Non-Qualified Stock Option dated April 14, 2020 by and between Brownies Marine Group, Inc. and Robert M. Carmichael

Exhibit 10.1

NON-QUALIFIED STOCK OPTION AGREEMENT NON-PLAN

THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) is entered into this ___ day of April, 2020 by and between Brownie’s Marine Group, Inc., a Florida corporation (the “Company”) and Robert M. Carmichael, an individual (the “Optionee”).

WHEREAS, the Optionee is the Chief Executive Officer and a member of the Company’s Board of Directors.

WHEREAS, the Company is desirous of granting the Optionee stock options which vest upon the achievement by the Company of certain hereinafter set forth milestones as a means to both further compensate the Optionee for his services to the Company and to more align the Optionee’s interests to those of the Company’s non-affiliated shareholders.

NOW THEREFORE, in consideration of the mutual covenants and promises hereafter set forth and for other good and valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:

1. Grant of Non-Qualified Stock Options.

(a) The Company grants to the Optionee, as additional compensation for his services to the Company, an option (the “Option”) to purchase up to an aggregate of 125,000,000 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), of which the right to purchase 75,000,000 shares of Common Stock is subject to vesting upon the achievement of the net revenue milestones set forth in Section 2(a) hereof (the “Net Revenue Portion of the Option”) and the right to purchase 50,000,000 shares of Common Stock is subject to vesting upon the achievement of the exchange listing of the Company’s Common Stock as set forth in Section 2(b) hereof (the “Exchange Listing Portion of the Option”). The Option is not intended to be an Incentive Stock Option as defined by Section 422 of the Internal Revenue Code of 1986, as amended.

(b) The Optionee acknowledges his understanding that the continuation of his employment with the Company and the devotion of substantially all of his time and effort to the business of the Company was a material consideration in the determination by the Board of Directors to grant the Optionee the Option. In consideration of the grant of the Option by the Company, the Optionee agrees to render faithful and efficient services to the Company, including its subsidiaries. Nothing in this Agreement shall confer upon the Optionee any right to continue in the employ or service of the Company or shall interfere with or restrict in any way the rights of the Company, which rights are hereby expressly reserved, to discharge or terminate the services of the Optionee at any time for any reason whatsoever, except to the extent expressly provided otherwise in a written agreement between the Company and the Optionee.

2. Vesting of the Option. The Option shall vest as follows:

(a) Net Revenue Portion of the Option.

(i) The Net Revenue Portion of the Option shall vest as follows:

(A) The right to purchase 25,000,000 shares of Common Stock shall vest at such time as the Company reports cumulative consolidated net revenues, including revenues from related parties and revenues recognized by the Company arising out of any subsequent acquisitions, mergers, or other business combinations following the closing date of such transaction (the collectively, “Net Revenues”), in excess of $3,500,000 in the aggregate over four (4) consecutive fiscal quarters commencing May 1, 2020 and ending on April 30, 2023 (the “Net Revenue Period”);

(B) The right to purchase an additional 25,000,000 shares of Common Stock shall vest at such time as the Company reports cumulative Net Revenues in excess of $7,000,000 in the aggregate over four (4) consecutive fiscal quarters during the Net Revenue Period; and

(C) The right to purchase an additional 25,000,000 shares of Common Stock shall vest at such time as the Company reports cumulative Net Revenues in excess of $10,500,000 in the aggregate over four (4) consecutive fiscal quarters during the Net Revenue Period.

(ii) There shall be no pro rata vesting of any of the Net Revenue Portion of the Option. For example, if the Company should report cumulative net revenues of $9,000,000 for four consecutive fiscal quarters for the period ending June 30, 2022, Optionee’s right to purchase 50,000,000 shares of common stock would vest, and if the Company should report cumulative net revenues of $11,000,000 at a later point during the Net Revenue Period, Optionee’s right to purchase the remaining 25,000,000 shares would vest.

(iii) The determination of the achievement of the Net Revenue milestones shall be made by the independent member(s) of the Company’s Board of Directors based upon the Company’s reviewed consolidated financial statements (for the first three (3) quarters of each fiscal year) and the Company’s audited consolidated financial statements (for the full fiscal year) as included in the periodic reports filed by the Company with the Securities and Exchange Commission. Such determination shall be made immediately following the filing of the applicable report, and any portion of the Net Revenue Portion of the Option to which the Net Revenue milestones have been met will thereafter immediately vest and become exercisable in accordance with the terms of this Agreement.

