Exhibit 10.2

 

 

 

 

 

 

 

 

 

Intercreditor Deed

 

 

 

¾

Wayne Edward Dearing (Seller Security Agent)

Each Person named in Schedule 1 (Sellers)

The Crone Law Group, P.C. (New Lender Security Agent)

Each Person named in Schedule 2 (New Lenders)

Grom Social Enterprises, Inc. (GSE)

Grom Holdings, Inc. (Grom)

TD Holdings Limited (TDH)

Top Draw Animation HongKong Limited (TDAHK)

The Crone Law Group, P.C. (Escrow Agent)

¾

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 32 Wu Chung House 213 Queen's Road East

Hong Kong

T +852 2841 6888 F +852 2810 0235

minterellison.com

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 1 

 

 

Intercreditor deed

 

 

Details 4 Agreed terms 8 1.   Defined terms and interpretation 8 1.1   Defined
terms 8 1.2   Successors and Assigns 13 1.3   Headings 13 1.4   Miscellaneous 14
1.5   Effect as a Deed 15 1.6   Third Party Rights 15 2.   Repayment of the
Seller Notes 15 3.   Closing Obligations 15 3.1   Closing obligations of GSE and
the Security Providers 15 3.2   Closing obligations of the New Lender Security
Agent 16 3.3   Closing obligations of the Seller Security Agent 17 4.   Escrow
Arrangement 17 4.1   Escrow Documents 17 4.2   Authorisations 18 4.3   Return of
Escrow Documents 18 5.   Consent 18 5.1   Conditions precedent 18 5.2   Consent
18 5.3   Effectiveness of this Deed 19 5.4   Delivery of Security Documents 19
6.   Securities and distributions 20 6.1   Application of this Clause 20
6.2   Equal ranking 20 6.3   Application of money and proceeds 20
6.4   Contingent liabilities 21 6.5   Arrangements paramount 21
6.6   Continuation 21 6.7   Other property 21

 

 

 

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7.   Dealings between Security Holders 22 7.1   Application of this Clause 22
7.2   Title documents 22 7.3   Distribution 22 7.4   Dealing with a Security 22
7.5   Increasing the Secured Obligation 23 7.6   Default under Security 23
7.7   Exercise of Powers and enforcement 23 7.8   Sale of Secured Assets 23
8.   Representations and warranties 23 8.1   General representations and
warranties 23 8.2   By the Security Providers 24 8.3   Reliance and survival 25
9.   Security Provider provisions 25 9.1   Acknowledgment 25 9.2   Co-operation
25 9.3   Cross default 25 9.4   No subrogation 25 9.5   Provide copies of
Security and variations 26 10.   Payments 26 10.1   Manner of payment 26
10.2   Payments and receipts in foreign currency 26 10.3   Due day for payment
26 11.   Costs, expenses and Taxes 26 11.1   Costs and expenses of Security
Providers 26 11.2   Amendment costs 26 11.3   Enforcement costs 27 11.4   Taxes,
fees and charges 27 12.   Notices and other communications 27 12.1   Service of
notices 27 12.2   Effective on receipt 27 13.   Assignment 28 13.1   By Security
Holder 28 13.2   By Security Providers 28

 

 

 

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14.   Protection provisions 28 14.1   Security Holder not liable 28
14.2   Security Holder not restricted 28 14.3   Indemnities and reimbursement
obligations 29 14.4   Reinstating avoided transaction 29 14.5   Authorised
Representatives and communications 29 15.   General provisions 29
15.1   Consideration 29 15.2   Prompt performance 29 15.3   Powers 30
15.4   Consent and waivers 30 15.5   Notices or demands as evidence 30
15.6   Severability 30 15.7   Amendments 30 15.8   Termination 30
15.9   Governing law 30 15.10   Jurisdiction 30 15.11   Service of process 31
15.12   No Presumption 31 15.13   Counterparts 31 Schedule 1 – The Sellers 32
Schedule 2 – The New Lenders 33 Signing page 34

 

 

 

