Document:

Exhibit 4.1

 

SPLASH BEVERAGE GROUP, INC.

2020 LONG-TERM INCENTIVE COMPENSATION PLAN

 

ARTICLE I
PURPOSE

 

Section 1.1 Purpose. This
2020 Long-Term Incentive Compensation Plan (the “Plan”) is established by Splash Beverage Group, Inc., a Colorado corporation
(the “Company”), to create incentives which are designed to motivate Participants to put forth maximum effort toward
the success and growth of the Company and to enable the Company to attract and retain experienced individuals who by their position,
ability and diligence are able to make important contributions to the Company’s success. Toward these objectives, the Plan
provides for the grant of Options, Restricted Stock Awards, Stock Appreciation Rights (“SARs”), Performance Units and
Performance Bonuses to Eligible Employees and the grant of Nonqualified Stock Options, Restricted Stock Awards, SARs and Performance
Units to Consultants and Eligible Directors, subject to the conditions set forth in the Plan.

 

Section 1.2 Establishment.
The Plan is effective as of _________________, 2020 and for a period of ten years thereafter. The Plan shall continue in effect
until all matters relating to the payment of Awards and administration of the Plan have been settled. The Plan is subject to approval
by the Company’s stockholders in accordance with applicable law which approval must occur within the period ending twelve
months after the date the Plan is adopted by the Board. Pending such approval by the
stockholders, Awards under the Plan may be granted, but no such Awards may be exercised prior to receipt of stockholder approval
of the Plan. In the event stockholder approval is not obtained within a twelve-month period, all Awards granted shall be void.

 

Section 1.3 Shares Subject
to the Plan. Subject to the limitations set forth in the Plan, Awards may be made under this Plan for a total of 6,939,398
shares of the Company’s common stock, no par value per share (the “Common Stock”), all of which may be issued
in respect of Incentive Stock Options.

 

Section 1.4
Automatic Increases of Shares Subject to the Plan. Notwithstanding Section 1.3 above, on the first day of each calendar year,
commencing January 1, 2021, or the first business day of the calendar year if the first day of the calendar year falls on a Saturday
or Sunday, the Awards of Common Stock available under the Plan will automatically increase in an amount equal to the lesser of
(i) 5% of the total number of shares of Common Stock outstanding as of December 31st of the preceding fiscal year or (ii) such
number of shares of Common Stock as determined by the Board, provided that no such increase shall be effective if it would violate
any applicable law or stock exchange rule or regulation, or result in adverse tax consequences to the Company or any Participant
that would not otherwise result but for the increase.

ARTICLE II DEFINITIONS

 

Section 2.1 “Account”
means the recordkeeping account established by the Company to which will be credited an Award of Performance Units to a Participant.

 

Section 2.2 “Affiliated
Entity” means any corporation, partnership, limited liability company or other form of legal entity in which a majority
of the partnership or other similar interest thereof is owned or controlled, directly or indirectly, by the Company or one or more
of its Subsidiaries or Affiliated Entities or a combination thereof. For purposes hereof, the Company, a Subsidiary or an Affiliated
Entity shall be deemed to have a majority ownership interest in a partnership or limited liability company if the Company, such
Subsidiary or Affiliated Entity shall be allocated a majority of partnership or limited liability company gains or losses or shall
be or control a managing director or a general partner of such partnership or limited liability company.

 

Section 2.3 “Award”
means, individually or collectively, any Option, Restricted Stock Award, SAR, Performance Unit or Performance Bonus granted
under the Plan to an Eligible Employee by the Board or any Nonqualified Stock Option, Performance Unit, SAR or Restricted Stock
Award granted under the Plan to a Consultant or an Eligible Director by the Board pursuant to such terms, conditions, restrictions,
and/or limitations, if any, as the Board may establish by the Award Agreement or otherwise.

 

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Section 2.4 “Award
Agreement” means any written instrument that establishes the terms, conditions, restrictions, and/or limitations applicable
to an Award in addition to those established by this Plan and by the Board’s exercise of its administrative powers.

 

Section 2.5 “Board”
means the Board of Directors of the Company and, if the Board has appointed a Committee as provided in Section 3.1, the term
“Board” shall include such Committee.

 

Section 2.6 “Change of
Control Event” means, except as otherwise provided in an Award Agreement, each of the following:

 

(i)  
Any transaction in which shares of voting securities of the Company representing more than
50% of the total combined voting power of all outstanding voting securities of the Company are issued by the Company, or sold or
transferred by the stockholders of the Company as a result of which those persons and entities who beneficially owned voting securities
of the Company representing more than 50% of the total combined voting power of all outstanding voting securities of the Company
immediately prior to such transaction cease to beneficially own voting securities of the Company representing more than 50% of
the total combined voting power of all outstanding voting securities of the Company immediately after such transaction;

 

(ii) 
The merger or consolidation of the Company with or into another entity as a result of which
those persons and entities who beneficially owned voting securities of the Company representing more than 50% of the total combined
voting power of all outstanding voting securities of the Company immediately prior to such merger or consolidation cease to beneficially
own voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities
of the surviving corporation or resulting entity immediately after such merger of consolidation; or

 

(iii) 
The sale of all or substantially all of the Company’s assets to an entity of which those
persons and entities who beneficially owned voting securities of the Company representing more than 50% of the total combined voting
power of all outstanding voting securities of the Company immediately prior to such asset sale do not beneficially own voting securities
of the purchasing entity representing more than 50% of the total combined voting power of all outstanding voting securities of
the purchasing entity immediately after such asset sale.

