Document:

Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made and effective December 17, 2013.

 

	
BETWEEN:
    	
Gregory J. Trudel (the “Executive”), an   individual with his main address at: 3327 Alexander Way, Broomfield, CO   80023.
    
	
 
    	
 
    
	
AND:
    	
Encision Inc. (the “Company”), an   entity organized and existing under the laws of Colorado, with its head   office located at: 6797 Winchester Circle, Boulder, CO 80301.
    

 

RECITALS

 

In consideration of the covenants and agreements herein contained and the moneys to be paid hereunder, the Company hereby employs the Executive and the Executive hereby agrees to perform services as an Executive of the Company, upon the following terms and conditions:

 

1.              TERM

 

Commencing December 23, 2013, (the “Start Date”) the Company employs Executive to serve as President and Chief Executive Officer and to serve in such additional position or positions as the Company may determine in its sole discretion. The term of employment shall be for a period of three (3) years (“Employment Period”) to commence on the Start Date, unless earlier terminated as set forth herein.

 

This Agreement shall continue in effect until the earliest of:

 

A.            The effective date of any subsequent employment agreement between the Company and the Executive;

 

B.            The effective date of any termination of employment as provided elsewhere herein; or

 

C.            Three years from the Start Date, provided, that this Employment Agreement shall automatically renew for successive periods of one year each unless either party gives written notice to the other that it does not wish to automatically renew this Agreement, which written notice must be received by the other party no less than ninety days prior to the expiration of the applicable term.

 

2.              DUTIES AND RESPONSIBILITIES

 

Within the limitations established by the By-laws of the Company, the Executive shall preside at all meetings of the shareholders, shall have general supervision of the affairs of the Company, and such other or different duties on behalf of the Company, as may be assigned from time to time by the Board of Directors. Particular emphasis is placed upon growing sales and earnings, and upon keeping in mind such items as required product developments, quality, and overall risk management.

 

3.              LOCATION

 

The initial principal location at which Executive shall perform services for the Company shall initially be 6797 Winchester Circle, Boulder, CO 80301.  The Company may move its offices to another location in the Denver-Boulder metro area without being in violation of this Agreement.

 

Employment Agreement — Mr. Trudel

 

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4.              ACCEPTANCE OF EMPLOYMENT

 

Executive accepts employment with the Company upon the terms set forth above and agrees to devote all Executive’s time, energy and ability to the interests of the Company, and to perform Executive’s duties in an efficient, trustworthy and business-like manner.

 

5.              DEVOTION OF TIME TO EMPLOYMENT

 

The Executive shall devote the Executive’s best efforts and substantially all of the Executive’s working time to performing the duties on behalf of the Company. The Executive shall provide services during the normal business hours of the Company as determined by the Company. Reasonable amounts of time may be allotted to personal or outside business, charitable and professional activities and shall not constitute a violation of this Agreement provided such activities do not materially interfere with the services required to be rendered hereunder or violate another provision of this Agreement.

 

6.              COMPENSATION

 

6.1.         Base Salary

 

Executive shall be paid a base salary (“Base Salary”) at the annual rate of $210,000, payable in bi-weekly installments consistent with Company’s payroll practices. In consideration of the services under this Agreement, Executive shall be paid the aggregate of basic compensation, bonus and benefits as hereinafter set forth.

 

6.2.         Payment

 

Payment of all compensation to Executive hereunder shall be made in accordance with the relevant Company policies in effect from time to time, including normal payroll practices.  However, severance payments are payable as provided below.

 

6.3.         Bonus

 

From time to time, the Company may pay to Executive a bonus.

 

Payment of any bonus compensation shall be at the sole discretion of the Board of Directors or the compensation committee of the Board of Directors and the Executive shall have no entitlement to such amount absent a decision by the Company as aforesaid to make such bonus compensation.

 

Executive shall also be entitled to a bonus determined as follows:

 

a.                   An annual bonus pool for each year starting with the fiscal year ending 3/31/15 and continuing through the Employment Period, will be established in an amount that is equal to 10% of the increase in pre-tax GAAP income in each fiscal year compared to the preceding fiscal year. When comparing a fiscal year over a prior fiscal year, losses in any fiscal year will be considered for the bonus computation. For this Article 6.3, for the fiscal year ending 3/31/14, any pre-tax GAAP loss shall not exceed $500,000. In addition, in any fiscal year ending after 3/31/14, and as determined by the Board of Directors or the compensation committee of the Board of Directors, any incremental expense, or reduced expense, that occurs as a result of raising capital for such purpose shall be excluded as an expense, or as income, from the pre-tax GAAP income calculation,

 

b.                   50% of the bonus pool will be allocated to the CEO,

 

c.                    50% of the bonus pool will be allocated to executives (presently defined to include 5 executives, excluding the CEO) in ratio to their base pay.

 

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Eligibility for participation in the bonus pool for a year includes a requirement that the person must be employed during the 2-1⁄2 months following the end of such fiscal year.  A payment will not be made under the bonus pool if the Executive has been terminated for Cause before the payment is received.  The bonus pool rules and interpretation will favor the Company, as opposed to participants, and will be subject to interpretation and oversight by the Board of Directors.  A bonus will not be paid under this bonus pool in respect to any income resulting from a Corporate Transaction as defined in the Company’s 2007 Stock Option Plan. The term “pre-tax GAAP income” means GAAP net income before taxes and excluding extraordinary items as defined by GAAP. This bonus will be paid by June 15 of the following fiscal year.  There are no third party beneficiaries of this provision, and no executive or non-executive has a claim to a bonus payment due to this provision nor is the consent of any such person required to modify this bonus provision.

 

Acquisition bonus.  In the event that during the term of the Executive’s employment the Company is acquired within 5 years of the Start Date, at a net cash price of $7.50 per common share or more (net cash price means the net amount received by the selling shareholders either in cash or in stock which is of a class regularly traded on a U.S. exchange or U.S. trading system (including the OTCBB), or a combination thereof), then Executive will receive an acquisition bonus which is computed as the difference between the per share stock price of the Company on the Start Date and the per share price paid in the acquisition, multiplied by 40,000. The per share stock price on the Start Date and the 40,000 multiplier will be appropriately adjusted for stock splits, stock dividends, and the like, and cash dividends paid between the date of this Agreement and the date of closing of the acquisition will be counted towards that $7.50 per share price.  The Company is considered “acquired” if a Corporate Transaction, as defined in the Company’s 2007 Stock Option Plan, occurs. If any of the acquisition price is payable by an earn out or other contingent payment, then the Board shall in good faith determine the present fair market value of that earn out or contingent payment at the time of closing of the acquisition for purposes of determining whether a payment is owing hereunder and the amount of the payment.  If any of the acquisition price is payable in the form of stock which is of a class regularly traded on a U.S. exchange or U.S. trading system, but either it is not readily tradable under the securities laws or by contractual restriction, or if it is stock which is not as a practical matter immediately saleable into a liquid market, then the Board shall in good faith determine the present fair market value of that stock taking into account that limitation on the ability to immediately trade that stock,  at the time of closing of the acquisition for purposes of determining whether a payment is owing hereunder and the amount of the payment The acquisition bonus will be paid within thirty (30) days after closing of the acquisition.