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Details

 

Date 13 March 2020

 

Parties

 

Name Wayne Edward Dearing as security agent for himself and on behalf of the
Sellers (as defined below) Short form name Seller Security Agent Notice details

Address: 12 Zinia Street, Valle Verde 2, Pasig City, Philippines 1605

Email: wdearing@topdrawanimation.com

 

    Name Each Person named in Schedule 1 Short form name collectively, the
Sellers Notice details As specified in Schedule 1

 

    Name The Crone Law Group, P.C. as security agent on behalf of the New
Lenders Short form name New Lender Security Agent Place of incorporation State
of California in the US Notice details

Address: 500 Fifth Ave, Suite 938, New York, NY 10110

Email: mcrone@cronelawgroup.com

Fax number: (818) 688-3130

Attention: Mark E. Crone

 

    Name Each Person named in Schedule 2 Short form name collectively, the New
Lenders Notice details As specified in Schedule 2

 

    Name Grom Social Enterprises, Inc. Short form name GSE Place of
incorporation Florida Notice details

Address: 2060 NW Boca Raton Boulevard, Suite #6 Boca Raton Florida 33431

Emails: mel@gromsocial.com and darren@gromsocial.com

Fax number: (844) 704-4766

Attention: Melvin Leiner and Darren Marks

 

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    Name Grom Holdings, Inc. Short form name Grom Place of incorporation
Delaware Notice details

Address: 2711 Centerville Road, Suite 400, City of Wilmington19808, County of
New Castle, Delaware

 

    Name TD Holdings Limited Short form name TDH Place of incorporation Hong
Kong (company number 996145) Notice details

Address: Rooms 1009-1012, 10/F, K. Wah Centre, 191 Java Road, North Point, Hong
Kong

 

    Name Top Draw Animation HongKong Limited Short form name TDAHK Role Hong
Kong (company number 738855) Notice details

Address: Rooms 1009-1012, 10/F, K. Wah Centre, 191 Java Road, North Point, Hong
Kong

 

    Name The Crone Law Group, P.C. as escrow agent Short form name Escrow Agent
Place of incorporation State of California in the US Notice details

Address: 500 Fifth Ave, Suite 938, New York, NY 10110

 

 

 

 

 

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Background

 

ABy a share sale agreement dated 20 June 2016 and entered into between the
Sellers and Grom (as the same may be amended, supplemented or otherwise modified
from time to time) (the SPA), the Sellers agreed to sell, and Grom agreed to
purchase, the entire issued share capital of TDH pursuant to the terms and
subject to the conditions therein.

 

BIn accordance with the SPA, the consideration for the sale and purchase of the
entire issued share capital of TDH was partially paid by way of (i) the Short
Term Note (as defined below) in the amount of US$500,000; and (ii) the Buyer
Notes (as defined below) in the amount of US$4,000,000. The obligations of the
Short Term Note and the Buyer Notes were guaranteed by, among other things, the
provision of the Guarantees (as defined below) by TDH and TDAHK, respectively,
in favour of the Seller Security Agent under the Seller Debentures (as defined
below). The Guarantees were secured by, among other things, the fixed and
floating charges created under the Seller Debentures (as defined below).

 

CGSE, being the holding company of Grom, proposes to issue the Convertible Notes
(as defined below) in the aggregate amount of US$3,000,000 in favour of the New
Lenders on the terms and conditions of the Convertible Notes Subscription
Agreements (as defined below), the proceeds of which shall be used for, among
other things, the partial repayment of the Seller Notes. As security for the
obligations of the Convertible Notes:

 

(i)Grom proposes to enter into the New Lender TDH Share Charge in favour of the
New Lender Security Agent (on behalf of the New Lenders);

 

(ii)TDH proposes to enter into the New Lender TDH Debenture and the New Lender
TDAHK Share Charge in favour of the New Lender Security Agent (on behalf of the
New Lenders); and

 

(iii)TDAHK proposes to enter into the New Lender TDAHK Debenture in favour of
the New Lender Security Agent (on behalf of the New Lenders).