(b) Exchange Listing Portion of the Option. The Exchange Listing Portion of the Option will immediately vest and become exercisable by the Optionee upon the Company’s receipt during the Net Revenue Period of official notice of listing of its Common Stock from either the Nasdaq Stock Market or the NYSE American LLC, or similar “stock exchange” as that term is defined in the rules of the Securities and Exchange Commission.

(c) Exercisability of the Option. The Option may only be exercised to the extent that such Option shall have become vested and exercisable. The conditions to vesting set forth in Sections 2(a) and 2(b) hereof requires continued employment of the Optionee by the Company through each applicable vesting date as a condition to the vesting of the applicable portion of the Option. Regardless of reason for termination of the Optionee’s employment or services, employment or services for only a portion of the vesting period, even if a substantial portion, will not entitle the Optionee to any proportionate such vesting or avoid or mitigate a termination of rights and benefits under this Agreement.

2. Exercise Period; Exercise Price; Cashless Exercise.

(a) Exercise Period. Once vested, that portion of the Option will be exercisable by the Optionee for a period of ninety (90) days following the date of vesting (the “Exercise Period”). If not exercised by the Optionee during the Exercise Period, any vested portion of the Option will lapse and no longer be exercisable by the Optionee. Any portion of the Option which have not vested by the expiration of the Net Revenue Period will lapse and not entitle the Optionee to exercise any such unvested portion of the Option.

(b) Exercise Price. The initial exercise price of the Option shall be $.045 per share of Common Stock. Such price shall be subject to adjustment pursuant to the terms hereof (such price, as adjusted from time to time, is hereinafter referred to as the “Exercise Price”).

(c) Method of Exercise. In order to exercise the vested portion of the Option, the Optionee much deliver the Notice of Exercise attached hereto as Annex I, duly completed and executed by the Optionee, to the Company at the principal executive offices of the Company, together with payment in the amount obtained by multiplying the Exercise Price then in effect by the number of shares of Common Stock thereby purchased, as designated in the Notice of Exercise. Payment may be in cash, wire transfer or by check payable to the order of the Company in immediately available funds. The Option is only exercisable for a whole number of shares of Common Stock.

(d) Cashless Exercise. In lieu of exercising the vested portion of the Option for cash, the Optionee may elect to receive shares of Common Stock equal to the value (as determined below) of the exercised portion of the Option (the “Cashless Exercise”) with the properly endorsed Notice of Exercise with the Cashless Exercise election in which event the Company shall issue to the Optionee that number of shares of Common Stock determined according to the following formula:

X = Y (A-B)

A

(e) Conditions to Issuance of Stock Certificates. The shares of Common Stock deliverable upon the exercise of the Option, or any portion thereof, may be either previously authorized but unissued shares of Common Stock, treasury shares or issued shares of Common Stock which have then been reacquired by the Company. Such shares of Common Stock shall be fully paid and nonassessable when issued in accordance with the terms of this Agreement. The Company shall not be required to issue or deliver any certificates or make any book entries evidencing shares of Common Stock purchased upon the exercise of the Option or portion thereof prior to fulfillment of the conditions set forth in this Agreement.

(f) Restricted Securities. The shares of Common Stock purchasable upon the exercise of the Option will constitute “restricted securities” under the federal securities laws inasmuch as they will be acquired from the Company in transactions not involving a public offering and, accordingly, may not, under such laws and applicable regulations, be resold or transferred without registration under the Securities Act of 1933, as amended (the “Securities Act”), or an applicable exemption from such registration. The certificates representing the shares of Common Stock issuable upon the exercise of the Option shall bear an appropriate securities legend to the foregoing effect.

3. Adjustment of the Exercise Price and Number of Shares. If the Company shall at any time while the Option is outstanding subdivide its outstanding Common Stock, by split-up or otherwise, or combine its outstanding Common Stock, the number of shares of Common Stock as to which the Option is exercisable as of the date of such subdivision, split-up or combination shall forthwith be proportionately increased in the case of a subdivision, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the Exercise Price, but the aggregate purchase price payable for the total number of shares of Common Stock purchasable under the Option as of such date shall remain the same.

4. Rights as a Shareholder. The Optionee shall not be, nor have any of the rights or privileges of, a shareholder of the Company in respect of any shares of Common Stock purchasable upon the exercise of any part of the Option unless and until such shares shall have been issued by the Company to the Optionee (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).

