Document:

Exhibit 10.1

 

DATED 11 JANUARY 2019

 

 

 

 

 

SECOND AMENDING AGREEMENT TO

THE SHARE SALE AGREEMENT FOR THE ENTIRE
ISSUED SHARE CAPITAL OF TD HOLDINGS LIMITED AND

THE SECURED PROMISSORY NOTE

 

 

 

 

 

 

 

 

Gray Corporate Law Limited

Unit 1, 6-8 London Street, Sydney NSW 2042
Australia

 

 

 

 

    	 	 	 

     

    

 

THIS AGREEMENT is made on 11 January
2019

 

BETWEEN

 

		(1)	GROM SOCIAL ENTERPRISES, INC. a company incorporated in the State of Florida, the United
States of America (formerly known as GROM HOLDINGS INC.), and having its principal office at 2060 NW Boca Raton Boulevard,
Suite #6 Boca Raton Florida 33431 (“Buyer”);

 

		(2)	WAYNE EDWARD DEARING of 12 Zinia Street, Valle Verde 2, Brgy Ugong, Pasig City 1605, DAVID
ARDEN PEABODY of 4 Banaba Rd Bgy, Forbes Park, Forbes Park South, Makati City, Philippines and MICHAEL ALLARDICE GORDON
HISCOCK of 85 Wanganella Street, Balgowlah 2093, Sydney, Australia (collectively the “Sellers”);

 

WHEREAS

 

		(A)	The Buyer and the Sellers entered into an agreement dated 20 June 2016 for the sale and purchase
of the entire issued share capital of TD Holdings Limited (“Original Agreement”).

 

		(B)	The Original Agreement was amended on 1 January 2018.

 

		(C)	The Buyer has requested an extension of the date of repayment of the Secured Promissory Note, to
which the Sellers have agreed.

 

		(D)	The Buyer and the Sellers now wish to amend the terms and conditions of the Original Agreement
and the Secured Promissory Note by entering into this Agreement.

 

IT IS AGREED as follows:

 

		1.	Definitions

 

		1.1	In this Agreement, the following words and expressions shall have the following meanings unless
the context otherwise requires:

 

Agreement means this
Agreement.

 

First Amendment Agreement
means the agreement entered into between the Sellers and the Buyers dated 1 January 2018 amending the terms and conditions
of the Original Agreement and the Secured Promissory Note.

 

Group
Profit Share means a share in the retained earnings of the Group, required without restriction or condition by the Sellers
to be calculated and paid monthly in arrears by the Buyers in accordance with the Sellers payment instructions after making prudent
provision for:

 

		(a)	The working capital requirements of the Group; 

 

		(b)	The capital expenditure requirements of the Group;

 

		(c)	In both cases cognisant of the Sellers’ plans to perform the EBITDA targets set out in the
Earnout Payments; and

 

		(d)	If the Sellers have concerns around the way in which the Buyers have dealt with items in paragraphs
(a), (b) and (c) above, the Sellers may refer their concerns to an Expert for determination under clause 27 of the Original Agreement.

 

 

 

 

    	 	2	 

     

    

 

Original Agreement means
the agreement entered into between the Sellers and the Buyer dated 20 June 2016 for the sale and purchase of the entire issued
share capital of TD Holdings Limited.

 

Secured
Promissory Note means the loan note created by the Sellers and the Buyer dated 16 June 2016 to give effect to the Buyer Notes
referred to in the Original Agreement.

 

		2.	Interpretation

 

		2.1	In this Agreement, unless the context otherwise requires:

 

		(a)	defined words used in this Agreement shall have the meaning ascribed to them in the Original Agreement
and the Secured Promissory Note both as amended by the First Amendment Agreement;

 

		(b)	references to times of day are, unless the context otherwise requires, to Hong Kong time and references
to a day are to a period of twenty-four hours running from midnight on the previous day;

 

		(c)	any amount expressed to be in $ or dollars, shall be to the lawful currency of the United States
of America;

 

		(d)	the index, headings and any descriptive notes in brackets following references to statutes in this
Agreement are for convenience only and shall not affect its construction or interpretation;

 

		(e)	references to Clauses, Recitals or Schedules are to clauses of and recitals and schedules to this
Agreement and references in a Schedule or a part of a Schedule to a paragraph are to a paragraph of that Schedule or that part
of that Schedule;

 

		(f)	all Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise
defined herein shall have the meaning as defined in this Agreement;

 

		(g)	use of the singular shall include the plural and vice versa, and the use of any gender shall include
all other genders;

