Exhibit
10.1


 





 


Binding
Term Sheet


 


This
Term Sheet (this “Term Sheet”) represents the binding intention of Brownie’s Marine Group, Inc. (the “Buyer”)
to acquire all of the equity interests of Submersible Systems, LLC (the “Company”) from its two equity owners (the
“Sellers”). Upon execution and delivery of this Term Sheet, the parties agree to mutually negotiate, execute and deliver
a merger agreement (the “Merger Agreement”) containing the terms and provisions provided below, including representations,
warranties and indemnities customary for a transaction of this nature, and the ancillary agreements incorporating the other terms hereof.
The parties intend that the merger (“Merger”) qualify as a “reorganization” under Section 368(a) of the Internal
Revenue Code of 1986, as amended.


 


	Business:	The
    Company designs, tests, manufactures, distributes and sells scuba, diving and rescue equipment, and air compressors and nitrox generation
    fill systems (the “Business”). 
	 	 
	Consideration:	The
    aggregate consideration to be paid by the Buyer to the Sellers for the outstanding equity interests of the Company will be $1,750,000,
    to be paid by the issuance of the Sellers’ Notes and the Equity Consideration.
	 	 
	Sellers’
    Notes: 	$350,000
    of the aggregate consideration will be paid by the issuance of Sellers’ Note, with each Seller to receive a Sellers’
    Note in the principal amount based on the total number of equity interests it holds in the Company, which shall have the following
    terms:


 


	 	●	Term:
    36 months from the closing.
	 	 	 
	 	● 	Principal
    Payments: Within 30 days after each quarter, commencing on the first full quarter after the closing the Buyer shall pay as a
    reduction of the principal amount of the Note in cash payments equal to 50% of the Operating Income of the Company. Operating Income
    shall be the net income of the Company before interest, taxes, depreciation and amortization (but expressly excluding any overhead
    cost allocation applied to the Company by the Buyer). The final payment will be a balloon payment of the balance due upon the end
    of the term of the Sellers’ Note.
	 	 	 
	 	●	Interest
    Payments: The Buyer shall pay interest on the outstanding balance of the Note at the rate of 8.00% per annum. Interest shall
    be paid at the end of each 3-month period commencing on September 30, 2021 in shares of common stock of the Buyer (the “Common
    Stock”). The number of shares to be issued (the “Conversion Rate”) shall be based on the amount due
    on said date divided by the VWAP for the 180 days prior to the date of the parties’ execution of this Term Sheet or the closing
    date of the Merger Agreement, whichever results in a lower VWAP. 
	 	 	 
	 	●	Conversion:
    The holder of a Sellers’ Note shall have the right to convert the Note, in whole or in part, at any time, within the 36-month
    term into shares of Common Stock at the Conversion Rate. 


 


	Equity
    Consideration: 	$1,400,000
    of the aggregate consideration shall be paid in shares of Common Stock, calculated at the Conversion Rate. Each Seller shall receive
    its pro rata portion of the Equity Consideration based on the total number of equity interests it holds in the Company.


 




    	 



    	 



    

 


	Leak-Out
    Provision: 	Shares
    of Common Stock issued to the Sellers, both pursuant to the Sellers’ Notes and Equity Consideration, shall not be transferred
    except as follows:


 


	 	(i)	Up
    to 12.5% after a holding period of 6 months after closing;
	 	 	 
	 	(ii)	Up
    to 25% after a holding period of 9 months after closing; 
	 	 	 
	 	(iii)	Up
    to 75% after a holding period of 24 months after closing; and
	 	 	 
	 	(iv)	Up
    to 100% after 36 months after closing.


 


	 	The leak-out provisions can be waived by the Buyer if the Common
Stock is trading either on the NYSE American or Nasdaq and has a rolling 30-day average trading volume of 50,000 shares per day; provided,
however, that (i) only up to five percent (5%) of the previous days total volume can be sold in one day and (ii) the holder can only
sell through executing trades “On the Offer.”
	 	 
	Adjustments	 
	to
    Merger Consideration:	The
    amount of the Merger Consideration was determined based upon the Company’s balance sheet as of December 31, 2020, and further
    validated with the Company’s balance sheet as of May 31, 2021. The amount of the Merger Consideration shall be reduced by an
    amount equal to any non-operational deterioration to the Company’s cash balances in any form, including, without limitation,
    distributions, payroll, payments of any kind to the Sellers or non-employees of the Company, or payments of payroll to the Company’s
    employees inconsistent with that of average prior periods, and such amount will be deducted dollar-for-dollar from the principal
    amount of the Sellers’ Notes, on a pro-rata basis, without limitation.
	 	 
