Document:

Property
OPTION AGREEMENT

 

THIS
PROPERTY OPTION (hereinafter referred to as this “Option Agreement”) is made as of 30th day of September,
2019.

 

BETWEEN:

37
CAPITAL INC., having an office at Suite 400, 570 Granville Street,

Vancouver,
B.C. Canada, V6C 3P1

(hereinafter
referred to as "37 Capital")

OF
THE FIRST PART

AND:

 

EAGLE
PLAINS RESOURCES LTD., having an office at Suite 200

44
- 12th Avenue South, Cranbrook, BC, V6C 2R7

(hereinafter
referred to as "Eagle Plains")

OF
THE SECOND PART

 

Eagle
Plains and 37 Capital shall collectively be referred to as “the Parties”.

 

 

		A.	37
                                         Capital is a British Columbia junior mineral exploration company. The common shares of
                                         37 Capital are listed for trading on the Canadian Securities Exchange (the “CSE”)
                                         under the symbol “JJJ”, and are also listed for trading on the OTCQB tier
                                         of the OTC Markets Inc., under the symbol “HHHEF”.

		B.	Eagle
                                         Plains is a British Columbia company the common shares of which are listed for trading
                                         on the TSX Venture Exchange under the symbol “EPL”.

		C.	Eagle
                                         Plains is the holder of a 100% undivided right, title and interest, in certain mineral
                                         claims consisting of approximately 4,734 hectares (collectively referred to as the “Acacia
                                         Property”) located in the Adams Plateau Area of the Province of British Columbia
                                         as more particularly described in Schedule "A" hereto;

		D.	Eagle
                                         Plains represents and warrants that there are no underlying royalties or encumbrances
                                         whatsoever on the Acacia Property.

		E.	Eagle
                                         Plains wishes to grant to 37 Capital, and 37 Capital wishes to so acquire, an immediate,
                                         irrevocable, sole and exclusive right and option to acquire a 60% undivided interest
                                         in the Acacia Property, on the terms and conditions of this Option Agreement (the “Option”);

NOW
THEREFORE, this Option Agreement witnesses
that for good and valuable consideration, the receipt and sufficiency of which is acknowledged, Eagle Plains and 37 Capital hereby
agree as follows:

ARTICLE 1

technical report

1.1              
In conjunction with the execution of this Option Agreement, Eagle Plains shall provide to 37 Capital, at no cost or expense to
37 Capital, a current Technical Report compliant with the requirements of National Instrument 43-101 on the Acacia Property (the
“Current Acacia NI 43-101 Technical Report”).

ARTICLE 2

grant of option

 

2.1                 
In order for 37 Capital to exercise the Option and acquire a 60% right, title and undivided interest in the Acacia Property, 37
Capital shall;

 

		a)	Provided
                                         that Eagle Plains has delivered to 37 Capital the Current Acacia NI 43-101 Technical
                                         Report, 37 Capital will issue to Eagle Plains 100,000 (One Hundred Thousand common shares
                                         in the capital of 37 Capital as fully paid and non-assessable within a period of five
                                         (5) business days after the execution of this Option Agreement by the Parties. These
                                         common shares will have the applicable regulatory hold period of 4 months and one day;

 

b)
Incur a total amount of $100,000 (One Hundred Thousand Dollars) in property related expenditures during the 1st Anniversary of
this Option Agreement which shall be a firm commitment of 37 Capital provided that Eagle Plains has delivered the Current Acacia
NI 43-101 Technical Report to 37 Capital in conjunction with the execution of this Option Agreement;

		c)	Within
                                         a period of 30 Business Days after the 1st Anniversary of this Option Agreement, 37 Capital
                                         shall decide whether or not it wishes to continue with this Option Agreement;

		d)	In
                                         the event that 37 Capital wishes to continue with this Option Agreement, then 37 Capital
                                         shall: i) forthwith issue to Eagle Plains an additional 50,000 (Fifty Thousand) common
                                         shares in the capital of 37 Capital, as fully paid and non assessable, with a hold period
                                         of 4 months and one day, and ii) shall make a firm commitment to incur a total amount
                                         of $100,000 (One Hundred Thousand Dollars) in property related expenditures during the
                                         2nd Period of this Option Agreement;

		e)	Within
                                         a period of 30 Business Days after the completion of the 2nd Period of this Option Agreement,
                                         37 Capital shall decide whether or not it wishes to continue with this Option Agreement;

		f)	In
                                         the event that 37 Capital wishes to continue with this Option Agreement, then 37 Capital
                                         shall: i) forthwith issue to Eagle Plains an additional 50,000 (Fifty Thousand) common
                                         shares in the capital of 37 Capital, as fully paid and non-assessable, with a hold period
                                         of 4 months and one day, and ii) shall make a firm commitment to incur a total amount
                                         of $300,000 (Three Hundred Thousand Dollars) in property related expenditures during
                                         the 3rd Period of this Option Agreement;

		g)	Within
                                         a period of 30 Business Days after the completion of the 3rd Period of this Option Agreement,
                                         37 Capital shall decide whether or not it wishes to continue with this Option Agreement;

		h)	In
                                         the event that 37 Capital wishes to continue with this Option Agreement, then 37 Capital
                                         shall: i) forthwith issue to Eagle Plains an additional 50,000 (Fifty Thousand) common
                                         shares in the capital of 37 Capital, as fully paid and non-assessable, with a hold period
                                         of 4 months and one day, and ii) shall make a firm commitment to incur a total amount
                                         of $750,000 (Seven Hundred Fifty Thousand Dollars) in property related expenditures during
                                         the 4th Period of this Option Agreement;

		i)	Within
                                         a period of 30 Business Days after the completion of the 4th Period of this Option Agreement,
                                         37 Capital shall decide whether or not it wishes to continue with this Option Agreement;