 

DAs further security for the obligations of the Seller Notes:

 

(i)Grom proposes to enter into the Seller TDH Share Charge in favour of the
Seller Security Agent (for himself and on behalf of the Sellers); and

 

(ii)TDH proposes to enter into the Seller TDAHK Share Charge in favour of the
Seller Security Agent (for himself and on behalf of the Sellers).

 

EThe Parties agree that the Seller Security and the New Lender Security shall
rank equally on a pari passu basis, and the Parties will cooperate on the
enforcement of such Security, as set out in this Deed.

 

 

 

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Agreed terms

 

1.Defined terms and interpretation

 

1.1Defined terms

 

In this Deed:

 

Account Bank means the bank with which The Crone Law Group, P.C. has established
the Company Account which it maintains funds on behalf of GSE.

 

Approval means any approval, clearance, license, authorisation, release, order,
or consent required to be obtained from, or any registration, qualification,
permit, designation, declaration, filing, notice, statement or other
communication required to be filed with or delivered to, any Governmental
Authority or any other Person, or any waiver of any of the foregoing or from any
Governmental Authority or any other Person.

 

Authorised Representative means:

 

(a)in respect of each Security Provider, a director or company secretary, or a
Person it notifies to the Security Holders (with a certified true copy of that
Person's specimen signature) as being authorised to act as its authorised
representative for the purposes of this Deed; and

 

(b)in respect of a Security Holder, a Person notified to the other Parties to
act as its/his/her authorised representative for the purposes of this Deed.

 

Avoidance has the meaning given to it in Clause 14.4 (Reinstating avoided
transaction).

 

Business Day means a day on which commercial banks in Hong Kong are generally
open for business (other than a Saturday, Sunday, public holiday or a day on
which commercial banks do not open for business owing to a tropical cyclone
warning signal number 8 or above or a "black" rainstorm warning signal being in
force in Hong Kong).

 

Buyer Notes has the meaning given to it in the SPA.

 

Closing Date means the date of completion of the issue and subscription of the
Convertible Notes.

 

Companies Ordinance means the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong).

 

Company Account means the bank account designated by GSE for receiving the
proceeds from the issue of the Convertible Notes.

 

Confirmation has the meaning given to it in Clause 4.1(c) (Escrow Documents).

 

Convertible Notes means certain convertible notes in the aggregate principal
amount of US$3,000,000 of GSE issued in favour of the New Lenders.

 

 

 

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Convertible Notes Subscription Agreements means collectively the subscription
agreements dated on or around the date of this Deed and entered into between GSE
and each New Lender in relation to, among other things, the subscription of the
Convertible Notes.

 

Encumbrance means any interest or equity of any Person (including any right to
acquire, option or right of pre-emption or first offer or first refusal) or any
mortgage, charge, pledge, lien, assignment, hypothecation, security interest,
title retention or other security agreement or arrangement or any restriction on
use, voting, transfer, receipt of income or exercise of any other attribute of
ownership.

 

Escrow Agent means The Crone Law Group, P.C. in its capacity as escrow agent for
the benefit of the Security Providers and the Security Holders.

 

Escrow Documents means collectively (a) the documents to be delivered to the
Escrow Agent by the Security Providers pursuant to Clause 3.1(b)(i) and
3.1(b)(iii); (b) the documents to be delivered to the Escrow Agent by the New
Lender Security Agent pursuant to Clause 3.2; and (c) the documents to be
delivered to the Escrow Agent by the Seller Security Agent pursuant to Clause
3.3(a), and each an Escrow Document.

 

Event of Default means an event of default (however described) under any of the
Seller Security and the New Lender Security.

 

Governmental Authority means any nation or government or any federation,
province or state or any other political subdivision thereof; any entity,
authority or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including any
government authority, agency, department, board, commission, instrumentality,
securities exchange, supervisory or regulatory body of any country, or any
political subdivision thereof, any court, tribunal or arbitrator, and any
self-regulatory organisation.

