Document:

jcg-ex101_93.htm

Exhibit 10.1

FINAL FORM

 

J. CREW GROUP, INC.
2019 SPECIAL BONUS PLAN

Section 1.  Purpose

The purpose of the Special Bonus Plan (the “Plan”) is to promote the interests of J. Crew Group, Inc. and its subsidiaries (the “Company”) by providing select associates of the Company with employment retention incentives.

Section 2.  Administration

(a)The Plan shall be administered by the Compensation Committee (the “Committee”) of the Board of Directors of the Company.

(b)The Committee may, subject to the provisions of the Plan, establish, adopt or revise rules and regulations relating to the Plan or take such actions as it deems necessary or advisable for the proper administration of the Plan.  The Committee shall have the authority to interpret the Plan in its absolute discretion.  Each interpretation made or action taken by the Committee pursuant to the Plan shall be final and conclusive for all purposes and binding upon all Participants (as defined in Section 3) or former Participants and their successors in interest.  The Committee may request advice or assistance or employ such persons (including, without limitation, legal counsel and accountants) as it deems necessary for the proper administration of the Plan.

(c)Neither the Committee nor any member of the Committee shall be liable for any act, omission, interpretation, construction or determination in connection with the Plan made in good faith, except for willful misconduct or as expressly provided by statute, and the members of the Committee shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law.

Section 3.  Eligibility

Awards may be granted only to associates of the Company who are selected for participation in the Plan by the Committee.  A qualifying associate selected by the Committee to participate in the Plan shall be a “Participant” in the Plan. Participation in the Plan shall be in addition to participation, if any, in the Company’s Annual Incentive Plan.  

Section 4.  Special Bonus and Payment

(a)The maximum aggregate amount available for payment as Bonus Amounts hereunder shall be five million dollars ($5 million). 

(b)Each Participant shall be eligible to receive the grant of a special bonus equal to a percentage of such Participant’s base salary, as determined by the Committee in its sole discretion.  Except as otherwise provided in the Award, such amount shall be earned in two equal installments on each of the last day of the Company’s fiscal year within which the Grant Date occurs, and the date that is the last day of the sixth month of the subsequent fiscal year following 

 

 

the Grant Date, provided that with respect to each installment, the Participant remains in continued employment with the Company from the Grant Date through the applicable date each installment is earned (each a “Vesting Date”).  

(c)Unless otherwise provided in the Award, payments of Bonus Amounts under this Plan shall be paid to the Participant as soon as reasonably practicable following the applicable Vesting Date, and in no event later than 30 days thereafter.

Section 5.  Definitions

As used herein, the following terms shall have the meanings set forth below:

(a)“Award” means the grant of a special bonus pursuant to the terms of the Plan.

(b)“Bonus Amount” means the amount payable in respect of an Award, in accordance with Section 4(b) herein.  

(c)“Code” means the U.S. Internal Revenue Code of 1986, as amended.

(d)“Grant Date” shall have the meaning set forth in the Participant’s Award.

Section 6.  Miscellaneous Provisions

(a)No Rights to Awards or Continued Employment.  No associate of the Company shall have any claim or right to receive Awards under the Plan.  Neither the Plan nor any action taken under the Plan shall be construed as giving any associate any right to be retained by the Company in any capacity.

(b)No Limits on Other Awards and Plans.  Nothing contained in this Plan shall prohibit the Company from establishing other special awards or incentive compensation plans providing for the payment of incentive compensation to associates of the Company, including any Participants.

(c)Withholding Taxes.  The Company shall deduct from all payments and distributions under the Plan any required federal, state or local governments tax withholdings.

(d)Unfunded Status of Plan.  The Company shall not have any obligation to establish any separate fund or trust or other segregation of assets to provide for payments under the Plan.  To the extent any person acquires any rights to receive payments hereunder from the Company, such rights shall be no greater than those of an unsecured creditor.

