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):      December 12, 2012
 
   
JBI, Inc.
   
   
(Exact name of registrant as specified in its charter)
   
         
Nevada
 
000-52444
 
90-0822950
(State or other jurisdiction
 
(Commission
 
(I.R.S. Employer
of incorporation)
 
File Number)
 
Identification No.)
  
       
20 Iroquois St
Niagara Falls, NY
     
14303
(Address of principal executive offices)
     
(Zip Code)
 
Registrant’s telephone number, including area code:  (716) 278-0015
 
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.

On December 27, 2012 and December 31, 2012, JBI, Inc., a Nevada corporation (the “Company”), entered into Subscription Agreements (the “Purchase Agreements”) with several “accredited investors” (the “Purchasers”) in connection with the first closings of the Company’s private placement of up to 2,000,000 shares of the Company’s Series B Convertible Preferred Stock, $0.001 par value per share (the “Series B Preferred Stock”), at a purchase price of $3.50 per share, for maximum gross proceeds of $7,000,000 (the “Offering”).  The Offering is expected to occur in multiple closings on or before January 31, 2013, unless extended by the Company.  Between December 27, 2012 and December 31, 2012, pursuant to the Purchase Agreements, the Company sold 1,146,444 shares of Series B Preferred Stock for gross proceeds of $4,012,554 .
 
The Series B Preferred Stock was created pursuant to the Certificate of Designation setting forth the powers, designations, preferences, rights, qualifications, limitations and restrictions of the Series B Convertible Preferred Stock filed with the Secretary of State of the State of Nevada on December 24, 2012 (the “Series B Designation”).  Pursuant to the Series B Designation, the Series B Preferred Stock is convertible at the election of the holder into shares of common stock, par value $0.001 per share, of the Company (“Common Stock”), at the rate of seven (7) shares of Common stock for each share of Series B Preferred Stock, subject to proportional adjustment for stock splits, combinations, consolidations, stock dividends, stock distributions, recapitalizations, reorganizations, reclassifications and other similar events. Upon any conversion, a holder of shares of Series B Preferred Stock must convert all shares of Series B Preferred Stock then held by such holder. All shares of Series B Preferred Stock that remain outstanding on June 30, 2014 shall be automatically converted into Common Stock .

Pursuant to the Series B Designation, in the event of the liquidation, dissolution or winding up of the Company, the holders of the Series B Preferred Stock shall be entitled to receive out of assets of the Company available for distribution to stockholders of the Company, prior and in preference to any distribution to the holders of any other capital stock of the Company, an amount per share of Series B Preferred Stock equal to the original purchase price for such shares of Series B Preferred Stock. The holders of the Series B Preferred Stock will vote together with the Common Stock and not as a separate class, except as otherwise required by law.  Each share of Series B Preferred Stock will have a number of votes equal to the number of shares of Common Stock then issuable upon conversion of such share of Series B Preferred Stock. The approval of the holders of a majority of the Series B Preferred Stock will be required to amend the Certificate of Designation or to alter or change the rights, preferences or privileges of the shares of Series B Preferred Stock in a manner that adversely affects such shares.

The holders of the Series B Preferred Stock shall not be entitled to receive dividends on the Series B Preferred Stock; provided, however, in the event the Board of Directors of the Company (the “Board”) declares and pays a dividend in respect of any Common Stock, then the Board shall declare and pay to the holders of the Series B Preferred Stock in an amount per share of Series B Preferred Stock equal to the number of shares of Common Stock into which the Series B Preferred Stock is convertible on the record date established by the Board or under applicable law for such dividend multiplied by the per share amount declared and paid in respect of each share of Common Stock.

On December 31, 2012, the Company issued a press release announcing the execution of Purchase Agreements for the sale of shares of Series B Preferred Stock in the first closing of the Offering. A copy of the press release is attached hereto as Exhibit 99.1.

The foregoing summary of the Offering and the securities to be issued in connection therewith, does not purport to be complete and is qualified in its entirety by reference to the Series B Designation and the form of Purchase Agreement, copies of which are attached to this Current Report on Form 8-K as Exhibit 3.1 and Exhibit 10.1, respectively.  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 Securities and Exchange Commission.
 
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 of Series B Preferred Stock described therein.  Such issuances were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended (the “Act”), and Regulation D promulgated thereunder on the basis that the issuances did not involve a public offering and the 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.
 
 
2
 

Section 5 — Corporate Governance and Management

Item 5.03   Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Certificate of Designation of Series B Convertible Preferred Stock
 
In connection with the Offering, on December 24, 2012, the Company approved and filed the Series B Designation with the Secretary of State of the State of Nevada.  The description of the Series B Preferred Stock created by the Series B Designation set forth in Section 1.01 of this Current Report on Form 8-K is incorporated herein by reference.  A copy of the Series B Designation is filed as Exhibit 3.1 to this Current Report on Form 8-K.

Amended and Restated Bylaws

On December 12, 2012, the Board approved and adopted the Amended and Restated Bylaws of the Company (the “Amended and Restated Bylaws”) primarily to provide greater indemnification of officers, directors and employees of the Company as permitted under Nevada law, and also to make other changes designed to conform the by-laws with current Nevada law. The following discussion of the Amended and Restated Bylaws is qualified in its entirety by reference to the full text of the Amended and Restated Bylaws, which is filed as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated herein by reference.

The amendments made to the original Bylaws of the Company (the “Original Bylaws”) by the Amended and Restated Bylaws are summarized as follows; provided, however, that certain stylistic or other minor language changes aimed at improving readability or clarity that do not change the meaning of such provisions are not summarized herein:

Changes to Indemnification Provisions

●   
The Amended and Restated Bylaws substantially revise Article VII to bolster the indemnification rights and privileges of the Company’s officer, directors and employees, as follows:

o  
Section 7.01 was amended to provide that, to the fullest extent permitted by Nevada law , the Company shall indemnify any director or officer who was or is a party to, or is threatened to be made a party to or is otherwise involved in, any threatened, pending, or completed suit or proceeding, whether civil, criminal, administrative or investigative, including, without limitation, an action, suit or proceeding by or in the right of the Company (“Proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise (“Indemnitee”), against all expenses, liability and loss (including, without limitation, attorneys’ fees, costs, judgments, fines, taxes, penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Indemnitee in connection with any Proceeding.

o  
A new Section 7.02 provides that the Board may, by a majority vote of a quorum of the Board, indemnify employees and other persons as though they were Indemnitees.

o  
A new Section 7.07 provides that any repeal or amendment of the indemnification rights set forth in the Amended and Restated Bylaws shall only apply prospectively and shall not limit any rights to indemnification with respect to any action or failure to act occurring prior to the time of such repeal or amendment.  Notwithstanding any other provision in the Amended and Restated Bylaws, no repeal or amendment shall take effect to limit or reduce the indemnification rights set forth therein in any matter unless adopted by (i) the unanimous vote of the directors of the Company then serving, or (ii) the stockholders of the Company.

o  
A new Section 7.08 provides that any references to Nevada law or to any provision thereof shall be to such law as it existed on the date the Amended and Restated Bylaws were adopted or as such law thereafter may be changed; provided, however, that (i) in the case of any change which expands the liability of directors or officers or limits the indemnification rights or the rights to advancement of expenses which the Company may provide, the rights to limited liability, to indemnification and to the advancement of expenses provided in the Company’s Articles of Incorporation or the Amended and Restated Bylaws shall continue as theretofore in effect to the extent permitted by law; and (ii) if such change permits the Company, without the requirement of any further action by the stockholders or directors, to limit further the liability of directors or officers or to provide broader indemnification rights or rights to the advancement of expenses than the Company was permitted to provide prior to such change, then liability thereupon shall be so limited and the rights to indemnification and the advancement of expenses shall be so broadened to the extent permitted by law.

o  
The primary differences between the indemnification provisions provided in the Original Bylaws and those contained in the Amended and Restated Bylaws is that, in the Original Bylaws (i) indemnification of officers and directors of the Company was not required, rather the decision to indemnify such officers or directors was within the discretion of Company as approved by either a majority of the stockholders of the Company or a majority of a quorum of the Board, consisting of directions who were not parties to the action, suit or proceeding, and (ii) indemnification was only available when the party seeking indemnification was deemed to be acting in good faith, as opposed to in the Amended and Restated Bylaws, where indemnification is allowed to the greatest extent permitted by Nevada law.
 
 
3
 
 
Other Changes

●   
The Amended and Restated Bylaws includes a new Section 1.02(b), which provides that no business shall be acted upon at a special meeting of the Company’s stockholders except as set forth in the notice calling the meeting, unless one of the conditions for the holding of a meeting without notice is satisfied, in which case any business may be transacted and the meeting shall be valid for all purposes.

●   
The Amended and Restated Bylaws includes a new Section 1.04, which provides that any stockholder may waive notice of any meeting by a signed writing, either before or after the meeting.
 
●   
The Amended and Restated Bylaws amends and restates Section 1.05 of the Original Bylaws, which clarifies how a stockholder meeting may be conducted without notice, providing that: (a) whenever all persons entitled to vote at any meeting consent, either by (i) a writing on the records of the meeting or filed with the Secretary of the Company, (ii) presence at such meeting and oral consent entered on the minutes, or (iii) taking part in the deliberations at such meeting without objection; the doings of such meeting shall be as valid as if done at a meeting regularly called and noticed; (b) at such meeting any business may be transacted which is not excepted from the written consent or to the consideration of which no objection for want of notice is made at the time; (c) if any meeting is irregular for want of notice or for such consent, provided a quorum was present at such meeting, the proceedings of the meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting; and (d) such consent or approval may be by proxy or attorney, but all such proxies and powers of attorney must be in writing.

●   
The Amended and Restated Bylaws amends Section 1.07(a) to clarify that each stockholder of record shall be entitled to one (1) vote for each share of voting stock of the Company, unless otherwise specified in the Company’s Articles of Incorporation or as provided in the resolution providing for the issuance of the stock adopted by the Board pursuant to authority expressly vested in it by the provisions of the Company’s Articles of Incorporation.
 
●   
The Amended and Restated Bylaws amends Section 1.07(c) to clarify which persons representing stockholders that are corporations or other legal entities may cast votes on behalf of such stockholder. The Original Bylaws did not set forth which persons had authority to cast votes on behalf of partnerships, limited liability companies, or other legal entities.
 
●   
The Amended and Restated Bylaws amends Section 1.08(a) to provide that in addition to the general quorum requirements, if, on any issue, voting by class or series is required by the laws of the State of Nevada, the Company’s Articles of Incorporation or its Bylaws, at least a majority of the voting power within each such class or series is necessary to constitute a quorum of each such class or series.
 
●   
The Amended and Restated Bylaws amends Section 1.08(b) to add that the stockholders present at a duly convened meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum of the voting power.
 
●   
The Amended and Restated Bylaws amends Section 2.01, removing the provision contained in the Original Bylaws providing that if the number of stockholders of the Company is less than 100, the Board may consist of one (1) person.  Section 2.01 already provides that the number of directors comprising the Board shall consist of at least one (1) and no more than seven (7).
 
●   
The Amended and Restated Bylaws amends Section 2.02 to clarify that in the event of a resignation of a director, a majority of the remaining directors, though less than a quorum, may appoint a successor to take office when the resignation becomes effective, and each director so appointed shall hold office during the remainder of the term of office of the resigning director.
 
●   
Section 2.5(b) of the Original Bylaws provided that any director may be removed from office, with or without cause, by the vote or written consent of stockholders representing not less than fifty percent of the issued and outstanding voting capital stock of the Company.  The Amended and Restated Bylaws amends Section 2.05(b) to provide an exception to the foregoing, that if the Company’s Articles of Incorporation provide for the election of directors by cumulative voting, no director may be removed from office except upon the vote of stockholders owning sufficient shares to have prevented such director’s election to office in the first instance.
 
●   
The Amended and Restated Bylaws amends Section 2.11(b) to correct a clerical error, clarifying that such provision applies when a quorum is not present.
 
●   
The Amended and Restated Bylaws amends Section 2.16 to add that the compensation payable to the Company’s directors, in addition to being as approved by the Board, shall be subject to any limitations contained in the laws of the State of Nevada, the Company’s Articles of Incorporation or any contract or agreement to which the Company is a party.
 
●   
The Amended and Restated Bylaws adds a new Section 3.04, which provides that the Chairman of the Board or in his absence, the Vice Chairman of the Board, shall preside at all meetings of the Board and may preside at meetings of the stockholders, and shall perform such other duties as may from time to time be assigned to them by the Board.

 
4
 
 
●   
The Amended and Restated Bylaws amends Section 4.01(a) to add that the issuance of capital stock of the Company, in addition to being as approved by the Board, shall be subject to any limitations contained in the laws of the State of Nevada, the Company’s Articles of Incorporation or any contract or agreement to which the Company is a party.
 
●   
The Amended and Restated Bylaws adds a new Section 4.01(b), which provides that the Board may authorize shares to be issued for consideration consisting of any tangible or intangible property of benefit to the Company including, but not limited to, cash, promissory notes, services performed, contracts for services to be performed or other securities of the Company.  Before the Company issues shares, the Board shall determine that the consideration received or to be received for the shares to be issued is adequate.  The judgment of the Board as to the adequacy of the consideration received for the shares issued is conclusive in the absence of actual fraud in the transaction.  When the Company receives the consideration for which the Board authorized the issuance of the shares, the shares issued therefor shall be considered fully paid.
 
●   
The Amended and Restated Bylaws adds a new Section 4.01(c), which provides that the Company may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make any other arrangements to restrict the transfer of the shares, as determined by the Board. The Company may credit distributions made for the shares against their purchase price, until the services are performed, the benefits are received or the promissory note is paid.  If the services are not performed, the benefits are not received or the promissory note is not paid, the shares escrowed or restricted and the distributions credited may be canceled in whole or in part.
 
●   
The Amended and Restated Bylaws amends Section 4.02 to provide that a facsimile of the signatures of the Company’s officers may be printed upon the certificate evidencing shares of the Company in lieu of the actual signatures and the seal.
 
●   
The Amended and Restated Bylaws adds a new Section 4.08 which provides that the power and authority of the Board concerning the issuance, transfer and registration of certificates for shares of capital stock of the Company is subject to the limitations of, and the Company’s compliance with, all state, federal and foreign securities and taxation laws, rules and regulations governing the same.
 
Section 9 — Financial Statements and Exhibits

Item 9.01   Financial Statements and Exhibits.

(d)           Exhibits
 
Exhibit No.
 
Description
3.1
 
Certificate of Designation of Series B Convertible Preferred Stock of JBI, Inc.
3.2
 
Amended and Restated Bylaws of JBI, Inc.
10.1
 
Form of Subscription Agreement.
99.1
 
Press Release dated December 31, 2012.
 
 
5
 
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.
   
December 31, 2012  
By:
/s/ Matthew J. Ingham
 
Name:  
Matthew J. Ingham
 
Title: 
Chief Financial Officer
 
 
6
 
 
EXHIBIT INDEX
 
Exhibit No.
 