 

Governmental Order means any applicable order, ruling, decision, verdict,
decree, writ, subpoena, mandate, precept, command, directive, consent, approval,
award, judgment, injunction or other similar determination or finding by, before
or under the supervision of any Governmental Authority.

 

Guarantees means collectively the guarantees provided by TDH and TDAHK,
respectively, in favour of the Seller Security Agent pursuant to the Seller
Debentures.

 

Hong Kong means the Hong Kong Special Administrative Region of the People's
Republic of China.

 

Law or Laws means any constitutional provision, statute or other law, rule,
regulation, guidance, decisions, published official policy or published official
interpretation of any Governmental Authority and any injunction, judgment,
order, ruling, assessment or writ issued by any Governmental Authority.

 

Loss means a loss, claim, action, damage, liability, cost, charge, expense,
penalty, fine or any other outgoing suffered, paid or incurred.

 

New Lender Security Agent Agreement means the security agent agreement dated on
or around the date of this Deed and entered into between the New Lender Security
Agent and each New Lender.

 

New Lender Debentures means collectively the New Lender TDH Debenture and the
New Lender TDAHK Debenture.

 

 

 

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New Lender Indebtedness means all outstanding indebtedness incurred by the
Security Providers under the New Lender Transaction Documents as at the date of
this Deed.

 

New Lender Secured Assets means all property and assets being the subject of the
New Lender Security.

 

New Lender Security means any Encumbrance granted, created or expressed to be
created under the New Lender Security Documents.

 

New Lender Security Documents means collectively:

 

(a)the New Lender Debentures; and

 

(b)the New Lender Share Charges.

 

New Lender Share Charges means collectively the New Lender TDH Share Charge and
the New Lender TDAHK Share Charge.

 

New Lender Subscription Amount means the aggregate subscription amount payable
by the New Lenders for their respective subscription of the Convertible Notes,
which shall be an amount no less than US$3,000,000.

 

New Lender TDAHK Debenture means the debenture to be entered into between TDAHK
as chargor and the New Lender Security Agent (on behalf of the New Lenders).

 

New Lender TDAHK Share Charge means the share charge to be entered into between
TDH as chargor and the New Security Agent (on behalf of the New Lenders), which
creates a security interest over all shares held by TDH in the issued share
capital of TDAHK.

 

New Lender TDH Debenture means the debenture to be entered into between TDH as
chargor and the New Lender Security Agent (on behalf of the New Lenders).

 

New Lender TDH Share Charge means the share charge to be entered into between
Grom as chargor and the New Security Agent (on behalf of the New Lenders), which
creates a security interest over the entire issued share capital of TDH.

 

New Lender Transaction Documents means collectively:

 

(a)the Convertible Notes Subscription Agreements;

 

(b)the document(s) creating and constituting the Convertible Notes;

 

(c)the New Lender Security Agent Agreement;

 

(d)this Deed; and

 

(e)the New Lender Security Documents.

 

 

 

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Party means each party to this Deed, and Parties shall be construed accordingly.

 

Payment Instruction has the meaning given to it in Clause 3.1(a) (Closing
deliverables of GSE and the Security Providers).

 

Person shall include an individual, corporation, company, partnership, firm,
trustee, trust, executor, administrator or other legal personal representative;
unincorporated association, joint venture, syndicate or other business
enterprise; any governmental, administrative or regulatory authority or agency;
and their respective successors, legal personal representatives and assigns, as
the case may be; and pronouns shall have a similarly extended meaning.

 

Power means, in respect of a Security Holder, any right, power, discretion or
remedy of that Security Holder under any of its Security or applicable law.

 

Receiver means any receiver, manager, receiver and manager or other similar
officer appointed by a Security Holder pursuant to a Security.

 

Repayment Amount has the meaning given to it in Clause 2(a) (Repayment of the
Seller Notes).

 

Repayment Date means the date on which the Repayment Amount is transferred to
the Seller Account and received by the Seller, which shall be a date no later
than one (1) Business Day after the Closing Date.

