Document:

gec-ex105_24.htm

Exhibit 10.5

 

Amended and Restated Notice of Performance Stock Award

 

	
(“Participant”)
	
 
	
Great Elm Capital Group, Inc.

	
 
	
 
	
ID: 94-3219054

	
 
	
 
	
800 South Street, Suite 230

	
 
	
 
	
Waltham, MA 02453

 

You have been awarded performance-based restricted shares of Common Stock of Great Elm Capital Group Inc. (the “Company”) as detailed below (the “Performance Shares”):

This Notice of Performance Stock Award (this “Notice”), together with the Great Elm Capital Group, Inc. 2016 Long-Term Incentive Compensation Plan (the “Plan”) in effect as of the Date of Grant, and the terms and conditions of the award of the Performance Shares (the “Award Agreement”) attached hereto, contain the terms of your Performance Shares.

 

	
Date of Grant:
	
 

	
Number of Performance Shares: 
	
 

	
Time Vesting Schedule
	
20% on 11/03/2017 and 5% on each subsequent quarterly anniversary.

	
Performance Vesting Date
	
11/03/2021

 

Performance Criteria and Vesting Schedule:

The Performance Shares will vest (i) based on your continuing service as a Non-Employee Director or Consultant or continuing employment as an Employee with the Company, a Subsidiary or an Affiliate over a five year time-vesting period ending November 3, 2021 and (ii) based upon the Percentage Achievement of the Performance Goal (as defined in the Award Agreement), in each case, subject to acceleration as further set forth in the Terms and Conditions of Performance Stock Award set forth below and incorporated herein by reference.

The foregoing is qualified in its entirety by the Award Agreement.

Acknowledgements and Agreements: 

By your signature and the signature of the representative for the Company, below, you and the Company agree that these Performance Shares are granted under and governed by the terms and conditions of the Plan and the Award Agreement, all of which are attached hereto and hereby incorporated by reference and made a part hereof.

 

	
PARTICIPANT
	
 
	
Great Elm Capital Group, INC.

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
 

	
Signature
	
 
	
 
	
 

	
 
	
 
	
Title:
	
 

	
Print Name  
	
 
	
 
	
 

	
 
	
 
	
 

	
Date
	
 
	
Date

 

 

 

 

Terms and Conditions of Performance Stock Award

	
1.
	
Grant of Restricted Performance Shares. The Company hereby awards to Participant, as of the Date of Grant indicated in the accompanying notice of award, an award (the “Award”) of a number of Performance Shares under the Company’s 2016 Long-Term Incentive Compensation Plan (the “Plan”). Each Performance Share is issued on the terms and conditions governing the Award, including the applicable time-based and performance-based vesting requirements, as set forth in this Award Agreement.

	
2.
	
Vesting Terms. The number of Performance Shares that may actually vest pursuant to the Award shall be determined pursuant to the two-step process detailed below:

	
(a)
	
Performance Vesting.  The Performance Shares shall vest based on the extent to which revenue received by the Company pursuant to the Investment Management Agreement, dated as of September 27, 2016, by and between Great Elm Capital Corp. and Great Elm Capital Management, Inc., (such agreement, as amended, modified, supplemented or replaced, the “IMA”), during the period November 3, 2016 to November 3, 2021 (the “Performance Period”) reaches $40 million (the “Performance Goal”).  Within seventy-five days after the earlier to occur of attainment of 100% of the Performance Goal or November 3, 2021, the Committee shall determine and certify the actual level of attainment for the Performance Goal (the “Percentage Achievement”). On the basis of that certified Percentage Achievement level, the number of Performance Shares will be multiplied by the applicable percentage (which may range from 0% to 100%) on a dollar for dollar basis of actual revenue collected by the Company under the IMA during the Performance Period compared to the Performance Goal. The number of Performance Shares resulting from such calculation shall constitute the maximum number Shares in which Participant may vest under this Award and shall be designated the “Performance-Qualified Shares.” In no event may the number of such Performance-Qualified Shares exceed 100% of the number of Performance Shares specified in the Award.