Description
3.1
 
Certificate of Designation of Series B Convertible Preferred Stock of JBI, Inc.
3.2
 
Amended and Restated Bylaws of JBI, Inc.
10.1
 
Form of Subscription Agreement.
99.1
 
Press Release dated December 31, 2012.
 

7
Exhibit 3.1
 
ROSS MILLER
Secretary of State
204 North Carson Street, Ste 1
Carson City, Nevada 89701-4520
(775) 684-5708
Website: www.nvsos.gov
Filed in the office of
/s/  Ross Miller
Ross Miller
Secretary of State
State of Nevada
Document Number
20120862663-46
Filing Date and Time
12/24/2012  10:11 AM
Entity Number
E0301232006-1
 
Certificate of Designation
(PURSUANT TO NRS 78.1955)
 
 
USE BLACK INK ONLY – DO NOT HIGHLIGHT
ABOVE SPACE FOR  OFFICE USE ONLY
 
Certificate of Designation
Nevada Profit Corporation
Pursuant to NRS 78.1955
 
1. Name of the corporation:
JBI, INC
 
2. By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock
 
See the attached Certificate of Designation setting forth the powers, designations, preferences and rights and qualifications, limitations and restrictions of the Series B Convertible Preferred Stock, par value $0.001 per share, of JBI, Inc., creating 2,000,000 shares of Series B Convertible Preferred Stock .
 
 
 3. Effective date of filing (optional):    
  (must not be later than 90 days after the certificate is filed)
 
4. Signature: (required)
 
 
 
Filing Fee: $175.00
 
IMPORTANT : Failure to include any of the above information and submit the proper fees ay cause this filing to be rejected.
 
This form must be accompanied by appropriate fees.
 
 
 
 
 
 
 
CERTIFICATE OF DESIGNATION SETTING FORTH THE
POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS
AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS
OF THE SERIES B CONVERTIBLE PREFERRED STOCK
OF
JBI, INC.
 
Pursuant to Section 78.1955
of the Revised Statutes of
the State of Nevada
 
JBI, Inc. (the “Company”), a corporation organized and existing under the Revised Statutes of the State of Nevada, does hereby certify that, pursuant to authority conferred upon the board of directors of the Company (the “Board of Directors”) by its Articles of Organization (the “Articles”), and pursuant to the provisions of Section 78.1955 of the Revised Statutes of the State of Nevada, at a meeting of the Board of Directors held on December 19, 2012, the Board of Directors duly approved and adopted the following resolutions:
 
WHEREAS, the Board of Directors of the Company is authorized by its Articles to issue up to five million (5,000,000) shares of preferred stock in one or more series and, in connection with the creation of any series, to fix by the resolutions providing for the issuance of shares the powers, designations, preferences and rights of the series and the qualifications, limitations or restrictions thereof;
 
WHEREAS , it is the desire of the Board of Directors to designate one new series of preferred stock and to fix the powers, designations, preferences and rights, and the qualifications, limitations or restrictions thereof, as provided herein;
 
NOW, THEREFORE, BE IT RESOLVED , that the Corporation does hereby designate two million (2,000,000) shares of the authorized but unissued preferred stock as Series B Convertible Preferred Stock (the “Series B Preferred Stock”) and does hereby fix the powers, preferences and rights and qualifications, limitations or restrictions of the Series B Preferred Stock to be as set forth on Annex A attached to this resolution (the “Designation”); and it is further
 
RESOLVED , that the executive officers of the Company are, and each hereby is, authorized and directed to file the Designation with the Secretary of State of the State of Nevada and to take such other actions as are necessary, appropriate, or advisable in connection therewith.
 
 
 
/s/ Kevin Rauber  
    Name:  Kevin Rauber  
    Title:    Chief Executive Officer and President  
       
ATTEST:
 
/s/ Matthew Ingham  
Name:  Matthew Ingham
 
Title:    Chief Financial Officer
 
 
 
1
 
 
ANNEX A
 
SERIES B CONVERTIBLE PREFERRED STOCK
 
The powers, designations, preferences and relative, participating, optional or other rights of the Series B Convertible Preferred Stock of JBI, Inc. (the “Company”) are as follows:
 
1.
DESIGNATION AND AMOUNT
 
(a)           There is hereby created out of the authorized and unissued shares of preferred stock of the Company a series of preferred stock designated as the “Series B Convertible Preferred Stock.”  The number of shares constituting such series shall be two million (2,000,000) shares, par value $0.001 per share, and are referred to as the “Series B Preferred Stock.”
 
(b)           Shares of Series B Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged, shall (upon compliance with any applicable provisions of the laws of Nevada) have the status of authorized and unissued shares of preferred stock undesignated as to series and may be redesignated and reissued as part of any series of preferred stock; provided that any issuance of such shares as Series B Preferred Stock must be in compliance with the terms hereof.
 
2.
CERTAIN DEFINITIONS
 
Unless the context otherwise requires, the terms defined in this Section 2 shall have, for all purposes of this resolution, the meanings herein specified (with terms defined in the singular having comparable meanings when used in the plural).
 
“ Affiliate ” of any specified Person means any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by,” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
 
“ Automatic Conversion Date ” means June 30, 2014.
 
“ Board” or “Board of Directors ” shall mean the Board of Directors of the Company as from time to time constituted.
 
“ Capital Stock ” means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.\
 
 
2
 
 
 “ Certificate of Designation ” means this Certificate of Designation setting forth the power, preferences and other rights and qualifications, limitations and restrictions of the Series B Preferred Stock.
 
 “ Articles ” means the Company’s Articles of Incorporation filed with the Office of the Secretary of State of the State of Nevada, as the same may be amended from time to time.
 
“ Common Stock ” means the shares of Common Stock, par value $0.001 per share, of the Company and any other class of common stock of the Company hereafter created and any securities of the Company into which such Common Stock may be reclassified, exchanged or converted.
 
“ Conversion Date ” has the meaning set forth in Section 6(b)(ii) .
 
“ Conversion Notice ” has the meaning set forth in Section 6(b)(ii) .
 
“ Holder ” means a holder in whose name a share of Series B Preferred Stock is registered.
 
“ Issue Date ” means, with respect to any share of Series B Preferred Stock, the initial date of issuance by the Company of such share of Series B Preferred Stock.
 
“ Junior Securities ” has the meaning set forth in Section 3 .
 
“ NRS ” means the Revised Statutes of the State of Nevada.
 
            “ Person ” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or any agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of such entity, subdivision or business).
 
“ Preference Amount ” has the meaning set forth in Section 5 .
 
“ Purchase Price ” means $3.50 per share of Series B Preferred Stock.
 
“ Series A Designation ” means the Certificate of Designations, Preferences and Rights of the Series A Super Voting Preferred Stock of JBI, Inc. as filed with the Office of the Secretary of State of the State of Nevada on December 1, 2009, as amended.
 
“ Series A Preferred Stock ” means that series of 1,000,000 shares of preferred stock, par value $0.001 per share, of the Company designated as the “Series A Super Voting Preferred Stock” which was created pursuant to the Series A Designation.
 
“ Series B Preferred Stock ” has the meaning set forth in Section 1(a) .
 
“ Transfer ” means, with respect to any shares of Capital Stock, any direct or indirect sale, assignment, pledge, offer or other transfer or disposal of any interest in such Capital Stock.
 
 
3
 
 
“ Transfer Conversion Date ” has the meaning set forth in Section 6(a)(iii) .
 
“ Transfer Notice ” has the meaning set forth in Section 6(a)(i) .
 
3.
RANKING
 
The Series B Preferred Stock shall, with respect to distributions upon the liquidation, winding-up and dissolution of the Company, rank senior to (i)  the Series A Preferred Stock, (ii) the Common Stock and (iii) each other class or series of Capital Stock created after the Issue Date by the Board of Directors of the Company, the terms of which expressly provide that such class or series will rank subordinate to the Series B Preferred Stock as to distributions upon the liquidation, winding-up and dissolution of the Company (the securities in clauses (i), (ii) and (iii) are collectively referred to as “Junior Securities”).  In all other respects, the Series B Preferred Stock shall rank pari passu with the Common Stock.
 
4.
DIVIDENDS
 
The Holders of the Series B Preferred Stock shall not be entitled to receive dividends on the Series B Preferred Stock; provided , however , in the event the Board of Directors declares and pays a dividend in respect of any Common Stock, then the Board of Directors shall declare and pay to the holders of the Series B Preferred Stock in an amount per share of Series B Preferred Stock equal to the number of shares of Common Stock into which the Series B Preferred Stock is convertible on the record date established by the Board of Directors or under applicable law for such dividend multiplied by the per share amount declared and paid in respect of each share of Common Stock.
 
5.
DISSOLUTION
 
In the event of the liquidation, dissolution or winding up of the Company, the Holders of the Series B Preferred Stock shall be entitled to receive out of assets of the Company available for distribution to stockholders of the Company, prior and in preference to any distribution to the holders of any Junior Securities, an amount per share of Series B Preferred Stock equal to the Purchase Price for such share of Series B Preferred Stock (the “Preference Amount”).
 
6.
TRANSFER AND CONVERSION
 
Shares of Series B Preferred Stock may be converted into shares of Common Stock, on the terms and conditions set forth in this Section 6 .
 
(a)            Transfers .
 
(i)           The Holders of Series B Preferred Stock may not Transfer the shares of Series B Preferred Stock to any Person, other than to an Affiliate, unless the Holder making such Transfer has given the Company written notice of such Holder’s intent to Transfer five (5) calendar days (or such shorter period as the Company may determine in its sole discretion) prior to such Transfer (the “Transfer Notice”).  The Transfer Notice shall be substantially in the form attached hereto as Exhibit A . Any Transfer in violation of this Section 6(a) , including, without limitation, the failure to submit a Transfer Notice within the specified time to the Company, shall be null and void.
 
 
4
 
 
(ii)            Upon the Transfer of the shares of the Series B Preferred Stock in accordance with Section 6(a)(i)  above to any Person other than an Affiliate of a Holder, every share of Series B Preferred Stock so transferred shall automatically convert into seven fully paid and non-assessable shares of Common Stock (such number of shares subject to adjustment pursuant to Section 6(g)  below).
 
(iii)           Shares of Series B Preferred Stock Transferred by any Holder to any Person, other than to an Affiliate of such Holder, shall be deemed converted without further action into shares of Common Stock immediately prior to the close of business on the day (the “Transfer Conversion Date”) immediately prior to the date of such Transfer.  Immediately prior to the close of business on the Transfer Conversion Date, the rights of the Holders of such shares of Series B Preferred Stock so transferred as a Holder shall cease, and the Person or Persons entitled to receive the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock as and after such time.
 
(b)            Optional Conversion by Holder .
 
(i)            At the option of the Holders, each share of Series B Preferred Stock held by the Holders shall convert into seven fully paid and non-assessable shares of Common Stock (such number of shares subject to adjustment pursuant to Section 6(g)  below), at any time after the Issue Date relating to such shares of Series B Preferred Stock.
 
(ii)           The Holder of any shares of Series B Preferred Stock may exercise the conversion rights as to all, but not less than all, of such shares by delivering to the Company during regular business hours, at the office of any transfer agent of the Company for the Series B Preferred Stock, or at the principal office of the Company or at such other place as may be designated by the Company, the certificate or certificates for the shares to be converted, duly endorsed for transfer to the Company or accompanied by a written instrument or instruments of transfer (if required by it), accompanied by written notice (the “Conversion Notice”) stating that the Holder elects to convert all or a number of such shares represented by the certificate or certificates.  The Conversion Notice shall be substantially in the form attached hereto as Exhibit B . Such notice shall also state such Holder’s name or the names of the nominees in which such Holder wishes the certificate or certificates for shares of Common Stock to be issued.  Conversion shall be deemed to have been effected on the date on which such delivery is made, and such date is referred to herein as the “Conversion Date.”  As promptly as practicable thereafter, the Company shall issue and deliver to such Holder, at such office or other place designated by the Company, a certificate or certificates for the number of full shares of Common Stock to which such Holder is entitled and a check for cash with respect to any fractional interest in a share of Common Stock as provided in Section 6(f) .  The Holder shall be deemed to have become a stockholder of record on the applicable Conversion Date.  Upon conversion of only a portion of the number of shares of Series B Preferred Stock represented by a certificate surrendered for conversion, the Company shall issue and deliver to the Holder of the certificate so surrendered for conversion, at the expense of the Company, a new certificate representing the number of shares of Series B Preferred Stock not so converted.
 
 
 
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(c)            Automatic Conversion .  On the Automatic Conversion Date, each share of Series B Preferred Stock shall automatically convert into seven shares of Common Stock (such number of shares subject to adjustment pursuant to Section 6(g)  below).
 
(d)            Effect of Conversion .  Upon conversion of any shares of Series B Preferred Stock pursuant to this Section 6 , such shares of Series B Preferred Stock shall not be transferred on the books of the Company or be deemed to be outstanding for any purpose whatsoever and shall constitute only the right to receive such number of shares of Common Stock as may be issuable on an as-converted basis upon such conversion upon compliance with the requirements of this Section 6 .
 
(e)            Notice of Automatic Conversion Date .  The Holders of converted shares of Series B Preferred Stock shall promptly deliver to the principal office of the Company, to the office of any transfer agent of the Company for the Series B Preferred Stock or to such other place as may be designated by the Company, the certificate or certificates for the shares that were converted.  As promptly as practicable thereafter, the Company shall issue and deliver to such Holder, at such office or other place designated by the Company, a certificate or certificates for the number of full shares of Common Stock to which such Holder is entitled and a check for cash with respect to any fractional interest in a share of Common Stock as provided in Section 6(f) .  The Holder shall be deemed to have become a stockholder of record of Common Stock on the applicable Automatic Conversion Date.
 
(f)            Fractions of Shares .  No fractional shares of Common Stock shall be issued by the Company.  In lieu thereof, the Company shall pay in cash the fair market value of such fractional share as determined in good faith by the Board of Directors.  Such conversion shall be deemed to have been made as of the date of the Conversion Notice and such surrender of the Series B Preferred Stock to be converted, and the Person or Persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock on said date.
 
(g)            Anti-Dilution Adjustment .  If the Company at any time (X) subdivides the outstanding Common Stock or (Y) issues a stock dividend on its outstanding Common Stock, the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock immediately prior to such subdivision or the issuance of such stock dividend shall be proportionately increased by the same ratio as the subdivision or dividend.  If the Company at any time combines its outstanding Capital Stock, the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock immediately prior to such combination shall be proportionately decreased by the same ratio as the combination.  All such adjustments described herein shall be effective at the close of business on the date of such subdivision, stock dividend or combination, as the case may be.
 
 
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(h)            Reorganization .  In case of any capital reorganization (other than in connection with a merger or other reorganization in which the Company is not the continuing or surviving entity) or any reclassification of the Common Stock, the Series B Preferred Stock shall thereafter be convertible into that number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock deliverable upon conversion of the Series B Preferred Stock immediately prior to such reorganization or recapitalization would have been entitled upon such reorganization or reclassification.  In any such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights, preferences and powers thereafter of the Holders of Series B Preferred Stock, such that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be, in relation to any share of stock or other property thereafter deliverable upon the conversion.
 