	Non-Compete:	For
    5 years from the closing, Rick Kearney shall not, directly or indirectly, own, manage, control, participate in, consult with, render
    services for, or in any other manner engage in any business, or as an investor in or lender to any business which competes either
    directly or indirectly with the Company in the Business, subject to the terms and conditions of a definitive non-competition agreement
    to be agreed upon by the parties and executed at closing.
	 	 
	Management:	The
    board of managers of the Company shall consist of Christopher Constable and Robert Carmichael, with Rick Kearney holding a seat as
    a board observer.


 




    	 



    	 



    

 


	Manufacturing:	After
    the closing, the Company will manufacture for Rick Kearney, or his assignee, the Company’s standard products, requiring no
    material modifications, for applications that are not currently a part of the Business; specifically related to medical devices for
    compressed gas delivery. The Company agrees to manufacture these products on the basis of the following cost structure: 
	 	 
	 	Component
    Cost + Manufacturing Labor + Overhead Burden + 30%
	 	 
	 	If
    the product requires material modifications, the Company is under no obligation to produce the product. In the event the Company
    elects to produce the product with material modifications, the pricing for that product will be negotiated separately.
	 	 
	License
    of Intellectual Property:	Rick
    Kearney shall assign the trademark Nomad to the Company for no additional consideration. 
	 	 
	 	Rick
    Kearney shall execute an exclusive license agreement, in a form acceptable to the Buyer, for (i) the patent for Snorkelator with
    a fee of $5 per sale of each Snorkelator, (ii) the trademark for Easy Dive, and (iii) the domain name easydive.us, for consideration
    of $30 per unit sold, which includes the $5 fee related to the Snorkelator included in each Easy Dive purchase, subject to Rick Kearney’s
    right to transfer his ownership interest in such intellectual property and the other terms and conditions of a definitive license
    agreement to be agreed upon by the parties and executed at closing.
	 	 
	Financial
    Reporting.	After
    the closing, the Buyer, the Company and Ligget & Webb, LLP, the Buyer’s independent auditor, or another mutually agreed
    upon audit firm, shall prepare and deliver, at the Buyer’s expense, audited financial statements of the Company in compliance
    with the American Institute of Certified Public Accountants’ generally accepted auditing standards for the years ended December
    31, 2020 and 2019 (the “Audit”), and any required interim periods, and any other information as required for the
    Buyer’s filings in connection with the transactions contemplated by this Agreement under the Exchange Act.
	 	 
	Registration
    Rights:	The
    Sellers shall have “piggyback” registration rights with respect to the shares received as Equity Consideration and pursuant
    to the Sellers’ Notes.
	 	 
	Closing
    Date:	August
    31, 2021 (or such other date as is mutually agreed to by the parties) but no later than August 31, 2021.
	 	 
	Expenses:	Each
    party shall bear their own respective expenses incurred in connection with this Term Sheet and the Merger.
	 	 
	Confidentiality.	This
    Term Sheet, and the transactions contemplated hereby, shall be confidential and shall not to be disclosed to anyone other than respective
    advisors and internal staff of the parties and necessary third parties. No press or other public releases will be issued to the general
    public concerning this Term Sheet or the transactions contemplated hereby, without the mutual consent of the parties, or as required
    by law.
	 	 
	Closing
    Conditions:	The
    closing of the Merger is subject to (a) consummation of Merger Agreement and all other required definitive agreements, (b) obtaining
    all necessary board, shareholder, and third-party consents, (c) satisfactory completion of all necessary technical and legal due
    diligence, and (d) satisfaction of other customary closing conditions.
	 	 
	Governing
    Law:	Florida.


 




    	 



    	 



    

 


IN
WITNESS WHEREOF, the parties have executed this binding Term Sheet as of this 30th day of July, 2021.


 


	 	BUYER:


 


	 	BROWNIE’S
    MARINE GROUP, INC.


 


	 	By:	/s/
    Christopher Constable
	 	Name:	Christopher
    Constable
	 	Title:	Chief
    Executive Officer


 


	 	COMPANY:


 


	 	SUBMERSIBLE
    SYSTEMS, LLC


 


	 	By:
    	/s/
    Rick Kearney
	 	Name:	Rick
    Kearney
	 	Title:	Chief
    Executive Officer


 


	 	SELLERS:


 


	 	TIERRA
    VISTA GROUP, LLC


 





	 	By:	/s/
    Claude R. Walker
	 	Name:	Claude
    R. Walker
	 	Title:	Manager


 


	 	SUMMIT
    HOLDINGS V, LLC


 


	 	By:	/s/
    Claude R. Walker
	 	Name:	Claude
    R. Walker
	 	Title:	Manager