		j)	In
                                         the event that 37 Capital wishes to continue with the this Option Agreement, then 37
                                         Capital shall: i) forthwith issue to Eagle Plains an additional 50,000 (Fifty Thousand)
                                         common shares in the capital of 37 Capital, as fully paid and non-assessable, with a
                                         hold period of 4 months and one day, and ii) shall make a firm commitment to incur a
                                         total amount of $1,250,000 (One Million Two Hundred Fifty Thousand Dollars) in property
                                         related expenditures during the 5th Period of this Option Agreement;

		k)	Upon
                                         37 Capital fulfilling all of its above mentioned obligations Article 2.1 (a) to (j),
                                         37 Capital will have earned a 60% undivided interest in and to the Acacia Property, at
                                         which time a joint-venture agreement will be executed by 37 Capital and Eagle Plains.
                                         In the event that such contemplated Joint Venture Agreement is not executed by the Parties,
                                         this Option Agreement shall remain in full force and effect. The initial interest of
                                         the Parties in the joint-venture shall be as follows: 37 Capital as to 60%, and Eagle
                                         Plains as to 40%;

		l)	Thereafter,
                                         each party will contribute its proportionate share of property related expenditures.
                                         If any party does not contribute its proportionate share of property related expenditures,
                                         then its right, title and interest in the Acacia Property shall be diluted on a straight-line
                                         basis. If any party's right, title and interest in the Acacia Property is diluted to
                                         less than 10%, then its right, title and interest in the Acacia Property shall be converted
                                         into a 2% NSR (the “Resulting NSR”). At anytime the remaining party may purchase
                                         50% of the Resulting NSR for $500,000 (Five Hundred Thousand Dollars), and furthermore
                                         the remaining party will have the right of first refusal for a period of 30 business
                                         days to purchase the remaining 50% of the Resulting NSR in the event that Eagle Plains
                                         intends to sell, or receives any good faith offer for its remaining 50% of the Resulting
                                         NSR;

 

		m)	During
                                         any period, should 37 Capital incur Property Related Expenditures which exceed the amount
                                         that 37 Capital is obligated to incur for that particular period (the “Excess Property
                                         Related Expenditures”), then the Excess Property Related Expenditures shall be
                                         credited in favour of and to the account of 37 Capital, and shall be applied towards
                                         37 Capital’s obligation to incur Property Related Expenditures for the immediately
                                         following next period. Conversely, 37 Capital may, at its sole discretion, at any time
                                         and from time-to-time, pay Eagle Plains cash in lieu of incurring Property Related Expenditures;

 

		n)	Upon
                                         the termination of this Option Agreement, or in the event of a breach of this Option
                                         Agreement by 37 Capital, then 37 Capital shall leave the Acacia Property in good standing
                                         for a period of not less than 12 (twelve) months from the date of the termination of
                                         this Option Agreement or, as the case may be, from the date of the breach of this Option
                                         Agreement by 37 Capital;

 

		o)	If
                                         during the Option, 37 Capital does not make the issuances to Eagle Plains of common shares
                                         in the capital of 37 Capital and/or does not incur the Property Related Expenditures
                                         within the above-mentioned timeframe 2.1 (a) to (j) (the “Default”), then
                                         37 Capital shall be entitled to have a grace period of 30 business days to rectify the
                                         Default, after which time, if the Default has not been rectified, then 37 Capital shall
                                         be in breach of this Option Agreement. In the event of a breach of this Option Agreement
                                         by 37 Capital, this Option Agreement shall forthwith terminate and, the issuances to
                                         Eagle Plains of the common shares in the capital of 37 Capital, and the Property Related
                                         Expenditures incurred by 37 Capital shall be forfeited and shall be considered as liquated
                                         damages;

 

		p)	At
                                         all times, and without any exceptions whatsoever, 37 Capital shall be the Operator of
                                         the Acacia Property. However, a subsidiary of Eagle Plains namely TerraLogic Exploration
                                         Inc. (“TerraLogic”) shall conduct the field work on the Acacia Property during
                                         the 1st Anniversary of this Option Agreement on the clear understanding and
                                         agreement that TerraLogic will ensure and will guarantee that all property related expenditures
                                         shall meet the requirements of and will qualify for Super Flow-Through Shares funding
                                         as per the regulations of the applicable Federal and Provincial Governments. Furthermore,
                                         TerraLogic shall be exclusively responsible to carry out and maintain an insurance policy
                                         covering all risks including public liability insurance in respect to all of its activities
                                         on the Acacia Property. After the 1st Anniversary of this Option Agreement, 37 Capital
                                         shall not be obligated to use the services of TerraLogic for field work unless the parties
                                         agree to do so in writing and by mutual consent.

ARTICLE 3

area of interest

3.1                                      
The Area of Interest shall be that area which extends a distance of two (2) kilometres from the outermost boundaries of the Acacia
Property.

3.2                                      
If at any time during this Option Agreement 37 Capital acquires, directly or indirectly, any right to or interest in any mineral
property located wholly or partially within the Area of Interest referred to in Article 3.1, then 37 Capital shall forthwith give
notice in writing to Eagle Plains of such acquisition, and the cost and expenses thereof. Eagle Plains may within thirty (30)
business days of receipt of this notice, elect to include within the Option the acquired rights by reimbursing 37 Capital all
such acquisition costs and expenses. If Eagle Plains elects not to include the acquired rights as part of the Acacia Property
and as part of this Option Agreement, then 37 Capital shall hold such acquired rights separate from this Option Agreement and
in such an event Eagle Plains shall have no rights whatsoever to the acquired rights.

3.3                                      
 

If
at any time during this Option Agreement Eagle Plains acquires, directly or indirectly, any right to or interest in any mineral
property located wholly or partially within the Area of Interest referred to in Article 3.1, then Eagle Plains shall forthwith
give notice in writing to 37 Capital of such acquisition, and the cost and expenses thereof. 37 Capital may within thirty (30)
business days of receipt of this notice, elect to include within the Option the acquired rights by reimbursing Eagle Plains all
such acquisition costs and expenses. If 37 Capital elects not to include the acquired rights as part of the Acacia Property and
as part of this Option Agreement, then Eagle Plains shall hold such acquired rights separate from this Option Agreement and in
such an event 37 Capital shall have no rights whatsoever to the acquired rights.