(i)            Authorized Shares .  The Company shall at all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of Series B Preferred Stock, the full number of shares of Common Stock deliverable from time to time upon the conversion of all shares of Series B Preferred Stock from time to time outstanding.  The Company shall from time to time (subject to obtaining necessary Board of Directors and stockholder approvals), in accordance with the laws of the State of Nevada, increase the authorized amount of its Common Stock if at any time the authorized number of shares of Common Stock remaining unissued shall not be sufficient to permit the conversion of all of the shares of Series B Preferred Stock at the time outstanding.
 
7.
VOTING AND CORPORATE ACTIONS
 
(a)            Voting Rights and Powers .
 
(i)            The Holders of Series B Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Series B Preferred Stock could be converted on the record date for the vote or consent of stockholders or, if no record date is established, at the date such vote is taken or any consent of stockholders solicited, and shall have voting rights and powers equal to the voting rights and powers of the Common Stock on an as-converted basis on all matters brought before the stockholders of the Company.
 
(ii)           The Holders of Series B Preferred Stock shall be entitled to notice of any stockholders’ meeting in accordance with the Company’s by-laws and applicable law and shall vote together with holders of the Common Stock as a single class upon any and all matters submitted to a vote of stockholders, except those matters required by law or this Certificate of Designation to be submitted to a class vote.
 
 
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(b)            Approval of Certain Corporate Actions .  Without the prior approval of the Holders of at least a majority of the outstanding shares of Series B Preferred Stock, an amendment to the Articles or this Certificate of Designation may not:
 
(i)             amend this Certificate of Designation;
 
(ii)            alter or change the voting rights or powers of the Series B Preferred Stock or reduce the number of shares of Series B Preferred Stock whose Holders must approve any such amendment; or
 
(iii)            increase or decrease the number of authorized shares of the Company designated as Series B Preferred Stock;
 
(c)            Merger, Consolidation, or Sale of Assets .  If the Company (i) merges or consolidates with or into another corporation or limited liability company in which the Company is not the surviving entity and by which the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise or (ii) sells or transfers all or substantially all of the Company’s properties and assets to any other Person, then, a provision shall be made so that, upon the basis and the terms and in the manner provided in this Certificate of Designation, the Holders of Series B Preferred Stock shall be entitled to receive stock or other securities, cash or property which the Holders would have been entitled to receive upon such consummation if the Holders had converted the shares of Series B Preferred Stock for such shares of Common Stock immediately prior thereto.  If the per share consideration payable to the Holders in connection with any such event is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Board of Directors.
 
8.
AMENDMENT
 
Notwithstanding anything to the contrary in the NRS, neither this Certificate of Designation nor the Articles shall be amended, altered or repealed (by merger, consolidation or otherwise) in any manner that would alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect the Holders thereof adversely without the affirmative vote of the Holders of a majority of the outstanding shares of Series B Preferred Stock voting separately as a class.
 
9.
EXCLUSION OF OTHER RIGHTS
 
Except as may otherwise be required by law, the shares of Series B Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in this Certificate of Designation (as such Certificate of Designation may be amended from time to time in accordance with the terms hereof) and in the Articles.
 
10.
HEADINGS OF SECTIONS
 
The headings of the various sections and subsections hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.
 
[Remainder of Page Left Intentionally Blank]
 
 
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EXHIBIT A
 
NOTICE OF TRANSFER
 
The undersigned, being the registered record holder of the Series B Convertible Preferred Stock (the “Series B Preferred Stock”) of JBI, Inc. (the “Company”) hereby gives the Company notice of a transfer of [number] outstanding shares of Series B Preferred Stock on [date] to [name of transferee] pursuant to Section 6(a)  of the Certificate of Designation of the Series B Preferred Stock.
 
Dated: __________, 2013 [five trading days prior to the date fixed for transfer]
 
________________________
Name
 
________________________
Address
 
________________________ 
Please print name and  
________________________
(Signature)
 
 
address, including zip
code number
 
Denominations:________
 
 
Ex. A-1
 
 
EXHIBIT B
 
NOTICE TO EXERCISE CONVERSION RIGHT
 
The undersigned, being the registered record holder of the Series B Convertible Preferred Stock (the “Series B Preferred Stock”) of JBI, Inc. (the “Company”) irrevocably exercises the right to convert all of the undersigns outstanding shares of Series B Preferred Stock on ___________, 2013, into shares of Common Stock of the Company in accordance with the terms of the shares of Series B Preferred Stock and the Company’s Articles, as amended, and directs that the shares issuable and deliverable upon the conversion be issued and delivered in the denominations indicated below to the registered holder hereof unless a different name has been indicated below.
 
Dated: _______, 2013
 
Fill in for registration of shares of Common Stock if to be issued otherwise than to the registered holder:
 
________________________
Name
 
________________________
Address
 
________________________ 
Please print name and  
________________________
(Signature)
 
 
address, including zip
code number
 
 
Ex. B-1
Exhibit 3.2
 
AMENDED AND RESTATED BY-LAWS
 
OF

JBI, INC.
 
ARTICLE I.
STOCKHOLDERS
 
Section 1.01            Annual Meeting .  The annual meeting of the stockholders of the corporation shall be held on such date and at such time as designated from time to time for the purpose or electing directors of the corporation and to transact all business as may properly come before the meeting.  If the election of the directors is not held on the day designated herein for any annual meeting of the stockholders, or at any adjournment thereof, the President shall cause the election to be held at a special meeting of the stockholders as soon thereafter as is convenient.
 
Section 1.02            Special Meeting .
 
(a)           Special meetings of the stockholders may be called by the President or the Board of Directors and shall be called by the President at the written request of the holders of not less than 50% of the issued and outstanding voting shares of the capital stock of the corporation.  All business lawfully to be transacted by the stockholders may be transacted at any special meeting or at any adjournment thereof.  However, no business shall be acted upon at a special meeting except that referred to in the notice calling the meeting, unless all of the outstanding capital stock of the corporation is represented either in person or in proxy.  Where all of the capital stock is represented, any lawful business may be transacted and the meeting shall be valid for all purposes.  All special meetings may be held telephonically or electronically with one or more of the stockholders being in contact telephonically or electronically, should such capabilities be reasonably available.  Any signatures required may be acquired via fax or electronically, which signatures shall be considered as originals for all purposes.
 
(b)           No business shall be acted upon at a special meeting except as set forth in the notice calling the meeting, unless one of the conditions for the holding of a meeting without notice set forth in Section 1.05 of these Bylaws shall be satisfied, in which case any business may be transacted and the meeting shall be valid for all purposes.
 
Section 1.03            Place of Meetings .  Any meeting of the stockholders of the corporation may be held at its principal office or at such other place in or out of the United States as the Board of Directors may designate.  A waiver of notice signed by the Stockholders entitled to vote may designate any place for the holding of the meeting.  All special meetings may be held telephonically and/or electronically with one or more of the stockholders being in contact in such manner, should such capabilities be reasonably available.  Any signatures required may be acquired via fax or electronically, which signatures shall be considered as originals for all purposes.
 
 
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Section 1.04            Notice of Meetings .
 
(a)           The Secretary shall sign and deliver to all stockholders of record written or printed notice of any meeting at least ten (10) days, but not more than sixty (60) days, before the date of such meeting. Said notice shall state the place, date and time of the meeting, the general nature of the business to be transacted, and, in the case of any meeting at which directors are to be elected, the names of the nominees, if any, to be presented for election.
 
(b)           In the case of any meeting, any proper business may be presented for action, except the following items shall be valid only if the general nature of the proposal is stated in the notice or written waiver of notice:
 
(i)      Action with respect to any contract or transaction between the corporation and one or more of its directors or officers or another firm, association, or corporation in which one of its directors or officers has a material financial interest;
 
(ii)     Adoption of amendments to the Articles of Incorporation;
 
(iii)          Action with respect to the merger, consolidation, reorganization, partial or complete liquidation, or dissolution of the corporation.
 
(c)           The notice shall be personally delivered, faxed, emailed or mailed by first class mail to each stockholder of record at the last known address thereof, as the same appears on the books of the corporation, and giving of such notice shall be deemed delivered the date the same is personally delivered, faxed, emailed or deposited in the United State mail, postage prepaid.  If the address of any stockholder does not appear upon the books of the corporation, it will be sufficient to address such notice to such stockholder at the principal office of the corporation.
 
(d)           The written certificate of the person calling any meeting, duly sworn, setting forth the substance of the notice, the time and place the notice was mailed, faxed, emailed or personally delivered to the stockholders, and the addresses to which the notice was mailed, delivered, emailed or faxed shall be prima facie evidence of the manner and the fact of giving such notice.
 
(e)           Any shareholder may waive notice of any meeting by a signed writing, either before or after the meeting
 
Section 1.05            Meeting Without Notice.
 
(a)           Whenever all persons entitled to vote at any meeting consent, either by:
 
(i)             A writing on the records of the meeting or filed with the Secretary;
 
(ii)            Presence at such meeting and oral consent entered on the minutes; or
 
(iii)           Taking part in the deliberations at such meeting without objection;
 
the doings of such meeting shall be as valid as if done at a meeting regularly called and noticed.
 
 
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(b)           At such meeting any business may be transacted which is not excepted from the written consent or to the consideration of which no objection for want of notice is made at the time.
 
(c)           If any meeting is irregular for want of notice or for such consent, provided a quorum was present at such meeting, the proceedings of the meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting.
 
(d)           Such consent or approval may be by proxy or attorney, but all such proxies and powers of attorney must be in writing.
 
Section 1.06            Determination of Stockholders of Records .
 
(a)           The Board of Directors may at any time fix a future date as a record date for the determination of the stockholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action.  The record date so fixed shall not be more than sixty (60) days nor less than ten (10) days prior to the date of such meeting nor more than sixty (60) days nor less than ten (10) days prior to any other action.  When a record date is so fixed, only stockholders of record on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution or allotment of rights, or to exercise their rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date.
 
(b)           If no record date is fixed by the Board of Directors, then (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived at the close of business on the next day preceding the day on which the meeting is held; (2) the record date for action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the written consent is given; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day in which the Board of Directors adopts the resolution relating thereto, or the sixtieth (60th) day prior to the date of such other action, whichever is later.
 
Section 1.07            Voting .
 
(a)           Unless otherwise provided in the Articles of Incorporation or in the resolution providing for the issuance of the stock adopted by the Board of Directors pursuant to authority expressly vested in it by the provisions of the Articles of Incorporation, each stockholder of record, or such stockholder’s duly authorized proxy or attorney-in-fact shall be entitled to one (1) vote for each share of voting stock standing registered in such stockholder’s name on the books of the corporation on the record date.
 
 
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(b)           Except as otherwise provided herein, all votes with respect to shares standing in the name of an individual on that record date (including pledged shares) shall be cast only by that individual or that individual’s duly authorized proxy, attorney-in-fact, or voting trustee pursuant to a voting trust.  With respect to shares held by a representative of the estate of a deceased stockholder, guardian, conservator, custodian or trustee, votes may be cast by such holder upon proof of capacity, even though the shares do not stand in the name of such holder.  In the case of shares under the control of a receiver, the receiver may cast in the name of the receiver provided that the order of the court of competent jurisdiction which appoints the receiver contains the authority to cast votes carried by such shares.  If shares are held in the name of a minor, votes may be cast only by the duly appointed guardian of the estate of such minor if such guardian has provided the corporation with written notice and proof of such appointment.
 
(c)           With respect to shares standing in the name of another corporation, partnership, limited liability company or other legal entity on the record date, votes may be cast: (i) in the case of a corporation, by such individual as the bylaws of such other corporation prescribe, by such individual as may be appointed by resolution of the board of directors of such other corporation or by such individual (including the officer making the authorization) authorized in writing to do so by the chairman of the board of directors, president or any vice-president of such corporation; and (ii) in the case of a partnership, limited liability company or other legal entity, by an individual representing such entity upon presentation to the corporation of satisfactory evidence of his or her authority to do so.
 
(d)           Notwithstanding anything to the contrary herein, no votes may be cast in respect of shares owned by this corporation or its subsidiaries, if any.  If shares are held by this corporation or its subsidiaries, if any in a fiduciary capacity, no votes shall be cast with respect thereto on any matter except to the extent that the beneficial owner thereof possesses and exercises either a right to vote or to give the corporation holding the same binding instructions on how to vote.
 
(e)           With respect to shares standing in the name of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, husband and wife as community property, tenants by the entirety, voting trustees, persons entitled to vote under a stockholder voting agreement or otherwise and shares held by two or more persons (including proxy holders) having the same fiduciary relationship with respect to the same shares, votes may be cast in the following manner:
 
(i)             If only one person votes, the vote of such person binds all.
 
(ii)            If more than one person votes, the act of the majority so voting binds all.
 
(iii)           If more than one person votes, but the vote is evenly split on a particular matter, the votes shall be deemed cast proportionately, as split.
 
(f)           Any holder of shares entitled to vote on any matter may cast a portion of the votes in favor of such matter and refrain from casting the remaining votes or cast the same against the proposal, except in the case in the election of directors.  If such holder entitled to vote fails to specify the number of affirmative votes, it will be conclusively presumed that the holder is casting affirmative votes with respect to all shares held.
 
(g)           If a quorum is present, the affirmative vote of the holders of a majority of the voting shares represented at the meeting and entitled to vote on the matter shall be the act of the stockholders, unless a vote of greater number by classes is required by the laws of the State of Nevada, the Articles of Incorporation or these Bylaws.
 
 
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Section 1.08            Quorum Adjourned Meetings .
 
(a)           At any meeting of the stockholders, a majority of the issued and outstanding voting shares of the corporation represented in person or by proxy, shall constitute a quorum for all purposes of such meetings. If, on any issue, voting by class or series is required by the laws of the State of Nevada, the Articles of Incorporation or these Bylaws, at least a majority of the voting power within each such class or series is necessary to constitute a quorum of each such class or series.
 
(b)           If less than a majority of the issued and outstanding voting shares are represented, a majority of shares so represented may adjourn from time to time at the meeting, until holders of the amount of stock required to constitute a quorum shall be in attendance.  At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted as originally called. When a stockholder’s meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced to the meeting to which the adjournment is taken, unless the adjournment is for more than ten (10) days in which event notice thereof shall be given.  The shareholders present at a duly convened meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum of the voting power.

Section 1.09            Proxies .  At any meeting of stockholders, any holder of shares entitled to vote may authorize, in a manner permitted by the laws of the State of Nevada, another person or persons to vote by proxy with respect to the shares held by an instrument in writing and subscribed to by the holder of such shares entitled to vote.  No proxy shall be valid after the expiration of six (6) months from the date of its creation, unless it is coupled with an interest or unless otherwise specified in the proxy.    Every proxy shall continue in full force and effect until expiration or revocation; provided, however , that in no event shall the term of a proxy exceed seven (7) years from the date of its execution.  Revocation may be effected by filing an instrument revoking the same or a duly executed proxy bearing a later date with the Secretary of the corporation.
 