 

		(h)	references to any document in the agreed form means in a form agreed by the parties and for the
purposes of identification initialled by each party;

 

		(i)	a party means a party to this Agreement and includes its permitted assignees and successors in
title and, in the case of an individual, his estate and personal representatives;

 

		(j)	a Person shall include any individual, firm, company, state or agency of the state or any association
or partnership or other body or entity (wherever and howsoever incorporated or established), and in each case, vice versa;

 

		(k)	includes or including shall mean including without limitation;

 

		(l)	general words shall not be given a restrictive meaning;

 

		(m)	writing or written includes faxes and any non-transitory form of visible reproduction including
e-mail;

 

 

 

 

    	 	3	 

     

    

 

		(n)	The words “hereof,” “herein,” “hereto” and “hereunder”
and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of
this Agreement.

 

		(o)	the captions herein are included for convenience of reference only and shall be ignored in the
construction or interpretation hereof.

 

		(p)	unless the context of this Agreement clearly requires otherwise, the term "or" has, except
where otherwise indicated, the inclusive meaning represented by the phrase "and/or."

 

		(q)	a rule of construction does not apply to the disadvantage of a party because the party was responsible
for the preparation of this Agreement or any part of it; and

 

		(r)	where any agreement, acknowledgement, covenant, representation, warranty, indemnity, undertaking,
obligation or liability is expressed to be made, undertaken or given by two or more persons their liability shall be deemed to
be joint and several.

 

		3.	Agreement to Amend

 

		3.1	This Agreement and each of its terms and conditions, is an amendment to the Original Agreement
and the Secured Promissory Note, and are deemed to be included where relevant in the terms and conditions of the Original Agreement
and the Secured Promissory Note. To the extent that there is an in consistency between a term or a condition in this Agreement
and the Original Agreement or the Secured Promissory Note, this Agreement will prevail.

 

		3.2	The Sellers agree to amend the Original Agreement and the Secured Promissory Note by extending
repayment of the Buyer Notes from the third anniversary of the Closing Date to 2 April 2020 in consideration for the following:

 

		(a)	Receipt of 800,000 Buyer Shares immediately upon execution of this Agreement by all parties in
accordance with each of the Buyer’s instructions;

 

		(b)	Amendment of the Earnout Payment, from the date hereon, to 50 percent cash (clause 5.2(a) of the
Original Agreement) and 50 percent Buyer Shares (clause 5.2(b) of the Original Agreement);

 

		(c)	If the Secured Promissory Note is not repaid by 2 July 2019, without prejudice to the Sellers rights
to enforce, and in no way to be interpreted as a waiver of, an Event of Default under the Secured Promissory Note, the Consideration
is to be increased by payment to the Sellers of the Group Profit Share, which for the avoidance of doubt commences on, and includes
all Group Profit Share earned from, 3 July 2019 to the date that the Secured Promissory Note is paid in full;

 

		(d)	If the Secured Promissory Note is not repaid by 2 July 2019, the following additional covenants
are hereby provided by the Buyer to the Sellers while all amounts payable under the Original Agreement and the Secured Promissory
Note remain unpaid, the following covenants are hereby deemed to be provided by the Buyer to the Seller on 3 July 2019:

 

		-	No Management Fee shall be paid to the Buyer as is provided for in the Original Agreement;

 

		-	No directors’ fees or any reimbursement in directors costs, shall be paid to any director
of a Group company, except for fees and expenses claims of Dearing;

 

		-	No distribution of cash, payment of fees, in whatever form, from the Group to the Buyer or any
Affiliate of the Buyer;

 

 

 

 

    	 	4	 

     

    

 

		-	No payment, or assumption, by the Group of any liability (actual or contingent) of the Buyer or
any Affiliate of the Buyer.

 

		-	Any action similar to the above where the Group is incurring a debit to the credit of the Buyer
or any affiliate of the Buyer.

 

		(e)	The Secured Promissory Note is convertible into Buyer Shares at the option of each of the Sellers
(Option) where;

 

		-	The Buyer Shares may be freely sold pursuant to an available exemption from the registration requirement
of the Securities Act of 1933, as amended;

 

		-	The Option conversion price shall be US$0.27 per Buyer
Share;

 

		-	The Option conversion rights are exercisable at any time by a Seller notifying the Buyer in writing
prior to repayment in full of the Secured Promissory Note;

 

		-	The Option conversion may, at the election of a Seller,
be in full or in part;

 

		-	The Option right to covert expires on repayment in full of the Note where the Buyer must give the
Sellers one months prior notice in writing of repayment in full (Repayment Notice) to allow the Sellers time to assess exercise
of the Option; and

 

		-	A Seller who elects to convert must notify the Buyer within two weeks of receipt of a Repayment
Notice and notify the Buyer of the shareholder details.