  

ARTICLE 4 

covenant
of 37 Capital

4.1                                      
During the currency of this Option Agreement, 37 Capital shall:

		(a)	use
                                         commercially reasonable efforts to obtain all corporate, shareholder and, if required,
                                         regulatory approvals for the transactions contemplated under this Agreement;

		(b)	carry
                                         out and record work for assessment purposes and as required to maintain the Acacia Property
                                         in good standing and will file all property work for assessment purposes;

		(c)	carry
                                         out exploration work on the Acacia Property in a good and workmanlike manner in accordance
                                         with good practice in the Canadian mining industry, in compliance with applicable laws;

		(d)	apply
                                         as assessment credits all exploration work carried out on the Acacia Property with the
                                         appropriate governmental authorities.

		(e)	have
                                         no right to grant a mortgage, charge or lien against its interest in the Acacia Property
                                         without the consent of Eagle Plains such consent not to be unreasonably withheld;

		(f)	while
                                         exploration and development is carried out, with the exception of work performed by TerraLogic
                                         during the first anniversary of the Option Agreement, furnish Eagle Plains with a final
                                         report within 150 days following the conclusion of each program. The final report shall
                                         show the exploration and development performed and the results obtained and shall be
                                         accompanied by a statement of costs and copies of pertinent plans, assay maps, diamond
                                         drill records and other factual engineering data; and

		(g)	deliver
                                         to Eagle Plains annually (including up to date maps if there are any) describing the
                                         results of work done in the last completed period, together with reasonable details of
                                         Property Related Expenditures made.

ARTICLE 5

Covenants of Eagle Plains

5.1                                      
Eagle Plains covenants with, and represents and warrants to 37 Capital that:

		(a)	Eagle
                                         Plains has the authority to enter into this Agreement;

		(b)	each
                                         of the mineral claims comprising the Acacia Property has been duly and validly located
                                         and recorded in accordance with the applicable laws and are valid and subsisting mineral
                                         claims as of the date of execution and delivery of this Option Agreement;

		(c)	the
                                         Acacia Property is in good standing and the Acacia Property is free and clear of all
                                         liens, charges, liabilities and encumbrances;

		(d)	it
                                         is the beneficial and registered or recorded holder of a 100% undivided interest in the
                                         Acacia Property;

		(e)	Eagle
                                         Plains has not transferred or encumbered or agreed to transfer or encumber all or any
                                         of its right, title or interest in or to the Acacia Property, except as provided for
                                         in this Option Agreement;

		(f)	Eagle
                                         Plains has the exclusive right and authority to enter into this Option Agreement and
                                         to dispose of the Acacia Property in accordance with the terms hereof, and no other person,
                                         firm or corporation has any proprietary or other interest in the same;

		(g)	to
                                         the best of Eagle Plains’ knowledge, information and belief, there are no threats,
                                         actions or claims in respect to the ownership of the Acacia Property;

		(h)	to
                                         the best of Eagle Plains' knowledge, information and belief, any and all previous work
                                         conducted on the Acacia Property was conducted in compliance with all applicable laws;
                                         and

		(i)	In
                                         conjunction with the execution of this Option Agreement Eagle Plains shall make available
                                         to 37 Capital, at no cost or expense to 37 Capital, a Current Acacia NI 43-101 Technical
                                         Report. all available technical data, geotechnical reports, maps, digital files and other
                                         data with respect to the Acacia Property, provide all such consents or other documentation
                                         and do all such things as may be reasonably requested by 37 Capital in connection with
                                         completing the transactions contemplated under this Option Agreement.

5.2              
The representations and warranties of Eagle Plains herein before set out form a part of this Option Agreement and are conditions
upon which 37 Capital has relied in entering into this Option Agreement and shall survive the acquisition of the Acacia Property
by 37 Capital.

ARTICLE 6

Termination

6.1                                      
37 Capital may elect to terminate this Agreement at any time after the Execution Date of this Option Agreement by providing 30
business days written notice (the Termination Notice") to Eagle Plains.

6.2                                      
Upon the Termination of this Option Agreement, 37 Capital will:

		(a)	leave
                                         the Acacia Property in good standing under the Mineral Tenure Act (British Columbia)
                                         for a period of not less than one (1) year from the date of the Termination Notice;

		(b)	deliver
                                         at no cost to Eagle Plains within 60 days of such termination all copies of all reports,
                                         maps, assay results and other relevant technical data compiled by or in the possession
                                         of 37 Capital with respect to the Acacia Property; and

		(c)	comply
                                         with applicable laws and regulations regarding reclamation for activities carried out
                                         on the Acacia Property.

6.3                                      
If 37 Capital fails to meet any of its obligations set out in this Option Agreement in order to keep the Option in good standing,
Eagle Plains shall deliver a notice to 37 Capital specifying such failure and 37 Capital shall have 45 business days (the "Grace
Period") to rectify such Default. If 37 Capital fails to rectify the Default within the Grace Period, then this Option Agreement
shall terminate.

ARTICLE 7

Assignment

7.1                                      
This Agreement shall inure to the benefit of and be binding upon each party’s assigns and successors.

7.2                                      
Either party may assign or otherwise transfer all or part of its rights and obligations under this Agreement, to a third party
provided that such third party first enters into an instrument in writing, in form and substance satisfactory to counsel for the
other party, agreeing to be bound by the terms and conditions of this Option Agreement.

 

ARTICLE 8

CONFIDENTIALity

8.1                                      
The parties agree to keep all information pertaining to this Option Agreement and all data and information concerning the Acacia
Property confidential unless required by regulatory or similar related disclosure. Subject to applicable law, both Eagle Plains
and 37 Capital agree to provide the other with a minimum of 24 hours to review any news releases pertaining to this Option Agreement
or the Acacia Property. Each party shall be permitted to make reasonable comments on each news release, and the other party agrees
to take such reasonable comments into account before issuing any news release.

