Exhibit 10.5


 





GROM SOCIAL ENTERPRISES, INC.


 


 


 


November 30, 2017


 


Fyoosion LLC.


4 Poplar Avenue


North Brunswick, NJ. 08902


Attn: Abhishek Jain, CEO


 


RE: Memorandum of Understanding for the
Acquisition of 100% of the Assets of Fyoosion, LLC


 


Dear Mr. Jain:


 


This Memorandum of Understanding (“MOU”)
provides for the general terms whereby Grom Social Enterprises, Inc., a Florida corporation (“Grom”, the “Company”
or the “Purchaser”), will acquire all of the Assets from Fyoosion LLC, a Delaware limited liability company
(“Fyoosion” or the “Seller”).


 


Sale of Assets.


 


1.1 The Seller shall
cause to be sold, assigned, transferred, conveyed and delivered to the Purchaser at the Closing good and valid title to all
of the current Assets of the Seller, all of which are listed on Schedule 1.1 and which shall include all assets
among things such as goodwill, cash, accounts receivable (but expressly exclude: (x) all receivables and amounts, if any,
owed by or from Watson Enterprises, Inc. or any of its subsidiaries or affiliates, including Younger You dba Avivi, or any of
their respective employees, officers and directors, hereafter collectively the “WEI Persons” to Fyoosion and (y)
all claims and rights if any that Fyoosion has or may assert against any one or more WEI Persons), prepayments, patents,
trademarks, source code, hardware appliances as well as all other documentation, processes, equipment and know how necessary
to operate the Seller’s business in a manner similar to its current operations (collectively the “Assets”).
The parties acknowledge that this transaction and the Closing thereof are subject to and conditioned upon, among other
things, the (i) delivery of the Assets clear of all encumbrances, except for as provided for in Assumed Liabilities section
1.2 and (ii) Definitive Documents in a form and substance reasonably satisfactory to Fyoosion and the Company and which do
not vary in any material way or manner from the terms and conditions set forth in this MOU. It is expressly understood and
agreed that the WEI Persons shall not be primarily or secondarily liable to make, or indemnify the Purchaser for any breach
of, any representation, warranty or other transaction obligation under the Definitive Documents or this MOU.


 


1.2 Purchase
Agreement; Structure. Upon full execution of this MOU, Purchaser shall cause its attorneys to prepare and deliver definitive documents
consistent with the terms of this MOU and which would include (i) an asset purchase agreement which contains all standard representations,
warranties and covenants by the Company as well as an indemnity by the Company and other standard provisions typical of the Transaction,
(ii) the Non-Competition Agreement, and (iii) other ancillary agreements, documents and instruments necessary to give effect to
the Transaction (the “Definitive Documents”). This MOU may be amended or modified only by a writing duly executed by
all of the parties, it being understood that an amendment or modification hereof would require separate additional approval of
the Fyoosion Board of Managers and Members.


 


1.3 Termination. Should
the Company be dissatisfied with the results of the due diligence, they shall notify the Seller in writing that this MOU is being
terminated. In the event the parties are unable or refuse to sign the definitive documents on or prior to December 15, 2017 for
a reason other than Grom cannot settle the liabilities it is assuming under terms to the satisfaction of the Company, this MOU
shall nonetheless remain in full force and effect in accordance with its terms and provisions, and any breach thereof shall cause
such breaching party (other than a WEI Person) to have liability therefore, including but not limited to consequential or special
damages, attorney fees and related expenses.


 


 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431







    	 	 	 



     


    


 


GROM SOCIAL ENTERPRISES, INC.


 


 


 


Assumed Liabilities.


 


2.1 The Purchaser shall
assume the liability for all Seller as of the Closing including without limitation, all outstanding accounts payable as of the
closing including those owed at Closing to the creditors listed in Schedule 1.1. PROVIDED HOWEVER, that the Purchaser, will not
assume any liabilities for the Seller's taxes or guaranteed payments or compensatory-service fee owed to a manager or a member
for actual services performed by such person for service as a manger or officer of the Company for any managers or members for
services rendered. Purchaser will work with the Seller to negotiate reductions and discounts in accounts payable balances due to
creditors prior to Closing, by offering “restricted” Grom common stock and extended cash payment terms in partial or
full settlement of accounts payable amounts due. Any agreement reached with creditors must be done prior to Closing and supported
by a written agreement agreed to by the creditor, the Seller and Grom pre-closing: which pre-closing agreements would then be assumed
and performed by Grom post-closing. Additionally, Grom as its sole discretion shall determine if the level of discounts agreed
upon by accounts payable vendors, is a sufficient level to close the transaction.


