Document:

Exhibit 10.1 

 

BlueCity
Holdings Limited

 

2021 SHARE INCENTIVE PLAN

 

Article
1 

 

PURPOSE

 

The purpose of this 2021 Share
Incentive Plan is to promote the success and enhance the value of BlueCity Holdings Limited, an exempted company formed under the laws
of the Cayman Islands (the “Company”), by linking the personal interests of the Directors, Employees, and Consultants
to those of the Company’s shareholders and by providing such individuals with an incentive for outstanding performance to generate
superior returns to the Company’s shareholders. The Plan is further intended to provide flexibility to the Company in its ability
to motivate, attract, and retain the services of the Directors, Employees, and Consultants upon whose judgment, interest, and special
effort the successful conduct of the Company’s operation is largely dependent.

 

Article
2 

 

DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms
are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun
shall include the plural where the context so indicates.

 

2.1           “Applicable
Laws” means the legal requirements relating to the Plan and the Awards under applicable provisions of the corporate, securities,
tax and other laws, rules, regulations and government orders, and the rules of any applicable stock exchange or national market system,
of any jurisdiction applicable to Awards granted to residents therein.

 

2.2           “Award”
means an Option, Restricted Share or Restricted Share Unit award or other types of award approved by the Committee granted to a Participant
pursuant to the Plan.

 

2.3           “Award
Agreement” means any written agreement, contract, or other instrument or document evidencing an Award, including through electronic
medium.

 

2.4           “Board” means the Board of Directors of the Company.

 

     

     

    

 

2.5           “Cause”
with respect to a Participant means (unless otherwise expressly provided in the applicable Award Agreement, or another applicable contract
with the Participant that defines such term for purposes of determining the effect that a “for cause” termination has on
the Participant’s Awards) a termination of employment or service based upon a finding by the Service Recipient, acting in good
faith and based on its reasonable belief at the time, that the Participant:

 

(a)              
has been negligent in the discharge of his or her duties to the Service Recipient, has refused to perform stated or assigned duties
or is incompetent in or (other than by reason of a disability or analogous condition) incapable of performing those duties;

 

(b)            
has been dishonest or committed or engaged in an act of theft, embezzlement or fraud, a breach of confidentiality, an unauthorized
disclosure or use of inside information, customer lists, trade secrets or other confidential information;

 

(c)              
has breached a fiduciary duty, or willfully and materially violated any other duty, law, rule, regulation or policy of the Service
Recipient; or has been convicted of, or plead guilty or nolo contendere to, a felony or misdemeanor (other than minor traffic violations
or similar offenses);

 

(d)              
has materially breached any of the provisions of any agreement with the Service Recipient;

 

(e)              
has engaged in unfair competition with, or otherwise acted intentionally in a manner injurious to the reputation, business or assets
of, the Service Recipient; or

 

(f)               
has improperly induced a vendor or customer to break or terminate any contract with the Service Recipient or induced a principal
for whom the Service Recipient acts as agent to terminate such agency relationship.

 

A termination for Cause shall
be deemed to occur (subject to reinstatement upon a contrary final determination by the Committee) on the date on which the Service Recipient
first delivers written notice to the Participant of a finding of termination for Cause.

 

2.6             
“Code” means the Internal Revenue Code of 1986 of the United States, as amended.

 

2.7             
“Committee” means a committee of the Board described in Article 10.

 

2.8             “Consultant” means any consultant or adviser if: (a) the consultant or adviser renders bona fide services to
a Service Recipient; (b) the services rendered by the consultant or adviser are not in connection with the offer or sale of securities
in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities; and
(c) the consultant or adviser is a natural person who has contracted directly with the Service Recipient to render such services.

 

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2.9            
“Corporate Transaction”, unless otherwise defined in an Award Agreement, means any of the following transactions,
provided, however, that the Committee shall determine under (d) and (e) whether multiple transactions are related, and its
determination shall be final, binding and conclusive:

 

(a)              
 an amalgamation, arrangement or consolidation or scheme of arrangement (i) in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the jurisdiction in which the Company is incorporated or (ii) following
which the holders of the voting securities of the Company do not continue to hold more than 50% of the combined voting power of the voting
securities of the surviving entity;

 

(b)              
the sale, transfer or other disposition of all or substantially all of the assets of the Company;

 

(c)              
the complete liquidation or dissolution of the Company;

 

(d)              
any reverse takeover or series of related transactions culminating in a reverse takeover (including, but not limited to, a tender
offer followed by a reverse takeover) in which the Company is the surviving entity but (A) the Company’s equity securities outstanding
immediately prior to such takeover are converted or exchanged by virtue of the takeover into other property, whether in the form of securities,
cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the
Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately
prior to such takeover or the initial transaction culminating in such takeover, but excluding any such transaction or series of related
transactions that the Committee determines shall not be a Corporate Transaction; or

 

(e)              
acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or
by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding
any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction.

 

2.10         
“Director”, means a member of the Board or a member of the board of directors of any Subsidiary of the Company.

 

2.11         
“Disability”, unless otherwise defined in an Award Agreement, means that the Participant qualifies to receive
long-term disability payments under the Service Recipient’s long-term disability insurance program, as it may be amended from time
to time, to which the Participant provides services regardless of whether the Participant is covered by such policy. If the Service Recipient
to which the Participant provides service does not have a long-term disability plan in place, “Disability” means that a Participant
is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determinable
physical or mental impairment for a period of not less than ninety (90) consecutive days. A Participant will not be considered to have
incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Committee in its discretion.

 

2.12         
“Effective Date” shall have the meaning set forth in Section 11.1.

 

2.13         
“Employee” means any person, including an officer or a Director, who is in the employment of a Service Recipient,
subject to the control and direction of the Service Recipient as to both the work to be performed and the manner and method of performance.
The payment of a director’s fee by a Service Recipient shall not be sufficient to constitute “employment” by the
Service Recipient.

 

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2.14         
“Exchange Act” means the Securities Exchange Act of 1934 of the United States, as amended.