5. Certain Optionee Obligations. The Optionee is not relying on the Company or any of its employees or agents with respect to the legal, tax, economic and related considerations of this Agreement or the Option, and the Optionee has relied on the advice of, or has consulted with, only its own accountants, attorneys, and advisors. The Optionee is ultimately liable and responsible for all taxes owed in connection with the Option, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Option. The Company does not make any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or exercise of the Option or the subsequent sale of Common Stock issuable upon the exercise of the Option. The Company does not commit and is under no obligation to structure the Option to reduce or eliminate the Optionee’s tax liability.

6. Restrictions on Transfer of Option. This Agreement and the Option shall not be transferable by the Optionee.

7. Reservation of Shares. With respect to the Option, the Company hereby agrees to at all times reserve for issuance and/or delivery upon payment by the Optionee of the Exercise Price, such number of shares of Common Stock as shall be required for issuance and/or delivery upon such payment pursuant to the Option.

8. Miscellaneous.

(a) Amendment. The Company may amend this Agreement at any time and from time to time; provided, however, that no amendment of this Agreement that would materially and adversely impair the Optionee’s rights or entitlements with respect to the Option shall be effective without the prior written consent of the Optionee.

(b) Severability. In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.

(c) Arbitration. Any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in Broward County, Florida (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.

(d) Benefit. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their legal representatives, successors and assigns.

(e) Notices and Addresses. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt, or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail or facsimile (if provided), during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five (5) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications sent to the Company shall be sent to: 300 NW 25 Avenue, Suite 1, Pompano Beach, Florida 33069 to the attention of the Board of Directors, with a copy to the Company’s counsel at: Pearlman Law Group LLP, 200 South Andrews Avenue, Suite 901, Fort Lauderdale, Florida 33301, Attn: Brian Pearlman, Esq., email: ***@***. Upon receipt of any communications delivered to the Board of Directors, the Optionee shall immediately delivery such communications to the independent members of the Board of Directors via email to the addresses regularly used for communications to such independent directors. All communications to the Optionee shall be sent to the Optionee’s address as set forth in the books and records of the Company, or to such e-mail address, facsimile number (if any) or address as subsequently modified by written notice given in accordance with this section.

(f) Attorneys’ Fees. In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses.

(g) Governing Law. This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the laws of the State of Florida without regard to choice of law considerations.

(h) Entire Agreement. This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof.

(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.

(j) Section or Paragraph Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement.

(k) Stop-Transfer Orders. The Optionee agrees that, in order to ensure compliance with the restrictions set forth in this Agreement, the Company may issue appropriate “stop transfer” instructions to its duly authorized transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. The Company shall not be required (i) to transfer on its books any shares of the Company’s Common Stock that have been sold or otherwise transferred in violation of this Agreement or (ii) to treat the owner of such shares of Common Stock or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such shares of Common Stock shall have been so transferred.

(l) Conformity to Securities Laws. The Optionee acknowledges that this Agreement is intended to conform to the extent necessary with all provisions of the Securities Act and the Securities Exchange Act of 1934, as amended, and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Agreement shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

(m) Role of Counsel. The Optionee acknowledges his understanding that this Agreement was prepared at the request of the independent member(s) of the Board of Directors Company by Pearlman Law Group LLP, its counsel, and that such firm did not represent the Optionee in conjunction with this Agreement or any of the related transactions. The Optionee, as further evidenced by his signature below, acknowledges that he has had the opportunity to obtain the advice of independent counsel of his choosing prior to his execution of this Agreement and that he has availed himself of this opportunity to the extent he deemed necessary and advisable.

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

NOTICE OF EXERCISE

To: Brownie’s Marine Group, Inc.

1. The undersigned Optionee hereby elects to purchase _____________ shares of Common Stock of Brownie’s Marine Group, Inc., a Florida corporation (the “Company”), pursuant to the terms of the Non-Qualified Stock Option Agreement dated April ____, 2020 by and between the Company and the Optionee (the “Agreement”). All terms not otherwise defined herein shall have the same meaning as in the Agreement.

2. The Optionee shall make payment of the Exercise Price as follows (check one):

[  ] “Cash Exercise”

[  ] “Cashless Exercise”

If the Optionee is making a Cash Exercise, the Optionee is hereby delivering the sum of $____________, in lawful money of the United States, to the Company in accordance with the terms of the Agreement.

If the Optionee is making a Cashless Exercise, the Company shall deliver to the Optionee ______________ shares of Common Stock in accordance with the terms of the Agreement, which such amount is subject to verification by the Company.

IN WITNESS WHEREOF, the Optionee has executed this Notice of Exercise as of the _____ day of __________, __________.