Section 1.10            Order of Business .  At the annual stockholders’ meeting, the regular order of business shall be substantially as follows:
 
1.           Determination of stockholders present and existence of quorum;
2.           Reading and approval of the minutes of the previous meeting or meetings;
3.           Reports of the Board of Directors, the President, Treasurer and Secretary of the corporation, in the order named;
4.           Reports of committees;
5.           Election of directors;
6.           Unfinished business;
7.           New business; and
8.           Adjournment.
 
 
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Section 1.11            Absentees’ Consent to Meetings .  Transactions of any meetings of the stockholders are valid as though had at a meeting duly held after regular call and notice of a quorum is present, either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy (and those who, although present, either object at the beginning of the meeting to the transaction of any business because the meeting has not been lawfully called or convened or expressly object at the meeting to consideration of matters not included in the notice which are legally required to be included there), signs and/or electronically transmits a written waiver of notice and/or consent to the holding of the meeting or an approval of the minutes thereof.  All such waivers, consents, and approvals shall be filed with the corporate records and made a part of the minutes of the meeting.  Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except that when the person objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and except that attendance at the meeting is not a waiver of any right to object to consideration of matters not included in the notice if such objection is expressly made at the time any such matters are presented at the meeting.  Neither the business to be transacted at nor the purpose of any regular or special meeting of stockholders need be specified in any written waiver of notice, except as otherwise provided in Section 1.04(b) of these Bylaws.
 
Section 1.12            Action Without Meeting .  Any action, except the election of directors, which may be taken by the vote of the stockholders at a meeting, may be taken without a meeting if consented to by the holders of a majority of the shares entitled to vote or such greater proportion as may be required by the laws of the State of Nevada, the Articles of Incorporation, or these Bylaws. Whenever action is taken by written consent, a meeting of stockholders need not be called or noticed.
 
Section 1.13            Telephonic Meetings .  Meeting of the stockholders may be held through the use of conference telephone or similar communications equipment, as long as all members participating in such meeting can communicate with one another at the time of such meeting.  Participation in such meeting constitutes presence in person at such meeting.
 
ARTICLE II.
DIRECTORS
 
Section 2.01            Number, Tenure, and Qualification .  Except as otherwise provided herein, the Board of Directors of the corporation shall consist of at least one (1) and no more than Seven (7) persons, who shall be elected at the annual meeting of the stockholders of the corporation and who shall hold office for one (1) year or until his or her successor or successors are elected and qualify.  A director need not be a stockholder of the corporation.
 
Section 2.02            Resignation .  Any director may resign effective upon giving written notice to the Chairman of the Board of Directors, the President or the Secretary of the corporation, unless the notice specified at a later time for effectiveness of such resignation.  A majority of the remaining directors, though less than a quorum, may appoint a successor to take office when the resignation becomes effective, and each director so appointed shall hold office during the remainder of the term of office of the resigning director.
 
 
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Section 2.03            Change in Number .  Subject to the limitations of the laws of the State of Nevada, the Articles of Incorporation or Section 2.01 of these Bylaws, the number of directors may be changed from time to time by resolution adopted by the Board of Directors without the need for an amendment to the Articles of Incorporation or these Bylaws.
 
Section 2.04            Reduction in Number .  No reduction of the number of directors shall have the effect of removing any director prior to the expiration of his term of office.
 
Section 2.05            Removal .
 
(a)           The Board of Directors of the corporation, by majority vote, may declare vacant the office of a director who has been declared incompetent by an order of a court of competent jurisdiction, convicted of a felony, suspected of misfeasance, malfeasance, immoral acts or otherwise brings disrespect or undue negative impact upon the corporation.
 
(b)           Any director may be removed from office, with or without cause, by the vote or written consent of stockholders representing not less than fifty percent of the issued and outstanding voting capital stock of the corporation, except that if the corporation’s Articles of Incorporation provide for the election of directors by cumulative voting, no director may be removed from office except upon the vote of shareholders owning sufficient shares to have prevented such director’s election to office in the first instance.

Section 2.06            Vacancies .
 
(a)           A vacancy in the Board of Directors because of death, resignation, removal, change in the number of directors, or otherwise may be filled by the stockholders at any regular or special meeting or any adjourned meeting thereof (but not by written consent) or the remaining director(s) of the affirmative vote of a majority thereof.  Each successor so elected shall hold office until the next annual meeting of stockholders or until a successor shall have been duly elected and qualified.
 
(b)           If, after the filling of any vacancy by the directors, the directors then in office who have been elected by the stockholders constitute less than a majority of the directors then in office, any holder or holders of an aggregate of five percent (5%) or more of the total number of shares entitled to vote may call a special meeting of the stockholders to be held to elect the entire Board of Directors.  The term of office of any director shall terminate upon the election of a successor.
 
Section 2.07            Annual or Regular Meetings .  As much as possible, immediately following the adjournment of, and at the same place as, the annual or any special meeting of the stockholders at which directors are elected other than pursuant to Section 2.06 of these Bylaws,  the Board of Directors, including directors newly elected, shall hold its annual meeting without notice other than the provision to elect officers of the corporation and to transact such further business as may be necessary or appropriate.  The Board of Directors may provide by resolution the place, date, and hour for holding additional regular meetings.
 
 
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Section 2.08            Special Meetings .  Special meetings of the Board of Directors may be called by the Chairman and shall be called by the Chairman upon request of any two (2) directors or the President of the corporation.
 
Section 2.09            Place of Meetings .  Any meeting of the directors of the corporation may be held at the corporation’s principal office or at such other place in or out of the United States as the Board of Directors may designate.  A waiver of notice signed by the directors may designate any place for holding of such meeting.  Any directors’ meetings may be held telephonically or by any other electronic means with one or more of the directors being in such contact, should such capabilities be reasonably available.  Any signatures required may be acquired via fax or electronically, which signatures shall be considered as originals for all purposes.
 
Section 2.10            Notice of Meetings .  Except as otherwise provided in Section 2.07 , the Chairman shall deliver to all directors written or printed notice of any special meeting, at least 48 hours before the time of such meeting, by delivery of such notice personally, via confirmed fax transmission, email or mailing such notice first class mail.  If mailed, the notice shall be deemed delivered two (2) business days following the date the same is deposited in the United States mail, postage prepaid.  Any director may waive notice of such a meeting, and the attendance of a director at such a meeting shall constitute a waiver of notice of such meeting, unless such attendance is for the express purpose of objecting to the transaction of business thereat because the meeting is not properly called or convened.
 
Section 2.11            Quorum; adjourned Meetings .
 
(a)           A majority of the Board of Directors in office shall constitute a quorum.
 
(b)           At any meeting of the Board of Directors where a quorum is not present, a majority of those present may adjourn, from time to time, until a quorum is present, and no notice of such adjournment shall be required.  At any adjourned meeting where a quorum is present, any business may be transacted which could have been transacted at the meeting originally called.
 
Section 2.12            Action without Meeting .  Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if a written consent thereto is signed by all of the members of the Board of Directors or of such committee, or if such written consent is confirmed or acknowledged via email or fax.  Such written consent or consents shall be filed with the minutes of the proceedings of the Board of Directors or committee.  Such action by written consent shall have the same force and effect as the majority vote of the Board of Directors or committee.
 
Section 2.13            Electronic Meetings .  Meetings of the Board of Directors may be held through the use of a conference telephone or similar communications equipment such as email, instant messaging or similar communication so long as all members participating in such meeting can communicate with one another at the time of such meeting.  Participation in such a meeting constitutes presence in person at such meeting.  Each person participating in the meeting shall sign the minutes thereof, which may be in counterparts.  Approval of said meeting may be accomplished via email or fax.
 
 
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Section 2.14            Board Decisions .  The majority vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
 
Section 2.15            Powers and Duties .
 
(a)           Except as otherwise provided in the Articles of incorporation or the laws of the State of Nevada, the Board of Directors is invested with complete and unrestrained authority to manage the affairs of the corporation, and is authorized to exercise for such purpose as the general agent of the corporation, its entire corporate authority in such a manner as it sees fit.  The Board of Directors may delegate any of its authority to manage, control or conduct the current business of the corporation to any standing or special committee or to any officer or agent and to appoint any persons to be agents of the corporation with such powers including the power to subdelegate, and upon such terms as may be deemed fit.
 
(b)           The Board of Directors shall present to the stockholders at annual meetings of the stockholders, and when called for by a majority vote of the stockholders at a special meeting of the stockholders, a full and clear statement of the condition of the corporation, and shall, at request, furnish each of the stockholders with a true copy thereof.
 
(c)           The Board of Directors, in its discretion, may submit any contract or act for approval or ratification at any annual meeting of the stockholders or any special meeting properly called for the purpose of considering any such contract or act, provide a quorum is preset.  The contract or act shall be valid and binding upon the corporation and upon all stockholders thereof, if approved and ratified by the affirmative vote of a majority of the stockholders at such meeting.
 
(d)           The Board of Directors may ratify a “Related Transaction” by a majority vote of the disinterested directors that are voting at any Special or Regularly scheduled board meeting.  A Related Transaction is defined as a material agreement, contract, or other transaction between a current officer, director, or shareholder of the corporation and the corporation itself. Additionally, under no circumstances may the Related Transaction that is ratified be on less favorable terms to the Company that it would had it been negotiated with an unrelated third Party.
 
Section 2.16           Compensation .  The directors shall be allowed and paid or reimbursed all necessary expenses incurred in attending any meetings of the Board of Directors and, subject to any limitations contained in the laws of the State of Nevada, the Articles of Incorporation or any contract or agreement to which the corporation is a party, shall be entitled to receive such compensation for their services as directors as shall be determined from time to time by the Board of Directors or any committee thereof.
 
 
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Section 2.17            Board of Directors .
 
(a)           At its annual meeting, the Board of Directors shall elect, from among its members, a Chairman to preside at meetings of the Board of Directors.  The Board of Directors may also elect such other board officers as it may, from time to time, determine advisable.
 
(b)           Any vacancy in any board office because of death, resignation, removal or otherwise may be filled by the Board of Directors for the unexpired portion of the term of such office.
 
Section 2.18            Order of Business .  The order of business at any meeting of the Board of Directors shall be substantially as follows:
 
1.             Determination of members present and existence of quorum;
2.             Reading and approval of minutes of any previous meeting or meetings;
3.             Reports of officers and committeemen;
4.             Election of officers (annual meeting);
5.             Unfinished business;
6.             New business; and
7.             Adjournment.
 
ARTICLE III.
OFFICERS
 
Section 3.01            Election .  The Board of Directors, at its annual meeting, shall elect a President, a Secretary and a Treasurer to hold office for a term of one (1) year and until their successors are elected and qualified.  Any person may hold two or more offices.  The Board of Directors may, from time to time, by resolution, appoint one or more Vice-Presidents, Assistant Secretaries, Assistant Treasurers and transfer agents of the corporation, as it may deem advisable, prescribe their duties and/or fix their compensation.
 
Section 3.02            Removal; Resignation .  Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors with or without cause.  Any office may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under contract to which the resigning officer is a party.
 
Section 3.03             Vacancies .  Any vacancy in any office because of death, resignation, removal or otherwise may be filled by the Board of Directors for the unexpired term or such office.
 
Section 3.04             The Chairman and Vice Chairman of the Board .  The Chairman of the Board or in his absence, the Vice Chairman of the Board, shall preside at all meetings of the Board of Directors and may preside at meetings of the shareholders, and shall perform such other duties as may from time to time be assigned to them by the Board of Directors.
 
 
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Section 3.05             President .  The President shall be deemed the general manager and executive officer of the corporation, subject to the supervision and control of the Board of Directors, and shall direct the corporate affairs, with full power to execute all resolutions and orders of the Board of Directors not especially entrusted to some other officer of the corporation.  The President, or his designee, shall preside at all meetings of the stockholders and shall perform such other duties as shall be prescribed by the Board of Directors.  Unless otherwise ordered by the Board of Directors, the President, or his designee shall have the power and authority on behalf of the corporation to attend, act and vote at meetings of the stockholders of any corporation in which the corporation may hold stock and, at such meetings, shall possess and may exercise any and all rights and powers incident to the ownership of such stock.  The Board of Directors, by resolution from time to time, may confer like powers on any person or persons in place of the President to represent the corporation for these purposes.
 
Section 3.06             Vice President .  The Board of Directors may elect one or more Vice Presidents who shall be vested with all the powers and perform all the duties of the President whenever the President is absent or unable to act, including the signing of the certificates of stock issued by the corporation, and the Vice President shall perform such other duties as shall be prescribed by the Board of Directors.
 
Section 3.07             Secretary .  The Secretary shall keep the minutes of all meetings of the stockholders and the Board of Directors in books provide for that purpose.  The Secretary shall attend to the giving and service of all notices of the corporation, may sign with the President in the name of the corporation all contracts authorized by the Board of Directors or appropriate committee, shall have the custody of the corporate seal, shall affix the corporate seal to all certificates of stock duly issued by the corporation, shall have charge of stock certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors or appropriate committee may direct, and shall, in general, perform all duties incident to the office of the Secretary.  All corporate books kept by the Secretary shall be open for examination by any director at any reasonable time.
 
Section 3.08             Assistant Secretary .  The Board of Directors may appoint an Assistant Secretary who shall have such powers and perform such duties as may be prescribed for him by the Secretary of the corporation or by the Board of Directors.
 
Section 3.09             Treasurer .  The Treasurer shall be the chief financial officer of the corporation, subject to the supervision and control of the Board of Directors, and shall have custody of all the funds and securities of the corporation.  When necessary or proper, the Treasurer shall endorse on behalf of the corporation for collection checks, notes, and other obligations, and shall deposit all moneys to the credit of the corporation in such bank or banks or other depository as the Board of Directors may designate, and shall sign all receipts and vouchers for payments by the corporation.  Unless otherwise specified by the Board of Directors, the Treasurer shall sign with the President all bills of exchange and promissory notes of the corporation, shall also have the care and custody of the stocks, bonds, certificates, vouchers, evidence of debts, securities, and such other property belonging to the corporation as the Board of Directors shall designate, and shall sign all papers required by law, by these Bylaws, or by the Board of Directors to be signed by the Treasurer.  The Treasurer shall enter regularly in the books of the corporation, to be kept for that purpose, full and accurate accounts of all moneys received and paid on account of the corporation and, whenever required by the Board of Directors, the Treasurer shall render a statement of any or all accounts.  The Treasurer shall at all reasonable times exhibit the books of account to any directors of the corporation and shall perform all acts incident to the position of the Treasurer subject to the control of the Board of Directors.  The Treasurer shall, if required by the Board of Directors, give bond to the corporation in such sum and with such security as shall be approved by the Board of Directors for the faithful performance of all the duties of Treasurer and for restoration to the corporation, in the event of the Treasurer’s death, resignation, retirement or removal from office, of all books, records, papers, vouchers, money and other property belonging to the corporation.  The expense of such bond shall be borne by the corporation.
 