	
(b)
	
Continuous Service Vesting. 20% of the Performance-Qualified Shares will vest on November 3, 2017, and thereafter 5% of the Performance-Qualified Shares will vest on each February 3, May 3, August 3 and November 3 on which Participant is providing continuing service as a Non-Employee Director or Consultant or is continuing employment as an Employee until fully vested on November 3, 2021 subject to Participant’s continuing service or continuing employment.  If Participant’s service is terminated by the Company without Cause or Participant terminates service for Good Reason, the Performance Shares will vest in full (with respect to both service and performance) immediately upon such termination. In addition to the vesting contemplated by Section 2(b), Section 2(c), Section 2(d) and Section 3, if Participant terminates service before November 3, 2021, the Participant will be entitled to the Performance-Qualified Shares (if any) that have vested pursuant to this Section 2 as of the date of termination.

	
(c)
	
Vesting Upon Disability or Death.  If Participant’s continuous service is terminated by reason of death or Disability, then the Performance-Qualified Shares shall immediately vest in full immediately upon such termination solely with respect to the service-based vesting in Section 2(b); the Performance Shares shall continue to be subject to Performance Vesting, in Section 2(a).

	
(d)
	
Vesting Upon Sale of the Investment Management Agreement.  If (i) the Company or its affiliates, directly or indirectly, transfers, sells, assigns, distributes, participates, delegates or encumbers its economic interest under the IMA (other than to GECC GP Corp or the Company) or (ii) the Company or any of its affiliates receives any compensation in connection 

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with the transfer, sale, assignment, distribution, participation, delegation, encumbrance, termination modification or amendment of the IMA, then the Performance Goal shall be deemed fully satisfied and the Participant’s service obligations under Section 2(b) shall be deemed fully satisfied as of the date of receipt of such consideration.

	
3.
	
Change of Control Vesting.  If a Change of Control occurs, the Performance Shares shall no longer be subject to achievement of the Performance Goal and shall immediately upon the Change of Control (i) become subject to only the time-based vesting schedule in Section 2(b), subject to the Participant’s continued service through each applicable time-based vesting date.  If following a Change of Control, Participant’s continuous service is terminated by the Company without Cause or Participant terminates for Good Reason, the Performance Shares will vest in full immediately upon such termination.

	
(a)
	
For purposes of this Award Agreement, “Cause” shall mean: (i) Participant’s theft, dishonesty, misconduct, or falsification of any of the Company’s or its affiliates’ records; (ii) any action by Participant outside of the scope of Participant’s employment agreement with the Company that has a material detrimental effect on the Company’s reputation or business as reasonably determined by the Committee; (iii) Participant’s substantial failure or inability to perform any reasonably assigned duties within the scope of Participant’s employment agreement with the Company that has not been cured within 30 business days of written notice from the Company to Participant, in each case, as determined by the Committee in its sole discretion; (iv) Participant’s violation of any Company policy; (v) Participant’s conviction (including any plea of guilty or no contest) of any criminal act; or (vi) Participant’s material breach of any written agreement with the Company which has not been cured within 10 business days’ of written notice from the Company to Participant thereof. 

	
(b)
	
For purposes of this Award Agreement, “Disability” shall mean the inability of the Participant, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of Participant’s position with the Company or an Affiliate of the Company because of the sickness or injury of the individual, or as may be otherwise defined under applicable local laws. 