 

6.4.         Benefits

 

The Company shall provide Executive with such benefits as are provided to other senior management of the Company. Benefits shall include at a minimum (i) paid vacation of twenty days per year of full employment, exclusive of legal holidays, as long as the scheduling of Executive’s vacation does not interfere with the Company’s normal business operations, (ii) medical and dental coverage, and life and disability insurance plans under the same terms as offered to other executives of the Company, (iii) retirement and profit sharing programs as offered to other executives of the Company, (iv) paid holidays as per the Company’s policies, and (v) such other benefits and perquisites as are approved by the Board of Directors. The Company has the right to modify conditions of participation, terminate any benefit, or change insurance plans and other providers of such benefits in its sole discretion.

 

6.5.         Withholding

 

All sums payable to Executive under this Agreement will be reduced by all federal, state, local, and other withholdings and similar taxes and payments required by applicable law.

 

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7.              OTHER EMPLOYMENT BENEFITS

 

7.1.         Business Expenses

 

Upon submission of itemized expense statements in the manner specified by the Company, Executive shall be entitled to reimbursement for reasonable travel and other reasonable business expenses duly incurred by Executive in the performance of his duties under this Agreement.

 

7.2.         Stock Options

 

Executive shall be entitled to 200,000 options to acquire shares of the Common Stock of the Company, as follows:

 

a.                   60,000 incentive stock options under the 2007 Stock Option Plan with normal vesting in accordance with Company’s standard option agreements (5 years, with 20% vesting after one year and the balance monthly thereafter); and,

 

b.                   140,000 stock options outside of the Company’s existing plan, with normal vesting in accordance with the Company’s standard option agreements (5 years with 20% vesting after one year and the balance monthly thereafter). Such options are to mirror the terms of the 2007 Stock Option Plan, except that the options will be non-qualified stock options (Executive recognizes that the options and shares issued upon exercise are issued pursuant to a private placement exemption from the registration requirements of the Securities Act of 1933 and will constitute restricted securities unless subsequently registered pursuant to the Securities Act of 1933).

 

The initial exercise price for the options shall be at the fair market value of the Company’s stock at the Start Date.

 

The Company will use reasonable diligence to register the shares underlying the options granted outside of the Company’s existing plan on Form S-8 on or before the date of exercise of those options, so long as such registration would not require the premature disclosure of any Company information.

 

The vesting of all options will accelerate immediately prior to a Corporate Transaction (but not a Change in Control unless the Board of Directors elects to allow acceleration on a Change in Control), as defined in the Company’s 2007 Stock Option Plan.

 

The vested options shall be exercisable for thirty days after termination of Executive’s employment with the Company, or three months in the case of death or disability (as provided in the Company’s 2007 Stock Option Plan), unless termination is for Cause in which case the options will terminate at the time of termination of employment. No additional vesting of options shall occur after Executive’s death, disability, or cessation of employment with the Company for any reason or no reason.

 

Issuance of the options shall be in accordance with all applicable securities laws and the other terms and conditions of the Company’s 2007 Stock Option Plan and form of the Stock Option Agreement.

 

8.              POLICIES AND PROCEDURES

 

The Company shall have the authority to establish from time to time the policies and procedures not inconsistent with this Agreement to be followed by the Executive in performing services for the Company. Executive shall abide by the provisions of any contract entered into by the Company under which the Executive provides services.

 

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9.              TERMINATION OF EMPLOYMENT

 

9.1.         For Cause

 

Notwithstanding anything herein to the contrary, the Company may terminate Executive’s employment hereunder for cause for any one of the following reasons: 1) conviction of a felony, any crime involving moral turpitude, or a misdemeanor where imprisonment is imposed, 2) commission of any act of theft, fraud, dishonesty, or falsification of any employment or Company records, 3) improper disclosure of the Company’s confidential or proprietary information, 4) any action by the Executive which has a material detrimental effect on the Company’s reputation or business, 5) Executive’s failure or inability to perform any reasonable assigned duties after written notice from the Company of, and a reasonable opportunity to cure, such failure or inability, 6) any breach of this Agreement, which breach is not cured within thirty days following written notice of such breach,  or repeated breaches of a similar nature even if cured after notice, 7) a course of conduct amounting to gross incompetence, 8) chronic and unexcused absenteeism, 9) unlawful appropriation of a corporate opportunity, or 10) material misconduct in connection with the performance of any of Executive’s duties, including, without limitation, misappropriation of funds or property of the Company, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company, misrepresentation to the Company, or any violation of law or regulations on Company premises or to which the Company is subject. Upon termination of Executive’s employment with the Company for cause or lack of financial performance (as defined below), the Company shall be under no further obligation to Executive, except to pay all accrued but unpaid base salary, accrued bonuses, and accrued vacation, to the date of termination thereof, and provide such benefits as Executive is entitled to as a matter of law.

 

9.2.         Without Cause

 

The Company may terminate Executive’s employment hereunder at any time without cause, provided, however, that Executive shall be entitled to severance pay, as discussed below, in addition to accrued but unpaid Base Salary, accrued bonuses, and accrued vacation, but if, and only if, Executive executes a valid and comprehensive release of any and all claims that the Executive may have against the Company, its officers, directors and employees,  in a form provided by the Company and Executive executes such form within ten days of tender or such longer period as the Company may specify.  Such release need not release (i) rights under directors and officers and insurance policies; (ii) rights to indemnification to Executive under the Company’s certificate of incorporation or bylaws;(iii) vested rights to purchase stock from the Company that are not contingent on the reason for termination of employment; and (iv) rights under this Agreement. No severance payments will be paid until such release is received from Executive and all rescission periods under the release have expired.  The severance payments are the sole rights to payment upon termination.

 

Severance for termination without cause will be in an amount equal to:

 

X × (60-Y) ÷ 60.

 

X is Base Salary

 

Y is the number of whole months elapsed between the Start Date and the date of termination of employment.

 

So, for example, if the termination without cause occurred one month after the Start Date the payment would be 59/60th of $210,000 and if it were 25 months after the Start Date the payment would be 35/60th of $210,000.

 

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The severance payments will be paid in equal installments over the twelve month period after termination, with each payment being on the first banking day of the month.  Notwithstanding the prior sentence, if termination is without cause and occurs upon the closing of a Corporate Transaction, as defined in the Company’s 2007 Stock Option Plan, then severance equal to one year’s Base Salary will be paid in one payment within twenty days after the later of the closing of the Corporate Transaction and such release is received from Executive and all rescission periods under the release have expired.

 

A failure to renew or extend the term of this Agreement is not a termination without cause.

 

9.3.         Resignation

 

Upon termination of employment, Executive shall have automatically resigned from the Board of Directors of the Company and any subsidiary or parent, from all employment positions with the Company, a subsidiary or parent, and from each position as a trustee or administrator of any benefit plan of the Company or any subsidiary or parent.  Employee is not entitled to any severance if he resigns from the Company other than upon a resignation for Good Reason (as defined below).