 


Transaction Summary.


 


3.1 This MOU contemplates
that Grom will purchase 100% of the operating Assets of Fyoosion using Grom's “restricted” common stock.
Grom shall also provide working capital for the Assets post-closing. Post-acquisition Grom intends to place the Assets into a
newly formed division within its Grom Social, Inc. subsidiary. (“NewDivision”). The operating
activity as well as the accounting process and tracking for NewDivison are intended to replicate the current operations of Fyoosion.
NewDivision will continue to operate its Business in its customary fashion under your leadership. In this regard
and as a condition of closing, we intend to enter into an employment agreement with you and your primary developer, Dimitry Polonsky.
See “Compensation” section below.


 


3.2 In addition to the
purchase price for the Assets, Fyoosion will have the opportunity to earn additional purchase consideration if a post-Closing
EBITDA milestones is achieved.


 


3.3 The purpose of this
MOU is to define the details of the transaction contemplated by the parties. This MOU is meant to create mutually binding obligations
on each party.


 


Purchase Price for the Assets.


 


4.1 The total initial
purchase consideration is 300,000 shares of “restricted” Grom common stock (currently trading on the OTCQB
“GRMM” at approximately $0.88 per share), (the “Shares”), payable (and delivered) at Closing. Simultaneous
with the Closing, Seller shall:


 


		·	distribute the greater of 38% of the Shares or 114,000 of the Shares to Watson Enterprises, Incorporated
(“WEI”) in full redemption of WEI's Member Interest in the Seller, and



 


		·	distribute the greater of 9% of the Shares or 27,000 of the Shares to Succession Equity Partners
(“SEP”) in full redemption of SEP's Member Interest in the Seller, 46% of the Shares or 138,000 of the Shares to Abhishek
Jain in full redemption of Abhishek Jain (“AJ”) Member Interest in the Seller and the remaining 7% of the Shares or 21,000
of the Shares to Dimity Polonskiy.



 


THE SHARES SO DISTRIBUTED (THE “REDEMPTION
CONSIDERATION”), TOGETHER WITH ALL OTHER SHARES PAID AND DELIVERED TO FYOOSION WHERE DISTRIBUTED TO ITS OTHER MEMBERS OR RETAINED
BY FYOOSION WILL BE MARKED WITH A RESTRICTIVE LEGEND WHICH WILL PRECLUDE THEM FROM BEING TRADED THEREAFTER FOR SIX MONTHS AND ONE
DAY.


 


 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431





    	 	 	 



     


    


GROM SOCIAL ENTERPRISES, INC.


 


 


 


4.2 At Closing, the Company
and all of the individuals who are receiving shares of Grom herein shall execute and deliver that certain “leak-out”
agreement limiting the number of shares that they may sell at one time. The form of Leakout Agreement is attached hereto and incorporated
herein as if set forth as Schedule 4.2


 


4.3 Additionally, Grom
agrees to provide $100,000 in cash into NewDivision following Closing specifically to be earmarked for working capital for the
Business.


 


Contingent Earnout.


 


5.1 A Contingent Earnout
of up to an additional 200,000 shares of Grom “restricted” common shares can be earned and will become
payable to the Seller only if the Business achieves the following performance goal post-Closing:


 


“The Business attains $125,000
in pre-tax earnings before interest, taxes, depreciation and amortization (“EBITDA”) calculated using generally
accepted accounting principles ("GAAP') for the one-year period post-closing. This calculation shall be based upon Fyoosion
stand-alone performance excluding any Grom intercompany revenue and expense, and will not include any corporate
fees or charges”.


 


In the event that such contingent earnout is
paid, Seller shall promptly distribute 38% of the Contingent Earnout to WEI and 9% of the Contingent Earnout to SEP and such distribution
shall be deemed additional Redemption Consideration for the redeemed interests. If Seller is no longer in existence at the time
the Contingent Earnout is paid, either because all of the members have elected to take liquidating distributions or otherwise,
the Contingent Earnout would be paid to the former members of Seller in the following proportions: 38% to WEI, 9% to SEP, 7% to
Dimitri and 46% to AJ.


 


Compensation


 


6.1 As a condition of closing
the transaction, we will enter into a one-year employment agreement with renewal clauses with you and Dimitry Polonsky. At Closing
you will become the Vice President of Digital Marketing for Grom Holdings working out of your current New Jersey office. Your duties
shall be to work closely with the entire Grom executive team and Zach Marks to help manage all of Grom's digital marketing and
technology buildout for all Grom entities, and well as managing the daily operations of Fyoosion.