 

Section 2.7 “Code”
means the Internal Revenue Code of 1986, as amended. References in the Plan to any section of the Code shall be deemed to include
any amendments or successor provisions to such section and any regulations under such section.

 

Section 2.8 “Committee”
means the Committee appointed by the Board as provided in Section 3.1.

 

Section 2.9 “Common Stock”
means the common stock, no par value per share, of the Company, and after substitution, such other stock as shall be substituted
therefore as provided in Article X.

 

Section 2.10 “Consultant”
means any person or entity who is engaged by the Company, a Subsidiary or an Affiliated Entity to render consulting or advisory
services.

 

Section 2.11 “Date of
Grant” means the date on which the grant of an Award is authorized by the Board or such later date as may be specified
by the Board in such authorization.

 

Section 2.12 “Disability”
means, except as otherwise provided in an Award Agreement, the Participant is unable to continue employment by reason of any
medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months. For purposes of this Plan, the determination of Disability shall be made in the sole
and absolute discretion of the Board.

 

Section 2.13 “Eligible
Employee” means any employee of the Company, a Subsidiary, or an Affiliated Entity as approved by the Board.

 

Section 2.14 “Eligible Director”
means any member of the Board who is not an employee of the Company, a Subsidiary or an Affiliated Entity.

 

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Section 2.15 “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

Section 2.16 “Fair Market
Value” means (A) during such time as the Common Stock is registered under Section 12 of the Exchange Act, the closing
price of the Common Stock as reported by an established stock exchange or automated quotation system on the day for which such
value is to be determined, or, if no sale of the Common Stock shall have been made on any such stock exchange or automated quotation
system that day, on the next preceding day on which there was a sale of such Common Stock, or (B) during any such time as the Common
Stock is not listed upon an established stock exchange or automated quotation system, the mean between dealer “bid”
and “ask” prices of the Common Stock in the over-the-counter market on the day for which such value is to be determined,
as reported by the National Association of Securities Dealers, Inc., or (C) during any such time as the Common Stock cannot be
valued pursuant to (A) or (B) above, the fair market value shall be as determined by the Board considering all relevant information
including, by example and not by limitation, the services of an independent appraiser.

 

Section 2.17 “Incentive Stock Option” means
an Option within the meaning of Section 422 of the Code.

 

Section 2.18 “Nonqualified Stock Option”
means an Option which is not an Incentive Stock Option.

 

Section 2.19 “Option” means an Award
granted under Article V of the Plan and includes both Nonqualified Stock Options and Incentive Stock Options to purchase shares
of Common Stock.

 

Section 2.20 “Participant” means
an Eligible Employee, a Consultant or an Eligible Director to whom an Award has been granted by the Board under the Plan.

 

Section 2.21 “Performance Bonus” means
the cash bonus which may be granted to Eligible Employees under Article IX of the Plan.

 

Section 2.22 “Performance Units” means
those monetary units that may be granted to Eligible Employees, Consultants or Eligible Directors pursuant to Article VIII hereof.

 

Section 2.23 “Plan” means this Canfield
Medical Supply, Inc. 2020 Long-Term Incentive Compensation Plan.

 

Section 2.24 “Restricted Stock Award” means
an Award granted to an Eligible Employee, Consultant or Eligible Director under Article VI of the Plan.

 

Section 2.25 “Retirement” means, except
as otherwise provided in an Award Agreement, the termination of an Eligible Employee’s employment with the Company, a Subsidiary
or an Affiliated Entity on or after attaining age 65.

 

Section 2.26 “SAR” means a stock appreciation
right granted to an Eligible Employee, Consultant or Eligible Director under Article VII of the Plan.

 

Section 2.27 “Subsidiary” shall have
the same meaning set forth in Section 424 of the Code.

 

Section 2.28 “Compensation Committee” means
the Compensation Committee of the Board.

 

ARTICLE
III ADMINISTRATION

 

Section 3.1 Administration.
The Board shall administer the Plan. The Board may, by resolution, appoint the Compensation Committee to administer the Plan
and delegate its powers described under this Section 3.1 and otherwise under the Plan for purposes of Awards granted to Eligible
Employees and Consultants.

 

Subject to the provisions of the Plan, the Board shall
have exclusive power to:

 

	 	(a)	Select Eligible Employees and Consultants to participate in the Plan.

 

 

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	 	(b)	Determine the time or times when Awards will be made to Eligible Employees or Consultants.

 

(c) Determine the form of an Award,
whether an Incentive Stock Option, Nonqualified Stock Option, Restricted Stock Award, SAR, Performance Unit, or Performance Bonus,
the number of shares of Common Stock or Performance Units subject to the Award, the amount and all the terms, conditions (including
performance requirements), restrictions and/or limitations, if any, of an Award, including the time and conditions of exercise
or vesting, and the terms of any Award Agreement, which may include the waiver or amendment of prior terms and conditions or acceleration
or early vesting or payment of an Award under certain circumstances determined by the Board.

 

	 	(d)	Determine whether Awards will be granted singly or in combination.

 

	 	(e)	Accelerate the vesting, exercise or payment of an Award or the performance period of an Award.