 
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Section 3.10             Assistant Treasurer .  The Board of Directors may appoint an Assistant Treasurer who shall have such powers and perform such duties as may be prescribed by the Treasurer of the corporation or by the Board of Directors, and the Board of Directors may require the Assistant Treasurer to give a bond to the corporation in such sum and with such security as it may approve, for the faithful performance of the duties of Assistant Treasurer, and for restoration to the corporation, in the event of the Assistant Treasurer’s death, resignation, retirement or removal from office, of all books, records, papers, vouchers, money and other property belonging to the corporation.  The expense of such bond shall be borne by the corporation.
 
 
ARTICLE IV.
CAPITAL STOCK
 
Section 4.01             Issuance; Payment for Shares .
 
(a)            Subject to any provisions or limitations of the laws of the State of Nevada, the Articles of Incorporation or any contracts or agreements to which the corporation may be a party, shares of capital stock of the corporation shall be issued in such manner and at such times and upon such conditions as shall be prescribed by the Board of Directors.  Additionally, the Board of Directors of the corporation may not cause a reverse split of the outstanding common stock of the corporation without an affirmative vote of the holders of 50% of the capital stock of the corporation entitled to vote or by the consent of the stockholders in accordance with Section 1.12 of these Bylaws.
 
(b)           The Board of Directors may authorize shares to be issued for consideration consisting of any tangible or intangible property of benefit to the corporation including, but not limited to, cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation.  Before the corporation issues shares, the Board of Directors shall determine that the consideration received or to be received for the shares to be issued is adequate.  The judgment of the Board of Directors as to the adequacy of the consideration received for the shares issued is conclusive in the absence of actual fraud in the transaction.  When the corporation receives the consideration for which the Board of Directors authorized the issuance of the shares, the shares issued therefor shall be considered fully paid.
 
(c)           The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make any other arrangements to restrict the transfer of the shares, as determined by the Board of Directors.  The corporation may credit distributions made for the shares against their purchase price, until the services are performed, the benefits are received or the promissory note is paid.  If the services are not performed, the benefits are not received or the promissory note is not paid, the shares escrowed or restricted and the distributions credited may be canceled in whole or in part.
 
 
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Section 4.02           Certificates .  Ownership in the corporation shall be evidenced by certificates for shares of the stock in such form as shall be prescribed by the Board of Directors, shall be under the seal of the corporation and shall be signed by the President or a Vice-President and also by the Secretary or an Assistant Secretary;   provided, however , whenever any certificate is countersigned or otherwise authenticated by a transfer agent or transfer clerk, and by a registrar, then a facsimile of the signatures of said officers of the corporation may be printed or lithographed upon the certificate in lieu of the actual signatures and the seal. Each certificate shall contain the then name of the record holder, the number, designation, if any, class or series of shares represented, a statement of summary of any applicable rights, preferences, privileges or restrictions thereon, and a statement that the shares are assessable, if applicable.  All certificates shall be consecutively numbered.  The name, address and federal tax identification number of the stockholder, the number of shares, and the date of issue shall be entered on the stock transfer books of the corporation.
 
Section 4.03            Surrender; Lost or Destroyed Certificates .  All certificates surrendered to the corporation, except those representing shares of treasury stock, shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been canceled, except that in case of a lost, stolen, destroyed or mutilated certificate, a new one may be issued therefor.  However, any stockholder applying for the issuance of a stock certificate in lieu of one alleged to have been lost, stolen, destroyed or mutilated shall, prior to the issuance of a replacement, provide the corporation with his, her or its affidavit of the facts surrounding the loss, theft, destruction or mutilation and if required by the Board of Directors, an indemnity bond in any amount and upon such terms as the Treasurer, or the Board of Directors, shall require.  In no case shall the bond be in an amount less than twice the current market value of the stock and it shall indemnify the corporation against any loss, damage, cost or inconvenience arising as a consequence of the issuance of a replacement certificate.
 
Section 4.04            Replacement Certificate .  When the Articles of Incorporation are amended in any way affecting the statements contained in the certificates for outstanding shares of capital stock of the corporation or it becomes desirable for any reason, including, without limitation, the merger or consolidation of the corporation with another corporation or the reorganization of the corporation, to cancel any outstanding certificate for shares and issue a new certificate for shares, the corporation shall issue an order for stockholders of record, to surrender and exchange the same for new certificates within a reasonable time to be fixed by the Board of Directors.  The order may provide that a holder of any certificate(s) ordered to be surrendered shall not be entitled to vote, receive dividends or exercise any other rights of stockholders until the holder has complied with the order, provided that such order operates to suspend such rights only after notice and until compliance.
 
Section 4.05            Transfer of Shares .  No transfer of stock shall be valid as against the corporation except on surrender and cancellation of the certificate therefor accompanied by an assignment or transfer by the registered owner made either in person or under assignment.  Whenever any transfer shall be expressly made for collateral security and not absolutely, the collateral nature of the transfer shall be reflected in the entry of transfer on the books of the corporation.
 
 
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Section 4.06            Transfer Agent .  The Board of Directors may appoint, or delegate the ability to appoint, one or more transfer agents and registrars of transfer and may require all certificates for shares of stock to bear the signature of such transfer agent and such registrar of transfer.
 
Section 4.07            Stock Transfer Books .  The stock transfer books shall be closed for a period of at least ten (10) days prior to all meetings of the stockholders and shall be closed for the payment of dividends as provided in Article V hereof and during such periods as, from time to time, may be faxed by the Board of Directors, and, during such periods, no stock shall be transferable.
 
Section 4.08            Compliance with Securities and Tax Laws . The power and authority of the Board of Directors concerning the issuance, transfer and registration of certificates for shares of capital stock of the corporation as set forth in this Article IV is subject to the limitations of, and the corporation’s compliance with, all state, federal and foreign securities and taxation laws, rules and regulations governing the same.
 
Section 4.09            Miscellaneous .  The Board of Directors shall have the power and authority to make such rules and regulations not inconsistent herewith as it may deem expedient concerning the issue, transfer, and registration of certificates for shares of the capital stock of the corporation.
 
ARTICLE V.
DIVIDENDS
 
Section 5.01            Dividends .  Dividends may be declared, subject to the provisions of the laws of the State of Nevada and the Articles of Incorporation, by the Board of Directors at any regular or special meeting and may be paid in cash, property, shares of the corporation stock, or any other medium.  The Board of Directors may fix in advance a record date, as provided in Section 1.6 of these Bylaws, prior to the dividend payment for purpose of determining stockholders entitled to receive payment of any dividend.  The Board of Directors may close the stock transfer books for such purpose for a period of not more than ten (10) days prior to the payment date of such dividend.
 
ARTICLE VI.
OFFICES ; RECORDS, REPORTS; SEAL AND FINANCIAL MATTERS
 
Section 6.01             Principal Office .  The principal office of the corporation shall be as directed by the Board of Directors and the Board of Directors may from time to time, by resolution, change the location of the principal office.  The corporation may also maintain an office or offices at such other place or places, either within or without the State of Nevada, as may be resolved, from time to time, by the Board of Directors.
 
 
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Section 6.02             Records .  The stock transfer books and a certified copy of the Bylaws, Articles of Incorporation, any amendments thereto, and the minutes of the proceedings of stockholders, the Board of Directors, and Committees of the Board of Directors shall be kept at the principal office of the corporation for the inspection of all who have the right to see the same and for the transfer of stock.  All other books of the corporation shall be kept at such places as may be prescribed by the Board of Directors.
 
Section 6.03              Financial Report on Request .  Any stockholder or stockholders holding at least five percent (5%) of the outstanding shares of any class of stock may make a written request for an income statement of the corporation for the three (3) month, six (6) month or nine (9) month period of the current fiscal year ended more than thirty (30) days prior to the date of the request and a balance sheet of the corporation as of the end of such period.  In addition, if no annual report of the last fiscal year has been sent to stockholders, such stockholder or stockholders may make a request for a balance sheet as of the end of such fiscal year and an income statement and statement of changes in financial position for such fiscal year.  The statements shall be delivered or mailed to the person making the request within thirty (30) days thereafter.  A copy of the statements shall be kept on file in the principal office of the corporation for twelve (12) months, and such copies shall be exhibited at all reasonable times to any stockholder demanding an examination of them or a copy shall be mailed to each stockholder.  Upon request by any stockholder, there shall be mailed to the stockholder a copy of the last annual, semiannual or quarterly income statement which it has prepared and a balance sheet as of the end of the period.  The financial statements referred to in this Section 6.3 shall be accompanied by the report thereon, if any, of any independent accountants engaged by the corporation or the certificate of an authorized officer of the corporation that such financial statements were prepared without audit from the books and records of the corporation.
 
Section 6.04              Right of Inspection .
 
(a)             The accounting and records and minutes of proceedings of the stockholders and the Board of Directors shall be open to inspection upon the written demand of any stockholder or holder of a voting trust certificate at any reasonable time during usual business hours for a purpose reasonably related to such holder’s interest as a stockholder or as the holder of such voting trust certificate.  This right of inspection shall extend to the records of the subsidiaries, if any, of the corporation.  Such inspection may be made in person or by agent or attorney, and the right of inspection includes the right to copy and make extracts.
 
(b)             Every director shall have the absolute right at any reasonable time to inspect and copy all books, records, and documents of every kind and to inspect the physical properties of the corporation and/or its subsidiary corporations.  Such inspection may be made in person or by agent or attorney, and the right of inspection includes the right to copy and make extracts.
 
Section 6.05              Corporate Seal .  The Board of Directors may, by resolution, authorize a seal, and the seal may be used by causing it, or a facsimile, to be impressed or affixed or reproduced or otherwise.  Except when otherwise specifically provided herein, any officer of the corporation shall have the authority to affix the seal to any document requiring it.
 
Section 6.06              Fiscal Year-End .  The fiscal year-end of the corporation shall be such date as may be fixed from time to time by resolution by the Board of Directors.
 
 
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Section 6.07              Reserves .  The Board of Directors may create, by resolution, out of the earned surplus of the corporation such reserves as the directors may, from time to time, in their discretion, think proper to provide for contingencies, or to equalize dividends or to repair or maintain any property of the corporation, or for such other purpose as the Board of Directors may deem beneficial to the corporation, and the directors may modify or abolish any such reserves in the manner in which they were created.
 
Section 6.08              Payments to Officers or Directors .  Any payments made to an officer or director of the corporation, such as salary, commission, bonus, interest, rent or entertainment expense, which shall be disallowed by the Internal Revenue Service in whole or in part as a deductible expense by the corporation, shall be reimbursed by such officer or director to the corporation to the full extent of such disallowance.  It shall be the duty of the Board of Directors to enforce repayment of each such amount disallowed.  In lieu of direct reimbursement by such officer or director, the Board of Directors may withhold future compensation to such officer or director until the amount owed to the corporation has been recovered.
 
ARTICLE VII.
INDEMNIFICATION
 
Section 7.01              Indemnification of Officers and Directors .  Subject to Section 7.02 , and to the fullest extent permitted by Nevada law, the corporation shall indemnify and hold harmless any director or officer who was or is a party to, or is threatened to be made a party to or is otherwise involved in, any threatened, pending, or completed suit or proceeding, whether civil, criminal, administrative or investigative, including, without limitation, an action, suit or proceeding by or in the right of the corporation (“Proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise (“Indemnitee”), against all expenses, liability and loss (including, without limitation, attorneys’ fees, costs, judgments, fines, taxes, penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Indemnitee in connection with any Proceeding.
 
Section 7.02              Indemnification of Employees and Other Persons .  The corporation may, by action of the Board of Directors based on a majority vote of a quorum of the Board of Directors, and to the extent provided in such action, indemnify employees and other persons as though they were Indemnitees.
 
Section 7.03              Advancing Expenses .  Expenses incurred in defending any Proceeding may be paid by the corporation in advance of the final disposition, when authorized by the Board of Directors, upon receipt of an undertaking by or on behalf of the person defending to repay such advances if indemnification is not ultimately available under these provisions.
 
Section 7.04              Continuing Indemnification .  The indemnification provided by these Bylaws shall continue as to a person who has ceased to be director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
 
 
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Section 7.05              Non-Exclusivity of Rights .  The rights to indemnification provided in this Article 7 shall not be exclusive of any other such rights that any person may have or hereafter acquire under any statute, provision of the Articles of Incorporation or these Bylaws, agreement, vote of shareholders, or directors or otherwise.
 
Section 7.06              Insurance .  The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the corporation or who is or was serving at the request of the corporation in any capacity against any liability asserted.
 
Section 7.07               Amendment .  The provisions of this Article 7 shall constitute a contract between the corporation and each of its directors and officers which may be modified as to any director or officer only with that person’s consent or as specifically provided in this Section 7.07 .  Notwithstanding any other provision of these Bylaws relating to their amendment generally, any repeal or amendment of this Article 7 which is adverse to any director or officer shall apply to such director or officer only on a prospective basis and shall not limit the rights of an Indemnitee to indemnification with respect to any action or failure to act occurring prior to the time of such repeal or amendment.  Notwithstanding any other provision of these Bylaws, no repeal or amendment of these Bylaws shall affect this Article 7 so as to limit or reduce the indemnification in any manner unless adopted by (i) the unanimous vote of the directors of the corporation then serving, or (ii) the shareholders as set forth in Article 8 hereof; provided, however , that no such amendment shall have retroactive effect inconsistent with the preceding sentence.
 
Section 7.08               Changes in Nevada Law .  References in this Article 7 to Nevada law or to any provision thereof shall be to such law as it existed on the date this Article 7 was adopted or as such law thereafter may be changed; provided, however , that (i) in the case of any change which expands the liability of directors or officers or limits the indemnification rights or the rights to advancement of expenses which the corporation may provide, the rights to limited liability, to indemnification and to the advancement of expenses provided in the Articles of Incorporation or these Bylaws shall continue as theretofore in effect to the extent permitted by law; and (ii) if such change permits the corporation, without the requirement of any further action by the shareholders or directors, to limit further the liability of directors or officers or to provide broader indemnification rights or rights to the advancement of expenses than the corporation was permitted to provide prior to such change, then liability thereupon shall be so limited and the rights to indemnification and the advancement of expenses shall be so broadened to the extent permitted by law.
 
ARTICLE VIII.
BYLAWS
 
Section 8.01               Amendment .  These Bylaws may be altered, amended or repealed at any regular meeting of the Board of Directors without prior notice, or at any special meeting of the Board of Directors if notice of such alteration, amendment or repeal be contained in the notice of such alteration, amendment or repeal be contained in the notice of such special meeting.  These Bylaws may also be altered, amended, or repealed at a meeting of the stockholders at which a quorum is present by the affirmative vote of the holders of 51% of the capital stock of the corporation entitled to vote or by the consent of the stockholders in accordance with Section 1.12 of these Bylaws.  The stockholders may provide by resolution that any Bylaw provision repealed, amended, adopted or altered by them may not be repealed amended, adopted or altered by the Board of Directors.
 