	
(c)
	
For purposes of this Award Agreement, "Good Reason" shall mean the Participant’s resignation from the Company within six months after the occurrence of any of the following events: (i) without the Participant’s express prior written consent, the significant reduction of the Participant’s duties, authority, responsibilities, job title, or reporting relationships relative to your duties, authority, responsibilities, job title, or reporting relationships as in effect immediately prior to such reduction, or the assignment to the Participant of such reduced duties, authority, responsibilities, job title, or reporting relationships; (ii) without the Participant’s express prior written consent, a reduction by the Company of the Participant’s base salary or bonus target as in effect immediately prior to such reduction or the Company’s failure to pay such amounts when due; (iii) a material reduction by the Company in the kind or level of employee benefits, excluding salary and bonuses, to which the Participant was entitled immediately prior to such reduction with the result that the Participant’s overall benefits package is significantly reduced (unless such reduction is part of a program generally applicable to other  employees of the Company of a similar level); (iv) the relocation of the Participant’s principal place of work to a facility or a location more than twenty five miles from the Participant’s then present location, without the Participant’s express prior written consent or (v) breach by the Company of its obligations hereunder or under incentive award (including the related award agreements) you hold; provided, however, that in each case, the Participant’s resignation shall not constitute Good Reason under this provision unless (A) the Participant provides the Company with written notice of the applicable event or circumstance within thirty days after the Participant first has 

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knowledge thereof, which notice reasonably identifies the event or circumstance that the Participant believes constitutes grounds for Good Reason, and (B) the Company fails to correct the event or circumstance so identified within thirty days after receipt of such notice.

	
4.
	
Issuance Date. The Performance Shares shall be issued on the date of the Award and held by the Company, as escrow agent, for the benefit of the Participant and the Company, until the Company determines the extent to which the Performance Shares vest pursuant to Section 2.

	
5.
	
Limited Transferability. Prior to the determination of which Performance Shares (if any) are Performance-Qualified Shares, Participant may not transfer any interest in the Performance Shares subject to this Award or pledge or otherwise hedge the sale of those Performance Shares , including (without limitation) any short sale or any acquisition or disposition of any put or call option or other instrument tied to the value of the Performance Shares.  Participant may also direct the Company to record the ownership of any Performance Shares that become vested hereunder in the name of a bona fide retirement planning, estate planning or charitable donation vehicle. Participant may make such a beneficiary designation or ownership directive at any time by completing the required forms and filing the completed form with the Committee or its designee.

	
6.
	
Stockholder Rights and Dividends. Subject to the other terms and restrictions set forth herein, including, but not limited to, the restriction on the right to transfer such Award prior to vesting, the holder of the Award shall have the rights and privileges of a stockholder of the Company, including, without limitation, voting rights and rights to dividends, in respect of any Performance Shares.  However, any such dividends shall be paid based on the number of Performance Shares, if any, that vest in accordance with the terms of this Award Agreement.

	
7.
	
Adjustment in Shares. The Committee shall adjust the Performance Shares as set forth in Section 3.2 of the Plan.

	
8.
	
Withholding and Section 83(b) Election.  The Company shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to the grant or vesting of the Award and any dividends paid in relation to the Award.  Participant understands that Section 83(a) of the Code taxes as ordinary income the difference between the amount, if any, paid for the Performance Shares and the Fair Market Value of such Shares at the time the Performance Shares vest. Participant understands that, notwithstanding the preceding sentence, Participant may elect to be taxed at the time of the Date of Grant, rather than at the time the Performance Shares vest, by filing an election under Section 83(b) of the Code (an “83(b) Election”) with the Internal Revenue Service within 30 days of the Date of Grant.  In the event Participant files an 83(b) Election, Participant shall provide the Company a copy thereof prior to the expiration of such 30 day period. Participant understands that if an 83(b) Election is filed with the Internal Revenue Service within such time period, Participant will recognize ordinary income in an amount equal to the difference between the amount, if any, paid for the Performance Shares and the Fair Market Value of such Performance Shares as of the Date of Grant. Participant further understands that an additional copy of such 83(b) Election form should be filed with his or her federal income tax return for the calendar year in which the date of this Award Agreement falls.  Participant acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to the Award hereunder, and does not purport to be complete.  Participant further acknowledges that the Company is not responsible for filing the Participant’s 83(b) Election, and the Company has directed Participant to seek independent advice regarding the applicable provisions of the Code, the income tax laws of any 

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municipality, state or foreign country in which Participant may reside, and the tax consequences of Participant’s death.