 

(f) 
Determine whether and to what extent a Performance Bonus may be deferred, either automatically
or at the election of the Participant or the Board.

 

(g) 
Reduce the exercise price of any Option or SAR to the then current Fair Market Value if the
Fair Market Value of the Common Stock covered by such Option or SAR shall have declined since the date such Award was granted.

 

(h)  
Take any and all other action it deems necessary or advisable for the proper operation or
administration of the Plan.

 

Notwithstanding the foregoing, the
Board may authorize the Company Chief Executive Officer, another executive officer, or a committee of such directors (the “Authorized
Officers”) to grant Options under the Plan, to the extent permitted by applicable law. If so authorized, the Authorized Officers
shall have the same authority as the Board under this Section 3.1 and otherwise under the Plan with respect to the grant of Options,
subject to the limitations set forth in such authorization, if any.

 

Section 3.2 Administration
of Grants to Eligible Directors. The Board shall have the exclusive power to select Eligible Directors to participate in the
Plan and to determine the number of Nonqualified Stock Options, Performance Units, SARs or shares of Restricted Stock awarded to
Eligible Directors selected for participation. If the Board appoints a committee to administer the Plan, it may delegate to the
committee administration of all other aspects of the Awards made to Eligible Directors.

 

Section 3.3 Board to Make Rules
and Interpret Plan. The Board in its sole discretion shall have the authority, subject to the provisions of the Plan, to establish,
adopt, or revise such rules and regulations and to make all such determinations relating to the Plan, as it may deem necessary
or advisable for the administration of the Plan. The Board’s interpretation of the Plan or any Awards and all decisions and
determinations by the Board with respect to the Plan shall be final, binding, and conclusive on all parties.

 

Section 3.4 Section 162(m).
The Company intends for the Plan and the Awards made thereunder to be exempt from the deductibility limitation in Code Section
162(m) if it is determined by the Board that such qualification is necessary or desirable for an Award. Accordingly, the Board
shall make determinations as to performance targets and all other applicable provisions of the Plan as necessary in order for the
Plan and Awards made thereunder to satisfy the requirements of Section 162(m) of the Code. Subject to adjustment as provided in
Article X, the maximum number of shares with respect to which Options or SARs may be granted to any Participant in any one calendar
year is 5 million. With respect to other types of Awards intended to be exempt from the deductibility limitation in Code Section
162(m), no Participant in any one calendar year may be granted Awards with respect to more than 5 million shares of Common Stock
in the aggregate, or if such Awards are payable in cash, the fair market value equivalent thereof. If an Award is cancelled, the
cancelled Award shall continue to be counted towards the applicable limitations.

 

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ARTICLE IV

GRANT OF AWARDS

 

Section 4.1 Grant of Awards. Awards
granted under this Plan shall be subject to the following conditions:

 

(a)  
Any shares of Common Stock related to Awards which terminate by expiration, forfeiture, cancellation
or otherwise without the issuance of shares of Common Stock or are exchanged in the Board’s discretion for Awards not involving
Common Stock, shall be available again for grant under the Plan and shall not be counted against the shares authorized under Section
1.3 or Section 1.4.

 

(b) 
Common Stock delivered by the Company in payment of an Award authorized under Articles V and
VI of the Plan may be authorized and unissued Common Stock or Common Stock held in the treasury of the Company.

 

(c) The Board shall, in its sole
discretion, determine the manner in which fractional shares arising under this Plan shall be treated.

 

(d) 
Separate certificates or a book-entry registration representing Common Stock shall be delivered
to a Participant upon the exercise of any Option.

 

(e)   
Eligible Directors may only be granted Nonqualified Stock Options, Restricted Stock Awards,
SARs or Performance Units under this Plan.

 

	 	(f)	The maximum term of any Award shall be ten years.

 

ARTICLE
V STOCK OPTIONS

 

Section 5.1 Grant of Options.
The Board may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine,
grant Options to Eligible Employees. These Options may be Incentive Stock Options or Nonqualified Stock Options, or a combination
of both. The Board may, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Nonqualified
Stock Options to Eligible Directors and Consultants. Each grant of an Option shall be evidenced by an Award Agreement executed
by the Company and the Participant, and shall contain such terms and conditions and be in such form as the Board may from time
to time approve, subject to the requirements of Section 5.2.

 

Section 5.2 Conditions of Options.
Each Option so granted shall be subject to the following conditions:

 

(a) 
Exercise Price. Each Option shall state the exercise price which shall be set by the Board
at the Date of Grant; provided, however, no Option shall be granted at an exercise price which is less than the Fair Market Value
of the Common Stock on the Date of Grant.

 

(b) 
Form of Payment. The exercise price of an Option may be paid (i) in cash or by check, bank
draft or money order payable to the order of the Company; (ii) by delivering shares of Common Stock having a Fair Market Value
on the date of payment equal to the amount of the exercise price, but only to the extent such exercise of an Option would not result
in an adverse accounting charge to the Company for financial accounting purposes with respect to the shares used to pay the exercise
price unless otherwise determined by the Board; or (iii) a combination of the foregoing. In addition to the foregoing, the Board
may permit an Option granted under the Plan to be exercised by a broker-dealer acting on behalf of a Participant through procedures
approved by the Board.

