties shall be enforced to the fullest extent possible.
 
7.3             Assignment And Binding Effect .  This Agreement shall be binding upon and inure to the benefit of Employee and his heirs, executors, personal representatives, administrators and legal representatives.  Because of the unique and personal nature of the Employee's duties under this Agreement, however, neither this Agreement nor any rights or obligations under this Agreement shall be assignable by Employee.  This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives.  Any successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes.  For this purpose, "successor" means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company.
 
7.4             Construction And Interpretation .  The headings set forth in this Agreement are for convenience of reference only and shall not be used in interpreting this Agreement.  All parties have cooperated in the drafting and preparation of this Agreement.  Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter.
 
 
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7.5             Voluntary Agreement .  Employee acknowledges and agrees that he is fully aware that he may discuss any and all aspects of this Agreement with an attorney of his choice, that he has carefully read and fully understands all of the provisions of this Agreement, and that he is voluntarily entering into this Agreement.
 
7.6             Counterparts .  This Agreement may be executed in counterparts, and each counterpart when executed shall have the efficacy of a signed original.  Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
 
7.7             Entire Agreement .  This Agreement constitutes the entire agreement and understanding between the parties and supersedes any and all other agreements, communications, understandings, promises, stipulations, arrangements, whether any of the same are either oral or in writing, or express or implied, between the parties hereto with respect to the subject matter hereof, including, but not limited to, any implied-in-law or implied-in-fact covenants or duties relating to employment or the termination of employment.  No change to or modification of this Agreement shall be valid or binding unless the same shall be in writing and signed by Employee and Company.
 
7.8             Governing Law .  The validity and effect of this Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of New York, exclusive of its conflict of law rules.
 
 
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IN WITNESS WHEREOF , the parties hereto acknowledge that they have read this Agreement, fully understand it, and have freely and voluntarily entered into it as of the effective date stated above.
 
DATED:  May 15, 2012 
By:
/s/ John Bordynuik  
    JOHN BORDYNUIK  
 
DATED:  May 15, 2012 
JBI, INC.,
a Nevada corporation
 
       
 
By:
/s/ Matthew Ingham  
  Name:  Matthew Ingham  
  Title:  Chief Financial Officer  
       

 
 -12-

Exhibit 10.3
 
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement ("Agreement") is made and entered into, effective May 15, 2012 (the “Effective Date”), by and between JBI, Inc., (the “Company”), and Kevin Rauber (the “Employee”).
 
ARTICLE I - EMPLOYMENT
 
1.1     Employment . The Company hereby employs the Employee, and the Employee hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement.
 
1.2     Term . The term of this Agreement shall begin on the Effective Date and shall continue for a period of three (3) years after the Effective Date, unless this Agreement is terminated as provided for herein.
 
1.3     Title . Employee shall be the President and Chief Executive Officer of the Company.
 
1.4     Duties . The Employee shall do and perform all services, acts or things necessary or advisable to manage the Company. This will include Employee being expected to oversee, execute and manage the rollout of JBI’s business plan with Rock-Tenn. Employee shall loyally, conscientiously, and professionally perform all of his duties and responsibilities, which may be revised from time to time, as Company deems appropriate or necessary. At all times during his employment, Employee shall adhere to all rules, policies, and guidelines of Company that are now in effect or as they may be modified by the Company's management, in its sole discretion, from time to time. The Employee agrees that the hiring of one operations senior executive by the Company is considered essential to performing his duties. No other senior management hires are permitted until the Company has a minimum of six processors running consistently, unless such hire is made out of commercial necessity and agreed to by the Board of Directors of the Company. While employed by Company, Employee shall not, directly or indirectly, render any services of a business, commercial or professional nature to any other person, firm or organization, whether for compensation or otherwise. Employee will sign all environmental permitting document on behalf of the Company in his capacity as CEO/ President.
 
ARTICLE II – COMPENSATION
 
2.1     Base Salary . Company shall pay Employee, and Employee shall accept an annual base salary of Two hundred and Fifty Thousand Dollars ($250,000.00), payable weekly in 52 equal installments, subject to standard withholding and other deductions required by law.
 
 
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2.2     Signing Bonus . On the Effective Date of this Agreement, Employee shall receive Five Hundred Thousand (500,000) options to purchase shares of the Company’s common stock, vesting in equal annual installments beginning one year from the Effective Date for five years as follows.
 
●
Vesting one (1) year from the Effective Date; 100,000 options to purchase common stock at $1.50 per share
 
●
Vesting two (2) years from the Effective Date; 100,000 options to purchase common stock at $1.50 per share
 
●
Vesting three (3) years from the Effective Date; 100,000 options to purchase common stock at $1.50 per share
 
●
Vesting four (4) years from the Effective Date; 100,000 options to purchase common stock at $1.50 per share
 
●
Vesting five (5) years from the Effective Date; 100,000 options to purchase common stock at $1.50 per share
 
m
At the time of exercise, the Employee will have the option to issue payment to the Company for the option price times the number of options being exercised. For example, if the Employee exercises 100,000 options, Employee would provide cash in the amount of $150,000 to the Company and in turn receive 100,000 shares of JBI Common Stock.
 
m
Additionally, the Employee can perform a cashless exercise, in which the total number of shares to be issued will be offset by the amount the Employee would be required to remit to the Company. For example, if 100,000 shares are exercised when the price of the Company’s common stock is $5.00, then the Employee would receive Common Stock in the amount of the options exercised multiplied by the market price less the number of options exercised multiplied by the $1.50 per option (100,000*$5.00) - (100,000*1.50) = $350,000 of shares of JBI Common Stock (valued at the market price on the date of exercise).
 