PARTICIPANT HEREBY ASSUMES ALL RESPONSIBILITY FOR FILING PARTICIPANT’S 83(b) ELECTION AND PAYING ANY TAXES RESULTING FROM SUCH ELECTION OR FROM FAILURE TO FILE THE ELECTION AND PAYING TAXES RESULTING FROM THE VESTING OF THE PERFORMANCE SHARES. 

PARTICIPANT UNDERSTANDS THAT PARTICIPANT MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PARTICIPANT’S PURCHASE OR DISPOSITION OF SHARES AND PARTICIPANT REPRESENTS THAT PARTICIPANT IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

	
9.
	
Compliance with Laws and Regulations. The issuance of Performance Shares pursuant to the Award shall be subject to compliance by the Company and the Participant with all applicable laws relating thereto.

	
10.
	
Construction. This Award Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of any conflict between the provisions of this Award Agreement and the terms of the Plan, the terms of the Plan shall be controlling. All decisions of the Committee with respect to any question or issue arising under the Plan or this Award Agreement shall be conclusive and binding on all persons having an interest in the Award.  Articles 14-18 of the Plan shall apply mutatis mutandis as if set forth herein.  Notwithstanding anything to the contrary in the Plan, this Award Agreement may not be modified in any manner adverse to the Participant other than pursuant to a written agreement signed by the Participant.

	
11.
	
Governing Law. The interpretation, performance and enforcement of this Award Agreement shall be governed by the laws of the State of Delaware applicable to contracts made in and to be solely performed in the State of Delaware.

	
12.
	
Employment at Will. Nothing in this Award Agreement or in the Plan shall confer upon Participant any right to remain in employment or service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Subsidiary of Affiliate employing or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant’s service or employment at any time for any reason, with or without Cause.

	
13.
	
Participant Acceptance. Participant must accept the terms and conditions of this Award Agreement either electronically through the electronic acceptance procedure established by the Company or through a written acceptance delivered to the Company in a form satisfactory to the Company. In no event shall any Shares be issued under this Award Agreement in the absence of such acceptance.

	
14.
	
Amendment and Restatement.  This Award Agreement amends and fully restates the award agreement between the Company and the Participant, dated November 3, 2016 (the “Original Agreement”).  The Performance Shares issued under the Original Agreement shall remain outstanding under this Award Agreement and this Award Agreement shall govern such Performance Shares retroactive to their original issuance. The Original Agreement shall be superseded by this Award Agreement.

4gec-ex106_27.htm

Exhibit 10.6

 

Great Elm Capital Management, Inc.

Performance Bonus Plan

September 18, 2017

	
1.
	
Effective Date and Purpose. Great Elm Capital Management, Inc., a Delaware corporation (“GECM”), adopts this Great Elm Capital Management Performance Bonus Plan effective September 18, 2017. The purpose of the Plan is to motivate Eligible Employees to achieve GECM’s objectives. This Plan and each Award Opportunity granted hereunder shall be subject to the terms and conditions set forth below. Capitalized terms used herein without definition shall have the respective meanings given to them in Section 22.

	
2.
	
Plan Administration. The board of directors of GECM (the “Board”), in consultation with the Compensation Committee (the “Compensation Committee”) of the board of directors of Great Elm Capital Group, Inc. and its counsel and compensation consultants (if any), shall be responsible for administration of the Plan. Subject to approval and authorization by the stockholders of GECM, the Board is authorized to interpret the Plan, to prescribe, amend and rescind regulations relating to the Plan, and to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Determinations, interpretations or other actions made or taken by the Board pursuant to the provisions of the Plan shall be final, binding and conclusive for all purposes and upon all Eligible Employees, Beneficiaries and all other persons who have or claim an interest herein.