 

2.15         
“Fair Market Value” means, as of any date, the value of Shares determined as follows:

 

(a)              
If the Shares are listed on one or more established stock exchanges or national market systems, including without limitation, the
New York Stock Exchange or the Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such shares (or the closing
bid, if no sales were reported) as quoted on the principal exchange or system on which the Shares are listed (as determined by the Committee)
on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading
date such closing sales price or closing bid was reported), as reported on the website maintained by such exchange or market system or
such other source as the Committee deems reliable;

 

(b)              
If the Shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities
dealer, its Fair Market Value shall be the closing sales price for such Shares as quoted on such system or by such securities dealer on
the date of determination, but if selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high
bid and low asked prices for the Shares on the date of determination (or, if no such prices were reported on that date, on the last date
such prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

 

(c)              
In the absence of an established market for the Shares of the type described in (a) and (b) above, the Fair Market Value thereof
shall be determined by the Committee in good faith and in its discretion by reference to (i) the placing price of the latest private placement
of the Shares and the development of the Company’s business operations and the general economic and market conditions since such
latest private placement, (ii) other third party transactions involving the Shares and the development of the Company’s business
operation and the general economic and market conditions since such transaction, (iii) an independent valuation of the Shares, or (iv)
such other methodologies or information as the Committee determines to be indicative of Fair Market Value.

 

2.16         
“Group Entity” means any of the Company and Subsidiaries of the Company.

 

2.17         
“Incentive Share Option” means an Option that is intended to meet the requirements of Section 422 of the Code
or any successor provision thereto.

 

2.18         
“Independent Director” means (i) if the Shares or other securities representing the Shares are not listed on
a stock exchange, a Director of the Company who is a Non-Employee Director; and (ii) if the Shares or other securities representing the
Shares are listed on one or more stock exchange, a Director of the Company who meets the independence standards under the applicable corporate
governance rules of the stock exchange(s).

 

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2.19         
 “Non-Employee Director” means a member of the Board who qualifies as a “Non-Employee Director”
as defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the Board.

 

2.20         
“Non-Qualified Share Option” means an Option that is not intended to be an Incentive Share Option.

 

2.21         
“Option” means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number
of Shares at a specified price during specified time periods. An Option may be either an Incentive Share Option or a Non-Qualified Share
Option.

 

2.22         
“Participant” means a person who, as a Director, Consultant or Employee, has been granted an Award pursuant
to the Plan.

 

2.23         
“Parent” means a parent corporation under Section 424(e) of the Code.

 

2.24         
“Plan” means this 2021 Share Incentive Plan of BlueCity Holdings Limited, as amended and/or restated from time
to time.

 

2.25         
“Related Entity” means any business, corporation, partnership, limited liability company or other entity in
which the Company, a Parent or Subsidiary of the Company holds a substantial ownership interest, directly or indirectly, or controls through
contractual arrangements and consolidates the financial results according to applicable accounting standards, but which is not a Subsidiary
and which the Board designates as a Related Entity for purposes of the Plan.

 

2.26         
“Restricted Share” means a Share awarded to a Participant pursuant to Article 6 that is subject to certain restrictions
and may be subject to risk of forfeiture.

 

2.27         
“Restricted Share Unit” means the right granted to a Participant pursuant to Article 7.

 

2.28         
“Securities Act” means the Securities Act of 1933 of the United States, as amended.

 

2.29         “Service Recipient” means the Company or Subsidiary of the Company to which a Participant provides services
as an Employee, a Consultant or a Director.

 

2.30         
“Share” means the ordinary shares of the Company, par value US$0.0001 per share, and such other securities of
the Company that may be substituted for Shares pursuant to Article 9.

 

2.31         
“Subsidiary” means any corporation or other entity of which a majority of the outstanding voting shares or voting
power is beneficially owned directly or indirectly by the Company.

 

2.32         
 “Trading Date” means the closing of the first sale to the general public of the Shares pursuant to a registration
statement filed with and declared effective by the U.S. Securities and Exchange Commission under the Securities Act.

 

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Article
3 

 

SHARES SUBJECT TO THE PLAN

 

3.1             
Number of Shares.

 

(a)             
Subject to the provisions of Article 9 and Section 3.1(b), the maximum aggregate number of Shares which may be issued pursuant
to all Awards (including Incentive Share Options) (the “Award Pool”) under the Plan
shall initially be 298,780 Shares, plus an annual increase on the first day of each fiscal year of the Company during the term of this
Plan commencing with the fiscal year beginning January 1, 2022, by (i) an amount equal to 1.5% of the total number of Shares issued and
outstanding on the last day of the immediately preceding fiscal year, or (ii) such lesser number of Shares as may be determined by the
Board; provided that the size of the Award Pool shall be equitably adjusted in the event of any share dividend, subdivision, reclassification,
recapitalization, split, reverse split, combination, consolidation or similar transactions.

 

(b)              
To the extent that an Award terminates, expires, or lapses for any reason, any Shares subject to the Award shall again be available
for the grant of an Award pursuant to the Plan. To the extent permitted by Applicable Laws, Shares issued in assumption of, or in substitution
for, any outstanding awards of any entity acquired in any form or combination by a Group Entity shall not be counted against Shares available
for grant pursuant to the Plan. Shares delivered by the Participant or withheld by the Company upon the exercise of any Award under the
Plan, in payment of the exercise price thereof or tax withholding thereon, may again be optioned, granted or awarded hereunder, subject
to the limitations of Section 3.1(a). If any Restricted Shares are forfeited by the Participant or repurchased by the Company, such Shares
may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a). Notwithstanding the provisions of this
Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Share Option to fail to qualify
as an incentive share option under Section 422 of the Code.

 

3.2             
Shares Distributed. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued
Shares, treasury Shares (subject to Applicable Laws) or Shares purchased on the open market. Additionally, at the discretion of the Committee,
any Shares distributed pursuant to an Award may be represented by American Depository Shares. If the number of Shares represented by an
American Depository Share is other than on a one-to-one basis, the limitations of Section 3.1 shall be adjusted to reflect the distribution
of American Depository Shares in lieu of Shares.

 

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Article
4 

 

ELIGIBILITY AND PARTICIPATION

 

4.1              Eligibility.
Persons eligible to participate in this Plan include Employees, Consultants, and Directors, as determined by the Committee.

 

4.2             
Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible
individuals, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No individual shall have any
right to be granted an Award pursuant to this Plan.

 

4.3             
Jurisdictions. In order to assure the viability of Awards granted to Participants employed in various jurisdictions, the
Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax
policy, or custom applicable in the jurisdiction in which the Participant resides, is employed, operates or is incorporated. Moreover,
the Committee may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary
or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however,
that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Section
3.1 of the Plan. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that
would violate any Applicable Laws.

 

Article
5 

 

OPTIONS

 

5.1             
General. The Committee is authorized to grant Options to Participants on the following terms and conditions:

 

(a)              
Exercise Price. The exercise price per Share subject to an Option shall be determined by the Committee and set forth in
the Award Agreement which may be a fixed price or a variable price related to the Fair Market Value of the Shares. The exercise price
per Share subject to an Option may be amended or adjusted in the absolute discretion of the Committee, the determination of which shall
be final, binding and conclusive. For the avoidance of doubt, to the extent not prohibited by Applicable Laws or any exchange rule, a
downward adjustment of the exercise prices of Options mentioned in the preceding sentence shall be effective without the approval of the
Company’s shareholders or the approval of the affected Participants.