 

9.4.         Resignation for Good Reason

 

If the Company has breached a material term of this Agreement and has not cured such breach within thirty (30) days after written notice of the breach from Executive to the Chairman of the Board of Directors and the Chief Financial Officer, then Executive may resign his employment and such resignation will be deemed a resignation for “Good Reason”.  Upon a resignation for Good Reason Executive will be entitled to the payments and benefits he would receive upon a termination by the Company without cause, so long as Executive has complied with the provisions hereof regarding payments and benefits, including delivering the release provided for in Section 9.2, and subject to the right of the Company to terminate payments under Section 9.6.  If Executive does not comply with this Section 9.4 he is only entitled to the payments and benefits he is entitled to if he resigned without Good Reason and Executive has no further claim or right to damages against any person or entity for breach of this Agreement by the Company.

 

9.5.         Cooperation

 

After notice of termination, Executive shall cooperate with the Company, as reasonably requested by the Company, to effect a transition of Executive’s responsibilities and to ensure that the Company is aware of all matters being handled by Executive.

 

9.6.         Compensation After Notice of Termination

 

After notice of termination has been given by either Company or Executive, as provided in this Article, Executive shall be entitled to receive the compensation provided for in this Agreement until the notice period has expired. It is understood that after the written notice is given by either Company or Executive, Executive shall continue to devote substantially all of the Executive’s time to the Executive’s normal services for the Company during the notice period.

 

9.7.         Effect of Breach

 

Without limiting any other rights of the Company, it has no obligation to make any further severance payments if Executive violates Articles 11, 12 or 13.

 

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10.       DISABILITY OF EXECUTIVE

 

The Company may terminate this Agreement without liability if Executive shall be permanently prevented from properly performing his essential duties hereunder with reasonable accommodation by reason of illness or other physical or mental incapacity for a period of more than sixty consecutive days. Upon such termination, Executive shall be entitled to all accrued but unpaid Base Salary and vacation, such benefits as Executive is entitled to as a matter of law, and the other payments described in this Article 10.

 

10.1.                                        Definitions

 

For purposes of this Agreement, whenever used in this Article 10:

 

“Total disability” shall mean that the Executive is unable, mentally or physically, whether it is due to sickness, accident, age or other infirmity, to engage in more than fifty percent (50%) of any aspect of the Executive’s normal duties as set forth in this Agreement.

 

“Partial disability” shall mean that the Executive is not subject to total disability and is able to engage in more than fifty percent (50%) of every aspect of the Executive’s normal duties as set forth in this Agreement, but that the Executive is unable, mentally or physically, to devote the same amount of time and ability to such services as was devoted prior to the occurrence of such sickness or accident.

 

10.2.                                        Total Disability

 

During a single period of total disability of the Executive, the Executive shall be entitled to receive from the Company, the Executive’s Base Salary for the shorter of first three (3) months of disability or until any disability insurance policy available through the Executive’s employment begins to pay benefits. If the single period of disability should continue beyond three (3) months, the Executive shall receive only such amount as the Executive shall be entitled to receive under disability insurance coverage on the Executive, if any.

 

10.3.                                        Partial Disability

 

During a period of partial disability of the Executive, the Executive shall receive an amount of compensation computed as follows:

 

That portion of the Executive’s Base Salary which bears the same ratio to the Executive’s Base Salary as the amount of time which the Executive is able to devote to the usual performance of services on behalf of the Company during such period bears to the total time the Executive devoted to performing such services prior to the commencement date of the single period of partial disability, and

 

Such amount shall be calculated by multiplying the Executive’s Base Salary by a fraction, the numerator of which shall be the percentage of normal services that the Executive is able to perform and the denominator which shall be the total services that the Executive is able to perform absent the partial disability.

 

10.4.                                        Combination of Total and Partial Disability

 

If a single period of disability of the Executive consists of a combination of total disability and partial disability, the maximum total disability compensation to which the Executive shall be entitled from the Company under this disability provision shall not exceed an amount equal to one (1) times the Executive’s Base Salary.

 

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10.5.                                        Broken Periods of Disability

 

A period of disability may be continuous or broken. If broken into partial periods of disability which are separated by intervening periods of work, there shall be aggregated together all of such successive partial periods of disability except any period prior to the time when any single period of work extends for six months or longer; and such aggregated periods of disability shall be treated as a single period in determining the amount of disability compensation to which Executive shall be entitled under any provision of this Section.

 

10.6.             Termination Due to Disability

 

If and when the period of total or partial disability of the Executive totals six months, Executive’s employment with the Company shall automatically terminate. Upon such termination, Executive is entitled to all accrued but unpaid Base Salary, accrued bonuses, and accrued vacation, to the date of termination, and such benefits as the spouse or estate is entitled to as a matter of law.  Notwithstanding the foregoing, if the disabled Executive and the Company agree, the disabled Executive may thereafter be employed by the Company upon such terms as may be mutually agreeable.

 

10.7.                                        Commencement Date of Disability

 

The commencement date of a period of disability, whether it is a continuous period or the aggregate of successive partial periods, shall be the first day on which the Executive is disabled.

 

10.8.                                        Dispute Regarding Existence of Disability

 

Any dispute regarding the existence, extent or continuance of the disability shall be resolved by the determination of a majority of three (3) competent physicians, one (1) of whom shall be selected by the Company, one (1) of whom shall be selected by the Executive and the third (3rd) of whom shall be selected by the other two (2) physicians so selected.

 

10.9.                                        Death of Executive

 

In the event the Executive shall die during the term hereof, the Company shall pay to the Executive’s surviving spouse, or if the Executive shall leave no surviving spouse, then to the Executive’s estate, all accrued but unpaid Base Salary, accrued bonuses, and accrued vacation, to the date of termination thereof, and such benefits as the spouse or estate is entitled to as a matter of law, as well as an amount equal to the payment upon a termination by the Company without cause.

 

11.       CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENTS

 

Executive recognizes and acknowledges that all records and information with respect to clients, business associates, vendors, customer or referral lists, contracting parties and referral sources of the Company, and all personal, financial and business and proprietary information of the Company, its employees, officers, directors and shareholders obtained by the Executive during the term of this Agreement and not generally known in the public (the “Confidential Information”) are valuable, special, unique and proprietary assets of the Company. The Executive hereby agrees that during the term of this Agreement and following the termination of this Agreement, whether the termination shall be voluntary or involuntary, or with or without cause, or whether the termination is solely due to the expiration of the term of this Agreement, the Executive will not at any time, directly or indirectly, disclose any Confidential Information, in full or in part, in written or other form, to any person, firm, Company, association or other entity, or utilize the same for any reason or purpose whatsoever other than for the benefit of and pursuant to authorization granted by the Company. “Confidential Information” shall also include any information (including, but not limited to, technical or non-technical data, a formula, a pattern, a compilation, a program, a device, an idea, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers) that: (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by,

 

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other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. In the case of Company’s business, Company’s Trade Secrets include (without limitation) information regarding names and addresses of any customers, sales personnel, account invoices, training and educational manuals, administrative manuals, prospective customer leads, in whatever form, whether or not computer or electronically accessible “on-line.”  For the avoidance of doubt, Confidential Information does not include the names and addresses of customers or any other information, if the fact the person is a customer or such other information is publically known in the public domain or already known to Executive prior to the signing of this Agreement unless the information was conveyed to Executive by the Company.