	
3.
	
Performance Award Pool.

	
3.1
	
EBITDA Target.  The annual EBITDA Target is $4,500,000 for the Initial Performance Period.  The Board shall determine the EBITDA Target, which may be zero, for subsequent Performance Periods in its sole and absolute discretion.  Any calculation of adjustments of the EBITDA Target by the Board in accordance with the terms hereof shall be final, binding and conclusive.  The EBITDA Target shall be pro-rated for any partial years.

	
3.2
	
Minimum Achievement.  If EBITDA for a Performance Period is less than eighty percent of the EBITDA Target for such Performance Period, no amounts shall be payable hereunder.  If EBITDA for a Performance Period is eighty percent of the EBITDA Target for such Performance Period, then thirty three and one third percent of the Target Award shall be payable under this Plan with respect to each Award Opportunity for such Performance Period.

	
3.3
	
Less Than Target Achievement.  If EBITDA for a Performance Period is greater than eighty percent of the EBITDA Target for such Performance Period but less than the EBITDA Target for such Performance Period, then the Percentage Achievement multiplied by the Target Award shall be payable under this Plan with respect to each Award Opportunity for such Performance Period.

	
3.4
	
Target Achievement.  If EBITDA for a Performance Period is equal to the EBITDA Target for such Performance Period, then the Target Award shall be payable under this Plan with respect to each Award Opportunity for such Performance Period.

	
3.5
	
Upside Achievement.  If EBITDA for a Performance Period is greater than the EBITDA Target for such Performance Period, then the Percentage Achievement multiplied by the Target Award shall be payable under this Plan with respect to each Award Opportunity for such Performance Period.

	
3.6
	
Maximum Achievement. If EBITDA for a Performance Period is greater than 175% of the EBITDA Target for such Performance Period, then each Award Opportunity shall be limited to the Cap specified in the applicable Award Notice.

	
4.
	
Eligibility. The Board shall designate the Eligible Employees, if any, for each Performance Period. An Employee who is designated as an Eligible Employee for a given Performance Period is not guaranteed of being selected as an Eligible Employee for any other Performance Period.

 

 

	
5.
	
Establishment of Award Opportunities. Not later than the ninetieth day of each Performance Period following the Initial Performance Period, the Board shall establish the Target Award of each Eligible Employee assuming the EBITDA Target is achieved for such Performance Period, which may be zero. GECM shall provide a Notice of Award to each Eligible Employee as soon as practical following the establishment of the Eligible Employee’s Target Award.

	
6.
	
Determination of Amount Payable Under Award Opportunities. Following the end of each Performance Period, the Board shall certify in writing (a) the level of achievement of EBITDA for the Performance Period, (b) the Percentage Achievement applicable to each Eligible Employee for the Performance Period, and (c) the amount of the Award Opportunity, if any, earned by each Eligible Employee for the Performance Period pursuant to Section 3 and the applicable Award Notice.

	
7.
	
Payment of Awards. Except as otherwise provided in this Plan, GECM shall make a cash payment to each Eligible Employee equal to the amount payable under this Plan, if any, as certified by the Committee pursuant to Section 6. The cash payment shall be made following the end of the Performance Period and the certifications by the Committee pursuant to Section 6, but not later than two and one-half months following the end of the applicable Performance Period. Notwithstanding the foregoing, payment of an Eligible Employee’s Award Opportunity under this Plan may be deferred (i) with respect to any outstanding receivable included in the calculation of EBITDA for purposes hereof that has not been paid to GECM in cash (the “Non-Cash Amount”), in an amount equal to the portion of such Award Opportunity relating to the Non-Cash Amount; provided that any such deferred amount shall be paid to each such Eligible Employee within thirty days of the end of the quarter during which the Company’s received cash in respect of such Non-Cash Amount or (ii) pursuant to a valid election by the Eligible Employee in her or his sole discretion under the terms and conditions of deferral arrangements, if any, as may be established from time to time by GECM in its sole discretion.  Payments under this Plan shall be subject to applicable withholding and other payroll deductions.