 

(b)              
Time and Conditions of Exercise. The Committee shall determine the time or times at which an Option may be exercised in
whole or in part, including exercise prior to vesting; provided that the term of any Option granted under the Plan shall not exceed
ten years, except as provided in Section 12.1. The Committee shall also determine any conditions, if any, that must be satisfied before
all or part of an Option may be exercised.

 

(c)               Payment.
The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including,
without limitation (i) cash or check denominated in U.S. Dollars, (ii) to the extent permissible under the Applicable Laws, cash or
check in Chinese Renminbi, (iii) cash or check denominated in any other local currency as approved by the Committee, (iv) Shares
held for such period of time as may be required by the Committee in order to avoid adverse financial accounting consequences and
having a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof,
(v) after the Trading Date the delivery of a notice that the Participant has placed a market sell order with a broker with respect
to Shares then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise price; provided that payment of such proceeds is
then made to the Company upon settlement of such sale, (vi) other property acceptable to the Committee with a Fair Market Value
equal to the exercise price, or (vii) any combination of the foregoing. Notwithstanding any other provision of the Plan to the
contrary, no Participant who is a member of the Board or an “executive officer” of the Company within the meaning of
Section 13(k) of the Exchange Act shall be permitted to pay the exercise price of an Option in any method which would violate
Section 13(k) of the Exchange Act.

 

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(d)              
Evidence of Grant. All Options shall be evidenced by an Award Agreement between the Company and the Participant. The Award
Agreement shall include such additional provisions as may be specified by the Committee.

 

(e)              
Effects of Termination of Employment or Service on Options. Termination of employment or service shall have the following
effects on Options granted to the Participants:

 

(i)                
Dismissal for Cause. Unless otherwise provided in the Award Agreement, if a Participant’s employment by or service
to the Service Recipient is terminated by the Service Recipient for Cause, the Participant’s Options will terminate upon such termination,
whether or not the Option is then vested and/or exercisable;

 

(ii)             
Death or Disability. Unless otherwise provided in the Award Agreement, if a Participant’s employment by or service
to the Service Recipient terminates as a result of the Participant’s death or Disability:

 

		(a)	the Participant (or his or her legal representative or beneficiary, in the case of the Participant’s Disability or death, respectively),
will have until the date that is 12 months after the Participant’s termination of Employment to exercise the Participant’s
Options (or portion thereof) to the extent that such Options were vested and exercisable on the date of the Participant’s termination
of Employment on account of death or Disability;

 

		(b)	the Options, to the extent not vested and exercisable on the date of the Participant’s termination of Employment or service,
shall terminate upon the Participant’s termination of Employment or service on account of death or Disability; and

 

		(c)	the Options, to the extent exercisable for the 12-month period following the Participant’s termination of Employment or service
and not exercised during such period, shall terminate at the close of business on the last day of the 12-month period.

 

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(iii)           
 Other Terminations of Employment or Service. Unless otherwise provided in the Award Agreement, if a Participant’s
employment by or service to the Service Recipient terminates for any reason other than a termination by the Service Recipient for Cause
or because of the Participant’s death or Disability:

 

		(a)	the Participant will have until the date that is 90 days after the Participant’s termination of Employment or service to exercise
his or her Options (or portion thereof) to the extent that such Options were vested and exercisable on the date of the Participant’s
termination of Employment or service;

 

		(b)	the Options, to the extent not vested and exercisable on the date of the Participant’s termination of Employment or service,
shall terminate upon the Participant’s termination of Employment or service; and

 

		(c)	the Options, to the extent exercisable for the 90-day period following the Participant’s termination of Employment or service
and not exercised during such period, shall terminate at the close of business on the last day of the 90-day period.

 

5.2             
Incentive Share Options. Incentive Share Options may be granted to Employees of the Company or a Subsidiary of the Company.
Incentive Share Options may not be granted to employees of a Related Entity or to Independent Directors or Consultants. The terms of any
Incentive Share Options granted pursuant to the Plan, in addition to the requirements of Section 5.1, must comply with the following additional
provisions of this Section 5.2:

 

(a)              
Individual Dollar Limitation. The aggregate Fair Market Value (determined as of the time the Option is granted) of all Shares
with respect to which Incentive Share Options are first exercisable by a Participant in any calendar year may not exceed $100,000 or such
other limitation as imposed by Section 422(d) of the Code, or any successor provision. To the extent that Incentive Share Options are
first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Share Options.

 

(b)              
Exercise Price. The exercise price of an Incentive Share Option shall be equal to the Fair Market Value on the date of grant.
However, the exercise price of any Incentive Share Option granted to any individual who, at the date of grant, owns Shares possessing
more than ten percent of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary of the Company
may not be less than 110% of Fair Market Value on the date of grant and such Option may not be exercisable for more than five years from
the date of grant.

 

(c)              
Transfer Restriction. The Participant shall give the Company prompt notice of any disposition of Shares acquired by exercise
of an Incentive Share Option within (i) two years from the date of grant of such Incentive Share Option or (ii) one year after the transfer
of such Shares to the Participant.

 

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(d)              Expiration
of Incentive Share Options. No Award of an Incentive Share Option may be made pursuant to this Plan after the tenth anniversary of
the Effective Date.

 

(e)              Right
to Exercise. During a Participant’s lifetime, an Incentive Share Option may be exercised only by the Participant.

 

Article
6 

 

RESTRICTED SHARES 

 

6.1           Grant of Restricted Shares. The Committee, at any time and from time to time, may grant Restricted Shares to Participants
as the Committee, in its sole discretion, shall determine. The Committee, in its sole discretion, shall determine the number of Restricted
Shares to be granted to each Participant.

 

6.2           Restricted
Shares Award Agreement. Each Award of Restricted Shares shall be evidenced by an Award Agreement that shall specify the period of
restriction, the number of Restricted Shares granted, and such other terms and conditions as the Committee, in its sole discretion, shall
determine. Unless the Committee determines otherwise, Restricted Shares shall be held by the Company as escrow agent until the restrictions
on such Restricted Shares have lapsed.

 

6.3           Issuance
and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions as the Committee
may impose (including, without limitation, limitations on the right to vote Restricted Shares or the right to receive dividends on the
Restricted Shares). These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such
installments, or otherwise, as the Committee determines at the time of the grant of the Award or thereafter.

