JBI, Inc.
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(Exact name of registrant as specified in its charter)
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Nevada
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000-52444
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90-0822950
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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20 Iroquois St
Niagara Falls, NY
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14303
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(Address of principal executive offices)
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(Zip Code)
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JBI, Inc.
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August 30, 2013
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By:
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/s/ Nicholas J. Terranova
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Name:
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Nicholas J. Terranova
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Title:
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Chief Financial Officer
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Exhibit
No.
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Description
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10.1
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Subscription Agreement.
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10.2
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12% Secured Promissory Note.
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10.3
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Warrant.
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10.4
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Security Agreement.
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99.1
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Press Release dated August 30, 2013.
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To:
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JBI, Inc.
20 Iroquois Street
Niagara Falls, NY 14303
Attention: Mr. Nicholas J. Terranova
Chief Financial Officer
Telephone: (716) 278-0015
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1.
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COMPLETE YOUR NAME ABOVE;
and
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2.
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PROVIDE THE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED AND
ALL
INFORMATION REQUESTED ON PAGES 10 AND 11, AND COMPLETE THE INVESTOR QUESTIONNAIRE ATTACHED AS ANNEX A AND ANNEX B (FOR CANADIAN SUBSCRIBERS ONLY);
and
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3.
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SIGN THE AGREEMENT IN THE APPROPRIATE PLACE ON PAGE 11 AND ANNEX A AND ANNEX B, AS APPLICABLE, IN THE APPROPRIATE PLACE;
and
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4.
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MAKE YOUR CHECK PAYABLE TO “JBI, INC.” OR REQUEST WIRING INSTRUCTIONS PURSUANT TO SECTION 1.3 BELOW;
and
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5.
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DELIVER THE ORIGINAL SUBSCRIPTION AGREEMENT WITH CHECK (IF WIRE INSTRUCTIONS ARE NOT REQUESTED) TO AT THE ADDRESS ABOVE:
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Section 1.1
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Subscription
. The Subscriber, intending to be legally bound, hereby irrevocably subscribes for and agrees to purchase the principal amount of Notes indicated on Page 10 hereof, on the terms and conditions described herein.
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Section 1.2
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Purchase
. The Subscriber understands and acknowledges that the purchase price to be remitted to the Company in exchange for the Offered Securities shall be equal to the principal amount of Notes purchased.
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Section 1.3
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Payment for Purchase
. PAYMENT FOR THE SECURITIES SHALL BE BY WIRE TRANSFER OR CHECK PAYABLE TO: “JBI” and delivered to the Company, together with an original executed copy of this Agreement. Wire transfer instructions are available upon request from Mr. Nicholas J. Terranova at (716) 278-0015.
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Section 1.4
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Closings
. The Company may schedule any number of closings to consummate the sale and issuance of the Notes subscribed for by the Investors in connection with the
Offering (the “Closing”); provided that the initial Closing shall be for the sale of Notes equal to or greater than the minimum amount set forth above. The closings shall take place at the offices of the Company at any time designated by the Company, but in no event later than September 30, 2013, subject to extension for up to 15 days at the discretion of the Company.
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(a)
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The Subscriber understands and agrees that the Company reserves the right to reject this subscription for the Offered Securities in whole or in part in any order, if, in its reasonable judgment, it deems such action in the best interest of the Company, notwithstanding prior receipt by the Subscriber of notice of acceptance of the Subscriber’s subscription.
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(b)
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In the event of rejection of this subscription, or in the event the sale of the Offered Securities is not consummated by the Company for any reason (in which event this Agreement shall be deemed to be rejected), this Agreement and any other agreement entered into between the Subscriber and the Company relating to this subscription shall thereafter have no force or effect and the Company shall promptly return or cause to be returned to the Subscriber the purchase price remitted to the Company by the Subscriber in exchange for the Offered Securities.
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Section 3.1
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Subscriber Representations and Warranties
. The Subscriber hereby acknowledges, represents and warrants to, and agrees with, the Company and its affiliates as follows:
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(a)
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The Subscriber is acquiring the Offered Securities for the Subscriber’s own account as principal, not as a nominee or agent, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof in whole or in part and no other person has a direct or indirect beneficial interest in such Offered Securities. Further, the Subscriber does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities.