	
8.
	
Terminations, Promotions and New Hires.

	
8.1
	
Terminations. If an Eligible Employee’s employment is terminated for any reason or no reason during a Performance Period, the Eligible Employee shall not be entitled to receive any payment under this Plan with respect to that Performance Period.  Eligible Employees whose employment terminates following conclusion of any applicable Performance Period but prior to payment of the Award Opportunity therefor shall be entitled to receive such payment together with any deferred payments with respect to prior periods, in each case, when otherwise paid to other Eligible Employees.

	
8.2
	
Promotions and New Hires. With respect to an Eligible Employee who is newly hired or is promoted by GECM during a Performance Period, the Board may grant an Award Opportunity, or adjust an Award Opportunity previously granted, to such Eligible Employee for such Performance Period in the Board’s discretion; provided, however, that no Award Opportunity shall be granted or adjusted in such a manner as to cause any amount payable under this Plan to fail to qualify as “performance-based compensation” within the meaning of section 162(m)(4)(C) of the Code and Section 1.162-27 of the Treasury Regulations promulgated thereunder. 

	
9.
	
Tax Withholding. GECM and its Affiliates shall have the right to deduct from all payments made to or for the benefit of an Eligible Employee any federal, state, local, foreign or other taxes which, in the reasonable opinion of GECM, are required to be withheld with respect to any Short-Term Incentive Bonus payable under the Plan. 

	
10.
	
Source of Payment. Each amount that may become payable under the Plan shall be paid solely from the general assets of GECM. Nothing in this Plan shall be construed to create a trust or to establish or evidence any Eligible Employee’s claim of any right to payment of other than as an unsecured general creditor with respect to any payment to which he or she may be entitled. 

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11.
	
Rights of Employer. Nothing contained in this Plan nor any action taken under this Plan shall be construed as a contract of employment or as giving any Eligible Employee any right to continued employment with GECM or any Affiliate. 

	
12.
	
Nontransferability. Except as otherwise provided in this Plan, the benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, and these benefits shall be exempt from the claims of creditors of any Eligible Employee or other claimants and from all orders, decrees, levies, garnishment or executions against any Eligible Executive to the fullest extent allowed by law. Notwithstanding the foregoing, an Eligible Employee may designate a Beneficiary or Beneficiaries (both primary and contingent) to receive, in the event of the Eligible Employee’s death, any amounts remaining to be paid with respect to the Eligible Employee under the Plan. The Eligible Employee shall have the right to revoke any such designation and to re-designate a Beneficiary or Beneficiaries. To be effective, any such designation, revocation, or re-designation must be in such written form as the Company may prescribe and must be received and accepted by GECM prior to the Eligible Employee’s death. Any finalized divorce or marriage of an Eligible Employee subsequent to the date of a Beneficiary designation shall revoke such designation, unless in the case of divorce the previous spouse was not designated as a Beneficiary and unless in the case of marriage the Eligible Employee’s new spouse has previously been designated as a Beneficiary. The spouse of a married Eligible Employee shall consent to any designation of a Beneficiary other than the spouse, and the spouse’s consent shall be witnessed by a notary public. If an Eligible Employee dies without effectively designating a Beneficiary, or if either all designated Beneficiaries predecease the Eligible Employee or the Eligible Employee and all designated Beneficiaries die prior to any payment yet to be made under the Plan, any amounts remaining to be paid with respect to the Eligible Employee under the Plan shall be paid to the estate of the Eligible Employee. 

	
13.
	
Successors. The rights and obligations of GECM under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of GECM. 

	
14.
	
Governing Law. The Plan and all Award Opportunities shall be construed in accordance with and governed by the laws of the State of Delaware, but without regard to its conflict of law provisions. 

	
15.
	