 

6.4           Forfeiture/Repurchase.
Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Shares that are at that time subject to restrictions shall be forfeited
or repurchased in accordance with the Award Agreement; provided, however, the Committee may (a) provide in any Restricted Share
Award Agreement that restrictions or forfeiture and repurchase conditions relating to Restricted Shares will be waived in whole or in
part in the event of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture
and repurchase conditions relating to Restricted Shares.

 

6.5           Certificates
for Restricted Shares. Restricted Shares granted pursuant to the Plan may be evidenced in such manner as the Committee shall determine.
If certificates representing Restricted Shares are registered in the name of the Participant, certificates must bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and the Company may, at its discretion, retain
physical possession of the certificate until such time as all applicable restrictions lapse.

 

6.6           Removal
of Restrictions. Except as otherwise provided in this Article 6, Restricted Shares granted under the Plan shall be released from
escrow as soon as practicable after the last day of the period of restriction. The Committee, in its discretion, may accelerate the
time at which any restrictions shall lapse or be removed. After the restrictions have lapsed, the Participant shall be entitled to
have any legend or legends under Section 6.5 removed from his or her Share
certificate, and the Shares shall be freely transferable by the Participant, subject to applicable legal restrictions. The Committee
(in its discretion) may establish procedures regarding the release of Shares from escrow and the removal of legends, as necessary or
appropriate to minimize administrative burdens on the Company.

 

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Article
7 

 

RESTRICTED SHARE UNITS

 

7.1           Grant
of Restricted Share Units. The Committee, at any time and from time to time, may grant Restricted Share Units to Participants as
the Committee, in its sole discretion, shall determine. The Committee, in its sole discretion, shall determine the number of Restricted
Share Units to be granted to each Participant.

 

7.2           Restricted Share Units Award Agreement. Each Award of Restricted Share Units shall be evidenced by an Award Agreement that
shall specify any vesting conditions, the number of Restricted Share Units granted, and such other terms and conditions as the Committee,
in its sole discretion, shall determine.

 

7.3           Form and Timing of Payment of Restricted Share Units. At the time of grant, the Committee shall specify the date or dates
on which the Restricted Share Units shall become fully vested and nonforfeitable. Upon vesting, the Committee, in its sole discretion,
may pay Restricted Share Units in the form of cash, Shares or a combination thereof.

 

7.4           Forfeiture/Repurchase.
Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Share Units that are at that time unvested shall be forfeited or repurchased
in accordance with the Award Agreement; provided, however, the Committee may (a) provide in any Restricted Share Unit Award Agreement
that restrictions or forfeiture and repurchase conditions relating to Restricted Share Units will be waived in whole or in part in the
event of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture and
repurchase conditions relating to Restricted Share Units.

 

Article
8 

 

PROVISIONS APPLICABLE TO AWARDS

 

8.1           Award
Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for
each Award which may include the term of an Award, the provisions applicable in the event the Participant’s employment or service
terminates, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.

 

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8.2           No
Transferability; Limited Exception to Transfer Restrictions.

  

8.2.1       
 Limits on Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 8.2, by applicable law and by the Award
Agreement, as the same may be amended:

 

		(a)	all Awards are non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge,
encumbrance or charge;

 

		(b)	Awards will be exercised only by the Participant; and

 

		(c)	amounts payable or shares issuable pursuant to an Award will be delivered only to (or for the account of), and, in the case of Shares,
registered in the name of, the Participant.

 

In addition, the shares shall be subject
to the restrictions set forth in the applicable Award Agreement.

 

8.2.2       
Further Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 8.2.1 will not apply to:

 

		(a)	transfers to the Company or a Subsidiary;

 

		(b)	transfers by gift to “immediate family” as that term is defined in SEC Rule 16a-1(e) promulgated under the Exchange Act;

 

		(c)	the designation of a beneficiary to receive benefits if the Participant dies or, if the Participant has died, transfers to or exercises
by the Participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent
and distribution; or

 

		(d)	if the Participant has suffered a disability, permitted transfers or exercises on behalf of the Participant by the Participant’s
duly authorized legal representative; or

 

		(e)	subject to the prior approval of the Committee or an executive officer or director of the Company authorized by the Committee, transfer to one or more natural persons who are the Participant’s family members or entities owned and controlled by the Participant and/or the Participant’s family members, including but not limited to trusts or other entities whose beneficiaries or beneficial owners are the Participant and/or the Participant’s family members, or to such other persons or entities as may be expressly approved by the Committee, pursuant to such conditions and procedures as the Committee or may establish. Any permitted transfer shall be subject to the condition that the Committee receives evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes and on a basis consistent with the Company’s lawful issue of securities.

 

    12

     

    

 

Notwithstanding anything else in this Section
8.2.2 to the contrary, but subject to compliance with all Applicable Laws, Incentive Share Options, Restricted Shares and Restricted Share
Units will be subject to any and all transfer restrictions under the Code applicable to such Awards or necessary to maintain the intended
tax consequences of such Awards. Notwithstanding clause (b) above but subject to compliance with all Applicable Laws, any contemplated
transfer by gift to “immediate family” as referenced in clause (b) above is subject to the condition precedent that the transfer
be approved by the Committee in order for it to be effective.

 

8.3           Beneficiaries.
Notwithstanding Section 8.2, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights
of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal
guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the
Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and
to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community
property state, a designation of a person other than the Participant’s spouse as his or her beneficiary with respect to more than
50% of the Participant’s interest in the Award shall not be effective without the prior written consent of the Participant’s
spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant
to the Participant’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

 

8.4           Performance Objectives and Other Terms. The Committee, in its discretion, shall set performance objectives or other vesting
criteria which, depending on the extent to which they are met, will determine the number or value of the Awards that will be granted or
paid out to the Participants.

 

8.5           Share
Certificates. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any
certificates evidencing the Shares pursuant to the exercise of any Award, unless and until the Committee has determined, with advice
of counsel, that the issuance and delivery of such certificates is in compliance with all Applicable Laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on which the Shares are listed or traded. All Share
certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems
necessary or advisable to comply with all Applicable Laws, and the rules of any national securities exchange or automated quotation
system on which the Shares are listed, quoted, or traded. The Committee may place legends on any Share certificate to reference
restrictions applicable to the Shares. In addition to the terms and conditions provided herein, the Committee may require that a
Participant make such reasonable covenants, agreements, and representations as the Committee, in its discretion, deems advisable in
order to comply with any such laws, regulations, or requirements. The Committee shall have the right to require any Participant to
comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period
limitation, as may be imposed in the discretion of the Committee.