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(b)
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The Subscriber acknowledges the Subscriber’s understanding that the offering and sale of the Offered Securities is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) by virtue of Section 4(a)(2) of the Securities Act, the provisions of Rule 506 of Regulation D promulgated under the Securities Act (“Regulation D”) and Regulation S promulgated under the Securities Act (“Regulation S”). In furtherance thereof, the Subscriber represents and warrants to and agrees with the Company and its affiliates as follows:
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(i)
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The Subscriber realizes that the basis for the foregoing exemptions may not be present, if, notwithstanding such representations, the Subscriber has in mind merely acquiring Securities for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise. The Subscriber does not have any such intentions;
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(ii)
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The Subscriber has the financial ability to bear the economic risk of the Subscriber’s investment, has adequate means for providing for the Subscriber’s current needs and personal contingencies and has no need for liquidity with respect to the Subscriber’s investment in the Company; and
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(iii)
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The Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment. If other than an individual, the Subscriber also represents it has not been organized for the purpose of acquiring the Offered Securities.
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(c)
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The Subscriber represents and warrants to the Company as follows:
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(i)
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The Subscriber has been given the opportunity for a reasonable time prior to the date hereof to ask questions of, and receive answers from the Company or its representatives concerning the terms and conditions of the Offering, and other matters pertaining to this investment, and has been given the opportunity for a reasonable time prior to the date hereof to obtain such additional information in connection with the Company in order for the Subscriber to evaluate the merits and risks of purchase of the Offered Securities, to the extent the Company possesses such information or can acquire it without unreasonable effort or expense; and
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(ii)
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The Subscriber has not been furnished with any oral representation or oral information in connection with the offering of the Offered Securities; and
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(iii)
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The Subscriber has determined that the Offered Securities are a suitable investment for the Subscriber and that at this time the Subscriber could bear a complete loss of the Subscriber’s investment; and
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(iv)
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The Subscriber is not relying on the Company, or its affiliates with respect to economic considerations involved in this investment; and
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(v)
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The Subscriber realizes that it may not be able to resell readily any of the Securities purchased hereunder because (A) there may only be a limited public market for any Securities and (B) none of the Securities have been registered under the “blue sky” laws; and
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(vi)
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The Subscriber understands that the Company has the absolute right to refuse to consent to the transfer or assignment of the Securities if such transfer or assignment does not comply with applicable state and federal securities laws; and
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(vii)
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No representations or warranties have been made to the Subscriber by the Company, or any officer, employee, agent, affiliate or subsidiary of any of it, other than the representations of the Company in this Agreement; and
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(viii)
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Any information which the Subscriber has heretofore furnished to the Company with respect to the Subscriber’s financial position and business experience is correct and complete as of the date of this Agreement and if there should be any material change in such information the Subscriber will immediately furnish such revised or corrected information to the Company; and
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(ix)
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The Subscriber has received and reviewed the Company’s Confidential Private Placement Memorandum dated as of August 9, 2013, as amended, and has had access to the reports of the Company filed pursuant to the Securities Exchange Act of 1934, as amended; and
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(x)
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The foregoing representations, warranties and agreements shall survive the sale of the Securities and acceptance by the Company of the Subscriber’s subscription.
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Section 4.1
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Organization, Good
Standing and Qualification
. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on the business or properties of the Company and its subsidiaries taken as a whole.
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Section 4.2
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Authorization
. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and the authorization, issuance (or reservation for issuance) and delivery of the Securities being sold hereunder have been taken, and this Agreement constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms.
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Section 4.3
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Valid Issuance of Securities
. The Securities, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be validly issued, and, based in part upon the representations of the Subscriber in this Agreement, will be issued in compliance with all applicable U.S. federal and state securities laws.
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Section 4.4
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No Conflicts
. The execution and delivery of this Agreement and the consummation of the issuance of the Securities and the transactions contemplated by this Agreement do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under, the certificate of incorporation or bylaws of the Company, or any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, or any existing applicable decree, judgment or order of any court, Federal or State regulatory body, administrative agency or other governmental body having jurisdiction over the Company or any of its properties or assets.