●
The term of the options will be seven (7) years from the date of vesting;
 
●
All options, vested and unvested, will immediately vest upon the change in voting control of the Company, other than any change in voting control of the Company resulting from (i) the transfer of the Series A Super Voting Preferred Stock of the Company from Mr. John Bordynuik to any of the other parties signatory to a letter agreement dated May __, 2012 between Mr. John Bordynuik and the other parties signatory thereto; and (ii) the redemption or purchase of such Series A Super Voting Preferred Stock by the Company.
 
●
The Company will have a formal stock compensation plan in place within one month of the Effective Date of this agreement under which these options will be formally issued.
 
2.3     Performance Bonus . Beginning one year after the Effective Date of this Agreement and annually thereafter while employed, Employee shall receive a performance bonus equal to the Base Salary multiplied by the JBI Share Price divided by $10. For these purposes, the JBI Share Price shall be the weighted average share price in the month prior to the annual bonus date. The bonus shall be payable in JBI stock, with the value of the each JBI share equal to the JBI Share Price for the purposes of calculating the number of JBI shares. Employee will have the option to receive up to $100,000 of the Performance Bonus in cash. Such cash payment will be approved based on the Company’s consolidated cash balances being greater than $5 million at the time of the Performance Bonus payment.
 
 
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2.4     Employee Benefits . In addition to the compensation specified above, the Employee shall be entitled to the benefits generally made available by the Company to management employees, including but not limited to health insurance and dental insurance, subject to the terms, conditions, and limitations governing those programs. Employee’s health and dental insurances will allow for coverage in St. Louis, MO. If the Company does not have a national health and dental plan in place at the Effective Date, the Company will reimburse the Employee for costs of COBRA. In addition, Employee shall be provided with a computer and cell phone at company expense.
 
2.5     Vacation . Employee shall be entitled to four weeks paid vacation during the term of this Agreement.
 
2.6     Expenses . The Company shall reimburse Employee for all reasonable expenses incurred by Employee during the Term in the course of performing Employee’s duties under this Agreement and which are sought in accordance with the Company’s reimbursement policies in effect from time to time.
 
ARTICLE III – TERMINATION OF EMPLOYMENT
 
3.1     Grounds for Termination .
 
3.1.1     Termination by the Company . Employee’s employment with the Company is not at will but may be terminated by the Company either for “Cause” (as defined below), or without Cause. In either event, Employee’s compensation upon such termination is limited to the compensation expressly provided for in this Agreement. The Company may terminate Employee’s employment under this Agreement by delivery of written notice to the Employee specifying the nature of the termination and, if applicable, the Cause or Causes relied upon for such termination. Any such notice of termination shall effect termination as of the date specified in the notice, except as otherwise extended to the last day of any applicable cure period(s) provided below.
 
3.1.2     Termination for Death or Disability . Employee’s employment with the Company shall automatically terminate effective upon the date of Employee’s death or Complete Disability as defined in this Agreement; provided , however , that this Section 3.1.2 shall in no way limit the Company’s obligation to provide such reasonable accommodations to the Employee as may be required by law.
 
3.1.3     Termination by the Employee for Good Reason . The Employee may terminate his employment under this Agreement at any time upon the giving of adequate notice of termination to the Company as provided below. If during the Initial Term Employee terminates this Agreement and his employment hereunder for “Good Reason” (as defined below), he shall do so in accordance with the procedures specified in Section 3.3.3 below. If Employee during or after the Initial Term terminates his employment for any other reason or no reason, he shall provide the Company with at least 30 days written notice.
 
 
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3.1.4     Termination by Mutual Agreement of the Parties . The Employee’s employment pursuant to this Agreement may be terminated at any time upon a mutual agreement in writing of the Parties.
 
3.2     Compensation Upon Termination.
 
3.2.1     Termination for Cause or Without Good Reason . If at any time employment is terminated by the Company for Cause, or if at any time Employee terminates his employment hereunder without Good Reason, , the Company shall pay or provide to Employee the Base Salary accrued through the date of termination, and any applicable benefits as provided under the corresponding plans, including accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings. Employee shall be entitled to retain any vested options. Employee will forfeit any unvested options. Employee will be entitled to continued health and dental coverage under COBRA.
 
3.2.2     Death or Complete Disability . If Employee’s employment is terminated by death or Complete Disability as provided in Section 3.1.2, the Company shall pay or provide to Employee, or to Employee’s heirs, the Base Salary accrued through the date of termination for death or Complete Disability, and any applicable benefits as provided under the corresponding plans, including accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings. Employee shall be entitled to retain any vested options. Employee will forfeit any unvested options. For the purpose of determining the number of vested options, the date of termination under this 3.2.2 shall be assumed to be 12 months after the actual date of termination (i.e. there shall be a 12 month acceleration of vesting). Employee will be entitled to six (6) months continued health and dental coverage paid for by the Company and then will be eligible to continue coverage through COBRA.
 
3.2.3     Without Cause or With Good Reason . If the Company terminates Employee’s employment without Cause or Employee terminates his employment for Good Reason, the Company shall pay or provide to the Employee: (a) (i) the Base Salary accrued through the date of termination, and (ii) any applicable benefits as provided under the corresponding plans, including accrued and unused vacation earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings; plus (b) an amount equal to the Base Salary to which Employee would be eligible to receive in the event he had remained employed through the end of the Term; less standard deductions and withholdings, such payments to be made at the times and in the amounts that the Base Salary would have been paid had this Agreement not been so terminated. In the case of termination without Cause, Employee shall be entitled to retain all vested and unvested options. In the case of termination for Good Reason Employee shall be entitled to retain all vested options. For the purpose of determining the number of vested options, the date of termination under this 3.2.3 shall be assumed to be 12 months after the actual date of termination (i.e. there shall be a 12 month acceleration of vesting). For the purposes of this 3.2.3, the JBI Share Price shall equal the weighted average share price in the six months prior to the termination. Employee will be entitled to six (6) months continued health and dental coverage paid for by the Company and then will be eligible to continue coverage through COBRA.
 