Amendment or Termination. The Board reserves the right, at any time, without either the consent of, or any prior notification to, any Eligible Employee or other person, to amend, suspend, supplement or terminate the Plan or any Award Opportunity granted thereunder on a prospective basis, in whole or in part, in any manner, and for any reason; provided that any such amendment shall be subject to approval by GECM’s stockholders to satisfy the requirements of Section 162(m) of the Code and the Treasury Regulations promulgated thereunder, and provided further that any such amendment shall not cause the amount payable under an Award Opportunity to be increased as compared to the amount that would have been paid in accordance with the terms established as of the end of such period.  Notwithstanding the foregoing, no adverse amendment, suspension, supplement or termination may be made to any outstanding Award Opportunity held by an Eligible Employee without such Eligible Employee’s express prior written consent. 

	
16.
	
Claw-back Policy. If Great Elm Capital Group Inc.’s financial statements are restated (a “Restatement”) or as otherwise required by applicable law or listing requirement, each Award Opportunity granted, and each amount, if any, paid pursuant to this Plan (net of taxes) shall be subject to the terms and conditions of the Great Elm Capital Group Inc.’s claw back policy in effect from time to time; provided that, in the event of a claw-back because of a Restatement, (a) GECM  may only claw-back payments of any Award Opportunity earned in the period to which the Restatement applies and (b) except as mandated by applicable law or listing requirement, in no event may GECM claw back any payments of any Award Opportunity earned in periods occurring more than three years prior to such Restatement.

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17.
	
Section 409A of the Code. GECM intends that, except as otherwise provided pursuant to a deferral election described in Section 7, each amount payable under this Plan shall be exempt from the requirements of Section 409A of the Code under the “short-term deferral” exception set out in Section 1.409A-1(b)(4) of the Treasury Regulations. The Plan shall be interpreted and administered in a manner consistent with such intent.

	
18.
	
Plan Terms Control. If there is a conflict or ambiguity between the terms and conditions of any Notice of Award and the terms and conditions of the Plan, the terms and conditions of the Plan shall prevail, unless such term or condition is expressly addressed in the applicable Notice of Award. In the event of a conflict or ambiguity between the terms and conditions of any Notice of Award or of this Plan, the terms and conditions of the Plan shall prevail to the extent necessary for amounts paid under this Plan to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code and Section 1.162-27 of the Treasury Regulations promulgated thereunder.

	
19.
	
Severability. If any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provisions of the Plan. 

	
20.
	
Waiver. The waiver by the Board or GECM of any breach of any provision of the Plan by an Eligible Employee shall not operate or be construed as a waiver of any subsequent breach or a similar or other breach by or condition with respect to any other Eligible Employee.

	
21.
	
Captions. The captions of the sections of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 

	
22.
	
Definitions. The following capitalized words as used in this Plan shall have the following meanings:

	
22.1
	
“Affiliate” means any corporation or other entity (including, but not limited to, partnerships, limited liability companies and joint ventures) controlled by GECM or under common control with GECM or its parent.  Control means ownership of a majority of the equity interests, the right to elect a majority of the board of directors, managing member or other governing body or the right to control (by contract or otherwise) the affairs of such entity.

	
22.2
	
“Award Opportunity” means an opportunity granted by the Board under the Plan to an Eligible Employee to earn a bonus under this Plan with respect to a Performance Period, payable in cash and subject to the terms and conditions of this Plan and the applicable Notice of Award.

	
22.3
	
“Beneficiary” means a person designated by an Eligible Employee in accordance with Section 12 to receive, in the event of the Eligible Employee’s death, any amounts remaining to be paid with respect to the Eligible Employee under the Plan. 

	
22.4
	
“Board” means the Board of Directors of GECM.  It is expected that the Board will consult with the Compensation Committee before taking significant actions under the Plan and actions by the Board hereunder shall be subject to approval by the stockholders of GECM.