(e)Effective Date; Amendment.  The Plan is effective as of April 11, 2019.  The Committee may at any time and from time to time alter, amend, suspend or terminate the Plan in whole or in part.

(f)Governing Law.  The Plan and the rights of all persons under the Plan shall be construed and administered in accordance with the laws of the State of New York without regard to its conflict of law principles.

-2-

 

(g)Code Section 409A.  Each Award is intended not to be subject to Section 409A of the Code (“Section 409A”) by reason of being a short-term deferral and shall be interpreted accordingly.  In the event any of the compensation or benefits provided to a Participant pursuant to this Plan would result in a violation of Section 409A (including any regulations promulgated thereunder), the Company will use its reasonable best efforts to amend the Plan in the least restrictive manner necessary in order, where applicable (i) to ensure that such compensation is not considered “nonqualified deferred compensation” for purposes of Section 409A, or (ii) to comply with the provisions of Section 409A, in each case, where possible, without any diminution in the value of the compensation or benefits to be paid or provided to the Participant pursuant to this Agreement; provided, however, that nothing in this Agreement shall require the Company to provide any gross-up or other tax reimbursement to a Participant in connection with any violation of Section 409A or otherwise.

 

-3-Exhibit

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES IN THE UNITED STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.   

AMENDED AND RESTATED 
SUBORDINATED CONVERTIBLE PROMISSORY NOTE

	
		
	Note Series:
	2019MA

	 
	 

	Date of Note:
	March 29, 2019

	 
	 

	Principal Amount of Note:
	$

For value received ENERGY FOCUS, INC., a Delaware corporation (the “Company”), promises to pay to the undersigned holder or such party’s assigns (the “Holder”) the principal amount set forth above with simple interest on the outstanding principal amount at the rate of (i) from the date hereof until June 30, 2019, 5% per annum, and (ii) thereafter until the Maturity Date, 10% per annum. Interest shall commence with the date hereof and shall continue on the outstanding principal amount until paid in full or converted. Interest shall be computed on the basis of a year of 365 days for the actual number of days elapsed.  All unpaid interest and principal shall be due and payable upon request of the Majority Holders on or after December 31, 2021 (the “Maturity Date”).
1.BASIC TERMS.
(a)    Series of Notes.  This convertible promissory note (the “Note”) is issued as part of a series of notes designated by the Note Series above (collectively, the “Notes”) and issued in a single closing to certain persons and entities (collectively, the “Holders”).  The Company shall maintain a ledger of all Holders. 
(b)    Payments.  All payments of interest and principal shall be in lawful money of the United States of America, shall be made pro rata among all Holders and shall be made at such place as the Holder indicates. All payments shall be applied first to accrued interest, and thereafter to principal.
(c)    Prepayment.  The Company may not prepay this Note prior to the Maturity Date without the consent of the Holders of a majority of the outstanding principal amount of the Notes (the “Majority Holders”).
2.    CONVERSION AND REPAYMENT.
(a)    Automatic Conversion. The outstanding principal amount of this Note and any unpaid accrued interest (in total, the “Aggregate Outstanding Amount”) shall automatically convert in whole 

 