 
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3.3     Definitions . For purposes of this Agreement, the following terms shall have the following meanings:
 
3.3.1     Complete Disability . “Complete Disability” shall mean the inability of the Employee to perform the Employee’s essential duties under this Agreement, whether with or without reasonable accommodation, because the Employee has become permanently disabled within the meaning of any policy of disability income insurance covering employees of the Company then in force. In the event the Company has no policy of disability income insurance covering employees of the Company in force when the Employee becomes disabled, the term “Complete Disability” shall mean the inability of the Employee to perform the Employee’s essential duties under this Agreement, whether with or without reasonable accommodation, by reason of any incapacity, physical or mental, which the Board, based upon medical advice or an opinion provided by a licensed physician reasonably acceptable to the Board, determines to have incapacitated the Employee from satisfactorily performing all of the Employee’s usual services for the Company, with or without reasonable accommodation, for a period of at least one hundred twenty (120) days during any twelve (12) month period (whether or not consecutive).
 
3.3.2     Cause . “Cause” for the Company to terminate the Employee’s employment hereunder shall mean the occurrence of any of the following events:
 
(a)
the Employee’s conviction of any felony or crime involving moral turpitude;
 
(b)
the Employee’s engaging or in any manner participating in any material act of intentional misconduct against the Company, or its employees, agents or customers, including but not limited to fraud or the use or appropriation for his personal use or benefit of any funds or properties of the Company not authorized by the Company’s Board of Directors to be so used or appropriated; or,
 
(c)
the Employee’s refusal to implement or follow a lawful policy or directive of the Company following a written request or order to do so.
 
3.3.3     Good Reason . “Good Reason” shall mean the Employee’s termination of his employment upon the occurrence of a material reduction in the Employee’s duties, authority, or responsibilities relative to the duties, authority, or responsibilities in effect immediately prior to such reduction. Provided, however that, such termination by the Employee shall only be deemed for Good Reason pursuant to the foregoing definition if: (a) the Employee gives the Company written notice of the intent to terminate for Good Reason within thirty (30) days following the first notice to the Employee of the occurrence of the condition(s) that the Employee believes constitutes Good Reason, which notice shall describe such condition(s);and (b) the Company fails to remedy such condition(s) within thirty (30) days following receipt of the written notice.
 
 
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ARTICLE IV – CONFIDENTIAL INFORMATION;
NON-INTERFERENCE; NON-COMPETITION
 
4.1     Trade Secrets . During the course of Employee's employment, Employee may receive, develop, otherwise acquire, have access to or become acquainted with trade secrets or other confidential information relating to the business of Company (collectively called "Confidential Information"). In this regard, Employee understands and agrees that the term "Confidential Information" shall include, but not be limited to: names and addresses of members, customers, employees or applicants for employment; methods of operation; all manuals, books, and notes regarding Company's products and services; all drawings, designs, patterns, devices, methods, techniques, compilations, processes, product specifications, future plans, financial information, cost and pricing information, computer programs, formulas, and equations; the names, buying habits or practices and preferences of any of Company's members or customers; the cost to Company of supplying its products and services; written business records, files, documents, specifications, plans, and compilations of information concerning the business of Company; reports, correspondence, records, account lists, price lists, budgets, indexes, invoices, and telephone records.
 
4.2     Non-Disclosure . Employee shall not, at any time whatsoever, either during the term of this Agreement or after its termination, disclose to others, either directly or indirectly, or take or use for Employee's own competitive purposes or the competitive purposes of others, either directly or indirectly, any Confidential Information, knowledge or data of Company.
 
4.3     Special Relief . Employee understands and acknowledges that the Confidential Information of Company is a special, unique, unusual, extraordinary, and intellectual in character, which gives it a particular value, the loss of which cannot be reasonably compensated in damages in an action at law. Employee understands and acknowledges that in addition to any other rights or remedies that Company may possess, Company shall be entitled to injunctive and other equitable relief to prevent a breach of any provision of this Article IV of this Agreement by Employee.
 
4.4     Non-Interference . Employee shall not now or in the future disrupt, damage, impair, interfere with, or otherwise harm Company, its business or other interests in any way, including, without limit, doing any of the following: (i) inducing an employee to leave the Company's employ; (ii) inducing a consultant, sales representative or independent contractor to sever that person's relationship with the Company; (iii) disrupt the Company's relationship with a customer, vendor or anyone else.
 
 
-6-
 
 
ARTICLE V – ARBITRATION OF DISPUTES
 
5.1     Arbitration . Any dispute over the validity, enforcement, scope, breach or interpretation of this Agreement and any dispute of any kind whatsoever between Employee and Company, if any, shall be submitted and resolved in final and binding arbitration before a single arbitrator through the American Arbitration Association ("AAA") pursuant to the provisions of the AAA Employment Arbitration Rules or successor rules then in effect, applicable to individually negotiated agreements; except, no arbitrator shall have jurisdiction to grant any remedy or relief that would have been unavailable to the parties had the matter been heard in court in accordance with applicable law, including, but not limited to, awards of attorney's fees and costs.
 