 

(c) 
Exercise of Options. Options granted under the Plan shall be exercisable, in whole or in such
installments and at such times, and shall expire at such time, as shall be provided by the Board in the Award Agreement. Exercise
of an Option shall be by written notice to the Secretary of the Company at least two business days in advance of such exercise
stating the election to exercise in the form and manner determined by the Board. Every share of Common Stock acquired through the
exercise of an Option shall be deemed to be fully paid at the time of exercise and payment of the exercise price.

 

 

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(d) 
Other Terms and Conditions. Among other conditions that may be imposed by the Board, if deemed
appropriate, are those relating to (i) the period or periods and the conditions of exercisability of any Option; (ii) the minimum
periods during which Participants must be employed by the Company, its Subsidiaries, or an Affiliated Entity, or must hold Options
before they may be exercised; (iii) the minimum periods during which shares acquired upon exercise must be held before sale or
transfer shall be permitted; (iv) conditions under which such Options or shares may be subject to forfeiture; (v) the frequency
of exercise or the minimum or maximum number of shares that may be acquired at any one time; (vi) the achievement by the Company
of specified performance criteria; and (vii) non-compete and protection of business matters.

 

(e) 
Special Restrictions Relating to Incentive Stock Options. Options issued in the form of Incentive
Stock Options shall only be granted to Eligible Employees of the Company or a Subsidiary, and not to Eligible Employees of an Affiliated
Entity unless such entity shall be considered as a “disregarded entity” under the Code and shall not be distinguished
for federal tax purposes from the Company or the applicable Subsidiary.

 

(f) 
Application of Funds. The proceeds received by the Company from the sale of Common Stock pursuant
to Options will be used for general corporate purposes.

 

(g) 
Stockholder Rights. No Participant shall have a right as a stockholder with respect to any
share of Common Stock subject to an Option prior to the purchase of such shares of Common Stock by exercise of the Option.

 

ARTICLE VI RESTRICTED

STOCK AWARDS

 

Section 6.1 Grant of Restricted
Stock Awards. The Board may, from time to time, subject to the provisions of the Plan and such other terms and conditions as
it may determine, grant a Restricted Stock Award to Eligible Employees, Consultants or Eligible Directors. Restricted Stock Awards
shall be awarded in such number and at such times during the term of the Plan as the Board shall determine. Each Restricted Stock
Award shall be subject to an Award Agreement setting forth the terms of such Restricted Stock Award and may be evidenced in such
manner as the Board deems appropriate, including, without limitation, a book-entry registration or issuance of a stock certificate
or certificates.

 

Section 6.2 Conditions of Restricted
Stock Awards. The grant of a Restricted Stock Award shall be subject to the following:

 

(a) 
Restriction Period. Restricted Stock Awards granted to an Eligible Employee shall require
the holder to remain in the employment of the Company, a Subsidiary, or an Affiliated Entity for a prescribed period. Restricted
Stock Awards granted to Consultants or Eligible Directors shall require the holder to provide continued services to the Company
for a period of time. These employment and service requirements are collectively referred to as a “Restriction Period”.
The Board or the Committee, as the case may be, shall determine the Restriction Period or Periods which shall apply to the shares
of Common Stock covered by each Restricted Stock Award or portion thereof. In addition to any
time vesting conditions determined by the Board or the Committee, as the case may be, Restricted Stock Awards may be subject
to the achievement by the Company of specified performance criteria based upon the Company’s achievement of all or any of
the operational, financial or stock performance criteria set forth on Exhibit A annexed hereto, as may from time to time be established
by the Board or the Committee, as the case may be. At the end of the Restriction Period, assuming the fulfilment of any other specified
vesting conditions, the restrictions imposed by the Board or the Committee, as the case may be shall lapse with respect to the
shares of Common Stock covered by the Restricted Stock Award or portion thereof. In addition to acceleration of vesting upon the
occurrence of a Change of Control Event as provided in Section 11.5, the Board or the Committee, as the case may be, may, in its
discretion, accelerate the vesting of a Restricted Stock Award in the case of the death, Disability or Retirement of the
Participant who is an Eligible Employee or resignation of a Participant who is a Consultant or an Eligible Director.

 

(b)  
Restrictions. The holder of a Restricted Stock Award may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of the shares of Common Stock represented by the Restricted Stock Award during the applicable
Restriction Period. The Board shall impose such other restrictions and conditions on any shares of Common Stock covered by a Restricted
Stock Award as it may deem advisable including, without limitation, restrictions under applicable Federal or state securities laws,
and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions.

 

(c) 
Rights as Stockholders. During any Restriction Period, the Board may, in its discretion, grant
to the holder of a Restricted Stock Award all or any of the rights of a stockholder with respect to the shares, including, but
not by way of limitation, the right to vote such shares and to receive dividends. If any dividends or other distributions are paid
in shares of Common Stock, all such shares shall be subject to the same restrictions on transferability as the shares of Restricted
Stock with respect to which they were paid.

 

 

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ARTICLE VII

STOCK APPRECIATION RIGHTS

 

Section 7.1 Grant of SARs.
The Board may from time to time, in its sole discretion, subject to the provisions of the Plan and subject to other terms and
conditions as the Board may determine, grant a SAR to any Eligible Employee, Consultant or Eligible Director. SARs may be granted
in tandem with an Option, in which event, the Participant has the right to elect to exercise either the SAR or the Option. Upon
the Participant’s election to exercise one of these Awards, the other tandem Award is automatically terminated. SARs may
also be granted as an independent Award separate from an Option. Each grant of a SAR shall be evidenced by an Award Agreement executed
by the Company and the Participant and shall contain such terms and conditions and be in such form as the Board may from time to
time approve, subject to the requirements of the Plan. The exercise price of the SAR shall not be less than the Fair Market Value
of a share of Common Stock on the Date of Grant of the SAR.