	
22.5
	
“Cap” means the maximum payout under any Award Opportunity.  In no event may a Cap be greater than 200% provided that any deferred payments to an Eligible Employee of an Award Opportunity in respect of a prior Performance Period shall not count toward such Cap or the foregoing 200% limitation. 

	
22.6
	
“Cause” means: (a) Eligible Employee’s theft, dishonesty, misconduct, or falsification of any employment or GECM’s or an Affiliate’s records; (b) any action by Eligible Employee outside of the scope of Eligible Employee’s employment with GECM or an Affiliate that has a material detrimental effect on GECM’s or an Affiliate’s reputation or business as reasonably determined by the Board; (c) Eligible Employee’s substantial failure or inability to perform any reasonably assigned duties within the scope of Eligible Employee’s employment agreement with GECM that has not been cured within thirty business days of written notice from GECM to Eligible Employee, in each case, as determined by the Board in its sole discretion; (d) Eligible Employee’s violation of any GECM policy; 

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(e) Eligible Employee’s conviction (including any plea of guilty or no contest) of any criminal act (other than traffic violations); or (f) Eligible Employee’s material breach of any written agreement with GECM or an Affiliate which has not been cured within ten business days’  written notice from GECM to the Eligible Employee thereof.

	
22.7
	
“Code” means the Internal Revenue Code of 1986, as amended. 

	
22.8
	
“EBITDA” means, with respect to any Performance Period, net income or net loss of GECM (combined with  any affiliate of GECM which receives revenue from any fund or account managed by GECM) plus (a) depreciation of fixed assets, amortization of intangible assets (but not amortization of right to use assets) and impairment charges, (b) provision for income taxes, (c) interest expense and debt related charges (e.g. extinguishment of debt and amortization of financing costs), (d) stock-based compensation, (e) amounts payable under this Plan and (f) any fees, costs or expenses incurred by GECM or its affiliates in connection with the dispute with MAST Capital Management, LLC, (“MAST”) including, without limitation, any indemnification of legal expenses of employees of GECM or any contractual termination payments or other liabilities assumed by GECM in connection therewith that were deducted in the calculation of net income or net loss of GECM.

	
22.9
	
“EBITDA Target” means the EBITDA target, which may be zero, determined by the Board for any Performance Period following the Initial Performance Period in its sole and absolute discretion.

	
22.10
	
“Eligible Employee” means any Employee who is designated as such by the Board for a Performance Period pursuant to Section 4.

	
22.11
	
“Employee” means any person employed by GECM or an Affiliate, whether such Employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.

	
22.12
	
“Initial Performance Period” means the period commencing October 1, 2017 and ending September 30, 2018.

	
22.13
	
“Interim Performance Period” means the period commencing October 1, 2018 and ending December 31, 2018.

	
22.14
	
“Notice of Award” means a written or electronic communication to an Eligible Employee with respect to a Performance Period, which provides notice of the Eligible Employee’s Target Award and Cap for such Performance Period, subject to the terms and conditions of the Plan.  In the discretion of the Board, a Notice of Award may contain conditions not specified herein.

	
22.15
	
“Percentage Achievement” means, with respect to any Performance Period, (a) EBITDA for such Performance Period divided by (b) the EBITDA Target for such Performance Period.

	
22.16
	
“Performance Period” means, (i) the Initial Performance Period, (ii) the Interim Performance Period, if any, and (iii) beginning with the fiscal year commencing January 1, 2019, each subsequent fiscal year of GECM ending December 31 of such year.  If GECM changes its fiscal year after January 1, 2019, the Performance Period including such partial fiscal year shall be pro-rated and a new Performance Period shall commence on the beginning of the next fiscal year.

	
22.17
	
“Plan” means this Great Elm Capital Management Performance Bonus Plan, as amended from time to time in accordance with the terms hereof.

	
22.18
	
“Target Award” means the amount payable under an Award Opportunity assuming that the EBITDA Target is achieved in the applicable Performance Period.

5

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