ARTICLE VI – MISCELLANEOUS PROVISIONS
 
6.1     Indemnification . The Employee shall be indemnified to the extent permitted by the Company’s organizational documents and to the extent permitted by law.
 
6.2     Interpretation . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be valid and effective under applicable law. If any provision of this Agreement is found to be invalid or unenforceable, the validity and enforceability of the remaining parts, terms and provisions shall not be affected thereby, and a suitable and equitable provision shall be substituted to carry out, so far as may be enforceable and valid, the intent and purpose of the invalid or unenforceable provision. This Agreement shall be construed whenever possible to comply with all applicable laws, and the rights and obligations of the parties shall be enforced to the fullest extent possible.
 
6.3     Assignment And Binding Effect . This Agreement shall be binding upon and inure to the benefit of Employee and his heirs, executors, personal representatives, administrators and legal representatives. Because of the unique and personal nature of the Employee's duties under this Agreement, however, neither this Agreement nor any rights or obligations under this Agreement shall be assignable by Employee. This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives. Any successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, "successor" means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company.
 
6.4     Construction And Interpretation . The headings set forth in this Agreement are for convenience of reference only and shall not be used in interpreting this Agreement. All parties have cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter.
 
 
-7-
 
 
6.5     Voluntary Agreement . Employee acknowledges and agrees that he is fully aware that he may discuss any and all aspects of this Agreement with an attorney of his choice, that he has carefully read and fully understands all of the provisions of this Agreement, and that he is voluntarily entering into this Agreement.
 
6.6     Counterparts . This Agreement may be executed in counterparts, and each counterpart when executed shall have the efficacy of a signed original. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
 
6.7     Entire Agreement . This Agreement constitutes the entire agreement and understanding between the parties and supersedes any and all other agreements, communications, understandings, promises, stipulations, arrangements, whether any of the same are either oral or in writing, or express or implied, between the parties hereto with respect to the subject matter hereof, including, but not limited to, any implied-in-law or implied-in-fact covenants or duties relating to employment or the termination of employment. No change to or modification of this Agreement shall be valid or binding unless the same shall be in writing and signed by Employee and Company.
 
6.8     Governing Law . The validity and effect of this Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of New York, exclusive of its conflict of law rules.
 
 
-8-
 
 
IN WITNESS WHEREOF , the parties hereto acknowledge that they have read this Agreement, fully understand it, and have freely and voluntarily entered into it as of the effective date stated above.
 
DATED: May 15, 2012
By:
/s/ Kevin Rauber  
   
KEVIN RAUBER
 
 
DATED: May 15, 2012
JBI, INC.,
a Nevada corporation
 
     
 
By:
/s/ Matthew J. Ingham  
  Name:  Matthew J. Ingham  
 
Title:
Chief Financial Officer  
       

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Exhibit 10.4
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement ("Agreement") is made and entered into, effective May 15, 2012 (the “Effective Date”), by and between JBI, Inc., (the “Company"), and Matthew Ingham (the “Employee”).
 
ARTICLE I - EMPLOYMENT
 
1.1             Employment .  The Company hereby employs the Employee, and the Employee hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement.
 
1.2           ­ Term .  The term of this Agreement shall begin on the Effective Date and shall continue for a period of three (3) years after the Effective Date, unless this Agreement is terminated as provided for herein.
 
1.3           Title .  Employee shall be the Chief Financial Officer of the Company.
 
1.4          Duties .  The Employee shall do and perform all services, acts or things necessary or advisable to manage and supervise the financial and accounting functions of the Company and that are normally associated with the position of Chief Financial Officer of the Company.  The Employee shall report to the Chief Executive Officer.  Employee shall loyally, conscientiously, and professionally perform all of his duties and responsibilities, which may be revised from time to time, as Company deems appropriate or necessary.  At all times during his employment, Employee shall adhere to all rules, policies, and guidelines of Company that are now in effect or as they may be modified by the Company's management, in its sole discretion, from time to time.  While employed by Company, Employee shall not, directly or indirectly, render any services of a business, commercial or professional nature to any other person, firm or organization, whether for compensation or otherwise, unless he has obtained the prior written consent of Company’s Chief Executive Officer.
 
ARTICLE II  – COMPENSATION
 
2.1           Base Salary .  Company shall pay Employee, and Employee shall accept an annual base salary of $175,000 (One hundred and seventy five thousand dollars), payable weekly in 52 equal installments, subject to standard withholding and other deductions required by law.
 
2.2          Signing Bonus .  On the Effective Date of this Agreement, Employee shall receive Three Hundred Thousand (300,000) options to purchase the Company’s common stock, vesting in equal annual installments beginning one year from the Effective Date for five years as follows.
 
 
-1-
 
 
·  
Vesting one (1) year from the Effective Date; 100,000 options to purchase common stock at $1.50 per share
 
·  
Vesting two (2) years from the Effective Date; 100,000 options to purchase common stock at $1.50 per share
 
·  
Vesting three (3) years from the Effective Date; 100,000 options to purchase common stock at $1.50 per share
 
o  
At the time of exercise, the Employee will have the option to issue payment to the Company for the option price times the number of options being exercised.  For example, if the Employee exercises 100,000 options, Employee would provide cash in the amount of $150,000 to the Company and in turn receive 100,000 shares of JBI Common Stock.
 
o  
Additionally, the Employee can perform a cashless exercise, in which the total number of shares to be issued will be offset by the amount the Employee would be required to remit to the Company.  For example, if 100,000 shares are exercised when the price of the Company’s common stock is $5.00, then the Employee would receive Common Stock in the amount of the options exercised multiplied by the market price less the number of options exercised multiplied by the $1.50 per option (100,000*$5) - (100,000*1.50) = $350,000 of shares of JBI Common Stock (valued at the market price on the date of exercise).
 
