Document:

Exhibit
10.1

 

 

Binding
Term Sheet

 

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

 

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

 

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

 

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

 

    	 

    	 

    

 

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

 

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

 

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

 

    	 

    	 

    

 

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

 

    	 

    	 

    

 

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

 

	 	BUYER:

 

	 	BROWNIE’S
    MARINE GROUP, INC.

 

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

 

	 	COMPANY:

 

	 	SUBMERSIBLE
    SYSTEMS, LLC

 

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

 

	 	SELLERS:

 

	 	TIERRA
    VISTA GROUP, LLC

 

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

 

	 	SUMMIT
    HOLDINGS V, LLC

 

	 	By:	/s/
    Claude R. Walker
	 	Name:	Claude
    R. Walker
	 	Title:	ManagerEXECUTION COPY

          LETTER AMENDMENT NO. 1

Dated as of August 26, 2019

To the banks, financial institutions

and other institutional lenders
(collectively, the “Lenders”) parties
to the Credit Agreement referred to
below and to Bank of America, N.A., as administrative agent
(the “Administrative Agent”) for the Lenders

Ladies and Gentlemen:

We refer to the Credit Agreement dated as of October 17, 2018 (the “Credit Agreement”) among the undersigned and you. Capitalized terms not otherwise defined in this Letter Amendment have the same meanings as specified in the Credit Agreement.

It is hereby agreed by you and us as follows:

The Credit Agreement is, effective as of the date of this Letter Amendment, hereby amended as follows: 

(a) The definition of “Applicable Percentage” in Section 1.01 is amended by adding to the end of the embedded definition of “Debt Rating” therein the following:

provided further, that the Debt Rating of any rating agency shall be disregarded upon the request of the EWI, which request shall certify that (x) such rating was not issued pursuant to a contractual arrangement with EWI and (y) EWI did not participate or cooperate in analysis by such rating agency in relation to such Debt Rating

(b) The definition of “Credit Documents” in Section 1.01 is amended in full to read as follows:

“Credit Documents” means this Credit Agreement, the Notes, the Fee Letter, the Guaranties, each Designated Borrower Request and Assumption Agreement, the Issuer Documents, each Designated Borrower Notice, the Joinder Agreements, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.16 of this Credit Agreement, the Autoborrow Agreement, any fee letter entered into in connection with the Autoborrow Agreement and the Lender Joinder Agreements.

(c) Section 1.01 is further amended by adding thereto in appropriate alphabetical order the following new definitions:

“Autoborrow Agreement” has the meaning specified in Section 2.04(a)(i)(y).

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

“Covered Entity” means any of the following: (a) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (c) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

“QFC Credit Support” has the meaning specified in Section 11.21.

“Supported QFC” has the meaning specified in Section 11.21.

(d) Section 2.01(a)(iii) is amended in full to read as follows:

(iii) USD Swingline Loans. Unless (i) any USD Lender is a Defaulting Lender and (ii) the applicable USD Swingline Lender has not entered into arrangements satisfactory to it with the applicable Borrowers or such Defaulting Lender to eliminate such USD Swingline Lender’s exposure with respect thereto, the USD Swingline Lenders severally agree, subject to the terms of any Autoborrow Agreement, to make revolving credit loans (the “USD Swingline Loans”) to the applicable Borrowers in Dollars on any Business Day in an aggregate principal amount of up to FIFTY MILLION DOLLARS ($50,000,000) (as such amount may be decreased in accordance with the provisions hereof, the “USD Swingline Sublimit”), provided that the Outstanding Amount of USD Swingline Loans shall not exceed the USD Swingline Sublimit;

(e) Section 2.01(a)(vi) is amended by adding to the end of the first sentence thereof the following proviso:

; provided, however, that if an Autoborrow Agreement is in effect, the applicable USD Swingline Lender may, at its discretion, provide for an alternate rate of interest on USD Swingline Loans under the Autoborrow Agreement with respect to any USD Swingline Loans for which the applicable USD Swingline Lender has not  requested that the Revolving Lenders fund Revolving Loans to refinance, or to purchase and fund risk participations in, such USD Swingline Loans pursuant to Section 2.04(c).