 

Section 7.2 Exercise and Payment.
SARs granted under the Plan shall be exercisable in whole or in installments and at such times as shall be provided by the
Board in the Award Agreement. Exercise of a SAR shall be by written notice to the Secretary of the Company at least two business
days in advance of such exercise. The amount payable with respect to each SAR shall be equal in value to the excess, if any, of
the Fair Market Value of a share of Common Stock on the exercise date over the exercise price of the SAR. Payment of amounts attributable
to a SAR shall be made in shares of Common Stock.

 

Section 7.3 Restrictions. In
the event a SAR is granted in tandem with an Incentive Stock Option, the Board shall subject the SAR to restrictions necessary
to ensure satisfaction of the requirements under Section 422 of the Code. In the case
of a SAR granted in tandem with an Incentive Stock Option to an Eligible Employee who owns more than 10% of the combined voting
power of the Company or its Subsidiaries on the date of such grant, the amount payable with respect to each SAR shall be equal
in value to the applicable percentage of the excess, if any, of the Fair Market Value of a share of Common Stock on the Exercise
date over the exercise price of the SAR, which exercise price shall not be less than 110% of the Fair Market Value of a share of
Common Stock on the date the SAR is granted.

 

ARTICLE
VIII PERFORMANCE UNITS

 

Section 8.1 Grant of Awards.
The Board may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine,
grant Performance Units to Eligible Employees, Consultants and Eligible Directors. Each Award of Performance Units shall be evidenced
by an Award Agreement executed by the Company and the Participant, and shall contain such terms and conditions and be in such form
as the Board may from time to time approve, subject to the requirements of Section 8.2.

 

Section 8.2 Conditions of Awards.
Each Award of Performance Units shall be subject to the following conditions:

 

(a)  
Establishment of Award Terms. Each Award shall state the target, maximum and minimum value
of each Performance Unit payable upon the achievement of performance goals.

 

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(b)  Achievement of Performance
Goals. The Board shall establish performance targets for each Award for a period of no less than a year based upon some or all
of the operational, financial or performance criteria listed in Exhibit A attached. The Board shall also establish such other terms
and conditions as it deems appropriate to such Award. The Award may be paid out in cash or Common Stock as determined in the sole
discretion of the Board.

 

ARTICLE
IX PERFORMANCE BONUS

 

Section 9.1 Grant of Performance
Bonus. The Board may from time to time, subject to the provisions of the Plan and such other terms and conditions as the Board
may determine, grant a Performance Bonus to certain Eligible Employees selected for participation. The Board will determine the
amount that may be earned as a Performance Bonus in any period of one year or more upon the achievement of a performance target
established by the Board. The Board shall select the applicable performance target(s) for each period in which a Performance Bonus
is awarded. The performance target shall be based upon all or some of the operational, financial or performance criteria listed
in Exhibit A attached.

 

Section 9.2 Payment of
Performance Bonus. In order for any Participant to be entitled to payment of a Performance Bonus, the applicable performance
target(s) established by the Board must first be obtained or exceeded. Payment of a Performance Bonus shall be made within 60 days
of the Board’s certification that the performance target(s) has been achieved unless the Participant has previously elected
to defer payment pursuant to a nonqualified deferred compensation plan adopted by the Company. Payment of a Performance Bonus may
be made in either cash or Common Stock as determined in the sole discretion of the Board.

 

ARTICLE X

STOCK ADJUSTMENTS

 

In the event that the shares of
Common Stock, as constituted on the effective date of the Plan, shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation (whether by reason of merger, consolidation, recapitalization,
reclassification, stock split, spin-off, combination of shares or otherwise), or if the number of such shares of Common Stock shall
be increased through the payment of a stock dividend, or a dividend on the shares of Common Stock, or if rights or warrants to
purchase securities of the Company shall be issued to holders of all outstanding Common Stock, then there shall be substituted
for or added to each share available under and subject to the Plan, and each share theretofore appropriated under the Plan, the
number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be so changed or
for which each such share shall be exchanged or to which each such share shall be entitled, as the case may be, on a fair and equivalent
basis in accordance with the applicable provisions of Section 424 of the Code; provided, however, with respect to Options, in no
such event will such adjustment result in a modification of any Option as defined in Section 424(h) of the Code. In the event there
shall be any other change in the number or kind of the outstanding shares of Common Stock, or any stock or other securities into
which the Common Stock shall have been changed or for which it shall have been exchanged, then if the Board shall, in its sole
discretion, determine that such change equitably requires an adjustment in the shares available under and subject to the Plan,
or in any Award, theretofore granted, such adjustments shall be made in accordance with such determination, except that no adjustment
of the number of shares of Common Stock available under the Plan or to which any Award relates that would otherwise be required
shall be made unless and until such adjustment either by itself or with other adjustments not previously made would require an
increase or decrease of at least 1% in the number of shares of Common Stock available under the Plan or to which any Award relates
immediately prior to the making of such adjustment (the “Minimum Adjustment”). Any adjustment representing a change
of less than such minimum amount shall be carried forward and made as soon as such adjustment together with other adjustments required
by this Article X and not previously made would result in a Minimum Adjustment. Notwithstanding the foregoing, any adjustment required
by this Article X which otherwise would not result in a Minimum Adjustment shall be made with respect to shares of Common Stock
relating to any Award immediately prior to exercise, payment or settlement of such Award. No fractional shares of Common Stock
or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the nearest whole share.