 


Your compensation payable from Grom shall
be $5,000 per month ($60,000 per year), as well as 100,000 Grom stock options at a strike price of $1.50 vesting prorata
over a three-year period. The vesting of these options will be expressly contingent upon the Business obtaining breakeven operations
under GAAP and which excludes Grom intercompany revenue and expense generated from Grom subsidiaries or affiliates. You will
also have the opportunity to earn up to a maximum of $10,000 per month in “Additional Compensation”
based solely upon the financial performance NewDivision/Fyoosion post-Closing. The factors determining the level of additional
compensation shall be based upon cash flow levels and the profitability of Fyoosion. The determination of how much additional
compensation has been earned and is payable monthly, will be at the sole discretion of Grom.


 


6.2 Upon the closing of
this agreement Dimitry Polonskiy shall become a Software Development Engineer for Grom Holdings. His duties shall be to perform
software development services for all Grom entities. His compensation payable from Grom shall be $4,000 per month ($48,000 per
year), as well as 15,000 Grom stock options at a strike price of $1.50 vesting over a three-year period. He will also have the
opportunity to earn up to a maximum of $10,000 per month in “Additional Compensation”
based solely upon the financial performance NewDivision/Fyoosion post-closing. The factors determining the level of additional
compensation shall be based upon cash flow levels and the profitability of Fyoosion. The determination of how much additional
compensation has been earned and is payable monthly, will be at the sole discretion of Grom.


 


 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431





    	 	 	 



     


    


 


GROM SOCIAL ENTERPRISES, INC.


 


 


 


Closing Date.


 


7.1 The parties will use
good faith efforts to enter into definitive agreements and consummate the transaction on, or before, December 31, 2017.



 


Conditions of Closing.


 


8.1 The consummation of
the transaction is expressly contingent upon following conditions:


 


		(a)	Delivery by the Seller of a detailed software development budget, acceptable to Grom not to exceed
$150,000.



 


		(b)	Entering into a mutually agreeable employment agreement with you and your CTO as described in the
Compensation section above.



 


		(c)	Preparation by the Seller of a detailed one-year financial model for the Business post-closing.



 


		(d)	The Seller agrees that Grom shall have 100% control of all cash accounts and disbursements post-closing.



 


		(e)	It is understood that Mr. Abhishek, Fyoosion, Watson Enterprises, Inc. (“WEI”), Arthur
Watson, Jr., SEP and each of the other Board Members, will obtain mutual releases from each other.



 


Definitive Agreement.


 


9.1 The parties will negotiate
and execute definitive agreements which will include employments for you and Dimitry Polonsky, setting forth the principal terms
hereof and such other representations, warranties, covenants and conditions which are standard in the context of such a transaction.
It is agreed that when the definitive agreement is drafted, that WEI and Mr. Kitt Watson will not be required indemnitors
to the agreement. If the definitive agreement and employment contracts cannot be negotiated by December 31, 2017, the terms
of this MOU shall become binding.


 


Access to Information-Confidentiality.


 


10.1 Fyoosion will permit
Grom and its accountants, attorneys, tax accountants and other advisers to conduct a thorough due diligence examination of the
Business. Grom and its officers, employees, representatives, and other advisers will treat as confidential all nonpublic
information about the Business that is disclosed to them during this examination. Grom will permit Fyoosion and
its accountants, attorneys, and other advisers to conduct a thorough due diligence examination of Grom. Fyoosion, and its officers,
employees, representatives, and other advisers will treat as confidential all nonpublic information about Grom that is disclosed
to them during this examination.


 


Public Disclosure.


 


11.1 Grom, Fyoosion and
their officers, employees, accountants, attorneys, representatives, and other advisers will treat as confidential all discussions
regarding the transaction until a press release is issued by Grom. Neither party will issue a press release or make any other public
announcement regarding the transaction without the approval of the other party, unless they are advised by counsel that such disclosure
is required by law.


 


 


 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431





    	 	 	 



     


    


GROM SOCIAL ENTERPRISES, INC.


 


 


 


Notices.


 


12.1 Any notices regarding
this MOU should be delivered by email and overnight mail carrier and addressed to:


 


If to Fyoosion:


4 Poplar Avenue


North Brunswick, NJ. 08902


Attn: Abhishek Jain, CEO


 


If to the Company:


2060 NW Boca Raton Boulevard


Boca Raton, Florida 33431


Attn: Melvin Leiner, Executive VP




 


Exclusivity and Stand-Still.