 

Secured Assets means collectively the Seller Secured Assets and the New Lender
Secured Assets.

 

Secured Obligations means:

 

(a)all present and future obligations and liabilities (whether actual or
contingent, whether now existing or hereafter arising, whether or not for the
payment of money and including any obligation or liability to pay damages and
whether jointly or severally or in any other capacity) of the Security Providers
to the Security Holders under the Seller Transaction Documents or the New Lender
Transaction Documents (as the case may be), whether for outstanding principal,
interest, fees, cost, expenses, indemnities or otherwise; and

 

(b)in the event of any proceeding(s) for the collection or enforcement of any of
the obligations or liabilities described in sub-paragraph (a) above, the
expenses of taking, holding, preparing for sale or transfer, selling or
otherwise disposing of or realising the security constituted by this Deed
including, without limitation, the fees of legal and other advisers and court
costs,

 

but shall not include any obligation or liability to the extent that if it were
so included in any Security Document or any part thereof would give rise to
financial assistance within the meaning of sections 274 and 275 of the Companies
Ordinance unless such financial assistance is not prohibited by virtue of
section 275 and sections 277 to 289 of the Companies Ordinance.

 

Security means collectively the Seller Security and the New Lender Security.

 

 

 

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Security Holder means each of Security Holder A and Security Holder B, and
collectively the Security Holders.

 

Security Holder A means collectively the Sellers and the Seller Security Agent
(for himself and on behalf of the Sellers).

 

Security Holder B means collectively the New Lenders and the New Lender Security
Agent (on behalf of the New Lenders).

 

Security Provider means each of Grom, TDH and TDAHK, and collectively the
Security Providers.

 

Seller Account means the bank account designated by the Sellers for receiving
the Repayment Amount.

 

Seller Debentures means collectively the Seller TDH Debenture and the Seller
TDAHK Debenture.

 

Seller Indebtedness means all outstanding indebtedness incurred by the Security
Providers under the Seller Transaction Documents as at the date of this Deed.

 

Seller Notes means collectively the Short Term Note and the Buyer Notes.

 

Seller Secured Assets means all property and assets being the subject of the
Seller Security.

 

Seller Security means any Encumbrance granted, created or expressed to be
created under the Seller Security Documents.

 

Seller Security Documents means collectively:

 

(a)the Seller Debentures; and

 

(b)the Seller Share Charges.

 

Seller Security Trust Deed means the security trust deed dated 11 July 2016 and
entered into between the Seller Security Agent and each Seller.

 

Seller Share Charges means collectively the Seller TDH Share Charge and the
Seller TDAHK Share Charge.

 

Seller TDAHK Debenture the guarantee and debenture dated 11 July 2016 and
entered into between TDAHK as guarantor and chargor and the Seller Security
Agent (for himself and on behalf of the Sellers).

 

Seller TDAHK Share Charge means the share charge to be entered into between TDH
as chargor and the Seller Security Agent (for himself and on behalf of the
Sellers), which creates a security interest over all shares held by TDH in the
issued share capital of TDAHK.

 

Seller TDH Debenture means the guarantee and debenture dated 11 July 2016 and
entered into between TDH as guarantor and chargor and the Seller Security Agent
(for himself and on behalf of the Sellers).

 

 

 

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Seller TDH Share Charge means the share charge to be entered into between Grom
as chargor and the Seller Security Agent (for himself and on behalf of the
Sellers), which creates a security interest over the entire issued share capital
of TDH.

 

Seller Transaction Documents means collectively:

 

(a)the SPA;

 

(b)the Seller Notes;

 

(c)the Seller Security Trust Deed;

 

(d)this Deed; and

 

(e)the Seller Security Documents.

 

Short Term Note means the short term buyer notes dated 1 July 2016 and entered
into between Grom and each of the Sellers.

 

SPA has the meaning given to it in the Background.