without any further action by the Holder into the number of shares of the Company’s Series A Convertible Preferred Stock (the “Preferred Stock”), determined by dividing (x) the Aggregate Outstanding Amount of this Note by (y) $0.67 (the “Conversion Rate”), on the first business day following the date on which the Company’s stockholders approve the transactions contemplated herein, including (A) the issuance of shares of the Company’s Common Stock upon the conversion of the shares of Preferred Stock in excess of the number of shares of Common Stock permitted by Rule 5635(d)(1)(B) or Rule 5635(b), as applicable, of the Rules of the Nasdaq Stock Market, and (B) the increase in the number of authorized and available shares of Preferred Stock pursuant to the Company’s Certificate of Incorporation, as amended. 
(b)    Procedure for Conversion.  In connection with any conversion of this Note into Preferred Stock, the Holder shall surrender this Note to the Company and deliver to the Company any documentation reasonably required by the Company.  Such conversion shall be deemed to have been effected as of the close of business on the Automatic Conversion Date. The Company shall not be required to deliver the Preferred Stock into which this Note may convert until the Holder has surrendered this Note to the Company and delivered to the Company any such documentation.  No fractional shares of Preferred Stock shall be issued to the Holder upon the conversion of the Note. The Company shall round up the result of the Conversion Rate to the nearest whole share. Provided that this Note has been surrendered and such additional required documentation has been delivered, as soon as practicable (but in no event more than 10 calendar days following the Automatic Conversion Date), the Company shall deliver to the Holder, certificates representing the number of shares of Preferred Stock issuable upon such conversion registered in such name or names and such denomination or denominations as the Holder shall have specified.   
3.    EVENTS OF DEFAULT.
(a)    If there shall be any Event of Default (as defined below) hereunder, at the option and upon the declaration of the Majority Holders and upon written notice to the Company (which election and notice shall not be required in the case of an Event of Default under subsection (ii) or (iii) below), this Note shall accelerate and all principal and unpaid accrued interest shall become due and payable. The occurrence of any one or more of the following shall constitute an “Event of Default”:
(i)    The Company fails to pay timely any of the principal amount due under this Note on the date the same becomes due and payable or any unpaid accrued interest or other amounts due under this Note on the date the same becomes due and payable;
(ii)    The Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing; 
(iii)    An involuntary petition is filed against the Company (unless such petition is dismissed or discharged within sixty (60) days under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee or assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company);
(iv)    default in the obligation of the Company for borrowed money, other than this Note, which shall continue for a period of sixty (60) days, or any event that results in acceleration of the maturity of any indebtedness of the Company under any note, indenture, contract, or agreement; 
or 

 

(v)    any levy, seizure, attachment, lien, or encumbrance of or on the Company’s property, other than those existing as of the date hereof, which is not discharged by the Company within twenty (20) days.
(b)    In the event of any Event of Default hereunder, the Company shall pay all reasonable attorneys’ fees and court costs incurred by the Holder in enforcing and collecting this Note.
(c)    The obligations of the Company to pay the principal balance and interest due to the Holder shall be absolute and unconditional and the Company shall make such payment without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense, setoff, recoupment, or counterclaim which the Company may have or assert against the Holder or any other person.
4.    MISCELLANEOUS PROVISIONS.
(a)    Waivers.  The Company hereby waives demand, notice, presentment, protest and notice of dishonor.
(b)    Further Assurances.  The Holder agrees and covenants that at any time and from time to time the Holder will promptly execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to carry out the full intent and purpose of this Note and to comply with state or federal securities laws or other regulatory approvals.
(c)    Transfers of Notes.  This Note may be transferred only upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company to a party that provides to the Company a joinder agreement to the Note Purchase Agreement dated March 29, 2019 entered into by the initial Holder hereof (the “Purchase Agreement”), causing the transferee to agree and become entitled to the terms, rights and conditions set forth therein, including without limitation, making the representations set forth in Section 3.2 thereof. Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or a new Note for like principal amount and interest shall be issued to, and registered in the name of, the transferee. Interest and principal shall be paid solely to the registered holder of this Note. Such payment shall constitute full discharge of the Company’s obligation to pay such interest and principal. 
(d)    Amendment and Waiver.  Any term of this Note may be amended or waived with the written consent of the Company and the Holder.  In addition, any term of this Note may be amended or waived with the written consent of the Company and the Majority Holders. Upon the effectuation of such waiver or amendment with the consent of the Majority Holders in conformance with this paragraph, such amendment or waiver shall be effective as to, and binding against the holders of, all of the Notes and the Company shall promptly give written notice thereof to the Holder if the Holder has not previously consented to such amendment or waiver in writing; provided that the failure to give such notice shall not affect the validity of such amendment or waiver.
(e)    Governing Law.  This Note shall be governed by and construed under the laws of the State of Delaware, as applied to agreements among Delaware residents, made and to be performed entirely within the State of Delaware, without giving effect to conflicts of laws principles.
(f)    Binding Agreement.  The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  Nothing in this Note, expressed 