 

Executive agrees that all Intellectual Property (as hereinafter defined) conceived or made by him while he is employed by the Company belongs to the Company. Executive will promptly disclose all Intellectual Property to the other officers of the Company. Executive hereby assigns, and will further assign, Executive’s full right, title and interest to all Intellectual Property and will execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights (including without limitation the execution and delivery of instruments of further assurance or confirmation) reasonably requested by the Company to assign such Intellectual Property to the Company and to permit the Company to enforce any patents, copyrights and other proprietary rights to such Intellectual Property. All copyrightable works that Executive creates that constitute Intellectual Property shall be considered “work made for hire.” For purposes of this Agreement, “Intellectual Property” means inventions, innovations, improvements, discoveries, developments, methods, processes, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by Executive (whether alone or with others, whether or not during normal business hours or on or off Company premises) during Executive’s employment with the Company that relate to any business, venture or activity being conducted or, to Executive’s knowledge, proposed to be conducted by the Company at any time during Executive’s employment with the Company.

 

Upon request, Executive will return any Company property to the Company.

 

The term “Company” in this Article includes any subsidiary of the Company.  This Article will survive termination of this Agreement.

 

12.       EXCLUSIVE EMPLOYMENT; NON-COMPETE

 

During employment with the Company, Executive will not do anything to compete with the Company’s present or contemplated business, nor will he or she plan or organize any competitive business activity. Executive will not enter into any agreement which conflicts with his duties or obligations to the Company. Executive will not during his employment or within one year after it ends, without the Company’s express written consent, directly or indirectly, solicit or encourage any employee, agent, independent contractor, supplier, customer, consultant or any other person or company to terminate or alter a relationship with the Company.

 

Should Executive wish to serve on other boards of directors or have other minor non-company activities, the Executive will supply a list of all such activities, and to update the list quarterly, including the amount of time spent on each. The Company requests that such activities be held to a reasonable minimum.

 

The term “Company” in this Article includes any subsidiary of the Company.  This Article will survive termination of this Agreement.

 

If, at the time of enforcement of Articles 12 or 13 of this Agreement, a court or arbitrator holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law. By action of its Board the Company may also unilaterally reduce the duration, type of activity, geographic area, or other scope, of Articles 12 or 13.

 

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13.       HIRING

 

The Executive agrees that during the Executive’s employment with the Company and for a period of one year following the termination of this Agreement, whether the termination shall be voluntary or involuntary, or with or without cause, or whether the termination is solely due to the expiration of the term of this Agreement, the Executive will not attempt to hire any employee or independent contractor of the Company or otherwise encourage or attempt to encourage any other Executive or independent contractor of the Company to leave the Company’s employ.

 

The term “Company” in this Article includes any subsidiary of the Company.  This Article will survive termination of this Agreement.

 

14.       ASSIGNMENT AND TRANSFER

 

Executive’s rights and obligations under this Agreement shall not be transferable by assignment or otherwise, and any purported assignment, transfer or delegation thereof shall be void. This Agreement may be assumed (but need not be) by any purchaser of substantially all of Company’s assets, any corporate successor to Company or any assignee thereof. The Company may assign its rights under Articles 12 and 13 of this Agreement in whole or in part to, a person or entity who buys the assets of the Company, a person or entity who buys the business of the Company related to Executive’s line of work with the Company, or a person or entity who buys or is licensed inventions or other proprietary work product with which Executive was involved.  Among other things, this means that Executive could be subject to Article 12 and 13 of this Agreement as to more than one person or entity.

 

15.       NO INCONSISTENT OBLIGATIONS

 

Executive is aware of no obligations, legal or otherwise, inconsistent with the terms of this Agreement or with his undertaking employment with the Company. Executive will not disclose to the Company, or use, or induce the Company to use, any proprietary information or trade secrets of others. Executive represents and warrants that he has returned all property and confidential information belonging to all prior employers.

 

16.       INJUNCTIVE RELIEF; ATTORNEYS’ FEES

 

The parties hereto agree that, in the event of breach or threatened breach of any covenants of Executive, the damage or imminent damage to the value and the goodwill of the Company’s business shall be inestimable, and that therefore any remedy at law or in damages shall be inadequate. Accordingly, the parties hereto agree that the Company shall be entitled to injunctive relief against Executive in the event of any breach or threatened breach of any of such provisions by Executive, in addition to any other relief (including damages) available to the Company under this Agreement or under law. The prevailing party in any action instituted pursuant to this Agreement shall be entitled to recover from the other party its reasonable attorneys’ fees and other expenses incurred in such action.

 

In the event that either party is required to engage the services of legal counsel to enforce the terms and conditions of this Agreement against the other party, regardless of whether such action results in litigation or arbitration, the prevailing party shall be entitled to reasonable attorneys’ fees, costs of legal assistants, and other costs from the other party, which shall include any fees or costs incurred at trial or in any appellate proceeding, and expenses and other costs, including any accounting expenses incurred.

 

17.       GOVERNING LAW

 

This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado without regard to conflict of law principles that would result in the application of another law.

 

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18.       AMENDMENT

 

This Agreement may be amended only by a writing signed by Executive and by a duly authorized representative of the Company.

 

19.       SEVERABILITY

 

If any term, provision, covenant or condition of this Agreement, or the application thereof to any person, place or circumstance, shall be held to be invalid, unenforceable or void, the remainder of this Agreement and such term, provision, covenant or condition as applied to other persons, places and circumstances shall remain in full force and effect.

 

20.       CONSTRUCTION

 

The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed according to its fair meaning and not strictly for or against the Company or Executive.

 

21.       RIGHTS CUMULATIVE; EXCLUSIVE RIGHTS TO PAYMENTS AND BENEFITS

 

The rights and remedies provided by this Agreement are cumulative, and the exercise of any right or remedy by either party hereto (or by its successor), whether pursuant to this Agreement, to any other agreement, or to law, shall not preclude or waive its right to exercise any or all other rights and remedies. The rights to payments and benefits herein are Executive’s exclusive rights to payment and benefits from the Company in the event of termination of this Agreement or employment except for amounts which the Company is required to pay under applicable law, and payments under insurance policies (if any) which are not duplicative of payments provided for herein.

 

22.       NONWAIVER

 

No failure or neglect of either party hereto in any instance to exercise any right, power or privilege hereunder or under law shall constitute a waiver of any other right, power or privilege or of the same right, power or privilege in any other instance. All waivers by either party hereto must be contained in a written instrument signed by the party to be charged and, in the case of the Company, by an officer of the Company (other than Executive) or other person duly authorized by the Company.

 

23.       NOTICES

 

Any and all notices or other communication provided for herein, shall be given by registered or certified mail, return receipt requested, in case of the Company to its principal office, and in the case of the Executive to the Executive’s residence address set forth on the first page of this Agreement or to such other address as may be designated by the Executive.

 

24.       ASSISTANCE IN LITIGATION

 

Executive shall, during and after termination of employment, upon reasonable notice, furnish such information and proper assistance to the Company as may reasonably be required by the Company in connection with any litigation in which it or any of its parent, subsidiaries or affiliates is, or may become a party; provided, however, that such assistance following termination shall be furnished at mutually agreeable times and for mutually agreeable compensation. This Article will survive termination of this Agreement.