(f) Section 2.04(a)(i) is amended by (i) adding to the beginning of the first sentence thereof the phrase “(x) Other than a USD Swingline Borrowing made pursuant to the Autoborrow Agreement,” and (ii) by adding immediately after such subsection a new subsection (y) to read as follows:

(y) In order to facilitate the borrowing of USD Swingline Loans, the Borrowers and the USD Swingline Lenders may mutually agree to, and are hereby authorized to, enter into an Autoborrow Agreement in form and substance satisfactory to the Administrative Agent and the USD Swingline Lenders (the “Autoborrow Agreement”) providing for the automatic advance by any USD Swingline Lender of USD Swingline Loans under the conditions set forth in such agreement, which shall be in addition to the conditions set forth herein. At any time an Autoborrow Agreement is in effect, the requirements for USD Swingline Borrowings set forth in the immediately preceding paragraph shall not apply, and all USD Swingline Borrowings shall be made in accordance with the Autoborrow Agreement; provided that any automatic advance made by Bank of America in reliance of the Autoborrow Agreement shall be deemed a USD Swingline Loan as of the time such automatic advance is made notwithstanding any provision in the Autoborrow Agreement to the contrary. For purposes of determining the Total Revolving Outstandings at any time during which an Autoborrow Agreement is in effect (other than for purposes of calculating Commitment Fees), the Outstanding Amount of all USD Swingline Loans shall be deemed to be the amount of the USD Swingline Sublimit. For purposes of any USD Swingline Borrowing pursuant to the Autoborrow Agreement, all references to Bank of America in the Autoborrow Agreement shall be deemed to be a reference to Bank of America, in its capacity as a USD Swingline Lender hereunder.

(g) Section 2.05(b) is amended in full to read as follows:

(b) USD Swingline Loans. At any time the Autoborrow Agreement is in effect, the USD Swingline Loans shall be repaid in accordance with the terms of the Autoborrow Agreement. At any time the Autoborrow Agreement is not in effect the Outstanding Amount of USD Swingline Loans shall be repaid in full on the earlier to occur of (i) the date of demand by the applicable USD Swingline Lender, and (ii) the Termination Date.

(h) Section 2.06(a)(ii) is amended by adding to the beginning of the first sentence thereof the phrase “At any time the Autoborrow Agreement is not in effect,” 

(i) Section 2.08(a)(iii) is amended by deleting the parenthetical phrase “(including USD Swingline Loans)” and substituting therefor the parenthetical phrase “(including USD Swingline Loans or, if an Autoborrow Agreement is in effect, at a rate per annum provided by the applicable USD Swingline Lender)”.

(j) Section 5.02(c) is amended in full to read as follows:

(c) The Administrative Agent, L/C Issuer and/or Swingline Lenders if, in the case of the USD Swingline Lenders, no Autoborrow Agreement is then in effect, shall have received a Request for Credit Extension in accordance with the requirements hereof.

(k) The last paragraph of Section 5.02 is amended in full to read as follows:

Each Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to other Types of Loans, or a continuation of Fixed LIBOR Rate Loans) submitted by the Borrowers and each USD Swingline Borrowing pursuant to an Autoborrow Agreement shall be deemed to be a representation and warranty by the Borrowers that the conditions specified in Sections 5.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.

(l) Section 11.01(d) is amended in full to read as follows:

(d) (i) unless also consented to in writing by the affected Swingline Lender, no such amendment, waiver or consent shall affect the rights or duties of such Swingline Lender under this Credit Agreement and (ii) the Autoborrow Agreement and any fee letters executed in connection therewith may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto;

(m) A new Section 11.21 is added to read as follows:

11.21 Acknowledgement Regarding Any Supported QFCs.

To the extent that the Credit Documents provide support, through a guarantee or otherwise, for any Swap Contract or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Credit Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States): In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the 

Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Credit Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Credit Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

This Letter Amendment shall become effective as of the date first above written when, and only when the Administrative Agent shall have received counterparts of this Letter Amendment executed by the undersigned and all of the Lenders. This Letter Amendment is subject to the provisions of Section 11.01 of the Credit Agreement.