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Section 4.5
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Compliance with Laws
. As of the date hereof, the conduct of the business of the Company complies in all material respects with all material statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto. The Company shall comply with all applicable securities laws with respect to the sale of the Securities.
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·
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the Subscriber is a resident of Alberta, Ontario or British Columbia and the Subscriber complies with one of the following:
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·
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The Subscriber is not a person created or used solely to purchase or hold securities in order to comply with an exemption from the prospectus requirements of applicable Canadian securities legislation; and
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·
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The Subscriber and any beneficial purchaser for whom it is acting is resident in the jurisdiction set out in column (1) on Schedule I, such address was not created and is not used solely for the purpose of acquiring the Offered Securities and the Subscriber was solicited to purchase in such jurisdiction.
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Section 5.5
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Stock Legends
. If the Subscriber is a resident of Alberta, Ontario or British Columbia, in addition to the securities legends set forth in Section 3.7, such Subscriber hereby agrees with the Company as follows: the certificates evidencing the Securities issued to such Subscriber, and each certificate issued in transfer thereof within the four month period after issuance of the Securities, will bear the following or similar legend:
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Section 6.1
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Additional Representations and Warranties of Non-U.S. Persons
. Each Subscriber that is not a U.S. Person (as defined under Regulation S), severally and not jointly, further represents and warrants to the Company as follows: (i) at the time of (A) the offer by the Company and (B) the acceptance of the offer by such Person, of the Securities, such Person was outside the U.S; (ii) no offer to acquire the Securities or otherwise to participate in the transactions contemplated by this Agreement was made to such Person or its representatives inside the U.S.; (iii) such Person is not purchasing the Securities for the account or benefit of any U.S. Person, or with a view towards distribution to any U.S. Person, in violation of the registration requirements of the Securities Act; (iv) such Person will make all subsequent offers and sales of the Securities either (A) outside of the U.S. in compliance with Regulation S; (B) pursuant to a registration under the Securities Act; or (C) pursuant to an available exemption from registration under the Securities Act; (v) such Person is acquiring the Securities for such Person’s own account, for investment and not for distribution or resale to others; (vi) such Person has no present plan or intention to sell the Securities in the U.S. or to a U.S. Person at any predetermined time, has made no predetermined arrangements to sell the Securities and is not acting as an underwriter or dealer with respect to such securities or otherwise participating in the distribution of such securities; (vii) neither such Person, its Affiliates nor any Person acting on behalf of such Person, has entered into, has the intention of entering into, or will enter into any put option, short position or other similar instrument or position in the U.S. with respect to the Securities at any time after the date of Closing through the one year anniversary of the date of Closing except in compliance with the Securities Act; (viii) such Person consents to the placement of a legend on any certificate or other document evidencing the Securities as required under applicable law (ix) such Person is not acquiring the Securities in a transaction (or an element of a series of transactions) that is part of any plan or scheme to evade the registration provisions of the Securities Act.
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Section 6.2
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Opinion
. Such Subscriber will not transfer any or all of such Subscriber’s Securities pursuant to Regulation S or absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition of such Subscriber’s Securities, without first providing the Company with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the Company) to the effect that such transfer will be made in compliance with Regulation S or will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable U.S. state securities laws
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Section 7.1
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Indemnity
. The Subscriber agrees to indemnify and hold harmless the Company, its officers and directors, employees and its affiliates and each other person, if any, who controls any thereof, against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty or breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to any of the foregoing in connection with this transaction.
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Section 7.2
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Modification
. Neither this Agreement nor any provisions hereof shall be waived, amended, modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, amendment, modification, discharge or termination is sought.
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Section 7.3
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Notices
. Any notice, demand or other communication which any party hereto may be required, or may elect, to give to anyone interested hereunder shall be in writing and shall be deemed given when (a) deposited, postage prepaid, in a United States mail letter box, registered or certified mail, return receipt requested, addressed to such address as may be given herein, or (b) delivered personally, to the other party hereto at their address set forth in this Agreement or such other address as a party hereto may request by notifying the other party hereto.