·  
The term of the options will be seven (7) years from the date of vesting;
 
·  
All shares, vested and unvested, will immediately vest upon the change in control of the Company other than any change in voting control of the Company resulting from (i) the transfer of the Series A Super Voting Preferred Stock of the Company from Mr. John Bordynuik to any of the other parties signatory to a letter agreement dated May 14, 2012 between Mr. John Bordynuik and the other parties signatory thereto; and (ii) the redemption or purchase of such Series A Super Voting Preferred Stock by the Company.
 
·  
The Company will have a formal stock compensation plan in place within one month of the Effective Date of this agreement under which these options will be formally issued.
 
2.3          Performance Bonus .  Beginning one year after the Effective Date of this Agreement and annually thereafter while employed, Employee shall receive a performance bonus equal to the Base Salary multiplied by the JBI Share Price divided by $10. For these purposes, the JBI Share Price shall be the weighted average share price in the month prior to the annual bonus date. The bonus shall be payable in JBI stock, with the value of the each JBI share equal to the JBI Share Price for the purposes of calculating the number of JBI shares. Employee will have the option to receive up to $100,000 of the Performance Bonus in cash.  Such cash payment will be approved based on the Company’s consolidated cash balances being greater than $5 million at the time of the Performance Bonus payment.
 
2.4          Employee Benefits .  In addition to the compensation specified above, the Employee shall be entitled to the benefits generally made available by the Company to management employees, including but not limited to health insurance and dental insurance, subject to the terms, conditions, and limitations governing those programs.   In addition, Employee shall be provided with a computer and cell phone at company expense.
 
 
-2-
 
 
2.5           Vacation .  Employee shall be entitled to four weeks paid vacation during the term of this Agreement.
 
2.6          Expenses .  The Company shall reimburse Employee for all reasonable expenses incurred by Employee during the Term in the course of performing Employee’s duties under this Agreement and which are sought in accordance with the Company’s reimbursement policies in effect from time to time.
 
ARTICLE III  – TERMINATION OF EMPLOYMENT
 
3.1          Grounds for Termination .
 
3.1.1       Termination by the Company .  Employee’s employment with the Company is not at will but may be terminated by the Company either for “Cause” (as defined below), or without Cause.  In either event, Employee’s compensation upon such termination is limited to the compensation expressly provided for in this Agreement.  The Company may terminate Employee’s employment under this Agreement by delivery of written notice to the Employee specifying the nature of the termination and, if applicable, the Cause or Causes relied upon for such termination.  Any such notice of termination shall effect termination as of the date specified in the notice, except as otherwise extended to the last day of any applicable cure period(s) provided below.
 
3.1.2       Termination for Death or Disability .  Employee’s employment with the Company shall automatically terminate effective upon the date of Employee’s death or Complete Disability as defined in this Agreement; provided , however , that this Section 3.1.2 shall in no way limit the Company’s obligation to provide such reasonable accommodations to the Employee as may be required by law.
 
3.1.3       Termination by the Employee for Good Reason .  The Employee may terminate his employment under this Agreement at any time upon the giving of adequate notice of termination to the Company as provided below.  If during the Initial Term Employee terminates this Agreement and his employment hereunder for “Good Reason” (as defined below), he shall do so in accordance with the procedures specified in Section 3.3.3 below.  If Employee during or after the Initial Term terminates his employment for any other reason or no reason, he shall provide the Company with at least 30 days written notice.
 
3.1.4       Termination by Mutual Agreement of the Parties .  The Employee’s employment pursuant to this Agreement may be terminated at any time upon a mutual agreement in writing of the Parties.
 
 
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3.2          Compensation Upon Termination.
 
3.2.1       Termination for Cause or Without Good Reason .  If at any time employment is terminated by the Company for Cause, or if at any time Employee terminates his employment hereunder without Good Reason, , the Company shall pay or provide to Employee the Base Salary accrued through the date of termination and eighteen months of Base Salary as severance, and any applicable benefits as provided under the corresponding plans, including accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings. Employee shall be entitled to retain any vested shares of common stock.  Employee will forfeit any unvested options.  Employee will be entitled to continued health and dental coverage under COBRA.
 
3.2.2         Death or Complete Disability .  If Employee’s employment is terminated by death or Complete Disability as provided in Section 3.1.2, the Company shall pay or provide to Employee, or to Employee’s heirs, the Base Salary accrued through the date of termination and eighteen additional months of Base Salary for death or Complete Disability, and any applicable benefits as provided under the corresponding plans, including accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings. Employee shall be entitled to retain any vested shares of common stock.  Employee will forfeit any unvested options. For the purpose of determining the number of vested options, the date of termination under this 3.2.2 shall be assumed to be 12 months after the actual date of termination (i.e. there shall be a 12 month acceleration of vesting).  Employee will be entitled to six (6) months continued health and dental coverage paid for by the Company and then will be eligible to continue coverage through COBRA.
 