 
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Exhibit 10.1
 
FORM OF SUBSCRIPTION AGREEMENT
 
This SUBSCRIPTION AGREEMENT (“ Agreement ”), dated as of _________________, is made by and among JBI, INC., a corporation organized under the laws of Nevada (the “ Company ”) and each of the Persons listed on Schedule I hereto (collectively, the “ Investors ,” and individually an “ Investor ”).  Each of the Company and Investors are referred to herein individually as a “ Party ” and collectively as the “ Parties .”
 
RECITALS:
 
WHEREAS, through a Confidential Private Placement Memorandum, dated as of December 19, 2012, including exhibits attached thereto (the “ Memorandum ”), the Company is offering (the “ Offering ”) to accredited investors (as defined in Rule 501(a) of Regulation D promulgated under the Securities Act) in one or more Closings up to 2,000,000 shares ( the “ Maximum Amount ”) of Series B Convertible Preferred Stock, $0.001 par value per share, of the Company (the “ Series B Preferred Stock ”), which shares shall have the rights, preferences and privileges as set forth in the Certificate of Designation of Series B Convertible Preferred Stock, attached as Exhibit D to the Memorandum (the “ Series B Designation ”);
 
WHEREAS, the Company and each Investor is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), Rule 506 of Regulation D promulgated by the U.S.  Securities and Exchange Commission (the “ SEC ”) under the Securities Act (“ Regulation D ”) and Regulation S promulgated by the SEC under the Securities Act (“ Regulation S ”); and
 
WHEREAS, each Investor wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, the aggregate number of shares of Series B Preferred Stock as set forth opposite such Investor’s name in column (3) on Schedule I at a per share purchase price of $3.50 per Share;
 
NOW, THEREFORE, in consideration of the foregoing premises, and the covenants, representations and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the Parties, intending to be legally bound, hereby agree as follows:
 
ARTICLE I
DEFINITIONS
 
Section 1.1             Definitions .
 
For all purposes of and under this Agreement, the following terms shall have the following respective meanings:
 
“ 8-K Filing ” has the meaning set forth in Section 5.2 .
 
“ Accredited Investor ” has the meaning set forth in Rule 501 under the Securities Act.
 
 
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“ Action ” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility.
 
“ Affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act.
 
“ Agreement ” has the meaning set forth in the preamble.
 
“ Business Day ” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in New York, New York are required or authorized to be closed.
 
“ Closing ” has the meaning set forth in Section 2.3 .
 
“ Closing Date ” has the meaning set forth in Section 2.3 .
 
“ Common Stock ” means the shares of common stock, par value $0.001 per share, of the Company.
 
“ Company ” has the meaning set forth in the preamble.
 
“ Company Organizational Documents ” means the Certificate of Incorporation and Bylaws of the Company and any other organizational documents of the Company and any of its Subsidiaries, each as amended.
 
“ Contract ” means any written or oral contract, lease, license, indenture, note, bond, agreement, arrangement, understanding, permit, concession, franchise or other instrument.
 
“ Conversion Shares ” means shares of Common Stock issuable upon conversion of the Series B Preferred Stock.
 
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same will then be in effect.
 
“ GAAP ” means, with respect to any Person, generally accepted accounting principles in the U.S. applied on a consistent basis with such Person’s past practices.
 
“ Governmental Authority ” means any domestic or foreign, federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, commission, court, tribunal, official, arbitrator or arbitral body.
 
“ Indemnified Liabilities ” has the meaning set forth in Section 7.2 .
 
“ Indemnitees ” has the meaning set forth in Section 7.2 .
 
 
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“ Intellectual Property ” means all industrial and intellectual property, including, without limitation, all U.S. and non-U.S.  patents, patent applications, patent rights, trademarks, trademark applications, common law trademarks, Internet domain names, trade names, service marks, service mark applications, common law service marks, and the goodwill associated therewith, copyrights, in both published and unpublished works, whether registered or unregistered, copyright applications, franchises, licenses, know-how, trade secrets, technical data, designs, customer lists, confidential and proprietary information, processes and formulae, all computer software programs or applications, layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, and records, whether such intellectual property has been created, applied for or obtained anywhere throughout the world.
 
“ Investor ” and “ Investors ” have the respective meanings set forth in the preamble.
 
“ Investor Questionnaires ” means the investor questionnaires completed by the Investors substantially in form attached hereto as Exhibit A , and each of the foregoing, is individually referred to herein as an “ Investor Questionnaire .”
 
“ Knowledge ” shall mean, except as otherwise explicitly provided herein, actual knowledge after reasonable investigation.  The Company shall be deemed to have “Knowledge” of a matter if any of its officers or directors has Knowledge of such matter.  Phrases such as “to the Knowledge of the Company” or the “Company’s Knowledge” shall be construed accordingly.
 
“ Laws ” means, with respect to any Person, any U.S.  or non-U.S., federal, national, state, provincial, local, municipal, international, multinational or other Law (including common law), constitution, statute, code, ordinance, rule, regulation or treaty applicable to such Person.
 
“ License ” means any security clearance, permit, license, variance, franchise, order, approval, consent, certificate, registration or other authorization of any Governmental Authority, judicial authority or regulatory body, and other similar rights.
 
“ Lien ” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by Law.
 
“ Material Adverse Effect ” means, with respect to any Person, a material adverse effect on the business, financial condition, operations, results of operations, assets, customer, supplier or employee relations or future prospects of such Person.
 
“ Maximum Amount ” has the meaning set forth in the recitals.
 
“ Memorandum ” has the meaning set forth in the recitals.
 
“ Offering ” has the meaning set forth in the recitals.
 
 
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“ Order ” means any order, judgment, ruling, injunction, assessment, award, decree or writ of any Governmental Authority or regulatory body.
 
“ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).
 
“ Party ” and “ Parties ” have the meanings set forth in the preamble.
 
“ Person ” means all natural persons, corporations, business trusts, associations, companies, partnerships, limited liability companies, joint ventures and other entities, governments, agencies and political subdivisions.
 
“ Principal Market ” means the OTCQB.
 
“ Purchase Price ” has the meaning set forth in Section 2.2 .
 
“ Regulation D ” has the meaning set forth in the recitals.
 
“ Regulation S ” has the meaning set forth in the recitals.
 
“ Regulation SHO ” has the meaning set forth in Section 3.7(d) .
 
“ Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration.
 
“ SEC ” has the meaning set forth in the recitals.
 
“ SEC Reports ” has the meaning set forth in Section 4.9.
 
“ Securities ” means the Shares.
 
“ Securities Act ” has the meaning set forth in the recitals.
 
“ Series A Preferred Stock ” has the meaning set forth in Section 4.6 .
 
“ Series B Designation ” has the meaning set forth in the recitals.
 
“ Series B Preferred Stock ” has the meaning set forth in the recitals.
 
“ Shares ” means, collectively, the shares of Series B Preferred Stock purchased in the Offering.
 
“ Short Sales ” has the meaning set forth in Section 3.7(d) .
 
“ Subsidiaries ” means any Person in which the Company, directly or indirectly, (a) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (b) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “ Subsidiary .”
 
 
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“ Transaction Documents ” means, collectively, this Agreement and the Investor Questionnaires and all agreements, certificates, instruments and other documents to be executed and delivered in connection with the transactions contemplated by this Agreement.
 
“ U.S. ” means the United States of America.
 
“ U.S. Person ” has the meaning set forth in Regulation S under the Securities Act.
 
ARTICLE II
PURCHASE AND SALE OF THE SHARES; CLOSING
 
Section 2.1             Purchase and Sale of the Shares.
 
At the Closing, the Company shall issue and sell to each Investor, and each Investor severally, but not jointly, shall purchase from the Company on the Closing Date, such aggregate number of Shares as is set forth opposite such Investor’s name in column (3) on Schedule I .
 
Section 2.2              Purchase Price; Form of Payment.
 
The aggregate purchase price for the Shares to be purchased by each Investor (the “ Purchase Price ”) shall be the amount set forth opposite such Investor’s name in column (2) on Schedule I .  On the Closing Date: (i) each Investor shall pay its respective Purchase Price  for the Shares to be issued and sold to such Investor at the Closing, by wire transfer of immediately available funds to the Company in accordance with the wire instructions provided by the Company, such funds to be held until Closing; and (ii) immediately upon the Closing, the Company shall deliver to its transfer agent written instructions for the issuance to each Investor of one or more certificates representing such aggregate number of Common Shares as is set forth opposite such Investor’s name in column (3) of Schedule I , in all cases, duly executed on behalf of the Company and registered in the name of such Investor or its designee.
 
Section 2.3             Closing .
 
Upon the terms and subject to the conditions of this Agreement, the transactions contemplated by this Agreement shall take place at a closing (the “ Closing ”) to be held at the offices of Pryor Cashman LLP located at 7 Times Square, New York, NY 10036, at a time and date to be specified by the Parties, which shall be no later than the second (2nd) Business Day following the satisfaction or, if permitted pursuant hereto, waiver of the conditions set forth in Article VI , or at such other location, date and time as Investors and the Company shall mutually agree.  The date and time of the Closing is referred to herein as the “ Closing Date .”  The Company may hold one or more Closings on the sale of Shares for an aggregate amount of not more than the Maximum Amount, and at any time after the initial Closing but not later than termination date specified in the Memorandum, the Company shall be permitted to sell, in one or more additional Closings, up to such number of Shares not sold at the initial Closing in an amount not to exceed the Maximum Amount in the aggregate (which amount shall include the amount sold in the initial Closing);
 
 
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ARTICLE III
REPRESENTATIONS OF THE INVESTORS
 
The Investors severally, and not jointly, hereby represent and warrant to the Company that the statements contained in this Article III are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article III ) (except where another date or period of time is specifically stated herein for a representation or warranty).
 
Section 3.1              Authority .
 
Such Investor has all requisite authority and power to enter into and deliver this Agreement and any of the other Transaction Documents to which such Investor is a party, and any other certificate, agreement, document or instrument to be executed and delivered by such Investor in connection with the transactions contemplated hereby and thereby and to perform such Investor’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  This Agreement has been, and each of the Transaction Documents to which such Investor is a party will be, duly and validly authorized and approved, executed and delivered by such Investor.
 
Section 3.2              Binding Obligations .
 
Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties hereto and thereto other than such Investor, this Agreement and each of the Transaction Documents to which such Investor is a party are duly authorized, executed and delivered by such Investor, and constitutes the legal, valid and binding obligations of such Investor, enforceable against such Investor in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.
 
Section 3.3             No Conflicts .
 
Neither the execution or delivery by such Investor of this Agreement or any Transaction Document to which such Investor is a party, nor the consummation or performance by such Investor of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the organizational documents of such Investor (if such Investor is not a natural person); (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which such Investor is a party or by which the properties or assets of such Investor are bound; or (c) contravene, conflict with, result in any breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, impair the rights of such Investor under, or alter the obligations of any Person under, or create in any Person the right to terminate, amend, accelerate or cancel, or require any notice, report or other filing (whether with a Governmental Authority or any other Person) pursuant to, or result in the creation of a Lien on any of the assets or properties of the Company under, any note, bond, mortgage, indenture, Contract, lease, License, permit, franchise or other instrument or obligation to which such Investor is a party or any of such Investor’s assets and properties are bound or affected, except, in the case of clauses (b) or (c) for any such contraventions, conflicts, violations, or other occurrences as would not have a Material Adverse Effect on such Investor.
 
 
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Section 3.4              Certain Proceedings .
 
There is no Action pending against, or to the Knowledge of such Investor, threatened against or affecting, such Investor by any Governmental Authority or other Person with respect to such Investor that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement.
 
Section 3.5              No Brokers or Finders .
 
No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against such Investor for any commission, fee or other compensation as a finder or broker, or in any similar capacity, based upon arrangements made by or on behalf of such Investor, and such Investor will indemnify and hold the Company and its Affiliates harmless against any liability or expense arising out of, or in connection with, any such claim.
 
Section 3.6              Investment Representations .
 
Each Investor severally, and not jointly, hereby represents and warrants, solely with respect to itself and not any other Investor, to the Company as follows:
 
(a)             Purchase Entirely for Own Account .  Such Investor is acquiring the Securities proposed to be acquired hereunder for investment for its own account and not with a view to the resale or distribution of any part thereof, and such Investor has no present intention of selling or otherwise distributing such Securities, or the Conversion Shares, except in compliance with applicable securities Laws.
 
(b)             Restricted Securities .  Such Investor understands that the Securities and the Conversion Shares are characterized as “restricted securities” under the Securities Act inasmuch as this Agreement contemplates that, if acquired by the Investor pursuant hereto, the Securities and the Conversion Shares would be acquired in a transaction not involving a public offering.  The issuance of the Securities hereunder is being effected, and the issuance of the Conversion Shares upon conversion of the Securities will be effected, in reliance upon an exemption from registration afforded under Section 4(2) of the Securities Act, Rule 506 of Regulation D and Regulation S.  Such Investor further acknowledges that if the Securities (or upon conversion, the Conversion Shares) are issued to such Investor in accordance with the provisions of this Agreement, such Securities (and upon conversion, such Conversion Shares) may not be resold without registration under the Securities Act or the existence of an exemption therefrom.  Such Investor represents that he is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act
 
 
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(c)             Acknowledgment of Non-Registration .  Such Investor understands and agrees that the Securities to be issued pursuant to this Agreement, and the Conversion Shares issuable upon conversion of the Securities, have not been registered under the Securities Act or the securities Laws of any state of the U.S. and that the Company has no obligation hereunder, nor does such Investor have any right(s) under any of the Transaction Documents to registration of such Securities or such Conversion Shares.
 
(d)             Status .  By its execution of this Agreement, such Investor represents and warrants to the Company as indicated on its signature page to this Agreement, either that: (i) such Investor is an Accredited Investor; or (ii) such Investor is not a U.S. Person.  Such Investor understands that the Securities are being offered and sold to such Investor in reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Investor set forth in this Agreement, in order that the Company may determine the applicability and availability of the exemptions from registration of the Securities on which the Company is relying.
 
(e)             Additional Representations and Warranties .  Such Investor, severally and not jointly, further represents and warrants to the Company as follows: (i) such Person qualifies as an Accredited Investor; (ii) such Person consents to the placement of a legend on any certificate or other document evidencing the Securities or the Conversion Shares substantially in the form set forth in Section 3.7(a) ; (iii) such Person has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such Person’s or entity’s interests in connection with the transactions contemplated by this Agreement; (iv) such Person has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Securities and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Securities; (v) such Person has received and reviewed the Memorandum and had access to the SEC Reports; (vi) such Person has been furnished during the course of the transactions contemplated by this Agreement with all other public information regarding the Company that such Person has requested and all such public information is sufficient for such Person to evaluate the risks of investing in the Securities; (vii) such Person has been afforded the opportunity to ask questions of and receive answers concerning the Company and the terms and conditions of the issuance of the Securities; (viii) such Person is not relying on any representations and warranties concerning the Company made by the Company or any officer, employee or agent of the Company, other than those contained in this Agreement or the SEC Reports; (ix) such Person will not sell or otherwise transfer the Securities, or the Conversion Shares, unless either (A) the transfer of such securities is registered under the Securities Act or (B) an exemption from registration of such securities is available; (x) such Person understands and acknowledges that the Company is under no obligation to register the Securities or the Conversion Shares for sale under the Securities Act; (xi) such Person represents that the address furnished in Schedule I is the principal residence if he is an individual or its principal business address if it is a corporation or other entity; (xii) such Person understands and acknowledges that the Securities have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Company that has been supplied to such Person and that any representation to the contrary is a criminal offense; and (xiii) such Person acknowledges that the representations, warranties and agreements made by such Person herein shall survive the execution and delivery of this Agreement and the purchase of the Securities.
 
