Item
1.01 Entry into a Material Definitive Agreement.
Amendment
to Share Exchange Agreement
As
previously disclosed in the Current Report on Form 8-K of Simplicity Esports and Gaming Company, formerly known as Smaaash Entertainment
Inc. (the “Company”), filed with the Securities and Exchange Commission (“SEC”) on December 28, 2018
,
on December 21, 2018, the Company entered into a share exchange agreement (as amended by Amendment No. 1 to Share Exchange Agreement,
dated December 28, 2018, the “Share Exchange Agreement”) by and among the Company, Simplicity Esports LLC, a Florida
limited liability company (“Simplicity”), each of the equity holders of Simplicity (“Simplicity Owners”)
and Jed Kaplan, in the capacity as the representative of the Simplicity Owners (the “Representative”), pursuant to
which, among other things, the Simplicity Owners agreed to transfer all the issued and outstanding equity interests of Simplicity
to the Company in exchange for up to an aggregate of 3,000,000 newly issued shares of common stock, par value $0.0001 per share
(“Common Stock”), of the Company (the “Transaction”).
The
Share Exchange Agreement provides that the Simplicity Owners will receive an aggregate of 300,000 shares of Common Stock at the
closing of the Transaction (the “Closing”) and an additional aggregate of 700,000 shares of Common Stock on January
7, 2019. The Share Exchange Agreement also provided that the Simplicity Owners were entitled to additional payments consisting
of (i) an additional aggregate of 500,000 shares of Common Stock once Simplicity has at least two fully operational gaming centers
in the United States, (ii) an additional aggregate of 750,000 shares of Common Stock if at any point within five years of the
Closing, the Company’s market capitalization equals at least $20 million and (iii) an additional aggregate of 750,000 shares
of Common Stock if at any point within five years of the Closing, the Company’s market capitalization equals at least $50
million (each of the additional payments, a “Contingent Payment” and each of the payment conditions, a “Payment
Condition”).
On
December 30, 2018, the Company, Simplicity and the Representative entered into Amendment No. 2 to Share Exchange Agreement (the
“Amendment”), which amended the Share Exchange Agreement to remove the Payment Conditions and the Contingent Payments,
and replace the Contingent Payments with a single payment of 2,000,000 shares of Common Stock (the “Share Payment”)
payable to the Simplicity Owners upon the Company’s receipt of approval from its stockholders for the issuance of such shares.
As amended, the Share Exchange Agreement, requires the Company to promptly seek stockholder approval for the issuance of the 2,000,000
shares of Common Stock, and in the event that the Company does not receive stockholder approval for the issuance by September
30, 2019 the Company and the other parties to the Share Exchange Agreement agree to promptly take all action reasonably necessary
so that the name “Simplicity” and any trademarks and copyright and similar rights are transferred to the Representative,
and the Company and its affiliates shall thereafter cease to use the name “Simplicity” in any of its operations.
The
foregoing description of the Amendment is qualified in its entirety by reference to the text of the Amendment, a copy of which
is included as Exhibit 10.1 to this report and is incorporated herein by reference.
Voting
Agreement
In
connection with the Closing, and as a condition to the Simplicity Owners selling their equity interests in Simplicity to the Company,
the Company and the officers and directors of the Company who own shares of Common Stock entered into a Voting Agreement, dated
as of December 31, 2018 (the “Voting Agreement”), pursuant to which, among other things, each stockholder party thereto
agreed to vote for or consent to, in their capacity as a stockholder and not as an officer or director of the Company, the issuance
of the Share Payment. The stockholders also agreed not to (i) transfer their shares, (ii) grant a proxy with respect to such shares,
(ii) permit a lien to be placed on their shares, or (iv) take any action that would prevent or impede the stockholder’s
ability to perform its obligations under the Voting Agreement, during the Voting Period (as defined in the Voting Agreement).
The
foregoing description of the Voting Agreement is qualified in its entirety by reference to the text of the Voting Agreement, a
copy of which is included as Exhibit 10.2 to this report and is incorporated herein by reference.
Employment
Agreements
On
December 31, 2018, the Company entered into an employment agreement with Jed Kaplan, pursuant to which he shall serve as the Co-Chief
Executive Officer of the Company until March 31, 2019, at which point he shall automatically become the sole Chief Executive Officer
of the Company. Mr. Kaplan shall not receive a salary or other monetary compensation and in lieu thereof he shall receive an equity
grant of 10,000 shares of Common Stock per month, which shares shall be fully vested upon grant. Mr. Kaplan shall also be eligible to receive a quarterly bonus in the form of cash or equity shares, and shall be entitled to participate in the Company’s
employee benefit plans. The term of Mr. Kaplan’s employment agreement is for an initial one-year term, which shall automatically
renew for successive one-year terms unless either party provides 60 days’ advance written notice of its intention not to
renew the agreement at the conclusion of the then applicable term. The term of the employment agreement may be terminated by the
Company with or without cause or by Mr. Kaplan with or without good reason, as such terms are defined therein. The foregoing description
of Mr. Kaplan’s employment agreement is qualified in its entirety by reference to the employment agreement, which is attached
hereto as Exhibit 10.3 and is herein incorporated by reference.