3.2.3       Without Cause or With Good Reason .  If the Company terminates Employee’s employment without Cause or Employee terminates his employment for Good Reason, the Company shall pay or provide to the Employee: (a) (i) the Base Salary accrued through the date of termination, and (ii) any applicable benefits as provided under the corresponding plans, including accrued and unused vacation earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings; plus (b) an amount equal to the greater of the Base Salary to which Employee would be eligible to receive in the event he had remained employed through the end of the Term or eighteen months of Base Salary as severance, and any applicable benefits as provided under the corresponding plans, including accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less standard deductions and withholdings, such payments to be made at the times and in the amounts that the Base Salary would have been paid had this Agreement not been so terminated. In the case of termination without Cause, Employee shall be entitled to retain all vested and unvested shares of common stock.   In the case of termination for Good Reason Employee shall be entitled to retain all vested shares of common stock. For the purpose of determining the number of vested options, the date of termination under this 3.2.3 shall be assumed to be 12 months after the actual date of termination (i.e. there shall be a 12 month acceleration of vesting). For the purposes of this 3.2.3, the JBI Share Price shall equal the weighted average share price in the six months prior to the termination.  The Employee will be entitled to payment and eighteen months of Base Salary as severance Employee will be entitled to six (6) months continued health and dental coverage paid for by the Company and then will be eligible to continue coverage through COBRA.
 
3.2.4       Relocation.   If there comes a time at which point the Company determines that the functions of the Employee and the Duties to be performed by the Employee cannot be performed in Niagara Falls, NY, the Employee or the Company will have the option to terminate this Agreement in accordance with Section 3.2.3.
 
 
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3.3          Definitions .  For purposes of this Agreement, the following terms shall have the following meanings:
 
3.3.1       Complete Disability .   “Complete Disability” shall mean the inability of the Employee to perform the Employee’s essential duties under this Agreement, whether with or without reasonable accommodation, because the Employee has become permanently disabled within the meaning of any policy of disability income insurance covering employees of the Company then in force.  In the event the Company has no policy of disability income insurance covering employees of the Company in force when the Employee becomes disabled, the term “Complete Disability” shall mean the inability of the Employee to perform the Employee’s essential duties under this Agreement, whether with or without reasonable accommodation, by reason of any incapacity, physical or mental, which the Board, based upon medical advice or an opinion provided by a licensed physician reasonably acceptable to the Board, determines to have incapacitated the Employee from satisfactorily performing all of the Employee’s usual services for the Company, with or without reasonable accommodation, for a period of at least one hundred twenty (120) days during any twelve (12) month period (whether or not consecutive).
 
3.3.2         Cause .   “Cause” for the Company to terminate the Employee’s employment hereunder shall mean the occurrence of any of the following events:
 
(a)  
the Employee’s conviction of any felony or crime involving moral turpitude;
 
(b)  
the Employee’s engaging or in any manner participating in any material act of intentional misconduct against the Company, or its employees, agents or customers, including but not limited to fraud or the use or appropriation for his personal use or benefit of any funds or properties of the Company not authorized by the Company’s Board of Directors to be so used or appropriated; or,
 
(c)  
the Employee’s refusal to implement or follow a lawful policy or directive of the Company following a written request or order to do so.
 
3.3.3         Good Reason .   “Good Reason” shall mean the Employee’s termination of his employment upon the occurrence of a material reduction in the Employee’s duties, authority, or responsibilities relative to the duties, authority, or responsibilities in effect immediately prior to such reduction.    Provided, however that, such termination by the Employee shall only be deemed for Good Reason pursuant to the foregoing definition if: (a) the Employee gives the Company written notice of the intent to terminate for Good Reason within thirty (30) days following the first notice to the Employee of the occurrence of the condition(s) that the Employee believes constitutes Good Reason, which notice shall describe such condition(s);and (b) the Company fails to remedy such condition(s) within thirty (30) days following receipt of the written notice.
 
 
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ARTICLE IV – CONFIDENTIAL INFORMATION;
NON-INTERFERENCE; NON-COMPETITION
 
4.1          Trade Secrets .  During the course of Employee's employment, Employee may receive, develop, otherwise acquire, have access to or become acquainted with trade secrets or other confidential information relating to the business of Company (collectively called "Confidential Information").  In this regard, Employee understands and agrees that the term "Confidential Information" shall include, but not be limited to:  names and addresses of members, customers, employees or applicants for employment; methods of operation; all manuals, books, and notes regarding Company's products and services; all drawings, designs, patterns, devices, methods, techniques, compilations, processes, product specifications, future plans, financial information, cost and pricing information, computer programs, formulas, and equations; the names, buying habits or practices and preferences of any of Company's members or customers; the cost to Company of supplying its products and services; written business records, files, documents, specifications, plans, and compilations of information concerning the business of Company; reports, correspondence, records, account lists, price lists, budgets, indexes, invoices, and telephone records.
 
4.2           Non-Disclosure .  Employee shall not, at any time whatsoever, either during the term of this Agreement or after its termination, disclose to others, either directly or indirectly, or take or use for Employee's own competitive purposes or the competitive purposes of others, either directly or indirectly, any Confidential Information, knowledge or data of Company.
 
4.3          Special Relief .  Employee understands and acknowledges that the Confidential Information of Company is a special, unique, unusual, extraordinary, and intellectual in character, which gives it a particular value, the loss of which cannot be reasonably compensated in damages in an action at law.  Employee understands and acknowledges that in addition to any other rights or remedies that Company may possess, Company shall be entitled to injunctive and other equitable relief to prevent a breach of any provision of this Article IV of this Agreement by Employee.
 
4.4          Non-Interference .  Employee shall not now or in the future disrupt, damage, impair, interfere with, or otherwise harm Company, its business or other interests in any way, including, without limit, doing any of the following: (i) inducing an employee to leave the Company's employ; (ii) inducing a consultant, sales representative or independent contractor to sever that person's relationship with the Company; (iii) disrupt the Company's relationship with a customer, vendor or anyone else.
 