 
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(f)             Additional Representations and Warranties of Non-U.S. Persons .  Each Investor that is not a U.S. Person, severally and not jointly, further represents and warrants to the Company as follows: (i) at the time of (A) the offer by the Company and (B) the acceptance of the offer by such Person, of the Securities, such Person was outside the U.S; (ii) no offer to acquire the Securities or otherwise to participate in the transactions contemplated by this Agreement was made to such Person or its representatives inside the U.S.; (iii) such Person is not purchasing the Securities for the account or benefit of any U.S. Person, or with a view towards distribution to any U.S. Person, in violation of the registration requirements of the Securities Act; (iv) such Person will make all subsequent offers and sales of the Securities or any Conversion Shares either (A) outside of the U.S. in compliance with Regulation S; (B) pursuant to a registration under the Securities Act; or (C) pursuant to an available exemption from registration under the Securities Act; (v) such Person is acquiring the Securities for such Person’s own account, for investment and not for distribution or resale to others; (vi) such Person has no present plan or intention to sell the Securities or any Conversion Shares in the U.S. or to a U.S. Person at any predetermined time, has made no predetermined arrangements to sell the Securities or any Conversion Shares and is not acting as an underwriter or dealer with respect to such securities or otherwise participating in the distribution of such securities; (vii) neither such Person, its Affiliates nor any Person acting on behalf of such Person, has entered into, has the intention of entering into, or will enter into any put option, short position or other similar instrument or position in the U.S. with respect to the Securities or any Conversion Shares at any time after the Closing Date through the one year anniversary of the Closing Date except in compliance with the Securities Act; (viii) such Person consents to the placement of a legend on any certificate or other document evidencing the Securities substantially in the form set forth in   Section 3.7(b) and (ix) such Person is not acquiring the Securities in a transaction (or an element of a series of transactions) that is part of any plan or scheme to evade the registration provisions of the Securities Act.
 
(g)             Opinion .  Such Investor will not transfer any or all of such Investor’s Securities, or any Conversion Shares issued upon conversion of such Securities, pursuant to Regulation S or absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition of such Investor’s Securities, without first providing the Company with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the Company) to the effect that such transfer will be made in compliance with Regulation S or will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable U.S. state securities laws
 
(h)             Consent .  Such Investor understands and acknowledges that the Company may refuse to transfer the Securities or any Conversion Shares, unless such Investor complies with Section 3.7 and any other restrictions on transferability set forth herein or in the Series B Designation.  Such Investor consents to the Company making a notation on its records or giving instructions to any transfer agent of the Securities or the Company’s Common Stock in order to implement the restrictions on transfer of the Securities.
 
 
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Section 3.7             Stock Legends .  Such Investor hereby agrees with the Company as follows:
 
(a)            The certificates evidencing the Securities issued to those Investors who are Accredited Investors, the Conversion Shares issued upon conversion thereof, and each certificate issued in transfer thereof, will bear the following or similar legend:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL WHICH IS SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATIONS ARE NOT REQUIRED.
 
The certificates evidencing the Securities, and each certificate issued in transfer thereof, will bear the following or similar additional legend:
 
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS A COMPLETE STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATION, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF SHARES OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OR SUCH PREFERENCES AND/OR RIGHTS.  ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE SECRETARY OF THE COMPANY.
 
(b)            The certificates evidencing the Securities issued to those Investors who are not U.S. Persons, the Conversion Shares issued upon conversion thereof, and each certificate issued in transfer thereof, will bear the following or similar legend:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO THE PROVISIONS OF REGULATION S UNDER SAID ACT.
 
 
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The certificates evidencing the Securities, and each certificate issued in transfer thereof, will bear the following or similar additional legend:
 
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS A COMPLETE STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATION, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF SHARES OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OR SUCH PREFERENCES AND/OR RIGHTS.  ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE SECRETARY OF THE COMPANY.
 
(c)             Other Legends .  The certificates representing such Securities, and each certificate issued in transfer thereof, and the certificates representing any Conversion Shares, will also bear any other legend required under any applicable Law, including, without limitation, any state corporate and state securities law, or contract.
 
(d)             Certain Trading Activities .  Such Investor has not directly or indirectly, nor has any person acting on behalf of or pursuant to any understanding with such Investor, engaged in any transactions in the securities of the Company (including, without limitation, Short Sales involving the Company’s securities) since the time that such Investor was first contacted by the Company regarding the investment in the Company contemplated herein.  “ Short Sales ” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act (“ Regulation SHO ”) and all types of direct and indirect stock pledges, forward sales contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S.  broker dealers or foreign regulated brokers (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
 
(e)             Residency; Foreign Securities Laws .  Unless such Investor resides, in the case of individuals, or is headquartered or formed, in the case of entities, in the U.S., such Investor acknowledges that the Company will not issue any Securities or Conversion Shares in compliance with the laws of any jurisdiction outside of the U.S. and the Company makes no representation or warranty that any Securities or any Conversion Shares issued outside of the U.S. have been offered or sold in compliance with the laws of the jurisdiction into which such Securities or Conversion Shares were issued.  Any Investor not a resident of or formed in the U.S. warrants to the Company that no filing is required by the Company with any governmental authority in such Investor’s jurisdiction in connection with the transactions contemplated hereby.  If such Investor is domiciled or was formed outside of the U.S., such Investor has satisfied itself as to the full observance of the laws of its jurisdiction in connection with the acquisition of the Securities or any Conversion Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities or the Conversion Shares.  If such Investor is domiciled or was formed outside the U.S., such Investor’s acquisition of and payment for, and its continued ownership of the Securities  or the Conversion Shares, will not violate any applicable securities or other laws of his, her or its jurisdiction.
 
 
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Section 3.8            Disclosure .
 
No representation or warranty of such Investor contained in this Agreement or any other Transaction Document and no statement or disclosure made by or on behalf of such Investor to the Company or any of its Subsidiaries pursuant to this Agreement or any other Transaction Document herein contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company represents and warrants to the Investors that, except as otherwise disclosed in the SEC Reports filed prior to the date hereof, the statements contained in this Article IV ,  are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article IV ) (except where another date or period of time is specifically stated herein for a representation or warranty).
 
Section 4.1              Organization and Qualification .
 
Each of the Company and its Subsidiaries is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, has all requisite corporate authority and power, governmental Licenses, authorizations, consents and approvals to carry on its business as presently conducted and to own, hold and operate its properties and assets as now owned, held and operated by it, and is duly qualified to do business and in good standing in each jurisdiction in which the failure to be so qualified would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Company.
 
Section 4.2              Authority .
 
The Company and each of its Subsidiaries has all requisite authority and power, Licenses, authorizations, consents and approvals to enter into and deliver this Agreement and any of the other Transaction Documents to which the Company and such Subsidiary is a party and any other certificate, agreement, document or instrument to be executed and delivered by the Company or such Subsidiary in connection with the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the other Transaction Documents by the Company and any of its Subsidiaries and the performance by the Company and any of its Subsidiaries of their respective obligations hereunder and thereunder and the consummation by the Company and any of its Subsidiaries of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and such Subsidiary.  Except for the filing of the Series B Designation prior to the first Closing, and any consents that will be obtained by the Company prior to the first Closing, neither the Company nor any of its Subsidiaries needs to give any notice to, make any filing with, or obtain any authorization, consent or approval of any Person or Governmental Authority in order for the Parties to execute, deliver or perform this Agreement or the transactions contemplated hereby.  This Agreement has been, and each of the Transaction Documents to which the Company and any of its Subsidiaries is a party will be, duly and validly authorized and approved, executed and delivered by the Company and such Subsidiary.
 
 
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Section 4.3              Binding Obligations .
 
Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties hereto and thereto other than the Company and its Subsidiaries, this Agreement and each of the Transaction Documents to which the Company and any of its Subsidiaries is a party are duly authorized, executed and delivered by the Company and such Subsidiary and constitutes the legal, valid and binding obligations of the Company and such Subsidiary enforceable against the Company and such Subsidiary in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.
 
Section 4.4              No Conflicts .
 
Neither the execution nor the delivery by the Company or any of its Subsidiaries of this Agreement or any Transaction Document to which the Company or any of its Subsidiaries is a party, nor the consummation or performance by the Company or any of its Subsidiaries of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the Company Organizational Documents, (b) contravene, conflict with or result in a violation of any Law, Order, charge or other restriction or decree of any Governmental Authority or any rule or regulation of the Principal Market applicable to the Company or any of its Subsidiaries, or by which the Company or any of its Subsidiaries or any of their respective assets and properties are bound or affected, (c) contravene, conflict with, result in any breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, impair the rights of the Company under, or alter the obligations of any Person under, or create in any Person the right to terminate, amend, accelerate or cancel, or require any notice, report or other filing (whether with a Governmental Authority or any other Person) pursuant to, or result in the creation of a Lien on any of the assets or properties of the Company or any of its Subsidiaries under, any note, bond, mortgage, indenture, Contract, License, permit, franchise or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective assets and properties are bound or affected; or (d) contravene, conflict with, or result in a violation of, the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Licenses, permits, authorizations, approvals, franchises or other rights held by the Company or any of its Subsidiaries or that otherwise relate to the business of, or any of the properties or assets owned or used by, the Company or any of its Subsidiaries, except, in the case of clauses (b), (c), or (d), for any such contraventions, conflicts, violations, or other occurrences as would not have a Material Adverse Effect on the Company as a whole.
 
Section 4.5              Subsidiaries .
 
Except as set forth in the SEC Reports filed prior to the date hereof, the Company does not own, directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise.  There are no Contracts or other obligations (contingent or otherwise) of the Company to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, any other Person or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.
 
 
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Section 4.6              Capitalization .
 
(a)            The authorized capital stock of the Company consists of 150,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, $0.001 par value per share of which (i) 89,855,816 shares of Common Stock are issued and outstanding; (ii) 1,997,500 shares of Common Stock are issuable upon the exercise of outstanding warrants; (iii) 5,240,000 shares of the Company’s Common Stock are issuable upon the exercise of unvested options granted under the Company’s 2012 Long-Term Incentive Plan; (iv) 1,000,000 of preferred stock are issued and outstanding (the “Series A Preferred Stock”), and (v) upon the filing of the Series B Designation with the Secretary of State of the State of Nevada prior to the first Closing, 2,000,000 shares of Series B Preferred Stock.  In addition, there are 4,685,000 shares of Common Stock reserved for issuance under the Company’s 2012 Long-Term Incentive Plan.  Except as set forth above, no shares of capital stock or other voting securities of the Company were issued, reserved for issuance or outstanding.  All outstanding shares of the capital stock of the Company are, and all such shares that may be issued prior to the Closing Date will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Laws of the jurisdiction of the Company’s organization, the Company Organizational Documents or any Contract to which the Company is a party or otherwise bound. Except as set forth above, there are no options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which the Company is a party or by which it is bound (x) obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Company, (y) obligating the Company to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (z) that give any Person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of the Company.  There are no outstanding Contracts or obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock of the Company.  There are no registration rights, proxies, voting trust agreements or other agreements or understandings with respect to any class or series of any capital stock or other security of the Company to which the Company is a party.  Notwithstanding the foregoing sentence, the Company is aware that Mr. John Bordynuik entered into a letter agreement dated May 15, 2012 with the investors in the Company’s May 2012 private placement with respect to, among other things, Mr. Bordynuik’s voting and ownership of certain securities of the Company.
 
(b)            The issuance of the Securities to the Investors has been duly authorized and, upon delivery to the Investors of certificates therefor in accordance with the terms of this Agreement, the Securities will have been validly issued and fully paid, and will be nonassessable, have the rights, preferences and privileges specified, will be free of preemptive rights and will be free and clear of all Liens and restrictions, other than Liens created by the Investors and restrictions on transfer imposed by this Agreement and the Securities Act.  The Conversion Shares have been duly authorized, reserved for issuance and, upon issuance in accordance with the Series B Designation, will have been validly issued and fully paid, and will be nonassessable, have the rights, preferences and privileges specified, will be free of preemptive rights and will be free and clear of all Liens and restrictions, other than Liens created by the Investors and restrictions on transfer imposed by this Agreement and the Securities Act
 
 
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Section 4.7              Title to Assets .
 
The Company and each Subsidiary has sufficient title to, or valid leasehold interests in, all of its properties and assets used in the conduct of their respective businesses.  All such assets and properties, other than assets and properties in which the Company or any of its Subsidiaries has leasehold interests, are free and clear of all Liens, except for Liens that, in the aggregate, do not and will not materially interfere with the ability of the Company or such Subsidiary to conduct business as currently conducted.
 
Section 4.8              Intellectual Property .
 
The Company and its Subsidiaries own or possess adequate rights or licenses to use all Intellectual Property necessary to conduct their respective businesses as now conducted and as presently proposed to be conducted.  None of the Company’s or any of its Subsidiaries’ Intellectual Property has expired, terminated or been abandoned, or is expected to expire, terminate or be abandoned, within two years from the date of this Agreement.  Neither the Company nor any of its Subsidiaries has Knowledge of any infringement by the Company or any of its Subsidiaries of Intellectual Property of other Persons.  There is no claim, action or proceeding being made or brought, or to the Knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property.  To the Knowledge of the Company or any of its Subsidiaries, there are no facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings.  The Company and each Subsidiary has taken reasonable security measures to protect the secrecy, confidentiality and value of all of their respective Intellectual Property.
 
Section 4.9              SEC Reports.   The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC, pursuant to the Exchange Act (the “ SEC Reports ”).
 
Section 4.10            Listing and Maintenance Requirements .
 
The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with the listing and maintenance requirements for continued listing or quotation of the Common Stock on the trading market on which the Common Stock is currently listed or quoted.  Neither the issuance and sale of the Securities under this Agreement, nor the issuance of any Conversion Shares upon conversion of the Securities, contravene the rules and regulations of the trading market on which the Common Stock is currently listed or quoted, and no approval of the stockholders of the Company is required for the Company to issue and deliver to the Investors the Securities contemplated by this Agreement.
 
 
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Section 4.11            No General Solicitation.
 
Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities.  No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Company for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions relating to or arising out of the transactions contemplated hereby.
 
Section 4.12            Disclosure .
 