On
December 31, 2018, the Company also entered into an employment agreement with F. Jacob Cherian, pursuant to which he shall serve
as the Co-Chief Executive Officer of the Company until March 31, 2019, at which point he shall automatically cease to be the Co-Chief
Executive Officer of the Company. During the term of his employment agreement,
Mr. Cherian shall receive (i) a monthly base salary of $8,333.33 and (ii) an equity grant of 3,000 shares of Common Stock per
month, which shares shall be fully vested upon grant. Mr. Cherian shall also be eligible to receive a quarterly bonus in the form
of cash or equity shares, and shall be entitled to participate in the Company’s employee benefit plans. The term of Mr.
Cherian’s employment agreement is for an initial one-year term, which shall automatically renew for successive one-year
terms unless either party provides 60 days’ advance written notice of its intention not to renew the agreement at the conclusion
of the then applicable term. The term of the employment agreement may be terminated by the Company with or without cause or by
Mr. Cherian with or without good reason, as such terms are defined therein. The foregoing description of Mr. Cherian’s employment
agreement is qualified in its entirety by reference to the employment agreement, which is attached hereto as Exhibit 10.4 and
is herein incorporated by reference.
On
December 31, 2018, the Company also entered into an employment agreement with Suhel Kanuga, pursuant to which he shall continue
to serve as the Chief Financial Officer of the Company. During the term of his employment agreement, Mr. Kanuga shall receive
(i) a monthly base salary of $8,333.33 and (ii) an equity grant of 3,000 shares of Common Stock per month, which shares shall
be fully vested upon grant. Mr. Kanuga shall also be eligible to receive a quarterly bonus in the form of cash or equity shares,
and shall be entitled to participate in the Company’s employee benefit plans. The term of Mr. Kanuga’s employment
agreement is for an initial one-year term which shall automatically renew for successive one-year terms unless either party provides
60 days’ advance written notice of its intention not to renew the agreement at the conclusion of the then applicable term.
The term of the employment agreement may be terminated by the Company with or without cause or by Mr. Kanuga with or without good
reason, as such terms are defined therein. The foregoing description of Mr. Kanuga’s employment agreement is qualified in
its entirety by reference to the employment agreement, which is attached hereto as Exhibit 10.5 and is herein incorporated by
reference.
On
December 31, 2018, the Company also entered into an employment agreement with Roman Franklin, pursuant to which he shall serve
as the President of the Company. During the term of his employment agreement, Mr. Franklin shall receive (i) a monthly base salary
of $8,333.33 and (ii) an equity grant of 3,000 shares of Common Stock per month, which shares shall be fully vested upon grant.
Mr. Franklin shall also be eligible to receive a quarterly bonus in the form of cash or equity shares, and shall be entitled to
participate in the Company’s employee benefit plans. The term of Mr. Franklin’s employment agreement is for an initial
one-year term, which shall automatically renew for successive one-year terms unless either party provides 60 days’ advance
written notice of its intention not to renew the agreement at the conclusion of the then applicable term. The term of the employment
agreement may be terminated by the Company with or without cause or by Mr. Franklin with or without good reason, as such terms
are defined therein. The foregoing description of Mr. Franklin’s employment agreement is qualified in its entirety by reference
to the employment agreement, which is attached hereto as Exhibit 10.6 and is herein incorporated by reference.
On
December 31, 2018, the Company also entered into an employment agreement with Steven Grossman, pursuant to which he
shall continue
to serve as the President of Simplicity. During the term of his employment agreement, Mr. Grossman shall
receive (i) a monthly base salary of $5,208.33 and (ii) an equity grant of 2,000 shares of Common Stock per month, which
shares shall be fully vested upon grant. Mr. Grossman shall also be eligible to receive a quarterly bonus in the form of cash
or equity shares, and shall be entitled to participate in Company’s employee benefit plans. The term of Mr.
Grossman’s employment agreement is for an initial one-year term, which shall automatically renew for successive
one-year terms unless either party provides 60 days’ advance written notice of its intention not to renew the agreement
at the conclusion of the then applicable term. The term of the employment agreement may be terminated by the Company with or
without cause or by Mr. Grossman with or without good reason, as such terms are defined therein. The foregoing description of
Mr. Grossman’s employment agreement is qualified in its entirety by reference to the employment agreement, which
is attached hereto as Exhibit 10.7 and is herein incorporated by reference.
Each
of the employment agreements contain customary non-competition and non-solicitation covenants for a period of one year after the
termination of the executive’s employment.