 

    13

     

    

 

8.6           Paperless Administration. Subject to Applicable Laws, the Committee may make Awards and provide applicable disclosure and
procedures for exercise of Awards by an internet website or interactive voice response system for the paperless administration of Awards.

 

8.7           Foreign Currency. A Participant may be required to provide evidence that any currency used to pay the exercise price of
any Award was acquired and taken out of the jurisdiction in which the Participant resides in accordance with Applicable Laws, including
foreign exchange control laws and regulations. In the event the exercise price for an Award is paid in Chinese Renminbi or other foreign
currency, as permitted by the Committee, the amount payable will be determined by conversion from U.S. dollars at the official rate promulgated
by the People’s Bank of China for Chinese Renminbi, or for jurisdictions other than the People’s Republic of China, the exchange
rate as selected by the Committee on the date of exercise.

 

Article
9 

 

changes
in capital structure

 

9.1           Adjustments.
In the event of any dividend, share split, combination or exchange of Shares, amalgamation, arrangement or consolidation, spin-off, recapitalization
or other distribution (other than normal cash dividends) of Company assets to its shareholders, or any other change affecting the shares
of Shares or the share price of a Share, the Committee shall make such proportionate adjustments, if any, as the Committee in its discretion
may deem appropriate to reflect such change with respect to (a) the aggregate number and type of shares that may be issued under the
Plan (including, but not limited to, adjustments of the limitations in Section 3.1); (b) the terms and conditions of any outstanding
Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (c) the grant or exercise
price per share for any outstanding Awards under the Plan.

 

9.2           Corporate
Transactions. Except as may otherwise be provided in any Award Agreement or any other written agreement entered into by and
between the Company and a Participant, if the Committee anticipates the occurrence, or upon the occurrence, of a Corporate
Transaction, the Committee may, in its sole discretion, provide for (i) any and all Awards outstanding hereunder to terminate at a
specific time in the future and shall give each Participant the right to exercise the vested portion of such Awards during a period
of time as the Committee shall determine, or (ii) the purchase of any Award for an amount of cash equal to the amount that could
have been attained upon the exercise of such Award (and, for the avoidance of doubt, if as of such date the Committee determines in
good faith that no amount would have been attained upon the exercise of such Award, then such Award may be terminated by the Company
without payment), or (iii) the replacement of such Award with other rights or property selected by the Committee in its sole
discretion or the assumption of or substitution of such Award by the successor or surviving corporation, or a Parent or Subsidiary
thereof, with appropriate adjustments as to the number and kind of Shares and prices, or (iv) payment of such Award in cash based on
the value of Shares on the date of the Corporate Transaction plus reasonable interest on the Award through the date as determined by
the Committee when such Award would otherwise be vested or have been paid in accordance with its original terms, if necessary to
comply with Section 409A of the Code.

 

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9.3           Outstanding
Awards – Other Changes. In the event of any other change in the capitalization of the Company or corporate change other than
those specifically referred to in this Article 9, the Committee may, in its absolute discretion, make such adjustments in the number
and class of shares subject to Awards outstanding on the date on which such change occurs and in the per share grant or exercise price
of each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights.

 

9.4           No
Other Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation
of Shares of any class, the payment of any dividend, any increase or decrease in the number of shares of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to
action of the Committee under the Plan, and no issuance by the Company of shares of any class, or securities convertible into shares
of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to an Award
or the grant or exercise price of any Award.

 

Article
10 

 

ADMINISTRATION

 

10.1         Committee.
The Plan shall be administered by the Board or a committee of one or more members of the Board (the “Committee”) to
whom the Board shall delegate the authority to grant or amend Awards to Participants other than any of the Committee members, Independent
Directors and executive officers of the Company. Reference to the Committee shall refer to the Board in absence of the Committee. Notwithstanding
the foregoing, the full Board, acting by majority of its members in office, shall conduct the general administration of the Plan if required
by Applicable Laws, and with respect to Awards granted to the Committee members, Independent Directors and executive officers of the
Company and for purposes of such Awards the term “Committee” as used in the Plan shall be deemed to refer to the Board.

 

10.2         Action
by the Committee. A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting
at which a quorum is present, and acts approved unanimously in writing all members of the Committee in lieu of a meeting, shall be deemed
the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of a Group Entity, the Company’s independent certified public accountants,
or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

 

10.3         Authority
of the Committee. Subject to any specific designation in the Plan, the Committee has the exclusive power, authority and discretion
to:

 

(a)              
designate Participants to receive Awards;

 

    15

     

    

 

(b)              
 determine the type or types of Awards to be granted to each Participant;

 

(c)              
determine the number of Awards to be granted and the number of Shares to which an Award will relate;

 

(d)              
determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price,
grant price, or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions
on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of
gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines;

 

(e)              
determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award
may be paid in, cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

 

(f)               
prescribe the form of each Award Agreement, which need not be identical for each Participant;

 

(g)              
decide all other matters that must be determined in connection with an Award;

 

(h)              
establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

 

(i)                
interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement;

 

(j)                
amend terms and conditions of Award Agreements; and

 

(k)              
make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable
to administer the Plan, including design and adopt from time to time new types of Awards that are in compliance with Applicable Laws.

 

10.4         Decisions
Binding. The Committee’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Award Agreement and all decisions
and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties.

 

Article
11 

 

EFFECTIVE AND EXPIRATION DATE

 

11.1         Effective
Date. The Plan shall become effective as of the date on which the Board adopts the Plan or as otherwise specified by the Board when
adopting the Plan (the “Effective Date”).

 

    16

     

    

 

11.2         Expiration Date. The Plan will expire on, and no Award may be granted pursuant to the Plan after, the tenth anniversary
of the Effective Date. Any Awards that are outstanding on the tenth anniversary of the Effective Date shall remain in force according
to the terms of the Plan and the applicable Award Agreement.

 

Article
12 

 

AMENDMENT, MODIFICATION, AND TERMINATION

 

12.1         Amendment,
Modification, and Termination. At any time and from time to time, the Board may terminate, amend or modify the Plan; provided,
however, that (a) to the extent necessary and desirable to comply with Applicable Laws or stock exchange rules, the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required, unless the Company decides to follow
home country practice, and (b) unless the Company decides to follow home country practice, shareholder approval is required for any amendment
to the Plan that (i) increases the number of Shares available under the Plan (other than any adjustment as provided by Article 9), or
(ii) permits the Committee to extend the term of the Plan or the exercise period for an Option beyond ten years from the date of grant.

 

12.2         Awards
Previously Granted. Except with respect to amendments made pursuant to Section 12.1, no termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent
of the Participant.