 

or implied, is intended to confer upon any third party any rights, remedies, obligations or liabilities under or by reason of this Note, except as expressly provided in this Note.
(g)    Counterparts; Manner of Delivery.  This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
(h)    Titles and Subtitles. The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing or interpreting this Note.
(i)    Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications to a party shall be sent to the party’s address set forth on the signature page hereto or at such other address(es) as such party may designate by ten (10) days’ advance written notice to the other party hereto. 
(j)    Delays or Omissions.  It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Holder, upon any breach or default of the Company under this Note shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  It is further agreed that any waiver, permit, consent or approval of any kind or character by the Holder of any breach or default under this Note, or any waiver by the Holder of any provisions or conditions of this Note, must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Note, or by law or otherwise afforded to the Holder, shall be cumulative and not alternative.  This Note shall be void and of no force or effect in the event that the Holder fails to remit the full principal amount to the Company within five (5) calendar days of the date of this Note.
(k)    Entire Agreement.  This Note and the Purchase Agreement constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof, and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein.
(l)    Exculpation among Holders.  The Holder acknowledges that the Holder is not relying on any person, firm or corporation, other than the Company and its officers and Board members, in making its investment or decision to invest in the Company.
(m)    Senior Indebtedness.  The obligations evidenced by this Note are hereby expressly subordinated in right of payment to the prior payment in full of all of the Company’s obligations under that certain Loan and Security Agreement, dated as of December 11, 2018, between Austin Financial Services, Inc. and the Company (the “Senior Indebtedness”).  Notwithstanding the foregoing, the Holder shall be entitled to receive (a) equity securities of the Company from the conversion of all or any part of the obligations evidenced by this Note, (b) any note, instrument or other evidence of indebtedness which may be issued by the Company in exchange for or in substitution of this Note, provided that such note, instrument or other 

 

evidence of indebtedness is subordinated to the Senior Indebtedness on the same terms and conditions as set forth in this Section 4(m) and (c) other payments consented to in writing by holders of Senior Indebtedness. 
(n)    Broker’s Fees. Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker’s or finder’s fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this subsection being untrue.
 [Signature pages follow]

 

The parties have executed this AMENDED AND RESTATED SUBORDINATED CONVERTIBLE PROMISSORY NOTE as of the date first noted above.

	
				
	 
	COMPANY:

	 
	 

	

	Energy Focus, Inc.

	 
	 

	 
	By:
	/s/ James Tu

	 
	 
	 

	 
	 
	Name:
	James Tu

	 
	 
	Title:
	Chairman of the Board, Chief Executive Officer and President

	 
	 
	 

	 
	E-mail:
	jtu@energyfocus.com

	 
	 

	 
	Address:
	32000 Aurora Road – Suite B

	 
	 
	Solon, Ohio 44139

	 
	 
	 

SIGNATURE PAGE TO
ENERGY FOCUS, INC.
SUBORDINATED CONVERTIBLE PROMISSORY NOTE

 

The parties have executed this SUBORDINATED CONVERTIBLE PROMISSORY NOTE as of the date first noted above.

	
				
	 
	HOLDER (if an entity):

	 
	 

	Name of Holder:
	 

	 
	 

	 
	By:
	 

	 
	 
	 

	 
	 
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	Address:
	 

	 
	 
	 

	 
	 
	 

	
			
	 
	HOLDER (if an individual):

	 
	 

	Name of Holder:
	 

	 
	 

	 
	 

	Signature:
	 

	 
	 

	 
	E-mail:
	 

	 
	 

	 
	Address:
	 

	 
	 
	 

	 
	 
	 

SIGNATURE PAGE TO
ENERGY FOCUS, INC.
SUBORDINATED CONVERTIBLE PROMISSORY NOTE

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