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Section 7.4
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Counterparts
. This Agreement may be executed through the use of separate signature pages or in any number of counterparts, and each of such counterparts shall, for all purposes, constitute one agreement binding on all parties, notwithstanding that all parties are not signatories to the same counterpart.
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Section 7.5
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Binding Effect
. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and assigns. If the Subscriber is more than one person, the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his heirs, executors, administrators and successors.
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Section 7.6
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Entire Agreement
. The Exhibits attached hereto are hereby incorporated herein by reference. This Agreement together with the Annex and Exhibits contains the entire agreement of the parties and there are no representations, covenants or other agreements except as stated or referred to herein.
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Section 7.7
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Assignability
. This Agreement is not transferable or assignable by the Subscriber except as may be provided herein.
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Section 7.8
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Applicable Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
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Amendments
. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and by the Subscribers currently holding fifty percent (50%) of the aggregate principal amount of the outstanding Notes as of the date of such amendment or waiver.
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Section 7.10
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Neutral Gender
. The use in this Agreement of words in the male, female or neutral gender are for convenience only and shall not affect or control any provisions of this Agreement.
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Section 7.11
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Captions
. The Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
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A.
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SUBSCRIPTION:
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B.
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MANNER IN WHICH TITLE IS TO BE HELD
(Please check One):
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1.
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o
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Individual
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7.
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o
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Trust/Estate/Pension or Profit Sharing Plan, and
Date Opened: _______________
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2.
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o
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Joint Tenants with Rights of Survivorship
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8.
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o
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As a Custodian for ___________
___________________________
UGMA ____________ (State)
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3.
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o
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Community Property
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4.
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o
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Tenants in Common
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9.
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o
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Married with Separate Property
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5.
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o
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Corporation/Partnership
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10.
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o
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Keogh
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6.
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o
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IRA
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11.
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o
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Tenants by the Entirety
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12.
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Other
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C.
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ACCREDITED INVESTOR REPRESENTATION:
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D.
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TITLE:
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Signature:
/s/ Richard Heddle
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Signature:
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Name:
Richard Heddle
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Name:
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Title (if applicable)
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Address On File with JBI, Inc.
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ACCEPTED ON BEHALF OF THE COMPANY:
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JBI, INC.
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By:
/s/ Nicholas J. Terranova
Name: Nicholas J. Terranova
Title: Chief Financial Officer
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Principal Amount of Notes:
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$1,000,000
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No. of Warrants:
1,000,000
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No. 1
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$1,000,000
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August 29, 2013
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(a)
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If the Company shall default in the due and punctual payment of the principal amount of this Note when and as the same shall become due and payable, whether at maturity or by acceleration; or
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(b)
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If the Company shall default in the due and punctual payment of interest on this Note when the same shall become due and payable; or
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(c)
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If the Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking of possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall take any corporate action to authorize any of the foregoing; or an involuntary case or other proceeding shall be commenced against the Company seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed or unstayed for a period of 60 consecutive days; or
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(d)
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Company defaults in the performance of any covenant or other provision with respect to this Note or any other agreement between Company and the Holder or the Collateral Agent (as defined in the Security Agreement referred to below); or
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(e)
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Company fails to pay when due (whether at the stated maturity, by acceleration or otherwise) any indebtedness for borrowed money owing to the Holder (other than under this Note), any third party or the occurrence of any event which could result in acceleration of payment of any such indebtedness or the failure to perform any agreement with any third party; or
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(f)
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any representation or warranty made in this Note, any related document, any agreement between Company and the Holder or the Collateral Agent or in any financial statement of Company proves to have been misleading in any material respect when made; Company omits to state a material fact necessary to make the statements made in this Note, any related document, any agreement between Company and the Holder or the Collateral Agent or any financial statement of Company not misleading in light of the circumstances in which they were made; or, if upon the date of execution of this Note, there shall have been any material adverse change in any of the facts disclosed in any financial statement, representation or warranty that was not disclosed in writing to the Holder at or prior to the time of execution hereof; or
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(g)
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any pension plan of Company fails to comply with applicable law or has vested unfunded liabilities that, in the opinion of the Holder, might have a material adverse effect on Company’s ability to repay its debts; or
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(h)
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if the validity of this Note or any mortgage, pledge agreement, security agreement or any other collateral agreement, including without limitation the Security Agreement, shall have been challenged or disaffirmed by or on behalf of any of such parties thereto; or if, other than as a direct result of any action or inaction of the Holder, the liens created or intended to be created by any such collateral agreements shall at any time cease to be valid and perfected first priority liens in favor of Holder’s collateral agent, subject to no equal or prior liens.