 

 

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ARTICLE XI

GENERAL

Section 11.1 Amendment
or Termination of Plan. The Board may alter, suspend or terminate the Plan at any time provided, however, that it may not,
without stockholder approval, adopt any amendment which would (i) increase the aggregate number of shares of Common Stock available
under the Plan (except by operation of Article X or Section 1.4), (ii) materially modify the requirements as to eligibility for
participation in the Plan, or (iii) materially increase the benefits to Participants provided by the Plan except as provided in
Section 1.4.

 

Section 11.2 Termination of
Employment; Termination of Service. Except as otherwise provided in an Award Agreement: (i) if an Eligible Employee’s
employment with the Company, a Subsidiary or an Affiliated Entity terminates as a result of death, Disability or Retirement, the
Eligible Employee (or personal representative in the case of death) shall be entitled to purchase all or any part of the shares
subject to any (x) vested Incentive Stock Option for a period of up to three months from such date of termination (one year in
the case of death or Disability), and (y) vested Nonqualified Stock Option during the remaining term of the Option; and (ii) if
an Eligible Employee’s employment terminates for any other reason, the Eligible Employee shall be entitled to purchase all
or any part of the shares subject to any vested Option for a period of up to three months from such date of termination. In no
event shall any Option be exercisable past the term of the Option. The Board may, in its sole discretion, accelerate the vesting
of unvested Options in the event of termination of employment of any Participant.

 

Except as otherwise provided in
an Award Agreement: (i) in the event a Consultant ceases to provide services to the Company or an Eligible Director terminates
service as a director of the Company, the unvested portion of any Award shall be forfeited
unless otherwise accelerated pursuant to the terms of the Eligible Director’s Award Agreement or by the Board; and (ii) the
Consultant or Eligible Director shall have a period of three years following the date he ceases to provide consulting services
or ceases to be a director, as applicable, to exercise any Nonqualified Stock Options which are otherwise exercisable on his date
of termination of service.

 

Section 11.3 Limited Transferability
– Options. The Board may, in its discretion, authorize all or a portion of the Nonqualified Stock Options granted under
this Plan to be on terms which permit transfer by the Participant to (i) the ex-spouse of the Participant pursuant to the terms
of a domestic relations order, (ii) the spouse, children or grandchildren of the Participant (“Immediate Family Members”),
(iii) a trust or trusts for the exclusive benefit of such Immediate Family Members, (iv) a partnership or limited liability company
in which such Immediate Family Members are the only partners or members, or (v) as otherwise determined by the Board in accordance
with applicable law. In addition, there may be no consideration for any such transfer. The Award Agreement pursuant to which such
Nonqualified Stock Options are granted expressly provide for transferability in a manner consistent with this paragraph. Subsequent
transfers of transferred Nonqualified Stock Options shall be prohibited except as set forth below in this Section 11.3. Following
transfer, any such Nonqualified Stock Options shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of Section 11.2 hereof the term “Participant” shall be deemed
to refer to the transferee. The events of termination of employment of Section 11.2 hereof shall continue to be applied with respect
to the original Participant, following which the Nonqualified Stock Options shall be exercisable by the transferee only to the
extent, and for the periods specified in Section 11.2 hereof. No transfer pursuant to this Section 11.3 shall be effective to bind
the Company unless the Company shall have been furnished with written notice of such transfer together with such other documents
regarding the transfer as the Board shall request. With the exception of a transfer in compliance with the foregoing provisions
of this Section 11.3, all other types of Awards authorized under this Plan shall be transferable only by will or the laws of descent
and distribution; however, no such transfer shall be effective to bind the Company unless the Board has been furnished with written
notice of such transfer and an authenticated copy of the will and/or such other evidence as the Board may deem necessary to establish
the validity of the transfer and the acceptance by the transferee of the terms and conditions of such Award.

 

Section 11.4 Withholding Taxes.
Unless otherwise paid by the Participant, the Company, its Subsidiaries or any of its Affiliated Entities shall be entitled to
deduct from any payment under the Plan, regardless of the form of such payment, the amount of all applicable income and employment
taxes required by law to be withheld with respect to such payment or may require the Participant to pay to it such tax prior to
and as a condition of the making of such payment. In accordance with any applicable
administrative guidelines it establishes, the Board may allow a Participant to pay the amount of taxes required by law to be withheld
from an Award by (i) directing the Company to withhold from any payment of the Award a number of shares of Common Stock having
a Fair Market Value on the date of payment equal to the amount of the required withholding taxes or (ii) delivering to the Company
previously owned shares of Common Stock having a Fair Market Value on the date of payment equal to the amount of the required withholding
taxes.

 

 

    9

     

    

 

However, any payment made
by the Participant pursuant to either of the foregoing clauses (i) or (ii) shall not be permitted if it would result in an adverse
accounting charge with respect to such shares used to pay such taxes unless otherwise approved by the Board.