 


13.1 Upon full execution
of this MOU, Fyoosion, its members, managers, officers, agents and representatives agree that they shall not solicit, discuss or
negotiate any proposals with other parties for the sale of the Assets which are described herein as part of the transaction proposed
herein. Until the earlier of the Closing and December 15, 2017, the Company shall conduct business consistent with historical practices
and in the ordinary course and shall not enter into any material agreements without Grom's written consent.


 


General.


 


14.1 Expenses.
Each party shall bear their own expenses until the signing of a definitive agreement.


 


14.2 Revisions.
The parties hereto by agreement in writing may extend the time and terms for the performance of any term or condition of this
non-binding Memorandum of Understanding, extend the date of entering into the formal definitive agreement between the parties,
waive any inaccuracies in any representations contained herein, and waive the future performance of any obligation.


 


14.3 Binding Effect.
It is the intent of this MOU to set out with sufficient particularity the details of the transactions contemplated by the
parties. Except as otherwise set forth herein, it is understood and agreed that this MOU, when executed by all of the parties
hereto, constitutes a binding commitment with respect to the proposed transaction.


 


14.4 Authority.
Both Parties declare and represent having all requisite power, authority and legal capacity to execute and deliver this Agreement
and to consummate the final transaction contemplated hereby.


 


14.5 Entire Agreement.
This MOU contains the entire agreement between the Seller and Groin with respect to the matters set forth herein and supersedes
all prior oral and written understandings and transactions related thereto and can only be changed in writing signed by all parties.


 


 


 





 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431





    	 	 	 



     


    


GROM SOCIAL ENTERPRISES, INC.


 


 


 



14.6 Counterpart Execution.
This MOU may be executed in several parts in the same form and by facsimile and such parts so executed will together form
one original agreement and construed as if all the signing parties hereto had executed one copy of this MOU.


 


14.7 Governing Law.
This MOU will be construed and governed under the laws of Florida and the parties agree to submit any disputes to the jurisdiction
of the courts of Florida, excluding the conflict of laws thereof.


 


14.8 Acknowledgement.
The parties expressly acknowledge that notwithstanding the form of this Agreement being a “Memorandum of Understanding,”
it is a legally binding obligation on the part of both parties and, other than to negotiate in good faith the definitive documents,
the failure to sign such definitive documents shall have no effect on or impair the enforceability of this MOU under all applicable
theories of law and equity.


 


If the terms set forth in this MOU are acceptable
to you, please sign this MOU in the space provided below and return it back. The proposal set forth in this MOU will terminate
if it is not accepted by you on or before 5 pm. EST on Thursday, November 30, 2017.


 


Very truly yours,


 


Accepted on November.______, 2017


 


GROM SOCIAL ENTERPRISES, INC.


 


/S/ Darren Marks


Darren Marks, CEO


 


Accepted on November 30, 2017


 


FYOOSION LLC


 


/s/ Abhishek Jain


Abhishek Jain, CEO, Manager


 


/s/ Arthur Watson, Jr.,


Arthur Watson, Jr., Manager


 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431





    	 	 	 



     


    


 


GROM SOCIAL ENTERPRISES, INC.


 


Schedule 1.1 Assets


 


 


1.       Assets: The assets (“Assets”)
to be acquired by Grom are the following:


 


The Assets include all of the Company's right,
title and interest, if any, to the following assets of the Company: (a) all of the Company's worldwide right, title and interest
in all “FYOOSIAN LLC” trademarks (registered or common law), service marks, trade names, service names, brand names,
all trade dress rights, logos, Internet domain names and corporate names and general intangibles of a like nature, together with
the goodwill associated with any of the foregoing, and all pending applications, registrations and renewals thereof, owned or used
by the Company, and all variations of the “FYOOSIAN LLC” trademarks and trade names (collectively, the “Marks”);
(b) all technology (“Technology”), including all designs, methods, techniques, ideas, know-how, research and development,
technical data, programs, materials, specifications, processes, inventions (patentable or unpatentable), patents, creations, improvements,
works of authorship and other similar materials, and all recordings, drawings, reports, analyses, and other writings, and other
tangible embodiment of the foregoing, in any form whether or not specifically listed herein, and all related technology, that are
used in, incorporated in, embodied in, displayed by or relate to, or are used or useful in the design, development, reproduction,
maintenance or modification of, any of the products developed, manufactured, marketed or sold by the Company using the Marks, whether
work in process, pending application or in final form; (c) all copyrights and registrations and applications therefor and works
of authorship, and mask work rights relating to goods sold bearing the Marks; (d) patterns, molds, tasks, computer aided designs
(CADs), samples and designs owned or used by the Company with respect to the Marks; (e) all books, records or files related to
the Marks, (f) all artwork, photography and archival material (including but not limited to advertising materials, copy, commercials,
catalogues, images, and artwork, as well as brand books, samples, and other material showing the heritage of the Company) owned
by the Company related to the Marks; (g) all visitor tracking codes and analysis, including but not limited to hits, page(s) viewed
and unique visitors to the FYOOSIAN LLC website (the “Website”) on a daily, weekly and monthly basis, and all related
charts, graphs and tools, records relating to third parties the Company pays to advertise the Website, and records relating to
third parties who place advertising on the Website, whether paid or gratis; (h) email lists and addresses related to the business
of the Company utilizing the Marks; and (i) records and documents, whether in hard copy or electronic, including all material files
maintained by the Company's attorney(s), to the extent relating to any of the foregoing. To the extent any of the Company's subsidiaries
or affiliates own any of the foregoing assets; such entities shall be parties to the Definitive Documents to convey such interests
(or shall convey such assets to the Company prior to the Closing). The purchase price shall be allocated as reasonably requested
by the Company among the parties which are designated as “Seller” under the Definitive Documents.