 

25.       ARBITRATION

 

Any controversy, claim or dispute arising out of or relating to this Agreement or the employment relationship, either during the existence of the employment relationship or afterwards, between the parties

 

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hereto, their assignees, their affiliates, their attorneys, or agents, shall be resolved by arbitration in Boulder or Denver, Colorado, such site to be determined by the Company. Such arbitration shall be conducted by the Judicial Arbiters Group (JAG) in accordance with the rules of the American Arbitration Association for commercial arbitration.  The following provisions will govern the arbitration. (a) one arbitrator shall be chosen; (b) each party to the arbitration will pay its pro rata share of the expenses and fees of the arbitrator(s), together with other expenses of the arbitration incurred or approved by the arbitrator(s); and (c) arbitration may proceed in the absence of any party if written notice of the proceedings has been given to such party. The parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be binding, final and conclusive and may be entered in any court having jurisdiction thereof as a basis of judgment and of the issuance of execution for its collection. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided however, that nothing in this subsection shall be construed as precluding the Company from bringing an action for injunctive relief or other equitable relief or relief under the confidentiality, return of property, no hire, non-solicitation, and invention assignment provisions. The arbitrator shall not have the right to award punitive damages, consequential damages, or speculative damages to either party, but may award lost profits even if they are consequential damages. The parties shall keep confidential the existence of the claim, controversy or disputes from third parties (other than the arbitrator), and the determination thereof, unless otherwise required by law or necessary for the business of the Company. The arbitrator(s) shall be required to follow applicable law.

 

IF FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES NOT APPLICABLE, AND AS TO ANY MATTER FOR WHICH LITIGATION IS PERMITTED HEREUNDER, THEN EACH PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER MATTER INVOLVING THE PARTIES HERETO, AND SUBMITS TO THE VENUE AND JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN DENVER AND BOULDER COUNTY COLORADO.

 

26.       COVENANTS INDEPENDENT

 

Each restrictive covenant on the part of the Executive set forth in this Agreement shall be construed as a covenant independent of any other covenant or provisions of this Agreement or any other agreement which the Company and the Executive may have, fully performed and not executory, and the existence of any claim or cause of action by the Executive against the Company whether predicated upon another covenant or provision of this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of any other covenant.

 

27.       INJUNCTIVE AND EQUITABLE RELIEF

 

Executive and Company recognize and expressly agree that the extent of damages to Company in the event of a breach by Executive of any restrictive covenant set forth herein would be difficult to ascertain, that the irreparable harm arising out of any breach shall be irrefutably presumed, and that the remedy at law for any breach may be inadequate to compensate the Company. Consequently, the Executive agrees that in the event of a breach of any such covenant, in addition to any other relief to which Company may be entitled, Company shall be entitled to enforce the covenant by injunctive or other equitable relief ordered by a court of competent jurisdiction.

 

28.       INDEMNIFICATION

 

The Executive hereby agrees to indemnify and hold the Company and its officers, directors, shareholders and Executives harmless from and against any loss, claim, damage or expense, and/or all costs of prosecution or defense of their rights hereunder, whether in judicial proceedings, including appellate proceedings, or whether out of court, including without limiting the generality of the foregoing, attorneys’ fees, and all costs and expenses of litigation, arising from or growing out of the Executive’s breach or threatened breach of any representation, warranty or covenant contained herein.

 

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The Company hereby agrees to indemnify and hold Executive harmless from and against any loss, claim, damage or expense, and/or all costs of prosecution or defense of his rights hereunder, whether in judicial proceedings, including appellate proceedings, or whether out of court, including without limiting the generality of the foregoing, attorneys’ fees, and all costs and expenses of litigation, arising from or growing out of the Company’s breach or threatened breach of any representation, warranty or covenant contained herein.

 

29.       ACKNOWLEDGMENT

 

The Executive acknowledges that when this Agreement is concluded, the Executive will be able to earn a living without violating the foregoing restrictions and that the Executive’s recognition and representation of this fact is a material inducement to the execution of this Agreement and to Executive’s continued relationship with the Company.

 

30.       SURVIVAL OF COVENANTS

 

All restrictive covenants contained in this Agreement shall survive the termination of this Agreement.

 

31.       REPRESENTATION AND WARRANTY OF EXECUTIVE

 

The Executive acknowledges and understands that the Company has extended employment opportunities to Executive based upon Executive’s representation and warranty that Executive is able to perform the work contemplated by this Agreement for the term hereof.

 

32.       INVALID PROVISION; SEVERABILITY

 

The invalidity or unenforceability of a particular provision of this Agreement shall not affect the other provisions hereof, and the Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

 

33.       MODIFICATION

 

No change or modification of this Agreement shall be valid unless the same is in writing and signed by the parties hereto.

 

34.       409A

 

This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) and shall be construed accordingly. It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax or interest imposed pursuant to Section 409A. To the extent such potential payments or benefits are or could become subject to Section 409A, the parties shall amend this Agreement with the goal of giving Executive the economic benefits described herein in a manner that does not result in such tax or interest being imposed, so long as such amendment does not adversely affect the Company. Executive shall, at the request of the Company, take any reasonable action (or refrain from taking any action), required to comply with any correction procedure promulgated pursuant to Section 409A.

 

If a payment that could be made under this Agreement would be subject to additional taxes and interest under Section 409A, the Company in its sole discretion may accelerate some or all of a payment otherwise payable under the Agreement to the time at which such amount is includible in the income of Executive, provided that such acceleration shall only be permitted to the extent permitted under Treasury Regulation § 1.409A-3(j)(4)(vii) and the amount of such acceleration does not exceed the amount permitted under Treasury Regulation § 1.409A-3(j)(vii).

 

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No payment to be made under this Agreement shall be made at a time earlier than that provided for in this Agreement unless such payment is (i) an acceleration of payment permitted to be made under Treasury Regulation § 1.409A-3(j)(4) or (ii) a payment that would otherwise not be subject to additional taxes and interest under Section 409A.

 

The right to each payment described in this Agreement shall be treated as a right to a series of separate payments and a separately identifiable payment for purposes of Section 409A.

 

The definition of Good Reason is intended to constitute “good reason” as such term is used in Treas. Reg. §1.409A-1(n)(2) and shall be interpreted and construed accordingly, and to the maximum extent permitted by Section 409A and guidance thereunder, a termination for Good Reason shall be an “involuntary separation from service” as such term is used in Treas. Reg. §1.409A-1(n).

 

For purposes of Article 9 of this Agreement, “termination” (or any similar term) when used in reference to Executive’s employment shall mean “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued thereunder, and Executive shall be considered to have terminated employment with the Company when, and only when, Executive incurs a “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued thereunder.

 

35.       ENTIRE AGREEMENT

 

This Agreement and the related option agreements contain the entire agreement and supersede all prior agreements and understandings, oral or written, with respect to the subject matter hereof. This Agreement may be changed only by an agreement in writing signed by the party against whom any waiver, change, amendment, modification, or discharge is sought.

 

IN WITNESS HEREOF, each party to this Agreement has caused it to be executed on December 17, 2013.