 
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ARTICLE V – ARBITRATION OF DISPUTES
 
5.1          Arbitration .  Any dispute over the validity, enforcement, scope, breach or interpretation of this Agreement and any dispute of any kind whatsoever between Employee and Company, if any, shall be submitted and resolved in final and binding arbitration before a single arbitrator through the American Arbitration Association ("AAA") pursuant to the provisions of the AAA Employment Arbitration Rules or successor rules then in effect, applicable to individually negotiated agreements; except, no arbitrator shall have jurisdiction to grant any remedy or relief that would have been unavailable to the parties had the matter been heard in court in accordance with applicable law, including, but not limited to, awards of attorney's fees and costs.
 
ARTICLE VI – MISCELLANEOUS PROVISIONS
 
6.1           Indemnification .  The Employee shall be indemnified to the extent permitted by the Company’s organizational documents and by-laws in effect at the time of this Agreement and to the extent permitted by law.
 
6.2          Interpretation .  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be valid and effective under applicable law.  If any provision of this Agreement is found to be invalid or unenforceable, the validity and enforceability of the remaining parts, terms and provisions shall not be affected thereby, and a suitable and equitable provision shall be substituted to carry out, so far as may be enforceable and valid, the intent and purpose of the invalid or unenforceable provision.  This Agreement shall be construed whenever possible to comply with all applicable laws, and the rights and obligations of the parties shall be enforced to the fullest extent possible.
 
6.3           Assignment And Binding Effect .  This Agreement shall be binding upon and inure to the benefit of Employee and his heirs, executors, personal representatives, administrators and legal representatives.  Because of the unique and personal nature of the Employee's duties under this Agreement, however, neither this Agreement nor any rights or obligations under this Agreement shall be assignable by Employee.  This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives.  Any successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes.  For this purpose, "successor" means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company.
 
6.4           Construction And Interpretation .  The headings set forth in this Agreement are for convenience of reference only and shall not be used in interpreting this Agreement.  All parties have cooperated in the drafting and preparation of this Agreement.  Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter.
 
 
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6.5           Voluntary Agreement .  Employee acknowledges and agrees that he is fully aware that he may discuss any and all aspects of this Agreement with an attorney of his choice, that he has carefully read and fully understands all of the provisions of this Agreement, and that he is voluntarily entering into this Agreement.
 
6.6          Counterparts .  This Agreement may be executed in counterparts, and each counterpart when executed shall have the efficacy of a signed original.  Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
 
6.7          Entire Agreement .  This Agreement constitutes the entire agreement and understanding between the parties and supersedes any and all other agreements, communications, understandings, promises, stipulations, arrangements, whether any of the same are either oral or in writing, or express or implied, between the parties hereto with respect to the subject matter hereof, including, but not limited to, any implied-in-law or implied-in-fact covenants or duties relating to employment or the termination of employment.  No change to or modification of this Agreement shall be valid or binding unless the same shall be in writing and signed by Employee and Company.
 
6.8          Governing Law .  The validity and effect of this Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of New York, exclusive of its conflict of law rules.
 
 
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IN WITNESS WHEREOF , the parties hereto acknowledge that they have read this Agreement, fully understand it, and have freely and voluntarily entered into it as of the effective date stated above.
 

       
DATED:  May 15, 2012  
By:
/s/ Matthew Ingham  
    MATTHEW INGHAM  
       
 
 
JBI, INC.,
a Nevada corporation
 
       
       
DATED:  May 15, 2012  
By:
/s/ John Bordynuik  
   
Name:  John Bordynuik
 
   
Title:  Chief Executive Officer
 

 
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Exhibit 99.1
 
 
JBI, INC ANNOUNCES $10 MILLION FINANCING, SUCCESSFUL INDEPENDENT ENGINEERING REVIEW OF P2O TECHNOLOGY BY SAIC AND MANAGEMENT AND GOVERNANCE CHANGES
 

 
THOROLD, Ontario, May 15, 2012 (GLOBE NEWSWIRE) – JBI, Inc. (the "Company") (OTCQB:JBII) is pleased to announce the following:

·  
Investment of $10 Million in equity capital
·  
Successful independent review of its Plastic2Oil® (“P2O®”) technology by SAIC
·  
John Bordynuik to become Chief of Technology (“CTO”)
·  
Senior RockTenn executive Kevin Rauber to join the Company as CEO and President
·  
Transition to governance practices consistent with other leading companies
 
 
$10MM Equity Capital Investment

JBI is pleased to announce that investors have agreed to invest it has raised $10 million of equity capital via a private placement of unregistered securities at $0.80 per share. The Investment Group participating consists of prominent private equity investors, venture capitalists, investment bankers and accomplished corporate executives.

The Company’s Chief Financial Officer, Matthew Ingham, commented:

“The timeliness of this financing is ideal. We now have the capital resources to accelerate the commercial roll-out of our P2O processors at our Niagara Falls plant and the initial RockTenn sites, endeavoring to achieve our near term goal of becoming cash flow positive.”

Successful Review of P2O Technology by SAIC

In conjunction with the financing, SAIC Energy, Environment & Infrastructure LLC (“SAIC”) was engaged to perform an independent review of the P2O technology and its commercial viability. The preliminary report provides a detailed analysis of the technology, process and business model for the Company’s patent pending Plastic2Oil (“P2O”) process. The report also contains a pro-forma financial assessment of the capital costs and earnings for the Plastic2Oil business model based on a scalable roll-out of three unit clusters.

SAIC is a FORTUNE 500 ® provider of scientific, engineering, systems integration and technical services and solutions.