On and after the effectiveness of this Letter Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Notes to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Letter Amendment.

The Credit Agreement and the Notes, as specifically amended by this Letter Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Letter Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under the Credit Agreement, nor constitute a waiver of any provision of the Credit Agreement.

If you agree to the terms and provisions hereof, please evidence such agreement by executing and returning at a counterpart of this Letter Amendment to Susan L. Hobart, Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022.   

This Letter Amendment may be executed in any number of counterparts (and by different parties hereto in separate counterparts), each of which when so executed shall constitute an original, but all of which taken together shall constitute a single agreement. Delivery of an executed counterpart of a signature page to this Letter  Amendment by telecopy or electronic imaging means shall be effective as delivery of a manually executed counterpart of this Letter Amendment.  

This Letter Amendment shall be governed by, and construed in accordance with, the law of the State of New York.

Very truly yours,

EURONET WORLDWIDE, INC., as a Borrower and a Guarantor

By /s/ Rick Weller
      Name: 
      Title:

Agreed as of the date first above written:

BANK OF AMERICA, N.A.,
            as Administrative Agent

By /s/ Liliana Claar
      Name: Liliana Claar
      Title: Vice President

BANK OF AMERICA, N.A.,
            as Lender

By /s/ Alok Jain
      Name: Alok Jain
      Title: Senior Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION 

By /s/ Brian Buck
      Name: Brian Buck
      Title: Managing Director

U.S. BANK NATIONAL ASSOCIATION

By /s/ Tim Landro
      Name: Tim Landro
      Title: Vice President

BMO HARRIS BANK, N.A. 

By /s/ Andrew Berryman
      Name: Andrew Berryman
      Title: Vice President

BANK OF MONTREAL,

By /s/ Andrew Berryman
      Name: Andrew Berryman
      Title: Vice President

BBVA USA, an Alabama banking corporation f/k/a Compass Bank

By /s/ Michael Wendling
      Name: Michael Wendling
      Title: Senior Vice President

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK

By /s/ Gordon Yip
      Name: Gordon Yip 
      Title: Director

By /s/ Michael Madnick
      Name: Michael Madnick
      Title: Managing Director

FIFTH THIRD BANK

By /s/ Michael Cortese
      Name: Michael Cortese
      Title: Vice President

KEYBANK NATIONAL ASSOCIATION

By /s/ Geoff Smith
      Name: Geoff Smith
      Title: Senior Vice President

LLOYDS BANK CORPORATE MARKETS PLC

By /s/ Kamala Basdeo
      Name: Kamala Basdeo
      Title: Assistant Vice President

By /s/ Dennis McClellan

      Name: Dennis McClellan
      Title: Vice President

REGIONS BANK

By /s/ James L. McGovern
      Name: James L. McGovern
      Title: Managing Director

BARCLAYS BANK PLC

By /s/ Nathalie Majlis                     Executed in New York
      Name: Nathalie Majlis
      Title: Director

KBC BANK N.V., NEW YORK BRANCH

By /s/ Jana Sevcikova
      Name: Jana Sevcikova
      Title: Director

By /s/ Francis X. Payne
      Name: Francis X. Payne
      Title: Managing Director

ROYAL BANK OF CANADA

By /s/ Theodore Brown
      Name: Theodore Brown
      Title: Authorized Signatory

BOKF, NA

By /s/ Ryan Humphrey
      Name: Ryan Humphrey
      Title: VP

CITIZENS BANK & TRUST

By /s/ Janelle Aubrecht
      Name: Janelle Aubrecht
      Title: Vice President

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