 

		4.	Confidentiality

 

		4.1	The parties undertake to keep confidential the terms of this Agreement and all information about
each other, and will ensure that the same level of confidentiality binds its employees, agents and advisors.

 

		4.2	The parties shall be entitled to disclose the information where:

 

		(a)	Information becomes public knowledge other than as a direct or indirect result of the information
being disclosed in breach of this Agreement;

 

		(b)	The parties agree in writing that such information is not confidential; and

 

		(c)	The disclosure is required by law, or by a regulatory body, tax authority or securities exchange.

 

		5.	Assignment

 

		5.1	This Agreement shall be binding on and shall enure for the benefit of the successors in title of
each party.

 

		5.2	No party shall be entitled to assign the benefit of any rights under this Agreement without the
prior written consent of the other parties, such consent not to be unreasonably withheld.

 

 

 

 

    	 	5	 

     

    

 

		6.	Further Assurance

 

Each party shall execute or
procure that any necessary third party shall execute all such documents and/or do or procure the taking of such steps as the other
party shall after Closing reasonably require in order to give effect to this Agreement (and any document entered into pursuant
to it) and to give each party the full benefit of the provisions of such documents.

 

		7.	Waiver, Variation and Release

 

		7.1	No failure or delay by a party in exercising any claim, remedy, right, power or privilege under
this Agreement shall operate as a waiver, nor shall any single or partial exercise of any claim, remedy, right, power or privilege
preclude any further exercise of any other claim, right, power or privilege.

 

		7.2	No variation of this Agreement shall be effective unless it is agreed in writing and executed by
each party.

 

		8.	Costs

 

The Buyer
shall pay the Sellers legal costs relating to this Agreement of US$7,500.

 

		9.	Counterparts

 

This Agreement may be entered
into in two or more counterparts, and by the parties to it on separate counterparts, but shall not be effective until each party
has executed at least one counterpart, and each counterpart, when executed and delivered shall be an original, and all counterparts
shall together constitute one and the same document.

 

		10.	Invalidity

 

Each of the provisions of this
Agreement shall be read and construed independently of the other provisions as entirely separate and is severable. If any provision
(or part thereof) is found by any court or competent authority to be illegal, invalid or unenforceable in any jurisdiction, that
provision (or part thereof) shall be deemed not to be part of this Agreement and shall not affect the continuation in force of
the remainder of this Agreement.

 

		11.	Third Party Rights

 

This Agreement and the documents
referred to in it are made for the benefit of the parties to them and their successors and permitted assigns, and are not intended
to benefit, or be enforceable by, anyone else.

 

		12.	Governing Law and Jurisdiction

 

		12.1	This Agreement and any dispute claim or obligation (whether contractual or non-contractual) shall
be governed by and construed in all respects in accordance with the law of Hong Kong.

 

		12.2	The parties irrevocably agree to submit to the exclusive jurisdiction of the courts of Hong Kong
in relation to any dispute, claim or obligation (whether contractual or non-contractual) arising out of or in connection with this
Agreement or the legal relationships established by it.

 

 

 

 

    	 	6	 

     

    

 

IN WITNESS WHEREOF THIS AGREEMENT
has been executed by the parties

 

	EXECUTED by GROM SOCIAL ENTERPRISES, INC. 
 	)	 
	in accordance with its constituting	)	 
	documents
    and the laws by which it is governed by:	)	 
	 	)	 
	 	 	Darren Marks
	 	 	Chief Executive Officer, President
	 	 	and Chairman
	 	 	 
	 	 	 
	 	 	Mel Leiner
	 	 	Chief Operating Officer, Executive 

    VicePresident, Chief Financial Officer, 

    Secretary and Director
	 	)	 
	EXECUTED by WAYNE EDWARD DEARING	)	 
	in the presence of:	)	 
	 	)	 
	 	)	 
	Signature of Witness	 	Wayne Edward Dearing
	 	 	 
	Name of Witness	 	 
	 	 	 
	 	 	 
	EXECUTED by DAVID ARDEN PEABODY	)	 
	in the presence of:	)	 
	 	)	 
	 	)	 
	 	)	 
	Signature of Witness	 	David Arden Peabody
	 	 	 