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(a)
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mortgages in the Company’s (or one of its subsidiaries’, as applicable) real properties located in Niagara Falls, New York;
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(b)
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one or more intellectual property security agreements covering material intellectual property owned by the Company (or one of its subsidiaries, as applicable).
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JBI, INC.
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By:
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/s/Nicholas Terranova
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Name: Nicholoas Terranova
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Title: Chief Financial Officer
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(a) If to Holder, then to:
Richard Heddle
208 Hillyard Street Hamilton
Ontario, Canada L8L6B6
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(b) If to the Corporation, then to:
JBI, Inc.
20 Iroquois Street
Niagara Falls, NY 14303
Attention: Chief Executive Officer
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By: | /s/ Nicholas J. Terranova |
Name: Nicholas J. Terranova | ||
Title: Chief Financial Officer |
(Signature of Registered Holder)
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(Street Address)
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(City) (State) (Zip)
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(Signature of Registered Holder)
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Name of Assignee
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Address
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No. of Shares
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(Signature)
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“
GRANTORS
”
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JBI, INC.
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By:
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/s/ Nicholas Terranova
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Name: Nicholas Terranova
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Title: Chief Financial Officer
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PLASTIC2OIL OF NY #1, LLC
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By:
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/s/ Nicholas Terranova
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Name: Nicholas Terranova
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Title: Vice President
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JBI RE#1, INC.
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By:
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/s/ Nicholas Terranova
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Name: Nicholas Terranova
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Title: Vice President
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“
COLLATERAL AGENT
”
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CHRISTIANA TRUST, a division of WSFS Bank
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By:
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/s/ Raye D. Goldsborough
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Name: Raye D. Goldsborough
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Title: Assistant Vice President
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LENDER
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PROMISSORY NOTE
PRINCIPAL AMOUNT
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Richard Heddle
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$1,000,000
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1.
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JBI (Canada), Inc., an Ontario, Canada Corporation
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2.
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JBI RE ONE, Inc., and Ontario, Canada, Corporation
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3.
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Plastic2Oil of NY #1, LLC, a New York limited liability company
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4.
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Plastic2Oil Land, Inc., a Nevada Corporation
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5.
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Plastic2Oil Marine, Inc., a Nevada Corporation
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6.
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PAK-IT, LLC, a Florida Corporation
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7.
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Javaco, Inc., an Ohio Corporation
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8.
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JBI RE #1, Inc., a New York Corporation
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1.
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Patent-pending P2O conversion process/processor
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a.
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U.S. Patent Application No., 61/512,733, titled “SYSTEM AND PROCESS FOR CONVERTING PLASTICS TO PETROLEUM PRODUCTS,” filed with the United States Patent and Trademark Office filed on July 28, 2011.
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b.
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International Publication No. WO 2013/015819, titled “SYSTEM AND PROCESS FOR CONVERTING PLASTICS TO PETROLEUM PRODUCTS”.
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2.
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Patent relating to our Data Business for the recovery of tape information.
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a.
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U.S. Patent Application No., 13/884,075, titled “SYSTEM AND METHOD FOR READING A MAGNETIC TAPE” filed with the United States Patent and Trademark Office filed on May 8, 2013.
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b.
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International Publication No. WO 2012/064691, titled “SYSTEM AND METHOD FOR READING A MAGNETIC TAPE”.
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3.
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Registered trademark for Plastic2Oil™
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a.
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U.S. Reg. No. 3,960,050
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4.
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Registered trademark for P2O™
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a.
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U.S. Reg. No. 4,102,871
|
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1.
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Mechanic’s lien against JBI, Inc. and Plastic2Oil of NY #1, LLC in favor of National Mechanic’s Contracting Corp. in the amount of $305,070.03.
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