ARTICLE 9

Notice

9.1                                      
Any notice required to be given under this Option Agreement shall be deemed to be well and sufficiently given if delivered in
person or if mailed by registered mail in Canada (save and except during the period of any interruption in the normal postal service
within Canada) or by telecopier as follows:

in
the case of 37 Capital addressed as follows:

 

Suite
400, 570 Granville Street

Vancouver, B.C. V6E 3V1

Attention:
Mr. Jake Kalpakian

Fax:
(604) 681-9428

 

and
in the case of Eagle Plains addressed as follows:

 

Suite
200, 44 - 12th Avenue South

Cranbrook,
BC, V6C 2R7

Attention:
Tim J. Termuende

Fax:
(250) 426-6899

and
any notice given as aforesaid shall be deemed to have been given, if delivered in person, when delivered, if telecopied, when
received, or if mailed on the third business day after the date of mailing thereof. Either party may from time to time by notice
in writing change its address for the purpose of this section.

article
10

Force Majeure

10.1
If 37 Capital is prevented or delayed in complying with any provisions of this Option Agreement by reason of strikes, lockouts,
labour shortages, power shortages, floods, adverse weather conditions, fires, wars, acts of God, governmental regulations restricting
normal operations or any other reason or reasons beyond the control of 37 Capital, except lack of funds, the time limited for
the performance of the various provisions of this Option Agreement as set out above shall be extended by a period of time equal
in length to the period of such prevention and delay. 37 Capital, insofar as is possible, shall promptly give written notice to
Eagle Plains of the particulars of the reasons for any prevention or delay under this Article and shall take all reasonable steps
to remove the cause of such prevention or delay as soon as reasonably practicable, and shall give notice to Eagle Plains as soon
as such cause ceases to subsist.

 

ARTICLE 11

Indemnities

11.1                                  
Each party hereto shall and does hereby indemnify and save harmless the other, as well as its directors, officers, employees,
servants, agents, contractors and shareholders, from and against any and all claims, suits, actions, proceedings, demands, liabilities,
losses, damages, costs, expenses, fees, fines, penalties, interests and deficiencies of any nature or kind whatsoever (collectively,
the “Claims”) arising by virtue of or in respect of any inaccuracy, misstatement, misrepresentation, act or omission
made by such party in connection with any matter set out herein, and any and all claims, suits, actions, proceedings, demands,
liabilities, losses, damages, costs and other expenses related or incidental thereto.

11.2                                  
In additional to the indemnification requirement set out in Article 11.1 above, 37 Capital shall indemnify and save Eagle Plains
harmless in respect of any and all costs, claims, liabilities and expenses arising out of 37 Capital’s activities on the
Acacia Property and, without limiting the generality of the foregoing will, during the currency of this Option Agreement, carry
not less than $2,000,000 (Two Million Dollars) in third party liability insurance in respect of its operations on the Acacia Property
for the benefit of 37 Capital, provided that 37 Capital will incur no obligation thereunder in respect of claims arising or damages
suffered after termination of the Option if upon the termination of the Option any workings or improvements to the Acacia Property
made by 37 Capital are left in safe condition.

ARTICLE 12 

CURRENCY

12.1Unless
otherwise specified, all references to moneys hereunder will mean Canadian funds.

ARTICLE 13

Arbitration

13.1
Any dispute or conflict between the Parties concerning this Option Agreement which cannot be settled by them shall be submitted
firstly to a mutually agreeable mediator who will have no authority to bind the Parties and, in the event that mediation efforts
are unsuccessful, to a single arbitrator pursuant to the provisions of the Commercial Arbitration Act (British Columbia)
or, if the Parties cannot agree upon a single arbitrator, to three arbitrators, one appointed by 37 Capital, one appointed
by Eagle Plains and a third appointed by the arbitrators appointed by 37 Capital and Eagle Plains. Arbitration proceedings shall
take place in Vancouver, British Columbia, at such place that the arbitrator or arbitrators shall determine.

 

ARTICLE
14

GOVERNING
LAW

 

14.1
This Option Agreement and the rights and obligations and relations of the Parties shall be governed by and construed in accordance
with the laws of the Province of British Columbia and the federal laws of Canada applicable therein. The Parties agree that the
courts of British Columbia shall have the sole jurisdiction to entertain any action or other legal proceedings based on any provisions
of this Option Agreement, and the Parties agree to attorn to the sole jurisdiction of such courts.

 

ARTICLE
15

PRIOR
AGREEMENTS

15.1
This Agreement supersedes and replaces all prior agreements between the Parties with respect to the Acacia Property, which said
prior agreements shall be deemed to be null and void upon the execution hereof.

 

ARTICLE
16

FURTHER
ASSURANCES

16.1Each
party hereto agrees to execute and deliver, or cause to be executed and delivered, such further instruments and assurances, and
to do such further acts and things, as may be necessary or desirable to give effect to this Option Agreement, including but not
limited to such as may be required for registering or recording changes in the ownership interests in the Acacia Property.

ARTICLE 17 

FUTURE
AMENDMENTS

17.1                                  
This Option Agreement sets forth the entire agreement between the Parties, and may only be altered in writing and must be signed
by the authorized representatives of both Parties.

ARTICLE 18

Counterparts

18.1                                  
The Parties may execute this Option Agreement in counterparts and deliver same by facsimile or by electronic mail, each facsimile
or electronic mail being deemed to be an original and such counterparts, shall be deemed to form one and the same instrument bearing
the date set forth above notwithstanding the date of actual execution.

ARTICLE 19

time

19.1                                  
Time shall be of the essence hereof.

 

IN
WITNESS WHEREOF the Parties hereto have hereunto executed these presents as of the day and year first above written.