	Name of Witness	 	 
	 	 	 
	 	 	 
	EXECUTED by MICHAEL ALLARDICE GORDON	)	 
	HISCOCK in the presence of:	 )	 
	 	)	 
	 	)	 
	Signature of Witness	)	Michael Allardice Gordon Hiscock
	 	 	 
	Name of Witness	 	 

 

 

 

 

 

    	 	7ex_132994.htm

Exhibit 10.1

 

 

 

 

 

Sent Via Email:

 

January 7, 2019

 

Mr. Michael C. Beck

 

 

Re: Employment Offer

 

Dear Mike:

 

We are very pleased to extend this offer of employment to join LSI Industries as Senior Vice President - Operations. The position will report to me in my role as President and Chief Executive Officer. The following is a summary description of the compensation, health and welfare benefits, and other Company plans and programs offered in connection with your employment.

 

	
			1.

				
			Base Salary; Start Date. The annual base salary for the position is $325,000. Any adjustment to base salary is subject to approval by the Compensation Committee of the Board of Directors. We anticipate that your first day employment with the Company will be February 11, 2019.

			

 

	
			2.

				
			Short Term Incentive Compensation. The position will be eligible to participate in the Company's Short Term Incentive Plan commencing with the Company's 2020 fiscal year (July 1, 2019 through June 30, 2020) at the "B5A Named Executive Officer" level. The FY20 STIP metrics and related performance objectives, and the determination of FY20 STIP incentive payouts, will be subject in all respects to the review and approval of the Compensation Committee and to the terms and conditions of the FY20 STIP document which will govern all matters associated with the FY20 STIP.

			

 

The following summary is provided to help familiarize you with the current structure of the STIP. The Company's FY19 STIP (July 1, 2018 through June 30, 2019) was approved by the Compensation Committee and provides for the payment of a cash incentive, subject to the achievement of the FY19 STIP performance objectives. The FY19 STIP metrics, performance objectives and the potential bonus percentage opportunity of each executive officer were reviewed and approved by the Compensation Committee. The 2019 STIP is based on corporate performance as measured by the achievement of two corporate metrics, net sales and operating income. The net sales and operating income performance objectives are each weighted at 50%. These metrics and their respective weightings have been employed in the STIP since FY18.

 

1

 

 

The Board of Directors approves the Company's annual operating plan and, in general, the operating plan net sales and operating income objectives have been used in setting STIP targets. However, the Compensation Committee considers a wide range of factors and exercises its discretion in setting STIP thresholds, targets, and payout percentages, in order to balance executive officer interests and shareholder interests. Assuming the FY20 STIP maintains the same structure as the FY19 STIP, at the threshold level of performance, it is anticipated that your FY20 STIP bonus opportunity will be 25% of base salary; at the target level of performance, the bonus opportunity will be 50% of base salary; and at the maximum level of performance, the bonus opportunity will be 100% of base salary.

 

	
			3.

				
			Long-Term Incentive Compensation. The Board of Directors has approved the Company's Long Term Incentive Plan. The SVP - Operations position is eligible to participate in the LTIP, subject to review and approval of the Compensation Committee. Your participation in the LTIP will commence with FY20 LTIP awards made in or about August 2019. At that time, you will have the opportunity to receive equity-based awards to be issued under the Company's Amended and Restated 2012 Stock Incentive Plan (or any successor plan), pursuant to and in accordance with the terms of the LTIP document which governs all matters associated with the LTIP. In connection with this offer of employment and as an inducement to your agreement to join the Company, the Board of Directors has approved an inducement award of stock options for the purchase of shares of the Company's common stock on the terms and conditions as set forth in Exhibit A to this letter.

			

 

	
			4.

				
			Signing Bonus: Relocation Expense: Temporary Housing Expense. In connection with this offer of employment, the Company will pay a lump sum of $45,000 to you as a signing bonus (the "Signing Bonus"). In addition, in connection with this offer of employment, the Company will pay a lump sum of $50,000 to you for purposes of covering all out-of-pocket expenses incurred in connection with your relocation to the Cincinnati area, including, without limitation, expenses for temporary housing (the "Relocation Amount"). The position is based at the Company's Cincinnati headquarters and it is expected that you will perform the duties of the position at our Cincinnati offices. The Signing Bonus and the Relocation Amount will be paid to you within thirty (30) days after the first day of your employment with the Company. In the event that the Signing Bonus and the Relocation Amount are taxable as income under applicable federal, state or local law, the Company will not "gross-up" such payments and you shall be solely responsible for any such tax. If you voluntarily terminate your employment within one (1) year of your start date with the Company, or if the Company terminates your employment for cause within one (1) year of your start date with the Company, then you will be obligated to repay the Signing Bonus and the Relocation Package not later than thirty (30) days after the date of such termination of employment.