 

Article
13 

 

GENERAL PROVISIONS

 

13.1         No Rights to Awards. No Participant, employee, or other person shall have any claim to be granted any Award pursuant to
the Plan, and neither the Company nor the Committee is obligated to treat Participants, employees, and other persons uniformly.

 

13.2         No Shareholders Rights. No Award gives the Participant any of the rights of a shareholder of the Company unless and until
Shares are in fact issued to such person in connection with such Award.

 

13.3         Taxes.
No Shares shall be delivered under the Plan to any Participant until such Participant has made arrangements acceptable to the
Committee for the satisfaction of any income and employment tax withholding obligations under Applicable Laws. The Company or any
Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy all applicable taxes (including the Participant’s payroll tax obligations) required or permitted by
Applicable Laws to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. The
Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company
withhold Shares otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Value equal to the sums
required to be withheld. Notwithstanding any other provision of the Plan, the number of Shares which may be withheld with respect to
the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award after such
Shares were acquired by the Participant from the Company) in order to satisfy any income and payroll tax liabilities applicable to
the Participant with respect to the issuance, vesting, exercise or payment of the Award shall, unless specifically approved by the
Committee, be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the
aggregate amount of such liabilities based on the minimum statutory withholding rates for the applicable income and payroll tax
purposes that are applicable to such supplemental taxable income.

 

    17

     

    

 

13.4         
No Right to Employment or Services. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way
the right of the Service Recipient to terminate any Participant’s employment or services at any time, nor confer upon any Participant
any right to continue in the employment or services of any Service Recipient.

 

13.5         
Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect
to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the
Participant any rights that are greater than those of a general creditor of the relevant Group Entity.

 

13.6         
Indemnification. To the extent allowable pursuant to Applicable Laws, each member of the Committee or of the Board shall
be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred
by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid
by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the
Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons
may be entitled pursuant to the Company’s Memorandum of Association and Articles of Association, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.

 

13.7         
Relationship to Other Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits
pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the any Group Entity except
to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

 

13.8         
Expenses. The expenses of administering the Plan shall be borne by the Group Entities.

 

13.9         
Titles and Headings. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the
event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

 

13.10     
Fractional Shares. No fractional Shares shall be issued and the Committee shall determine, in its discretion, whether cash
shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down as appropriate.

 

    18

     

    

 

13.11     
 Limitations Applicable to Section 16 Persons. Notwithstanding anything herein to the contrary, the Plan, and any Award
granted or awarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations
set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange
Act) that are requirements for the application of such exemptive rule. To the extent permitted by the Applicable Laws, the Plan and Awards
granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

 

13.12     
Government and Other Regulations. The obligation of the Company to make payment of awards in Shares or otherwise shall be
subject to all Applicable Laws, and to such approvals by government agencies as may be required. The Company shall be under no obligation
to register any of the Shares paid pursuant to the Plan under the Securities Act or any other similar law in any applicable jurisdiction.
If the Shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act or other
Applicable Laws, the Company may restrict the transfer of such Shares in such manner as it deems advisable to ensure the availability
of any such exemption.

 

13.13     
Governing Law. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the Cayman
Islands.

 

13.14     
Section 409A. To the extent that the Committee determines that any Award granted under the Plan is or may become subject
to Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section
409A of the Code. To the extent applicable, the Plan and the Award Agreements shall be interpreted in accordance with Section 409A of
the Code and the U.S. Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation
any such regulation or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary,
in the event that following the Effective Date the Committee determines that any Award may be subject to Section 409A of the Code and
related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the
Committee may adopt such amendments to the Plan and the applicable Award agreement or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate
to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect
to the Award, or (b) comply with the requirements of Section 409A of the Code and related U.S. Department of Treasury guidance.

 

13.15     
Appendices. Subject to Section 12.1, the Committee may approve such supplements, amendments or appendices to the Plan as
it may consider necessary or appropriate for purposes of compliance with Applicable Laws or otherwise and such supplements, amendments
or appendices shall be considered a part of the Plan; provided, however, that no such supplements shall increase the share limitation
contained in Section 3.1 of the Plan without the approval of the Board.

 

    19ex_288604.htm

 

Exhibit 10.1

 

SECOND AMENDMENT TO CREDIT AGREEMENT

 

This SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of October 1, 2021 (the “Second Amendment Effective Date”), is among HIGHPEAK ENERGY, INC., a Delaware corporation (the “Borrower”), FIFTH THIRD BANK, NATIONAL ASSOCIATION, as administrative agent (in such capacity, together with its successors in such capacity, the “Administrative Agent”), the Guarantors, and each of the Lenders party hereto.

 

RECITALS

 

A.         The Borrower, the Administrative Agent, and the Lenders are party to that certain Credit Agreement dated as of December 17, 2020 (as amended by that certain First Amendment to Credit Agreement dated as of June 23, 2021, the “Credit Agreement”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.

 

B.         The Borrower has requested amendments to certain provisions of the Credit Agreement and a redetermination of the Borrowing Base.

 

C.          The Borrower, the Guarantors, the Administrative Agent, and the Lenders have agreed to amend certain provisions of the Credit Agreement as more fully set forth herein.

 

D.         NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Section 1.    Defined Terms. Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Amendment, shall have the meaning ascribed such term in the Credit Agreement after giving effect to this Amendment. Unless otherwise indicated, all references to sections in this Amendment refer to sections in the Credit Agreement.

 

Section 2.    Amendments to Credit Agreement.

 

2.1      Amendment to Section 1.02.

 

(a)      Section 1.02 is hereby amended by adding the following terms in the appropriate alphabetical place:

 

“Second Amendment Effective Date” means October 1, 2021.

 

(b)      Section 1.02 is hereby further amended by amending and restating the following definitions in Section 1.02 in their entirety to read as follows:

 

“Aggregate Elected Commitments” means (a) on the Second Amendment Effective Date, $195,000,000, and (b) at any time thereafter, an amount determined in accordance with Section 2.06(c).

 

Second Amendment to Credit Agreement – Page 1

 

 

2.2      Amendment to Section 8.01(e). Section 8.01(e) is hereby amended and restated to read as follows:

 

(e)   Certificate of Financial Officer — Swap Agreements and Projected Production Reports. Concurrently with any delivery of financial statements under Section 8.01(a) and Section 8.01(b) and the delivery of each Reserve Report hereunder, (i) a certificate of a Financial Officer, in form and substance satisfactory to the Administrative Agent, setting forth as of a recent date, a true and complete list of all Swap Agreements of the Borrower and each Restricted Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark-to-market value therefor, any new credit support agreements relating thereto not listed on Schedule 7.20, any margin required or supplied under any credit support document, the counterparty to each such agreement, and a certification that the Credit Parties are in compliance with Section 8.19 and Section 9.18 in all respects, and (ii) a report, in form and substance satisfactory to the Administrative Agent, setting forth, for each calendar month for the 24-month period following such date, the projected and anticipated volume of production of crude oil for each such calendar month from all of the Oil and Gas Properties of the Borrower and its Restricted Subsidiaries (such report, a “Projected Production Report”).