 

THE
CORPORATE SEAL OF

37 Capital Inc. was hereunto affixed

in
the presence of:

/s/ Jake H. Kalpakian

Authorized Signatory

 

 

THE
CORPORATE SEAL OF

Eagle Plains Resources Ltd. was hereunto affixed

in
the presence of:

/s/ Tim Termuende

Authorized Signatory

 

    	 	1	 

     

    

 

Schedule
"A"

Description of the acacia Property

 

	EPL
    BC "ACACIA" TENURE (9 CLAIMS TOTAL)
	Title
    Number	Claim
    Name	Owner	Title
    Type	Title
    Sub Type	Map
    Number	Issue
    Date	Good
    To Date	Area
    (ha)
	376028	AC	138073
    (100%)	Mineral	Claim	082M012	April
    19, 2000	October
    8, 2020	500
	376984	AC	138073
    (100%)	Mineral	Claim	082M011	May
    12, 2000	October
    8, 2020	500
	516713	AC	138073
    (100%)	Mineral	Claim	082M	July
    11, 2005	October
    8, 2020	426.0326
	516715	AC	138073
    (100%)	Mineral	Claim	082M	July
    11, 2005	October
    8, 2020	953.9664
	516719	AC	138073
    (100%)	Mineral	Claim	082M	July
    11, 2005	October
    8, 2020	1238.4279
	706464	AC	138073
    (100%)	Mineral	Claim	082M	February
    17, 2010	October
    8, 2020	507.5616
	706465	AC	138073
    (100%)	Mineral	Claim	082M	February
    17, 2010	October
    8, 2020	507.3628
	1059807	ACACIA	138073
    (100%)	Mineral	Claim	082M	April
    5, 2018	October
    5, 2020	20.2801
	1043247	TM	138073
    (100%)	Mineral	Claim	082M	April
    4, 2016	October
    8, 2020	81.1256
	 	 	 	 	 	 	 	TOTAL:  	4734.757

 

    	 	2Exhibit 10.1

 

AMENDMENT NO. 3 TO TERM CREDIT AGREEMENT
AND AMENDMENT NO. 1 TO COLLATERAL AGREEMENT

 

THIS AMENDMENT NO.
3 TO TERM CREDIT AGREEMENT AND AMENDMENT NO.1 TO COLLATERAL AGREEMENT, dated as of June 5, 2020 (this “Agreement”),
is entered into by and among FOSSIL GROUP, INC., a Delaware corporation (the “Borrower”), the Lenders party
hereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent, under (i) that certain Term Credit Agreement, dated as of September 26,
2019 (as amended pursuant to that certain Amendment No. 1 to Term Credit Agreement dated as of February 20, 2020 and
that certain Amendment No. 2 to Term Credit Agreement dated as of May 12, 2020 (“Amendment No. 2”),
the “Term Credit Agreement”), among the Borrower, the Lenders party thereto and the Administrative Agent and
(ii) that certain Guarantee and Collateral Agreement, dated as of September 26, 2019 (the “Collateral Agreement”),
among the Borrower, the Guarantors party thereto and the Administrative Agent. All capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Term Credit Agreement.

 

WHEREAS, Section 9.02
of the Term Credit Agreement, Section 7.02 of the Collateral Agreement and Section 5(b) of Amendment No. 2
permit certain amendments of the Term Credit Agreement, the Collateral Agreement and Amendment No. 2, respectively, with the
consent of the Borrower, the Required Lenders and the Administrative Agent; and

 

WHEREAS, the Borrower,
the Lenders party hereto constituting the Required Lenders and the Administrative Agent desire to amend certain provisions of the
Term Credit Agreement, the Collateral Agreement and Amendment No. 2, as set forth below.

 

NOW, THEREFORE, in
consideration of the premises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

 

Section 1. Amendments
to the Term Credit Agreement. Effective as of the Amendment No. 3 Effective Date (as defined in paragraph (a) below),
the Term Credit Agreement shall be amended as follows:

 

(a)            The
following defined terms shall be inserted in Section 1.01 of the Term Credit Agreement in their proper alphabetical order:

 

“Amendment No. 3”
means that certain Amendment No. 3 to Term Credit Agreement and Amendment No. 1 to Collateral Agreement, among the Borrower,
the Administrative Agent and the Lenders party thereto.

 

“Amendment No. 3
Effective Date” means the date on which the conditions set forth in Section 4 of Amendment No. 3 were satisfied,
which date was June [5], 2020.

 

“Prepayment Fee Effective
Date” means September [4], 2020.

 

(b)            The
defined term “Applicable Prepayment Fee” in Section 1.01 of the Term Credit Agreement shall be replaced in its
entirety with the following:

 

“Applicable Prepayment
Fee” means (i) prior to the date that is one year after the Prepayment Fee Effective Date, 2.00% and (ii) from
and after the date that is one year after the Prepayment Fee Effective Date and prior to the date that is two years after the Prepayment
Fee Effective Date, 1.00%.”

 

    

     

    

 

(c)            The
defined term “Applicable Rate” in Section 1.01 of the Term Credit Agreement shall be replaced in its entirety
with the following:

 

“Applicable Rate”
means, for any day on and after the Amendment No. 3 Effective Date, (a) with respect to any Term Loan, (i) 8.50%
in the case of Eurodollar Term Loans and (ii) 7.50% in the case of ABR Term Loans, and (b) with respect to any Extended
Term Loans of any Series, the rate per annum specified in the Extension Agreement establishing the Extended Term Loans of such
Series.