SAIC was present at the Company’s Plastic2Oil facility in Niagara Falls, NY over a 3-day period, April 25-27, 2012. The role of SAIC was to review the principal aspects of the Company’s P2O process, including the basic engineering design, results from testing and operations at the Niagara Falls facility, and the commercial P2O processor, which is poised for roll-out at the first Rock-Tenn Company (“RockTenn”) site.
 
 
 
 

During the 3-day audit, the P2O processor ran in continuous mode, with 121,318 pounds of throughput, producing 10,287 gallons of No. 6 Fuel and 4,269 gallons of Naphtha.

“This independent review is by far the most comprehensive that we’ve undergone to date,” states John Bordynuik, CEO. “Furthermore, this is the first time we’ve received a pro-forma financial analysis from an independent third party, and we are extremely pleased with the positive conclusions.”

John Bordynuik to Become Chief of Technology (“CTO”)

Signifying the transition of JBI from a start-up technology company to a rapidly growing environmental and industrial business, the company is significantly enhancing the senior management team with the hire of a new CEO (described below). As part of this transition, John will step into the position of Chief Technology Officer. In his new role as Chief of Technology, Mr. Bordynuik will continue to play a leading role in furthering the technological development of the P2O process and assist in the escalating commercial roll-out of the P2O processors, which he invented.

John Bordynuik commented:

“We are now at a point where P2O has been proven to be commercially viable. While we will continue to improve the technology, it is time to focus on leveraging this unique technology to build a world class company. I am immensely proud of the achievements of our team to date, and am energized to be embarking on the commercialization phase of our technology. In my view, it is time to bring in senior management with deep operational, marketing and sales experience relevant to the roll-out of P2O. We are now intent on building a great leadership team to ensure the Company appropriately leverages P2O to become one of the world’s great companies.”

Kevin Rauber to become CEO and President of JBI

JBI is pleased to announce that Kevin Rauber has been hired as CEO and President of JBI. Kevin is a seasoned executive with extensive experience in all aspects of operations, business development, sales and marketing.  He has 25 years of waste industry experience, having previously held management roles at Waste Management, Browning Ferris Industries-BFI (now known as Republic Waste Services), and EnviroSolutions. In his role as CEO and President, Kevin will report directly to the Board of Directors and have responsibility for all the non-technology operations of JBI.

“This is an exciting moment in the Company’s development,” comments John Bordynuik, founder of JBI, Inc. “I’m pleased to introduce Kevin Rauber as our new Chief Executive Officer. Kevin comes to us from Rock-Tenn Company (“ RockTenn”), where he was Vice President of Waste Solutions overseeing a large global business.” Bordynuik continues, “Having Kevin onboard will allow  me to step away from the demands of the CEO role and focus on the technological aspects of the commercial Plastic2Oil (“P2O”) roll-out.”

Mr. Rauber stated, “This is an unparalleled opportunity to leverage an extraordinary technology, and build a significant business enterprise. My experience with John and his team over the last two years, has demonstrated to me the importance of and compelling nature of the technology they have developed. With vast market potential for the installation and operation of our processors, worldwide, I look forward to being an important team member in the execution of John’s and the company’s strategic vision.”
 
 
 
 
 

G overnance Changes

Additionally, the Company has commenced instituting changes to its corporate governance to align with practices consistent with other leading companies. Changes include objective qualifications with respect to the election of qualified members to its board. In consideration of these new election requirements, Dr. Robin Bagai will be stepping down from his position as Board Member and Chair of the Nominating Committee. The Company would like to extend its sincerest appreciation to Dr. Bagai for his contributions and his commitment to the success of JBI, Inc.

John Bordynuik commented:

“These governance changes transition JBI to governance practices consistent with other leading companies. I believe these changes are in the best interests of shareholders and are consistent with maximizing value for shareholders.”
 
 
About JBI, Inc.
 
JBI, Inc. is an innovative North American fuel company that transforms unsorted, unwashed waste plastic into ultra-clean, ultra-low sulphur fuel without the need for refinement. JBI, Inc.'s patent pending Plastic2Oil ® (P2O) process is a commercially viable, proprietary process designed to provide immediate economic benefit for industry, communities and government organizations with waste plastic recycling challenges. JBI, Inc. is committed to environmental sustainability by diverting plastic waste from landfill and potential incineration. For further information, please visit www.plastic2oil.com and review our SEC filings, including without limitation our Form 10-K, as amended, filed with the SEC on April 30, 2012.
 
 
Forward Looking Statements

This press release contains statements, which may constitute "forward looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act. The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees as of 1995. Those statements include statements regarding the intent, belief or current expectations of JBI, and members of its management as well as the assumptions on which such statements are based, including the expected timing of the Company's Form 10-K, execution of the proposed agreements described above and consummation of the transactions contemplated by such agreements. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Such risks include, but are not limited to: (1) JBI has a history of net losses, and may not be profitable in the future; (2) JBI may not be able to obtain necessary licenses, rights and permits required to develop or operate our Plastic2Oil business, and may encounter environmental or occupational, safety and health conditions or requirements that would adversely affect its business; and (3) JBI may experience delays in the commercial operations of its Plastic2Oil machines and there is no assurance that they can be operated profitably. For a more detailed discussion of such risks and other factors, see the Company's amended Annual Report on Form 10-K/A, filed on April 30, 2012, with the Securities and Exchange Commission, and its other SEC filings. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

CONTACT:
JBI, Inc. Investor Relations
1.716.471.5995

MEDIA INQUIRIES:
media@jbi.net or please visit the JBI, Inc. Newsroom at http://www.plastic2oil.com/site/news-room