 

2.3      Amendment to Section 8.19. Section 8.19 is hereby amended and restated to read as follows:

 

Section 8.19         Affirmative Hedging Covenant. (a) Within sixty (60) days after the Second Amendment Effective Date (or such later date as acceptable to Administrative Agent in its sole discretion), and (b) thereafter, as of the last day of each fiscal quarter (or, in each case, such later date acceptable to the Administrative Agent in its reasonable discretion), the Borrower shall deliver to the Administrative Agent evidence reasonably satisfactory to the Administrative Agent that the Borrower has entered into, or shall have caused another Credit Party to enter into: (i) Swap Agreements with one or more Approved Counterparties to hedge notional volumes covering, for the first twelve-month period following such measurement date, not less than sixty percent (60%) of the aggregate projected production of crude oil for such twelve-month period from the Borrower and its Restricted Subsidiaries’ Oil and Gas Properties owned as of such date constituting PDP Reserves as set forth in the most recently delivered Reserve Report, and (ii) Swap Agreements with one or more Approved Counterparties (including, to the extent applicable, any Swap Agreements entered into by any Credit Party for the requirement set forth under clause (i) above) to hedge notional volumes covering, for the 24-month period following such measurement date, not less than sixty percent (60%) of the aggregate projected production of crude oil for such 24-month period from the Borrower and its Restricted Subsidiaries’ Oil and Gas Properties owned as of such date constituting PDP Reserves as set forth in the most recently delivered Reserve Report.

 

2.4      Amendment to Section 9.18(a). Section 9.18(a)(i) is hereby amended and restated to read as follows:

 

(i)         Swap Agreements with an Approved Counterparty in respect of commodities entered into not for speculative purposes the notional volumes for which (when aggregated with other commodity Swap Agreements then in effect other than basis differential swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the date such Swap Agreement is entered into:

 

(A)         85% for the 1st through 24th month following the date such Swap Agreement is entered into, in the aggregate for such period;

 

Second Amendment to Credit Agreement – Page 2

 

 

(B)         85% for the 25th through 36th month following the date such Swap Agreement is entered into (and for each month during the period during which such Swap Agreement is in effect); and

 

(C)         75% for the 37th through 60th month following the date such Swap Agreement is entered into (and for each month during the period during which such Swap Agreement is in effect),

 

in each case of the reasonably anticipated production of (1) crude oil, (2) natural gas and (3) natural gas liquids and condensate, calculated separately with respect to each such clause (1) through (3), as such production is projected from the Borrower's and its Restricted Subsidiaries' Oil and Gas Properties classified as Proved Reserves as set forth on the most recent Projected Production Report delivered pursuant to the terms of this Agreement; provided, however, that such Swap Agreements shall not, in any case, have a tenor of longer than five (5) years. It is understood that Swap Agreements in respect of commodities which may, from time to time, "hedge" the same volumes, but different elements of commodity risk thereof, shall not be aggregated together when calculating the foregoing limitations on notional volumes.

 

2.5      Amendment to Section 9.18(b). Section 9.18(b) is hereby amended and restated to read as follows:

 

(b)         [Reserved].

 

2.6      Amendment to Annex I (List of Maximum Credit Amounts and Elected Commitments). Upon the occurrence of the Second Amendment Effective Date, Annex I of the Credit Agreement is hereby replaced with Annex I attached hereto on Exhibit A.

 

Section 3.    New Borrowing Base Notice; Waiver of Prior Notice for Section 2.07; Aggregate Elected Commitments.

 

3.1      The parties hereto agree that (i) this Amendment shall serve as (A) the Proposed Borrowing Base Notice pursuant to the requirements of Section 2.07(c)(ii) of the Credit Agreement and (B) the New Borrowing Base Notice pursuant to the requirements of Section 2.07(d) of the Credit Agreement, and (ii) any other notice or time period required by the terms of Section 2.07 of the Credit Agreement in connection with the increase in the Borrowing Base or Aggregate Elected Commitments to go in effect on the Second Amendment Effective Date is hereby waived.

 

3.2      As of the Second Amendment Effective Date, each of the Borrowing Base and Aggregate Elected Commitments shall be $195,000,000. Such Borrowing Base and Aggregate Elected Commitments shall remain in effect until the next Scheduled Redetermination Date, the next Interim Redetermination Date or as otherwise adjusted in accordance with the Credit Agreement, after giving effect to this Amendment.

 

Section 4.    Conditions Precedent as of the Second Amendment Effective Date. This Amendment shall become effective on the date, when each of the following conditions is satisfied (or waived in accordance with Section 12.02 of the Credit Agreement):

 

4.1      The Administrative Agent shall have executed and received from the Lenders and the Borrower, counterparts (in such number as may be requested by the Administrative Agent) of this Amendment signed on behalf of each such Person.

 

Second Amendment to Credit Agreement – Page 3

 

 

4.2      The Administrative Agent and the Lenders shall have received all fees and other amounts due and payable on or prior to the date hereof, including any fees or other amounts set forth in any fee letter executed as of the Second Amendment Effective Date by the Borrower and Administrative Agent.

 

4.3      Immediately before and after giving effect to this Amendment, no Default shall have occurred and be continuing as of the Second Amendment Effective Date.

 

The Administrative Agent is hereby authorized and directed to declare this Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 4 or the waiver of such conditions as permitted in Section 12.02 of the Credit Agreement. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.

 

Section 5.    Post-Closing Covenants.

 

5.1     Within 30 days after the Second Amendment Effective Date (or such later date as agreed to by Administrative Agent in its sole discretion), Borrower shall deliver, or shall cause another Credit Party to deliver, Security Instruments as required by Section 8.14(a) of the Credit Agreement. In connection with the execution and delivery of the Security Instruments, the Administrative Agent shall be reasonably satisfied that the Security Instruments create first priority, perfected Liens on at least 90% of the total value of the Proved Oil and Gas Properties evaluated in the most recently delivered Reserve Report

 

5.2     Within 30 days after the Second Amendment Effective Date (or such later date as agreed to by Administrative Agent in its sole discretion), Borrower shall deliver, or shall cause another Credit Party to deliver, title information as the Administrative Agent may reasonably require with respect to the status of title to at least 90% of the total value of the Borrowing Base Properties evaluated in the most recently delivered Reserve Report.