 

(d)            The
defined term “Collateral and Guarantee Requirement” in Section 1.01 of the Term Credit Agreement shall be amended
by replacing clause (b) thereof in its entirety with the following:

 

“(b) subject to Sections
5.19 and 5.20, all Equity Interests owned by or on behalf of any Loan Party shall have been pledged pursuant to, and to the extent
required by, the Collateral Agreement and, in the case of Equity Interests entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) in any CFC or CFC Holdco, the Loan Parties shall not be required to pledge more than 65% of such Equity
Interests entitled to vote of any such CFC or CFC Holdco (other than with respect to Fossil (East) Limited, Fossil (Gibraltar)
Ltd., Swiss Technology Holding GmbH and Fossil Europe B.V., with respect to which Persons the Loan Parties shall be required to
pledge all Equity Interests owned by or on behalf of any Loan Party), and the Administrative Agent shall, to the extent required
by the Collateral Agreement, have received certificates or other instruments representing all such certificated Equity Interests,
together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;”

 

(e)            The
defined term “Liquidity” in Section 1.01 of the Term Credit Agreement shall be replaced in its entirety with the
following:

 

“Liquidity”
means, as of any date of determination, the sum of (a) unrestricted cash and Cash Equivalents of the Borrower and its Subsidiaries
on such date plus (b) Availability (as defined in the ABL Credit Agreement) as of such date.

 

(f)            Section 2.08(a)(i) 
of the Term Credit Agreement shall be replaced in its entirety with the following:

 

(a)(i) The Borrower shall
repay the principal amount of the Term Borrowings on the dates set forth below in an aggregate amount based on the schedule set
forth in the table below (as such amounts may be adjusted pursuant to paragraph (c) of this Section).

 

    2

     

    

 

	Date	 	Amount	 
	June 30, 2020	 	$	5,000,000	 
	September 30, 2020	 	$	8,000,000	 
	December 31, 2020	 	$	10,000,000	 
	March 31, 2021	 	$	10,000,000	 
	June 30, 2021	 	$	10,000,000	 
	September 30, 2021	 	$	10,000,000	 
	December 31, 2021	 	$	10,000,000	 
	March 31, 2022	 	$	10,000,000	 
	June 30, 2022	 	$	10,000,000	 
	September 30, 2022	 	$	10,000,000	 
	December 31, 2022	 	$	10,000,000	 
	March 31, 2023	 	$	10,000,000	 
	June 30, 2023	 	$	10,000,000	 
	September 30, 2023	 	$	10,000,000	 
	December 31, 2023	 	$	10,000,000	 
	March 31, 2024	 	$	10,000,000	 
	June 30, 2024	 	$	10,000,000	 

 

(g)            Section 2.10(e) of
the Term Credit Agreement shall be replaced in its entirety as follows:

 

“In the event that during
the period commencing as of the Amendment No. 3 Effective Date and ending on the two year anniversary of the Prepayment Fee
Effective Date (x) the Borrower prepays any Term Loan with the proceeds of any other financing, including any issuance of
Equity Interests, or effects any conversion of any Term Loan into any new or replacement tranche of term loans, (y) any Lender
is required to assign its Loan pursuant to Section 2.17(b)(iii) or (z) the Borrower makes any payment in respect
of any Term Loan following acceleration of any Term Loans or after the Term Loans have otherwise become due prior to their Maturity
Date, in each case of this clause (z) in respect of and during the existence of an Event of Default, then, in each case the
Borrower shall pay such Lender a fee equal to the Applicable Prepayment Fee with respect to the principal amount of such Lender’s
Loan so prepaid or required to be assigned; provided that no Applicable Prepayment Fee shall be due or payable in connection
with any event described in clause (x) above if such event occurs prior to the Prepayment Fee Effective Date unless such event
occurs in connection with a transaction or series of transactions that would, if consummated, result in a Change in Control. Without
limiting the generality of the foregoing clause (z), it is understood and agreed that if the Term Loans are accelerated or otherwise
become due prior to their Maturity Date, in each case, in respect of and during the existence of an Event of Default (including
upon the occurrence of a bankruptcy or insolvency event (including the acceleration of claims by operation of law)), the Applicable
Prepayment Fee with respect to a voluntary prepayment of the Term Loans will also be due and payable on the date of such acceleration
or such other prior due date as though the Term Loans were voluntarily prepaid as of such date and shall constitute part of the
Secured Obligations, in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement
of the parties as to a reasonable calculation of each Lender’s loss as a result thereof. Any premium payable above shall
be presumed to be the liquidated damages sustained by each Lender and the Borrower agrees that it is reasonable under the circumstances
currently existing. THE BORROWER EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT
OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE PREPAYMENT FEE IN CONNECTION WITH ANY SUCH ACCELERATION.
The Borrower expressly agrees (to the fullest extent it may lawfully do so) that: (A) the Applicable Prepayment Fee is reasonable
and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (B) the
Applicable Prepayment Fee shall be payable notwithstanding the then prevailing market rates at the time payment is made; (C) there
has been a course of conduct between the Lenders and the Borrower giving specific consideration in this transaction for such agreement
to pay the Applicable Prepayment Fee; and (D) the Borrower shall be estopped hereafter from claiming differently than as agreed
to in this paragraph.”

 

    3

     

    

 

(h)            Section 5.20
of the Term Credit Agreement shall be replaced in its entirety with the following:

 

“Section 5.20.    Amendment
No. 3 Post-Closing Requirement. The Borrower shall deliver, within 60 days after the Amendment No. 3 Effective Date,
the additional pledges of Equity Interests arising out of the amendment to clause (b) of the definition of the term “Collateral
and Guarantee Requirement” implemented by Amendment No. 3.”

 

(i)            Section 6.08(a)(vi) shall
be replaced in its entirety with the following:

 

“(vi) [reserved]”

 

(j)            Section 6.13
of the Term Credit Agreement shall be replaced in its entirety with the following:

 

“Section 6.13.     Total
Leverage Ratio. Commencing with the Fiscal Quarter ending January 1, 2022, the Borrower will not permit the Total Leverage
Ratio as of the last day of each Fiscal Quarter to be greater than 1.50 to 1.00. For the avoidance of doubt, this Section 6.13
shall not apply with respect to any Fiscal Quarter ending in Fiscal Year 2020 or Fiscal Year 2021, other than the Fiscal Quarter
ending January 1, 2022.”