 


 


 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431





    	 	 	 



     


    


 


GROM SOCIAL ENTERPRISES, INC. 


 


Schedule 1.2 Assumed Liabilities 




 


 


	Abhishek	$10,000.00
	Dmitriy	$10,000.00
	Tempest (Norman)	$37,500.00
	Martin McCann	$ 6,280.00
	CVSI	$74,000.00
	CLI Marketing	$ 7,720.00
	CLI Dev	$14,673.00
	Reliance Accounting	$ 5,835.00
	Call Center - Teleiman	$83,651.00
	Affiliates	$39,646.00
	Kount	$ 3,000.00
	Maria Luda	$2,000.00
	TOTAL	$294,305.00


 


 


 


 


 


 


 


 


 


 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431





    	 	 	 



     


    


 


GROM SOCIAL ENTERPRISES, INC.


 


Schedule 4.2 Form of Leakout Agreement


 


 


 


_______________________,2017


 


Grom Social Enterprises, Inc. 

2060 NW Boca Raton Blvd., #6 

Boca Raton, FL, 33431


 


Re:          Leakout
Agreement


 


 


Gentlemen:


 


The undersigned is a beneficial owner of __________ shares of
the common stock of Grom Social Enterprises, Inc. (the “Company”), par value $.001 per share (the
“Shares”). The Shares were acquired as part of that certain Asset Purchase Agreement between the Company and
Fyoosian LLC (the “Agreement”). As part of the consideration included in the Agreement, the undersigned has agreed
to execute and deliver to the Company this “leak-out” agreement applicable to the Shares and agrees to the terms
and conditions contained hereinbelow.


 


The undersigned does agree, for the benefit
of the Company that the undersigned will not, without the prior written consent of the Company, in its sole discretion offer to
sell, sell assign, pledge, hypothecate, grant any option for the sale of, or otherwise dispose of, directly or indirectly, any
of the Shares owned by the undersigned, or subsequently acquired through the exercise of any options, warrants or rights, or conversion
of any other security, or by reason of any stock split or other distribution of stock, or grant options, rights or warrants with
respect to any such Shares, during the twelve (12) month period commencing on the effective date of the Agreement, except as follows:
The undersigned shall have the right, but not the obligation, to sell that number of Shares equal to 25% of the daily average trading
volume. Additional Shares may only be sold by the undersigned with the consent of the Company, in its sole discretion. Furthermore,
the undersigned will permit all certificates evidencing the Shares to be endorsed with the appropriate restrictive legends and
will consent to the placement of appropriate stop transfer orders with the transfer agent of the Company.


 


 


 


 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431







    	 	 	 



     


    

 


GROM SOCIAL ENTERPRISES, INC.


 


 


 


Notwithstanding the foregoing, the undersigned
may sell or dispose of the Shares, provided that such sale or disposition is a privately negotiated transaction, the transaction
is in compliance with federal and state securities laws and other applicable laws in the written opinion of counsel to the undersigned,
which counsel must be acceptable to the Company and its counsel, and the acquiror of the Shares executes a letter agreement with
the Company substantially identical to the terms contained herein.


 


Very truly yours


 


 


_______________________


(signature of holder)


 


 


_______________________


Please Print Name(s)


 


 _______________________


Number of shares of Common


Stock owned


 


 


 


 


 


2060
NW Boca Raton Blvd., #6


Boca
Raton, FL 33431