 

5.3     Borrower shall deliver, or shall cause another Credit Party to deliver, satisfactory evidence to the Administrative Agent that Borrower has entered into, or caused another Credit Party to enter into, Swap Agreements with one or more Approved Counterparties in compliance with and within the timeframe set forth in Section 8.19 of the Credit Agreement, as amended by this Amendment.

 

Section 6.    Adjustment of Elected Commitments, Maximum Credit Amounts and Applicable Percentages of Lenders. The Lenders have agreed among themselves, in consultation with the Borrower, to reallocate their respective Elected Commitments, Maximum Credit Amounts and Applicable Percentages as set forth on Exhibit A attached to this Amendment, and the Administrative Agent and the Borrower hereby consent to such reallocation. The Administrative Agent, the Lenders and the Borrower hereby waive (a) any requirement that an Assignment and Assumption or any other documentation be executed in connection with such reallocation, and (b) the payment of any processing and recordation fee to the Administrative Agent. Notwithstanding the foregoing, the reallocation of the Elected Commitments, Maximum Credit Amounts and Applicable Percentages among the Lenders shall be deemed to have been consummated pursuant to the terms of an Assignment and Assumption attached as Exhibit H to the Credit Agreement as if the Lenders had executed an Assignment and Assumption with respect to such reallocation. On the Second Amendment Effective Date, the Elected Commitment, Maximum Credit Amount and Applicable Percentage of each Lender shall be as set forth on Exhibit A attached to this Amendment.

 

Section 7.    Miscellaneous.

 

7.1     Confirmation. The provisions of the Credit Agreement, as amended by this Amendment, shall remain in full force and effect following the effectiveness of this Amendment.

 

Second Amendment to Credit Agreement – Page 4

 

 

7.2     Representations and Warranties. The Borrower and each Guarantor hereby (a) acknowledges and consents to the terms of this Amendment and (b) ratifies and affirms its obligations under, and acknowledges its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect as expressly amended, restated, supplemented or otherwise modified hereby or otherwise in connection with a delivery made herewith and (c) represents and warrants to the Administrative Agent and the Lenders that as of the date hereof, after giving effect to the terms of this Amendment: (i) all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects, except that (A) to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects as of such specified earlier date and (B) to the extent any such representation and warranty is qualified by materiality, such representation and warranty (as so qualified) is true and correct in all respects and (ii) no Default or Event of Default has occurred and is continuing.

 

7.3     Counterparts. This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by telecopy, facsimile or other electronic means (e.g., .pdf) shall be effective as delivery of a manually executed counterpart hereof.

 

7.4     No Oral Agreement. This Amendment, the Credit Agreement and the other Loan Documents executed in connection herewith and therewith represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or unwritten oral agreements of the parties. There are no subsequent oral agreements between the parties.

 

7.5     GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

 

7.6     Payment of Expenses. The Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable and documented out-of-pocket costs and expenses incurred in connection with this Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of one law firm acting as counsel to the Administrative Agent.

 

7.7     Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

7.8     Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

7.9     Miscellaneous. Section 12.09(b), (c) and (d) of the Credit Agreement shall apply to this Amendment, mutatis mutandis.

 

[SIGNATURES BEGIN NEXT PAGE]

 

Second Amendment to Credit Agreement – Page 5

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed effective as of the day and year first above written.

 

	 	
			BORROWER:

			 

			HIGHPEAK ENERGY, INC., a Delaware corporation

			

			

			By:         /s/ Jack Hightower                                         

			Jack Hightower

			Chief Executive Officer

			 

			 

			GUARANTORS:

			 

			HIGHPEAK ENERGY ACQUISITION CORP., a

			Delaware corporation

			HIGHPEAK ENERGY EMPLOYEES, INC., a

			Delaware corporation

			LAZY JJ PROPERTIES, LLC, a Delaware limited

			liability company

			

			

			By:         /s/ Jack Hightower                                         

			Jack Hightower         

			Chief Executive Officer

			 

			 

			HIGHPEAK ENERGY ASSETS, LLC, a Delaware

			limited liability company

			HIGHPEAK ENERGY HOLDINGS, LLC, a

			Delaware limited liability company

			 

			By:         /s/ Jack Hightower                                         

			Jack Hightower

			President

			

 

 

 

Signature Page to Second Amendment to Credit Agreement

HighPeak Energy, Inc.

 

 

 

 

 

	 	
			ADMINISTRATIVE AGENT:

			 

			FIFTH THIRD BANK, NATIONAL 

			ASSOCIATION,

			as Administrative Agent

			

			

			By:         /s/ Dan Condley                                               

			Dan Condley

			Managing Director

			

			

			LENDER:

			

			FIFTH THIRD BANK, NATIONAL 

			ASSOCIATION,

			as a Lender and as an Issuing Bank

			

			

			By:         /s/ Dan Condley                                               

			Dan Condley

			Managing Director

			

 

 

 

Signature Page to Second Amendment to Credit Agreement

HighPeak Energy, Inc.

 

 

 

 

	 	
			LENDER:

			 

			CITIZENS BANK N.A.,

			as a Lender

				 
	 	 	 
	 	 	 	 
	 	By: 	/s/ David Barron	 
	 	Name:	David Barron	 
	 	Title:	Vice President	 

                                                     

                                                      

Signature Page to Second Amendment to Credit Agreement

HighPeak Energy, Inc.

                                                      

 

 

 

 

 

	 	
			LENDER:

			 

			BOKF, NA dba BANK OF TEXAS,

			as a Lender

				 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Scott Miller	 
	 	Name:	Scott Miller	 
	 	Title:	Senior Vice President	 

 

 

 

Signature Page to Second Amendment to Credit Agreement

HighPeak Energy, Inc.

 

 

 

 

	 	
			LENDER:

			 

			BANK OF AMERICA, N.A.,

			as a Lender

				 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Pace Doherty	 
	 	Name:	Pace Doherty	 
	 	Title:	Vice President	 

 

 

 

Signature Page to Second Amendment to Credit Agreement

HighPeak Energy, Inc.

 

 

 

 

	 	
			LENDER:

			 

			UMB BANK n.a.,

			as a Lender

				 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Erica Spencer	 
	 	Name:	Erica Spencer	 
	 	Title:	Vice President – Energy Division	 

 

 

 

Signature Page to Second Amendment to Credit Agreement

HighPeak Energy, Inc.

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