 

(k)            Section 6.14
of the Term Credit Agreement shall be replaced in its entirety with the following:

 

Section 6.14.       Minimum
Liquidity. From and after the Amendment No. 3 Effective Date, the Borrower will not permit Liquidity as of the last day
of each Fiscal Month (commencing with the Fiscal Month ending June 30, 2020) to be less than the amount set forth in the table
below for such Fiscal Month.

 

	Last Day of Fiscal Month	 	Minimum Liquidity	 
	July 4, 2020	 	$	125,000,0000	 
	August 1, 2020	 	$	125,000,0000	 
	August 29, 2020	 	$	125,000,0000	 
	October 3, 2020	 	$	125,000,0000	 
	October 31, 2020	 	$	125,000,0000	 
	November 28, 2020	 	$	125,000,0000	 
	January 2, 2021	 	$	150,000,000	 
	thereafter	 	$	150,000,000	 

 

    4

     

    

 

(l)            A
new Section 6.15 of the Term Credit Agreement shall be inserted as follows:

 

Section 6.15.      Minimum
Consolidated EBITDA. The Borrower will not permit Consolidated EBITDA for any period set forth in the table below to be more
negative than the amount set forth for such period in the table below. For the avoidance of doubt, this Section 6.15 shall
not apply during any period not specifically set forth in the table below.

 

	Period	 	Minimum Consolidated EBITDA	 
	Fiscal Quarter ending April 3, 2021	 	 	-$	 	 	 	75,000,000	 
	Two Fiscal Quarter period ending July 3, 2021	 	 	-$	 	 	 	65,000,000	 
	Three Fiscal Quarter period ending October 2, 2021	 	 	-$	 	 	 	30,000,000	 

 

 

(m)           A
new Section 6.16 of the Term Credit Agreement shall be inserted as follows:

 

Section 6.16.      Maximum
Consolidated Capital Expenditures. The Borrower will not, and will not permit any of its Subsidiaries to, make or incur Consolidated
Capital Expenditures in any Fiscal Year in an aggregate amount for the Borrower and its Subsidiaries in excess of the amount set
forth in the table below for such Fiscal Year:

 

	Last Day of Fiscal Year	 	Maximum Consolidated Capital Expenditures	 
	January 2, 2021	 	$	10,000,000	 
	January 1, 2022	 	$	20,000,000	 
	December 31, 2022	 	$	25,000,000	 
	thereafter	 	$	25,000,000	 

 

(n)            Article VII(d) shall
be replaced in its entirety with the following:

 

“the Borrower shall fail to observe or perform
any covenant, condition or agreement contained in Section 5.02(a), 5.05 (with respect to the existence of the Borrower), 5.11,
5.20 or in Article VI;”

 

Section 2. Amendments
to the Collateral Agreement. Effective as of the Amendment No. 3 Effective Date, the Collateral Agreement shall be
amended as follows:

 

(a)            Section 3.01
of the Collateral Agreement shall be amended by replacing clause (a) thereof in its entirety with:

 

“(a)(i) the shares of
capital stock and other Equity Interests now owned or at any time hereafter acquired by such Grantor, including those set forth
opposite the name of such Grantor on Schedule 8(a) or (b) to the Perfection Certificate, and (ii) all certificates
and any other instruments representing all such Equity Interests (collectively, the “Pledged Equity Interests”),
provided that the Pledged Equity Interests shall not include (A) Equity Interests in any Person other than wholly-owned
Subsidiaries to the extent not permitted by the terms of such Person’s organizational or joint venture documents (for so
long as such Person remains a non-wholly owned Subsidiary) and (B) any Equity Interests in a Foreign Subsidiary or CFC Holdco
other than those required to be pledged pursuant to clause (b) of the definition of the term “Collateral and Guarantee
Requirement” as defined in the Credit Agreement (the interests so excluded under clauses (A) and (B) above being
collectively referred to herein as the “Excluded Equity Interests”)”

 

    5

     

    

 

(b)            The
table of Pledged Equity Interests attached as Schedule II to the Collateral Agreement is hereby replaced in its entirety with the
table attached as Annex A to this Agreement.

 

Section 3. Amendment
to Amendment No. 2. Effective as of the Amendment No. 3 Effective Date, (i) Section 4(a) of Amendment
No. 2 shall be deleted and replaced with the words “[Intentionally Deleted]” and (ii) the Borrower shall
not be subject to the requirements set forth in such Section 4(a). For the avoidance of doubt, the deletion of Section 4(a) of
Amendment No. 2 shall not release the Borrower of its obligation to deliver with the delivery of the financial statements
for the fiscal quarter ended April 4, 2020, a Compliance Certificate in accordance with the terms and conditions set forth
in Section 5.01(c) of the Term Credit Agreement.

 

Section 4. Representations
and Warranties. Each Loan Party represents and warrants to the Administrative Agent and the Lenders that, after giving
effect to this Agreement and the amendments set forth herein:

 

(a)            the
representations and warranties set forth in Article III of the Term Credit Agreement, and in each of the other Loan Documents,
are true and complete in all material respects on the date hereof as if made on and as of the date hereof (or, if any such representation
or warranty is expressly stated to have been made as of a specific date, such representation or warranty shall be true and correct
in all material respects as of such specific date), and as if each reference in such Article III to “this Agreement”
included reference to this Agreement (it being agreed that it shall be deemed to be an Event of Default under the Credit Agreement
if any of the foregoing representations and warranties shall prove to have been materially incorrect when made); and

 

(b)            no
Default or Event of Default has occurred and is continuing as of the date hereof.