 

Section 11.5 Change of Control.
Notwithstanding any other provision in this Plan to the contrary, Awards granted under the Plan to any Eligible Employee, Consultant
or Eligible Director shall be immediately vested, fully earned and exercisable upon the occurrence of a Change of Control Event
unless the terms of the Award state otherwise.

 

Section 11.6 Amendments to Awards.
The Board may at any time unilaterally amend the terms of any Award Agreement, whether or not presently exercisable or vested,
to the extent it deems appropriate. However, amendments which are adverse to the Participant shall require the Participant’s
consent.

 

Section 11.7 Registration;
Regulatory Approval. Following approval of the Plan by the stockholders of the Company as provided in Section 1.2 of the Plan,
the Board, in its sole discretion, may determine to file with the Securities and Exchange Commission and keep continuously effective,
a Registration Statement on Form S-8 with respect to shares of Common Stock subject to Awards hereunder. Notwithstanding anything
contained in this Plan to the contrary, the Company shall have no obligation to issue shares of Common Stock under this Plan prior
to the obtaining of any approval from, or satisfaction of any waiting period or other condition imposed by, any governmental agency
which the Board shall, in its sole discretion, determine to be necessary or advisable.

 

Section 11.8 Right to Continued
Employment. Participation in the Plan shall not give any Eligible Employee any right to remain in the employ of the Company,
any Subsidiary, or any Affiliated Entity. The Company or, in the case of employment with a Subsidiary or an Affiliated Entity,
the Subsidiary or Affiliated Entity reserves the right to terminate any Eligible Employee
at any time. Further, the adoption of this Plan shall not be deemed to give any Eligible Employee or any other individual any right
to be selected as a Participant or to be granted an Award.

 

Section 11.9 Reliance on Reports.
Each member of the Board and each member of the Board shall be fully justified in relying or acting in good faith upon any report
made by the independent public accountants of the Company and its Subsidiaries and upon any other information furnished in connection
with the Plan by any person or persons other than himself or herself. In no event shall any person who is or shall have been a
member of the Board be liable for any determination made or other action taken or any omission to act in reliance upon any such
report or information or for any action taken, including the furnishing of information, or failure to act, if in good faith.

 

Section 11.10 Construction.
Masculine pronouns and other words of masculine gender shall refer to both men and women. The titles and headings of the sections
in the Plan are for the convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such
titles or headings, shall control.

 

Section 11.11 Governing Law.
The Plan shall be governed by and construed in accordance with the laws of the State of Colorado except as superseded by applicable
Federal law.

 

Section 11.12 Other Laws. The
Board may refuse to issue or transfer any shares of Common Stock or other consideration under an Award if, acting in its sole discretion,
it determines that the issuance or transfer of such shares or such other consideration might violate any applicable law or regulation
or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by
a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant
Participant, holder or beneficiary.

 

Section 11.13 No Trust or Fund
Created. Neither the Plan nor an Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other person. To the extent that a Participant acquires the right to
receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any general unsecured
creditor of the Company.

 

Section 11.14 Conformance to
Section 409A of the Code To the extent that the Committee determines that any Award granted under the Plan is 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 Award Agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any
such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the
contrary, in the event that the Committee determines that any Award may be subject to Section 409A of the Code and related Department
of Treasury guidance, 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 (i) exempt the Award from Section 409A of the Code or (ii) comply with the requirements
of Section 409A of the Code and related Department of Treasury guidance.

 

    10

     

    

 

EXHIBIT A

 

2020 Long-Term Incentive
Compensation Plan

 

Performance Criteria

 

Operational Criteria may include:

Earnings per share

Cash flow

Operating Income

General and Administrative Expenses

Debt to equity ratio

Debt to cash flow

Debt to EBITDA

EBITDA to Interest

Return on Assets

Return on Equity

Return on Invested Capital

Profit returns/margins

Midstream margins

 

Stock Performance Criteria:

Stock price appreciation Total stockholder return

Relative stock price performance

 

 

    11llexq-ex101_6.htm

Exhibit 10.1

FIRST AMENDMENT TO SENIOR SECURED SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT

 

This FIRST AMENDMENT TO SENIOR SECURED SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this “Agreement”) dated as of August 17, 2020, is among Lilis Energy Inc., a Nevada corporation (the “Borrower”), certain Subsidiaries of the Borrower (the “Guarantors”), BMO Harris Bank N.A. (“BMO”), as Administrative Agent for the Lenders, and the other Lenders from time to time party hereto.

Recitals

	
A.
	
WHEREAS, the Borrower, the Guarantors, the Lenders party thereto and the Administrative Agent are parties to that certain Senior Secured Super-Priority Debtor-In-Possession Credit Agreement dated as of June 30, 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.

	
B.
	
WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders constituting the Majority Lenders enter into this Amendment to, among other things, grant an extension of certain Chapter 11 Milestones as further set forth herein.

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 1Defined Terms.  Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Agreement, shall have the meaning ascribed to such term in the Credit Agreement. 

Section 2Amendments.  Subject to the occurrence of the Effective Date, the following amendments to the Credit Agreement shall be made:

2.1Amendments to Section 8.23. 

(a)Section 8.23(d) of the Credit Agreement is hereby amended by replacing the phrase “within fifty (50) days following the Petition Date” with the phrase “no later than 11:59 P.M. (CT) on August 21, 2020”.