 

	
EXECUTIVE
    	
COMPANY
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/Gregory J. Trudel
    	
 
    	
By:
    	
/s/Patrick W. Pace
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Gregory J. Trudel
    	
 
    	
 
    	
Patrick W. Pace, Executive   Chairman
    
	
Print Name
    	
 
    	
 
    	
Print Name and Title
    

 

14Exhibit 4.1

 

WARRANT

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF (“TRANSFERRED”) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF JGWPT HOLDINGS INC. AND MAY NOT BE TRANSFERRED UNLESS SUCH TRANSFER COMPLIES WITH THE PROVISIONS OF SUCH CERTIFICATE OF INCORPORATION AND THE TERMS HEREOF.  A COPY OF SUCH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION IS ON FILE WITH THE SECRETARY OF JGWPT HOLDINGS INC. AND IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR.  THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF THE AFORESAID CERTIFICATE OF INCORPORATION AND THE TERMS HEREOF.

 

NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF JGWPT HOLDINGS INC. AND THE TERMS HEREOF.

 

 

Warrant Certificate No.: 1

 

Original Issue Date:  November 14 , 2013

 

FOR VALUE RECEIVED, JGWPT Holdings Inc., a Delaware corporation (the “Company”), hereby certifies that PGHI Corp., or its registered assigns (the “Holder”) is entitled to purchase from the Company 483,217 duly authorized, validly issued, fully paid and non-assessable shares of Common Stock (as defined below) at a purchase price per share of $35.78 (the “Exercise Price”), all subject to the terms, conditions and adjustments set forth below in this Warrant.  Certain capitalized terms used herein are defined in Section 1 hereof.

 

1.                                      Definitions. As used in this Warrant, the following terms have the respective meanings set forth below:

 

“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price.

 

“Board” means the board of directors of the Company.

 

“Business Day” means any day on which banks located in the States of New York and Pennsylvania are not required or authorized by law to remain closed.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the Class A common stock, par value $0.00001 per share, of the Company, and any capital stock into which such Class A Common Stock shall have been converted, exchanged or reclassified following the date hereof.

 

“Company” has the meaning set forth in the Preamble.

 

“Company’s Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of the State of Delaware, as amended.

 

“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.

 

“Exercise Date” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., New York, New York time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Notice, the Warrant and the Aggregate Exercise Price.

 

“Exercise Notice” has the meaning set forth in Section 3(a)(i).

 

“Exercise Period” has the meaning set forth in Section 2.

 

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“Exercise Price” has the meaning set forth in the Preamble.

 

“Fair Market Value” means the volume weighted average sale price per share of Common Stock on the New York Stock Exchange on such date, or if the Common Stock is not listed on the New York Stock Exchange, on the principal national securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national securities exchange, an automated quotation system on which the Common Stock is then listed or authorized for quotation, in each case as reported by Bloomberg Financial Markets (or any successor thereto) through its “Volume at Price” functions and ignoring any block trades (which, for purposes of this definition means any transfer of more than 100,000 shares (subject to adjustment to reflect stock dividends, stock splits, stock combinations and other similar events)), and if the Common Stock is not then listed on a national securities exchange or authorized for quotation on an automated quotation system, such value as the Board, in its reasonable discretion, shall determine.

 

“Holder” has the meaning set forth in the Preamble.

 

“Management Stock Option Plans” means the JGWPT Holdings Inc. 2013 Omnibus Incentive Plan, as and to the extent adopted by the Company, and any other equity compensation plan adopted by the Board.

 

“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

 

“Original Issue Date” means November 14, 2013.

 

“Original Price” has the meaning set forth in Section 4(a).

 

“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

 

“PGHI Warrants” means the warrants originally issued by the Company on the Original Issue Date, as the same may be replaced, amended or modified from time to time.

 

“Warrant” means this Warrant and all warrants issued upon division or combination of, or in substitution for, this Warrant.

 

“Warrant Shares” means the shares of Common Stock or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.

 

2.                                      Term of Warrant. Subject to the terms and conditions hereof, at any time or from time to time beginning on the date that is one hundred eighty (180) days immediately following the Original Issue Date and prior to 5:00 p.m., New York Time, on January 8, 2022 (the “Exercise Period”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to adjustment as provided herein).

 

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3.                                      Exercise of Warrant.

 

(a)                                 Exercise Procedure. This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, and unless otherwise requested by the holder hereof, this Warrant shall be deemed to have been exercised and such certificate or certificates representing Warrant Shares shall be deemed to have been issued, and the holder or transferee so designated in the Exercise Notice shall be deemed to have become the holder of record of such Warrant Shares for all purposes, as of the close of business on the date on which the Holder:

 

(i)                                     surrenders this Warrant to the Company at its then principal executive offices (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction, together with an appropriate bond if requested by the Company), together with an Exercise Notice in the form attached hereto as Exhibit A (each, an “Exercise Notice”), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and

 

(ii)                                  makes payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b).

 

(b)                                 Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Notice, by the following methods:

 

(i)                                     by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price;

 

(ii)                                  by instructing the Company to withhold a number of Warrant Shares then issuable upon exercise of this Warrant with an aggregate Fair Market Value as of the Exercise Date equal to such Aggregate Exercise Price; provided that the method set forth in this clause (ii) shall be permitted only so long as the Common Stock is listed for trading on the New York Stock Exchange or another national securities exchange;

 

(iii)                               by surrendering to the Company (x) Warrant Shares previously acquired by the Holder with an aggregate Fair Market Value as of the Exercise Date equal to such Aggregate Exercise Price and/or (y) other securities of the Company or JGWPT Holdings, LLC having a value as of the Exercise Date equal to the Aggregate Exercise Price (which value in the case of debt securities shall be the principal amount thereof plus accrued and unpaid interest, in the case of preferred stock shall be the liquidation value thereof, including accrued and unpaid dividends, and in the case of shares of Common Stock shall be the Fair Market Value thereof); or

 

(iv)                              any combination of the foregoing.

 

In the event of any withholding of Warrant Shares or surrender of other equity securities pursuant to clause (ii), (iii), or (iv) above where the number of shares whose value is equal to the Aggregate Exercise Price is not a whole number, the number of shares withheld by or surrendered to the Company shall be rounded up or down to the nearest whole share and the Company shall make a cash payment to the Holder

 

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(by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a share being so withheld by or surrendered to the Company in an amount equal to the product of (x) such incremental fraction of a share being so withheld or surrendered multiplied by (y) in the case of Common Stock, the Fair Market Value per Warrant Share as of the Exercise Date, and, in all other cases, the value thereof as of the Exercise Date determined in accordance with clause (ii)(y) above.

 

(c)                                  Delivery of Stock Certificates. Upon receipt by the Company of the Exercise Notice, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with Section 3(a) hereof), the Company shall, as promptly as practicable, and in any event within three (3) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, or evidence that Warrant Shares have been issued in book-entry form, together with cash in lieu of any fraction of a share, as provided in Section 3(d) hereof.  Any stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or, subject to compliance with Section 6 below, such other Person’s name as shall be designated in the Exercise Notice. This Warrant shall be deemed to have been exercised and such Warrant Shares shall be deemed to have been issued, and the Holder shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

 

(d)                                 Fractional Shares. The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant. As to any fraction of a Warrant Share that the Holder otherwise would be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

 

(e)                                  Delivery of New Warrant. Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with Section 3(c) hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

 

(f)                                   Valid Issuance of Warrant and Warrant Shares; Payment of Taxes. With respect to the exercise of this warrant, the Company hereby represents, covenants and agrees:

 

(i)                                     This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

 

(ii)                                  All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued

 

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without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all taxes, liens and charges.

 

(iii)                               The Company shall take all such actions as may be reasonably necessary to ensure that all Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation.