 

Section 5. Effectiveness
of Amendments. The amendments set forth in Sections 2, 3 and 4 of this Agreement shall become effective upon satisfaction
of the following conditions:

 

(a)            The
Borrower, the Administrative Agent and Lenders collectively constituting the Required Lenders shall have executed and delivered
a counterpart of this Agreement (by electronic transmission or otherwise) to the Administrative Agent;

 

(b)            The
Borrower shall have paid all fees and expenses (including expenses of counsel) due and payable on or before the Amendment No. 3
Effective Date; and

 

(c)            The
Borrower shall have made a prepayment of the Term Loans in an aggregate principal amount equal to $15,000,000 to be paid to the
Term Loan Lenders on a pro rata basis.

 

Section 6. Counterparts;
Entire Agreement; Amendment, Modification and Waiver.

 

(a)            This
Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute
an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a
signature page of this Agreement by electronic transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.

 

    6

     

    

 

(b)            After
the Amendment No. 3 Effective Date, this Agreement may not be amended, modified or waived except in accordance with Section 9.02
of the Term Credit Agreement, Section 7.02 of the Collateral Agreement or Section 5(b) of Amendment No. 2,
as applicable.

 

Section 7. Applicable
Law; Waiver of Jury Trial, Etc. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE
TO NATIONAL BANKS. THE PROVISIONS OF SECTIONS 9.09(c) THROUGH (e) AND 9.10 OF THE TERM CREDIT AGREEMENT SHALL APPLY
TO THIS AGREEMENT MUTATIS MUTANDIS.

 

Section 8. Headings.
The headings of this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

 

Section 9. Effect
of Agreement. Except as expressly set forth herein, this Agreement (a) shall not by implication or otherwise limit,
impair, constitute a waiver of or otherwise affect the rights and remedies of any party under the Term Credit Agreement or any
other Loan Document, and (b) shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Term Credit Agreement or any other provision of either such agreement or any other Loan
Document or be construed as a novation thereof, or serve to effect a novation of the obligations outstanding under the Term Credit
Agreement or instruments guaranteeing or securing the same, which shall remain and continue in full force and effect. Each and
every term, condition, obligation, covenant and agreement contained in the Term Credit Agreement as amended hereby, or any other
Loan Document as amended hereby, is hereby ratified and re-affirmed in all respects and shall continue in full force and effect.
This Agreement shall constitute a Loan Document for purposes of the Term Credit Agreement and, from and after the Amendment No. 3
Effective Date, (i) all references to the Term Credit Agreement in any Loan Document and all references in the Term Credit
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the
Term Credit Agreement, shall, unless expressly provided otherwise, refer to the Term Credit Agreement as amended and supplemented
by this Agreement, (ii) all references to the Collateral Agreement in any Loan Document and all references in the Collateral
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the
Collateral Agreement, shall, unless expressly provided otherwise, refer to the Collateral Agreement as amended and supplemented
by this Agreement and (iii) all references to Amendment No. 2 in any Loan Document and all references in Amendment No. 2
to “this Agreement”, “hereunder”, “hereof” or words of like import referring to Amendment No. 2,
shall, unless expressly provided otherwise, refer to Amendment No. 2 as amended and supplemented by this Agreement.

 

[Remainder of Page Left Intentionally
Blank]

 

    7

     

    

 

IN WITNESS WHEREOF,
the parties hereto have duly executed this Agreement as of the day and year first above written.

 

	 	FOSSIL GROUP, INC.,
	 	as the Borrower
	 	 	 
	 	By:	/s/ Jeffrey N. Boyer
	 	 	Name: 	Jeffrey N. Boyer
	 	 	Title: 	Chief Operating Officer, Chief Financial
	 	 	 	Officer and Treasurer

 

    

     

    

 

	 	JPMORGAN CHASE BANK, N.A.,
	 	as Administrative Agent
	 	 
	 	By:	 /s/ Ajay Gupta
	 	Name: Ajay Gupta
	 	Title: Vice President

 

    

     

    

 

	 	HG VORA SPECIAL OPPORTUNITIES MASTER FUND, LTD, as Lender
	 	 
	 	By:	HG VORA CAPITAL MANAGEMENT, LLC, as investment advisor
	 	 
	 	By:	/s/ Gary Moross
	 	Name: Gary Moross
	 	Title: Partner

 

    

     

    

 

	 	AT INVESTMENTS LLC, as a Lender
	 	 
	 	By:	 HG VORA OPPORTUNISTIC CAPITAL MASTER FUND LP, its Managing Member
	 	 
	 	By:	HG VORA CAPITAL MANAGEMENT, LLC, its Investment Manager
	 	 
	 	 
	 	By:	/s/ Gary Moross
	 	Name: Gary Moross
	 	Title: Partner

 

    

     

    

 

	 	BRYANT PARK FUNDING ULC, as a Lender
	 	 
	 	By:	 /s/ Mobasharul Islam
	 	Name: Mobasharul Islam
	 	Title: Authorized Signatory

 

    

     

    

 

	 	GEM 1 LOAN FUNDING LLC, as a Lender
	 	 
	 	By:	/s/ Morgan Land
	 	Name: Morgan Land
	 	Title: Attorney-in-Fact

 

    

     

    

 

	 	BEACHHEAD CREDIT OPPORTUNITIES LLC, as a Lender
	 	 
	 	By:	/s/ Christine Woodhouse
	 	Name: Christine Woodhouse
	 	Title: General Counsel

 

    

     

    

 

	 	CHILTERN
    HOLDINGS LIMITED, as a Lender
	 	 
	 	By: 	HG VORA CAPITAL MANAGEMENT, LLC, investment adviser
	 	 
	 	By: 	/s/ Philip M. Garthe
	 	Name:
    Philip M. Garthe
	 	Title:
    Chief Operating Officer

 

    

     

    

 

Annex A

 

Pledged Equity Interests

 

	Loan Party	 	Issuer	 	Type of
 Organization	 	Number of

 Shares 

Owned	 	Total Shares

 Outstanding	 	Percentage of

 Interest 

Pledged	 	Certificate
 No. (if
 uncertificated,
 please indicate
 so)

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