All documents and other papers delivered or made available by or on behalf of the Company or any of its Subsidiaries in connection with this Agreement are true, complete, correct and authentic in all material respects.  No representation or warranty of the Company or any of its Subsidiaries contained in this Agreement and no statement or disclosure made by or on behalf of the Company or any of its Subsidiaries to any Investor pursuant to this Agreement or any other agreement contemplated herein contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.
 
ARTICLE V
COVENANTS
 
Section 5.1              Form D; Blue Sky.
 
The Company shall file a Form D with respect to the Securities as required under Regulation D.  The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Investors at the Closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification).  Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable “blue sky” laws), and the Company shall comply with all applicable federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities to the Investors.
 
Section 5.2              Disclosure of Transactions and Other Material Information.
 
On or before the fourth (4th) Business Day after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the Exchange Act and attaching all the material Transaction Documents (including, without limitation, this Agreement (and all schedules to this Agreement) (including all attachments, the “ 8-K Filing ”), which such 8-K Filing may disclose the identity of the Investors that are party to this Agreement.
 
Section 5.3              Rule 144.
 
With a view to making available to the Investors the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit an Investor to sell securities of the Company to the public without registration, the Company shall:
 
 
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(i)            make and keep available adequate current public information, as those terms are understood and defined in Rule 144, at all times;
 
(ii)           use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and
 
(iii)           furnish to any Investor forthwith upon request  such  information as may be reasonably requested in availing any Investor of any rule or regulation of the SEC that permits the selling of any such securities without registration.
 
ARTICLE VI
CONDITIONS TO CLOSING
 
Section 6.1              Conditions to Obligation of the Parties Generally .
 
The Parties shall not be obligated to consummate the transactions to be performed by each of them in connection with the Closing if, on the Closing Date, (i) any Action shall be pending or threatened before any Governmental Authority wherein an Order or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, or (ii) any Law or Order which would have any of the foregoing effects shall have been enacted or promulgated by any Governmental Authority.
 
Section 6.2              Conditions to Obligation of the Investors.
 
The obligations of the Investors to enter into and perform their respective obligations under this Agreement are subject, at the option of the Investors, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Investors in writing:
 
(a)            The representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of the Closing Date (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date);
 
(b)            Company shall have performed and complied with all of its covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by terms such as “material” and “Material Adverse Effect,” in which case the Company shall have performed and complied with all of such covenants in all respects through the Closing;
 
(c)            No action, suit, or proceeding shall be pending or, to the Knowledge of the Company, threatened before any Governmental Authority wherein an Order or charge would (A) affect adversely the right of the Investors to own the Securities, or (B) affect adversely the right of the Company to own its assets or to operate its business (and no such Order or charge shall be in effect), nor shall any Law or Order which would have any of the foregoing effects have been enacted or promulgated by any Governmental Authority;
 
 
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(d)            No event, change or development shall exist or shall have occurred since the date of this Agreement that has had or is reasonably likely to have a Material Adverse Effect on the Company;
 
(e)            All consents, waivers, approvals, authorizations or orders required to be obtained, and all filings required to be made, by the Company for the authorization, execution and delivery of this Agreement and the consummation by it of the transactions contemplated by this Agreement, shall have been obtained and made by the Company and Company shall have delivered proof of same to the Investors;
 
(f)            Company shall have filed all reports and other documents required to be filed by it under the U.S. federal securities laws through the Closing Date;
 
(g)            Company shall have maintained its status as a company whose common stock is quoted on the Principal Market and no reason shall exist as to why such status shall not continue immediately following the Closing;
 
(h)            Trading in the Common Stock shall not have been suspended by the SEC or any trading market (except for any suspensions of trading of not more than one trading day solely to permit dissemination of material information regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall have been at all times since such date listed for trading on a trading market; and
 
(i)            The Company and each Subsidiary (as the case may be) shall have duly executed and delivered to each Investor each of the Transaction Documents to which it is a party and the Company shall have delivered instructions to its transfer agent to issue to such Investor the Shares in such aggregate number of Shares as is set forth across from such Investor’s name in column (3) of Schedule I .
 
Section 6.3              Conditions to Obligation of the Company .
 
The obligations of the Company to enter into and perform its obligations under this Agreement are subject, at the option of the Company, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Company:
 
(a)            The representations and warranties of the Investors set forth in this Agreement shall be true and correct in all material respects as of the Closing Date (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date);
 
(b)            The Investors shall have performed and complied with all of their covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by terms such as “material” and “Material Adverse Effect,” in which case the Investors shall have performed and complied with all of such covenants in all respects through the Closing;
 
(c)            Each Investor shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company;
 
 
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(d)            Each Investor shall have delivered to the Company the Purchase Price for the Shares being purchased by such Investor at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company; and
 
(e)            All actions to be taken by the Investors in connection with consummation of the transactions contemplated hereby and all payments, certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby shall be reasonably satisfactory in form and substance to the Company.
 
ARTICLE VII
SURVIVAL; INDEMNIFICATION
 
Section 7.1              Survival .
 
All representations, warranties, covenants, and obligations in this Agreement shall survive the Closing.
 
Section 7.2              Indemnification .
 
In consideration of each Investor’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Investor and each holder of any Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “ Indemnitees ”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “ Indemnified Liabilities ”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company or any of its Subsidiaries in any of the Transaction Documents, (b) any breach of any covenant, agreement or obligation of the Company or any of its Subsidiaries contained in any of the Transaction Documents or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any of its Subsidiaries) and arising out of or resulting from the execution, delivery, performance or enforcement of any of the Transaction Documents other than due to such Investor’s misconduct or gross negligence.
 
ARTICLE VIII
TERMINATION
 
Section 8.1              Termination.
 
In the event that the Closing shall not have occurred with respect to an Investor within five (5) days of the date hereof, then such Investor shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Investor to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8.1 shall not be available to such Investor if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Investor’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Shares shall be applicable only to such Investor providing such written notice.  Nothing contained in this Section 8.1 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.
 
 
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ARTICLE IX
MISCELLANEOUS PROVISIONS
 
Section 9.1              Expenses .
 
Except as otherwise expressly provided in this Agreement, each Party will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants.  In the event of termination of this Agreement, the obligation of each Party to pay its own expenses will be subject to any rights of such Party arising from a breach of this Agreement by another Party.
 
Section 9.2              Confidentiality.
 
The Parties will maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, any written, oral, or other information obtained in confidence from another Person in connection with this Agreement or the transactions contemplated by this Agreement, unless (i) such information is already known to such Party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such Party, (ii) the use of such information is necessary or appropriate in making any required filing with the SEC, or obtaining any consent or approval required for the consummation of the transactions contemplated by this Agreement, or (iii) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings. If the transactions contemplated by this Agreement are not consummated, each Party will return or destroy all of such written information each party has regarding the other Parties.
 
Section 9.3              Independent Nature of Investors’ Obligations and Rights.
 
The obligations of each Investor under the Transaction Documents are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges that the Investors do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Investors are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Investors are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by the Transaction Documents.  The decision of each Investor to purchase Securities pursuant to the Transaction Documents has been made by such Investor independently of any other Investor.  Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with such Investor making its investment hereunder and that no other Investor will be acting as agent of such Investor in connection with monitoring such Investor’s investment in the Securities or enforcing its rights under the Transaction Documents.  The Company and each Investor confirms that each Investor has independently participated with the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors.  Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose.  The use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision of any Investor, and was done solely for the convenience of the Company and its Subsidiaries and not because it was required or requested to do so by any Investor.  It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company, each Subsidiary and an Investor, solely, and not between the Company, its Subsidiaries and the Investors collectively and not between and among the Investors.
 
 
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Section 9.4              Notices .
 
All notices, demands, consents, requests, instructions and other communications to be given or delivered or permitted under or by reason of the provisions of this Agreement or in connection with the transactions contemplated hereby shall be in writing and shall be deemed to be delivered and received by the intended recipient as follows: (i) if personally delivered, on the Business Day of such delivery (as evidenced by the receipt of the personal delivery service), (ii) if mailed certified or registered mail return receipt requested, two (2) Business Days after being mailed, (iii) if delivered by overnight courier (with all charges having been prepaid), on the Business Day of such delivery (as evidenced by the receipt of the overnight courier service of recognized standing), or (iv) if delivered by facsimile transmission or other electronic means, including email, on the Business Day of such delivery if sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time, on the next succeeding Business Day.  If any notice, demand, consent, request, instruction or other communication cannot be delivered because of a changed address of which no notice was given (in accordance with this Section 9.4 ), or the refusal to accept same, the notice, demand, consent, request, instruction or other communication shall be deemed received on the second business day the notice is sent (as evidenced by a sworn affidavit of the sender).  All such notices, demands, consents, requests, instructions and other communications will be sent to the following addresses or facsimile numbers as applicable:
 
If to the Company, to:
 
JBI, Inc.
20 Iroquois Street
Niagara Falls, NY 14303
Attention: Matthew Ingham, CFO
Telephone: (716) 278-0015
     
If to the Investors, to:
 
The applicable address set forth in column (1) on Schedule I .
 
or such other addresses as shall be furnished in writing by any Party in the manner for giving notices hereunder.
 
 
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Section 9.5              Further Assurances .
 
The Parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other Parties may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.
 
Section 9.6              Amendment and Waivers .
 
The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, or waived unless the same shall be in writing and signed by the Company, provided that any Party may give a waiver as to itself.  The rights and remedies of the Parties are cumulative and not alternative.  Neither the failure nor any delay by any Party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege.  To the maximum extent permitted by applicable Law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other Parties; (b) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of such Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. Notwithstanding anything to the contrary contained in this Agreement, prior to Closing, the Investors who have subscribed to purchase  at least 75% of the Shares may waive the Company’s obligation to comply with any closing condition in Section 6.2 hereof.
 
Section 9.7              Entire Agreement .
 
This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto solely with respect to the subject matter hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Investor has entered into with the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Investor in the Company, (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries or any rights of or benefits to any Investor or any other Person in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Investor and all such agreements shall continue in full force and effect, or (iii) limit any obligations of the Company under any of the other Transaction Documents.
 
 
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Section 9.8              Assignments, Successors, and No Third-Party Rights .
 
No Party may assign any of its rights under this Agreement without the prior consent of the other Parties.  Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the Parties.  Except as set forth in Article VII hereof, nothing expressed or referred to in this Agreement will be construed to give any Person other than the Parties any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.
 
Section 9.9              Severability .
 
If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect.  Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
 
Section 9.10            Section Headings .
 
The headings of Articles and Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation.  All references to “Article” or “Articles” or “Section” or “Sections” refer to the corresponding Article or Articles or Section or Sections of this Agreement, unless the context indicates otherwise.
 
Section 9.11            Construction .
 
The Parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.  Any reference to any federal, state, local, or foreign statute or Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.  Unless otherwise expressly provided, the word “including” shall mean including without limitation.  The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance.  If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of such representation, warranty, or covenant.  All words used in this Agreement will be construed to be of such gender or number as the circumstances require.
 
 
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Section 9.12            Counterparts .
 
This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
 
Section 9.13            Specific Performance .
 
Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached.  Accordingly, each of the Parties agrees that the other Parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the U.S. or any state thereof having jurisdiction over the Parties and the matter (subject to the provisions set forth in Section 9.14 below), in addition to any other remedy to which they may be entitled, at Law or in equity.
 
Section 9.14            Governing Law; Submission to Jurisdiction .
 
This Agreement shall be governed by and construed in accordance with the laws of the State of New York without reference to the conflicts of law principles thereof that would result in the application of any law other than the law of the State of New York.  The United States District Courts located in New York City or the Commercial Division of the New York Supreme Court Branch, New York County, shall have exclusive jurisdiction over any and all disputes among the parties hereto, whether in law or equity, arising out of or relating to this Agreement.  Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto.  Any Party may make service on any other Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 9.4 above.  Nothing in this Section 9.14 , however, shall affect the right of any Party to serve legal process in any other manner permitted by Law or at equity.  Each Party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by Law or at equity.
 
Section 9.15            Waiver of Jury Trial .
 
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
[Signatures follow on next page]
 
 
24
 

 
IN WITNESS WHEREOF, the Company and the Investors have caused their respective signature pages to this Subscription Agreement to be duly executed as of the date first written above.
 
COMPANY:
 
JBI, INC.
 
By:
 
Name:
Kevin P. Rauber
Title:
President and Chief Executive Officer

 
[Signatures Continue on Next Page]
 
[Company Signature Page to Subscription Agreement]
 
 
 
 
 
IN WITNESS WHEREOF, the Company and the Investors have caused their respective signature pages to this Subscription Agreement to be duly executed as of the date first written above.
 
INDIVIDUAL INVESTOR:
 
     
(Print Name)
 
(Signature)
 
     
(Print Name of Joint Investor)
 
(Signature of Joint Investor)
 
PARTNERSHIP, CORPORATION, TRUST, LLC OR OTHER ENTITY:
 
     
(Print Name of Entity)
 
(Signature)
     
     
   
(Print Name and Title of Person Signing)
 
[Investor Signature Page to Subscription Agreement]
 
 
 
Exhibit 99.1

JBI, Inc. Raises $4 Million in Series B Financing to Fund Continued Execution of Business Plan

Niagara Falls, New York, December 31, 2012 -- JBI, Inc. (“JBI” or the “Company”) is pleased to announce that, between December 27, 2012 and December 31, 2012 it raised $4,012,554 in a private placement of 1,146,444 shares of the Company’s Series B Convertible Preferred Stock (the “Series B Shares”).  The Series B Shares, which were sold at a price of $3.50 per share, are each convertible into 7 shares of the Company’s common stock and have a mandatory conversion date of June 30, 2014.  The Series B Shares entitle the holders to a preference upon liquidation equal to the purchase price of the Series B Shares.  The terms of the Company’s private placement allow the Company to hold additional closings for the sale of additional Series B Shares up to the maximum offering amount of two million shares and gross proceeds of up to $7 million prior to the January 31, 2013 offering termination. 

“This financing, combined with our efforts to grow revenues and reduce costs, are important as we continue the momentum to execute our business plan,” stated JBI CEO Kevin Rauber. “With this financing, we will continue to move forward towards our stated goals and continue with development of our planned  Plastic2Oil® site on the RockTenn Company property in Jacksonville, Florida.”

Matthew Ingham, JBI CFO, commented, “We are excited about this financing, as we believe that it provides us with the necessary capital and flexibility to expand our production capabilities as we continue to work towards maximizing shareholder value.”

More information about this financing can be found in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 31, 2012.

JBI’s Niagara Falls facility currently has two operational Plastic2Oil processors and a third is being assembled and is expected to come online during the first quarter of 2013.
 
About JBI, Inc.
 
JBI, Inc. is a leading clean energy company that recycles waste plastic into liquid fuels. JBI’s proprietary Plastic2Oil technology can deliver economic and environmental benefits by replacing refined fuels and diverting waste plastic from landfills.   For further information, please visit www.plastic2oil.com .
 
 
 
 
 
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 Annual Report on Form 10-K, filed with the SEC on March 19, 2012, as amended on April 30, 2012, 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

Chris Irons
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