			

 

	
			5.

				
			LSI 401(K) Savings Plan. Employees may contribute up to 75% of salary, subject to all applicable IRS annual limits, in accordance with the terms of the Company's 401(K) Plan. The Company currently provides a 50% matching contribution on the first 5% contributed by an employee. A summary description of the Plan will be provided.

			

 

	
			6.

				
			LSI Non-Qualified Deferred Compensation Plan. You will be eligible to participate in the LSI Deferred Compensation Plan which permits the deferral of salary and / or incentive compensation in accordance with the terms of the Plan. A summary description of the Plan will be provided.

			

 

	
			7.

				
			Paid time off. You will be eligible for four weeks of paid time off per fiscal year.

			

 

2

 

 

	
			8.

				
			Holidays. The Company has ten paid designated holidays per calendar year, which includes one floating personal holiday.

			

 

	
			9.

				
			The LSI Health Benefits Plan. LSI currently offers a preferred provider network health plan with three plan choices (High PRO, Low PRO and HDHP) from which to select. A summary of the Company's health benefits plan will be provided.

			

 

	
			10.

				
			The LSI Dental and Vision Plans. LSI currently offers a dental plan with two plan choices (High PPO, Low PPO) from which to select, including preventative care benefits, as well as a vision care plan, for all covered family members.

			

 

	
			11.

				
			Prescription Drug Card. Employee prescription co-payments are based upon the Health Benefits Plan choice selected.

			

 

	
			12.

				
			Flexible Spending Accounts. You may elect to establish Health Care and Dependent Care Flexible Spending Accounts under the PPO option health plan choices, or to establish a Health Savings Account under the HDHP option choice.

			

 

	
			13.

				
			Disability Insurance. The Company covers the cost of both short-term and long-term disability insurance coverage.

			

 

	
			14.

				
			Accidental Death and Dismemberment Insurance. LSI covers the cost of accidental death and dismemberment insurance coverage.

			

 

	
			15.

				
			Basic Life Insurance. The Company covers the cost of basic term life insurance coverage up to a maximum specified benefit level.

			

 

	
			16.

				
			Dependent Life Insurance. LSI covers the cost of dependent life insurance, under which your spouse is covered for $10,000 and your dependent children (6 months to 19 years) are covered for $5,000 each.

			

 

	
			17.

				
			Optional Insurance. You may also secure additional insurance coverage at your option and cost for term life, accidental injury and critical illness.

			

 

A copy of our Restrictive Covenant Agreement for your review. The Restrictive Covenant Agreement covers matters related to confidentiality, non-competition and non-solicitation. This offer of employment is subject to your execution and delivery of the Restrictive Covenant Agreement on your first day of employment by the Company. We will also work through the details of the public announcement, press release, SEC filings and other matters associated with the start of your employment with the Company. This offer is also contingent upon successful completion of a background check.

 

We're very pleased to make this proposal for you to assume this important role for the Company, Mike. If you have any questions, please contact me at 513-372-3600 or 860-830-0672.

 

3

 

 

Sincerely,

 

James A. Clark

President and Chief Executive Officer LSI Industries Inc.

 

Please sign below to confirm that you are accepting this offer of employment and agree to the terms of employment set forth above. Your signature also confirms that your employment and duties with LSI Industries will not violate any contractual or other legal obligation with any prior employer. You further confirm that you have not misappropriated and will not use any prior employer's proprietary information or trade secrets in connection with your LSI Industries employment.

 

/s/ Michael Beck

 

Date: January 11, 2019

 

4

 

 

Exhibit A

 

Stock Option Inducement Award Summary

 

The Company will award at the close of business on your first day of employment with the Company a nonqualified stock option, which will be intended to qualify as an "inducement grant" under NASDAQ Listing Rule 5635(c)(4) and which will not be granted pursuant to the Company's 2012 Stock Incentive Plan. The stock option award will grant the right to purchase 50,000 shares of the Company's common stock at a per share exercise price equal to the fair market value of the Company's common stock as of the date of grant (i.e., the closing price per share on the NASDAQ Global Select Market on your first day of employment). The stock option will have a term of ten (10) years and shall vest only if you are employed by the Company for a period of three (3) years following the date of grant.

 

5

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