 

(iv)                              At any time that the Common Stock is listed or qualified on a national securities exchange, the Company shall take all such actions as may be reasonably necessary to ensure that all shares of Common Stock into which the Warrant Shares may be converted are issued without violation by the Company of any requirements of such U.S. securities exchange and shall use its reasonable best efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on such U.S. securities exchange (subject to official notice of issuance which shall be immediately delivered by the Company promptly upon each such issuance).

 

(g)                                  Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a public offering of securities of the Company or a direct or indirect sale of the Company (pursuant to a merger, sale of stock, sale of all or substantially all of the assets of the Company, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

 

(h)                                 Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable from time to time upon the exercise of this Warrant.  The Company shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant.

 

4.                                      Adjustment to Number of Warrant Shares. In order to prevent dilution of the purchase rights granted under this Warrant, the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 4 (in each case, after taking into consideration any prior adjustments pursuant to this Section 4).

 

(a)                                 Adjustment to Number of Warrant Shares for Dividends, Subdivisions and Combinations Involving the Common Stock. If the Company shall subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock by way of a stock split, stock dividend or otherwise, or consolidate its outstanding shares of Common Stock into a smaller number of shares of Common Stock, as applicable (any such event being herein called a “Stock Reorganization”), then (i) the Exercise Price shall be adjusted, effective at the close of business on the effective date of such Stock Reorganization, to a price determined by multiplying the Exercise Price in effect immediately prior to such effective date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such effective date before giving effect to such Stock Reorganization and the

 

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denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such Stock Reorganization, and (ii) the number of shares of Common Stock subject to purchase upon exercise of this Warrant shall be adjusted, effective at such time, to a number determined by multiplying the number of shares of Common Stock subject to purchase immediately before such Stock Reorganization by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding after giving effect to such Stock Reorganization and the denominator of which shall be the number of shares of Common Stock outstanding immediately before giving effect to such Stock Reorganization.

 

(b)                                 Other Dividends and Distributions. If the Company shall, at any time or from time to time after the Original Issue Date, make or declare, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or any other distribution payable in securities of the Company (other than a dividend or distribution of shares of Common Stock, Options or Convertible Securities in respect of outstanding shares of Common Stock), cash or other property, then, and in each such event, provision shall be made so that the Holder shall receive upon exercise of the Warrant, in addition to the number of Warrant Shares receivable thereupon, the kind and amount of securities of the Company, cash or other property which the Holder would have been entitled to receive had the Warrant been exercised in full into Warrant Shares on the date of such event and had the Holder thereafter, during the period from the date of such event to and including the Exercise Date, retained such securities, cash or other property receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this Section 4(b) with respect to the rights of the Holder; provided, that no such provision shall be made if the Holder receives, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities, cash or other property in an amount equal to the amount of such securities, cash or other property as the Holder would have received if the Warrant had been exercised in full into Warrant Shares on the date of such event.

 

(c)                                  Adjustment to Number of Warrant Shares for Reclassifications, Consolidations and Mergers Involving the Company. In the event of any (i) reclassification of the stock of the Company, (ii) consolidation or merger of the Company with or into another Person, (iii) sale of all or substantially all of the Company’s assets to another Person or (iv) other similar transaction (other than any such transaction covered by Section 4(a) or Section 4(b)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise; and, in such case, appropriate adjustment shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets

 

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thereafter acquirable upon exercise of this Warrant.  Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 4(c), the Holder shall have the right to elect prior to the consummation of such event or transaction, to exercise this Warrant as provided in Section 2 instead of giving effect to the provisions contained in this Section 4(c) with respect to this Warrant.

 

(d)                                 Certificate as to Adjustment.  As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than three (3) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

 

(e)                                  Notices.

 

(i)                                     In the event:

 

a.                                 that the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security;

 

b.                                 that there shall be any transaction that is referenced in Section 4(c); or

 

c.                                  of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company shall send or cause to be sent to the Holder as soon as reasonably practicable a written notice specifying, as the case may be, (A) the record date for such dividend, distribution or other right, and a description of such dividend, distribution or other right, or (B) the effective date on which such dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.  In the case of any action that would require the fixing of a record date referenced in clause (a) above, such notice shall be given at least ten (10) days prior to the date so fixed, and in case of all other actions referenced in clauses (b) and (c) above, such notice shall be given at least twenty (20) days prior to the taking of such proposed action.  Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action.

 

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(ii)                                  The Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

 

5.                                      Holder’s Rights

 

(a)                                 Information Rights:  For so long as the Company is required to file periodic reports with the Commission, the Company shall deliver to the Holder all quarterly and annual financial information that is required to be contained in a filing with the Commission on Forms 10-Q and 10-K, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Company’s independent accountants; provided that the availability of the Company’s filings on the Commission’s web site shall be deemed to satisfy the requirements of this Section 5(a).

 

(b)                                 Registration Rights.  The Warrant Shares shall be considered Registrable Securities, as such term is defined in the Registration Rights Agreement, dated as of November 14, 2013 (the “Registration Rights Agreement”), by and among the Company, the Holder, and certain stockholders of the Company, and the Holder shall be entitled to receive the notices contemplated by, and exercise the registration rights afforded under, Article II of the Registration Rights Agreement, the provisions of which shall apply mutatis mutandis to the Holder and the Warrant Shares issuable hereunder as though the Holder were a party thereto.

 

6.                                      No Transfer of Warrant. The Holder shall not Transfer (as defined below) this Warrant without the prior written consent of the Company, except for a Transfer to a Permitted Transferee (as defined below) of such Holder; provided, however, that prior to any Transfer of this Warrant by such Holder, the Permitted Transferee shall agree in writing to take such Warrant subject to, and to comply with, all of the provisions of this Warrant, a copy of which agreement shall be on file with the Secretary of the Company and shall include the address of such Permitted Transferee to which notices hereunder shall be sent.  As used herein, the following terms shall have the following meanings: (i) “Permitted Transferee” shall have the meaning ascribed to such term in clause (b) of the definition thereof in the Amended and Restated Limited Liability Company Agreement, dated as of November 13, 2013, of JGWPT Holdings, LLC (the “Amended and Restated Operating Agreement”); and (ii) “Transfer” shall have the meaning ascribed to such term in the Amended and Restated Operating Agreement (substituting, for this purpose, the term “Warrant” for the term “Interests” as used therein). Any attempt to Transfer this Warrant except in accordance with the foregoing shall be void ab initio.  Subject to the Transfer restrictions set forth above and referred to in the legend endorsed hereon, this Warrant and all rights hereunder shall be transferable as provided above, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B, together with funds sufficient to pay any transfer taxes described in Section 3(f)(v) in connection with the making of such transfer. Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the Permitted Transferee or Permitted Transferees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new

 

9

 

Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

 

7.                                      Holder Not Deemed a Stockholder; Limitations on Liability. Prior to the issuance to the Holder of the Warrant Shares to which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

8.                                      Replacement on Loss; Division and Combination.

 

(a)                                 Replacement of Warrant on Loss. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at the Holder’s expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided, that, in the case of mutilation, no indemnity or bond shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

 

(b)                                 Division and Combination of Warrant. Subject to compliance with the applicable provisions of this Warrant as to any Transfer which may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders or their agents or attorneys. Subject to compliance with the applicable provisions of this Warrant as to any Transfer which may be involved in such division or combination, the Company shall at the Holder’s expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

 

9.                                      Compliance with the Securities Act.

 

(a)                                 Agreement to Comply with the Securities Act; Legend. The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 9 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof

 

10

 

except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “Securities Act”). This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

 

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF (“TRANSFERRED”) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF JGWPT HOLDINGS INC. AND MAY NOT BE TRANSFERRED UNLESS SUCH TRANSFER COMPLIES WITH THE PROVISIONS OF SUCH CERTIFICATE OF INCORPORATION AND THE TERMS HEREOF.  A COPY OF SUCH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION IS ON FILE WITH THE SECRETARY OF JGWPT HOLDINGS INC. AND IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR.  THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF THE AFORESAID AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.