(b)Section 8.23(e) of the Credit Agreement is hereby amended by replacing the phrase “within fifty (50) days following the Petition Date” with the phrase “no later than 11:59 P.M. (CT) on August 28, 2020”.

(c)Section 8.23(f) of the Credit Agreement is hereby amended by replacing the phrase “within fifty (50) days following the Petition Date” with the phrase “no later than 11:59 P.M. (CT) on August 21, 2020”.

(d)Section 8.23(g) of the Credit Agreement is hereby amended by replacing the phrase “within eighty-five (85) days following the Petition Date” with the phrase “no later than 11:59 P.M. (CT) on October 2, 2020.

 

 

2.2Amendment to Section 10.01(p). Section 10.01(p) of the Credit Agreement is hereby amended by replacing the phrase “the date that is fifty (50) days following the Petition Date” with the phrase “11:59 P.M. (CT) on August 21, 2020 (or such later date consented to by the Administrative Agent and the Majority Lenders, which consent may be evidenced by electronic mail or other form of Electronic Signature)”.

Section 3Conditions Precedent to Effective Date.  This Agreement shall become effective on the date (such date, the “Effective Date”) when each of the following conditions is satisfied (or waived) in accordance with the terms herein: 

3.1The Administrative Agent shall have received from the Borrower, each Guarantor, and Lenders constituting the Majority Lenders, counterparts of this Agreement signed on behalf of such Persons.

3.2As of the Effective Date, after giving effect to this Agreement, (a) the representations and warranties of each Loan Party set forth in the Credit Agreement and in each other Loan Document shall be true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct), except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct) as of such earlier date and (b) no Default or Event of Default shall have occurred and be continuing.

Each party hereto hereby authorizes and directs the Administrative Agent to declare this Agreement to be effective (and the Effective Date shall occur) when it has received documents confirming or certifying, to the reasonable satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 3. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.

Section 4Miscellaneous.

4.1Limitation of Waivers. Nothing contained in this Agreement shall directly or indirectly in any way whatsoever, except as set forth herein, amend or alter any provision of the Credit Agreement, the other Loan Documents, or any other contract or instrument.

4.2Confirmation.  The provisions of the Credit Agreement and each Loan Document shall remain in full force and effect following the Effective Date.

4.3Ratification and Affirmation; Representations and Warranties.  Each of the Guarantors and the Borrower certifies to the Lenders, on the Effective Date, as applicable, that, after giving effect to this Agreement and the amendments and transactions occurring on the Effective Date, (a) the representations and warranties of each Loan Party set forth in the Credit Agreement and in each other Loan Document are true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty are true and correct), except to the extent such representations and warranties expressly relate to an earlier date, in which case they are true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty are true and correct) as of such earlier date and (b) no Default or Event of Default has occurred and is continuing.   

4.4Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this 

2

 

Agreement by email or facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.  The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any  document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that nothing herein shall require the Administrative Agent to accept electronic signatures in any form or format without its prior written consent.  Without limiting the generality of the foregoing, the Borrower hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and the Borrower and its Subsidiaries, electronic images of this Agreement or any other Loan Documents (in each case, including with respect to any signature pages thereto) shall have the same legal effect, validity and enforceability as any paper original, and (ii) waives any argument, defense or right to contest the validity or enforceability of the Loan Documents based solely on the lack of paper original copies of any Loan Documents, including with respect to any signature pages thereto.

4.5No Oral Agreement.  This Agreement, the Credit Agreement, the other Loan Documents and any separate letter agreement with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreement and understandings, oral or written, relating to the subject matter hereof and thereof. THIS AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

4.6GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

4.7WAIVER OF RIGHT TO TRIAL BY JURY.  EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

4.8Severability.  Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

4.9Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns in accordance with Section 12.04 of the Credit Agreement.

4.10Loan Documents.  This Agreement is a Loan Document.

[Signature Pages Follow]

 

3

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed effective as of the Effective Date.

		
	
 

BORROWER:
	
 

LILIS ENERGY, INC.

	
 
	
 

	
 
	
 

	
 
	
By:/s/ Joseph C. Daches

	
 
	
Name:Joseph C. Daches 

	
 
	
Title:Chief Executive Officer, President and Chief Financial Officer 

	
 

GUARANTORS:
	
 

BRUSHY RESOURCES, INC.

	
 
	
HURRICANE RESOURCES LLC

	
 
	
IMPETRO OPERATING LLC

	
 
	
LILIS OPERATING COMPANY, LLC

	
 
	
IMPETRO RESOURCES, LLC

	
 
	
 

	
 
	
 

	
 
	
Each By: /s/ Joseph C. Daches

	
 
	
Name:Joseph C. Daches

	
 
	
Title:Chief Executive Officer, President and Chief Financial Officer

 

 

	
ADMINISTRATIVE AGENT:
	
BMO HARRIS BANK N.A., 
as Administrative Agent, and a Lender

 

By:/s/ Melissa Guzmann___________
Name:Melissa Guzmann
Title:Director

5

 

	
LENDERS:
	
CAPITAL ONE, NATIONAL ASSOCIATION,
as a Lender

By:/s/ Michael P. Robinson___________________
Name:Michael P. Robinson
Title:Vice President

6

 

	

	
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender

By:/s/ Didier Siffer____________________
Name:Didier Siffer
Title:Authorized Signatory

By:/s/ Megan Kane_____________________
Name:Megan Kane
Title:Authorized Signatory

 

 

7

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