 

NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE AMENDED AND RESTATED  CERTIFICATE OF INCORPORATION OF JGWPT HOLDINGS INC. AND THE TERMS HEREOF.

 

10.                               Representations of the Holder. In connection with the issuance of this Warrant, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:

 

(a)                                 The Holder is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.

 

(b)                                 The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

11

 

(c)                                  The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

 

11.                               Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.  The Company reserves the right to amend this Warrant at any time and from time to time in order to appoint a warrant agent to act as agent for the Company with respect to the Warrant, with the Company providing reasonable compensation for the services of any such warrant agent.

 

12.                               Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12).

 

	
If to   the Company:
    	
 
    	
JGWPT   Holdings Inc.

201 King of   Prussia Road, Suite 501

Radnor, PA 19087-5148

Facsimile:                               (855) 285-5089

E-mail: skirkwood@jgwpt.com

Attention:                               Stephen Kirkwood, Esq.
    
	
 
    	
 
    	
 
    
	
with a   copy to:
    	
 
    	
Skadden, Arps, Slate, Meagher & Flom LLP

920 N.   King St.

Wilmington,   DE 19801

Facsimile:                               (651) 552-3240

Email:   steven.daniels@skadden.com

Attention:   Steven J. Daniels, Esq.
    
	
 
    	
 
    	
 
    
	
If to   PGHI:
    	
 
    	
PGHI   Corp.

6465 E.   Johns Crossing. Suite 200

Johns   Creek, GA 30097

Facsimile:

Email:   craiglessner@gmail.com
    

 

12

 

	
 
    	
 
    	
Attention:   Craig Lessner, Esq.
    
	
 
    	
 
    	
 
    
	
with a   copy to:
    	
 
    	
Shearman &   Sterling LLP

599   Lexington Avenue

New   York, NY 10022

Facsimile:                               (646) 848 8902

E-mail: stephen.besen@shearman.com

Attention:                               Stephen M. Besen, Esq.
    

 

13.                               Cumulative Remedies. Except to the extent expressly provided in Section 7 to the contrary, the rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

 

14.                               Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

 

15.                               Entire Agreement. This Warrant constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Warrant and such other agreements, the statements in the body of this Warrant shall control.

 

16.                               Successor and Assigns. This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

 

17.                               No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

 

18.                               Headings. The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

 

19.                               Amendment and Modification; Waiver. Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written

 

13

 

waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

20.                               Severability. If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

21.                               Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule thereof.

 

22.                               Submission to Jurisdiction. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, or relating in any manner to, this Agreement must be brought against any of the parties in the Court of Chancery of the State of Delaware in and for New Castle County or, if the Court of Chancery lacks subject matter jurisdiction, in another court of the State of Delaware, County of New Castle, or in the United States District Court for the District of Delaware, and each of the parties consent to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein.  Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world.

 

23.                               Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

 

24.                               Counterparts. This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

 

25.                               No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

[SIGNATURE PAGE FOLLOWS]

 

14

 

IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.

 

 

	
 
    	
 
    	
JGWPT   HOLDINGS INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Randi K. Sellari
    
	
 
    	
 
    	
Name:
    	
Randi K. Sellari
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Accepted   and agreed,
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
PGHI   CORP.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   James D. Terlizzi
    	
 
    	
 
    
	
Name:
    	
James   D. Terlizzi
    	
 
    	
 
    
	
Title:
    	
Chief   Executive Officer
    	
 
    	
 
    

 

 

Exhibit A

 

Exercise Notice

 

 

EXERCISE NOTICE

 

	
To:
    	
JGWPT   Holdings Inc. 
    	
Dated:
    
	
201 King of Prussia   Road, Suite 501
    	
 
    
	
Radnor, PA 19087-5148
    	
 
    
	
Attn: General Counsel
    	
 
    

 

 

The undersigned, pursuant to the provisions set forth in the attached Warrant No. 1 hereby irrevocably elects to purchase                    shares of the Common Stock covered by such Warrant and herewith makes payment of $                        , representing the full purchase price for such shares at the price per share provided for in such Warrant.  All capitalized terms used herein without definition shall have the same meaning herein as in used in the attached Warrant.

 

The undersigned herewith makes payment of the full purchase price for such shares at the price per share provided for in such Warrant.  Such payment takes the form of (check applicable box or boxes):

 

o                                    by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price;

 

o                                    by instructing the Company to withhold a number of Warrant Shares then issuable upon exercise of this Warrant with an aggregate Fair Market Value as of the Exercise Date equal to such Aggregate Exercise Price; provided that this method shall be permitted only so long as the Common Stock is listed for trading on the New York Stock Exchange or another national securities exchange;

 

o                                    by surrendering to the Company (x) Warrant Shares previously acquired by the Holder with an aggregate Fair Market Value as of the Exercise Date equal to such Aggregate Exercise Price and/or (y) other securities of the Company having a value as of the Exercise Date equal to the Aggregate Exercise Price (which value in the case of debt securities shall be the principal amount thereof plus accrued and unpaid interest, in the case of preferred stock shall be the liquidation value thereof, including accrued and unpaid dividends, and in the case of shares of Common Stock shall be the Fair Market Value thereof); or

 

o                                    or any combination of the checked boxes above, as detailed below:

 

 

 

 

 

	
 
    	
 
    	
Signature:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name   (print):
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title   (if applic.):
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Company   (if applic.):
    	
 
    
							

 

2

 

Exhibit B

 

Assignment

 

 

ASSIGNMENT

 

(To be executed only upon the assignment of the within Warrant)

 

FOR VALUE RECEIVED, the undersigned registered holder of the within Warrant hereby sells, assigns and transfers unto [                   ], whose address is [                                              ], all of the rights of the undersigned under the within Warrant, with respect to [      ] shares of Common Stock of JGWPT Holdings Inc. and, if such shares shall not include all the Warrant Shares issuable as provided in the within Warrant, that a new Warrant of like tenor for the number of Warrant Shares not being transferred hereunder be issued in the name of and delivered to (choose one) (a) the undersigned or (b)[                         ], whose address is [                                ], and does hereby irrevocably constitute and appoint [                              ] Attorney to register such transfer on the books of JGWPT Holdings Inc. maintained for the purpose, with full power of substitution in the premises.

 

 

NOTICE:

 

 

Dated: [                      ,    ].

 

 

	
 
    	
[                                         ]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
(Signature   of Holder)
    

 

 

NOTICE:                                            The signature on this Assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatever.

 

2

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