 

Tax or Taxes means all applicable forms of taxation, duties, levies imposts and
social security charges, whether direct or indirect, including but not limited
to corporate income tax, wage withholding tax, national social security
contributions and employee social security contributions, value added tax,
business tax, customs and excise duties, capital tax and other legal transaction
taxes, dividend withholding tax, dividend distribution tax, land taxes,
environmental taxes and duties and any other type of taxes or duties payable by
virtue of any applicable national, regional or local Law and which may be due
directly or by virtue of joint and several liability in any relevant
jurisdiction; together with any interest, penalties, surcharges or fines
relating to them, due, payable, levied, imposed upon or claimed to be owed in
any relevant jurisdiction.

 

US means the United States of America.

 

US Dollar or USD or US$ means United States Dollars, the lawful currency of the
US.

 

1.2Successors and Assigns

 

The expressions "Seller", "Seller Security Agent", "New Lender", "New Lender
Security Agent" and "Party" shall where the context permits include their
respective successors and permitted assigns and permitted transferees and any
Persons deriving title under them.

 

1.3Headings

 

The headings and subtitles used in this Deed are used for convenience only and
are not to be considered in construing or interpreting this Deed.

 

 

 

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1.4Miscellaneous

 

In this Deed, unless the context requires otherwise:

 

(a)references to "Background", "Clauses" and "Schedules" are references to the
background to, clauses of and schedules to this Deed;

 

(b)references to the singular shall include the plural and vice versa and
references to the masculine shall include the feminine or neuter and vice versa;

 

(c)the term "or" is not exclusive;

 

(d)the terms "herein", "hereof", and other similar words refer to this Deed as a
whole and not to any particular section, clause, paragraph or other subdivision;

 

(e)the terms "include" and "including" shall be construed to mean "including
without limitation";

 

(f)the terms "shall", "will", and "agrees" are mandatory, and the term "may" is
permissive;

 

(g)the term "day" means "calendar day" and the term "month" means "calendar
month";

 

(h)references to "assets" include present and future properties, rights and
assets of every description;

 

(i)references to "indebtedness" include any obligation (whether incurred as
principal or as surety) for the payment or repayment of money, whether present
or future, actual or contingent;

 

(j)references to statutory provisions shall be construed as references to those
provisions as amended or re-enacted or as their application is modified by other
provisions from time to time and shall include references to any provisions of
which they are re-enactments (whether with or without modification);

 

(k)references to any document are to be construed as references to such document
as amended, supplemented, extended, restated, novated and/or replaced in any
manner from time to time;

 

(l)references to a legal term for a legal document, court, judicial process,
action, remedy, legal status, official or any other legal concept, in respect of
a jurisdiction other than Hong Kong, shall be deemed to be a reference to
whatever most closely equates to the Hong Kong legal term in that jurisdiction;

 

(m)references to dates and times are references to Hong Kong dates and times;

 

(n)a rule of construction does not apply to the disadvantage of a Party because
the Party was responsible for the preparation of this Deed or any part of it;

 

(o)the Background and Schedules to this Deed form part of it and shall have the
same force and effect as if expressly set out in the body of this Deed; and

 

(p)a "certified true copy" of a document, unless otherwise expressly provided
herein, refers to a copy of such document certified by (i) a director or (if so
agreed by the Party receiving such copy) the company secretary of the relevant
Person producing such copy; or (ii) (if so agreed by the Party receiving such
copy) a certified public accountant or the Hong Kong legal adviser to the
relevant Person producing such copy, as a true copy of the original document.

 

 

 

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1.5Effect as a Deed

 

The Parties intend that this Deed shall take effect as a deed notwithstanding
the fact that a Party may only execute this Deed under hand.

 

1.6Third Party Rights

 

Notwithstanding any terms of this Deed:

 

(a)the Contracts (Rights of Third Parties) Ordinance (Chapter 623 of the Laws of
Hong Kong) shall not apply to this Deed and, unless specifically provided
herein, no Person other than the Parties shall have any rights under it nor
shall it be enforceable by any Person other than the Parties; and

 

(b)the consent of any third party is not required for any variation to
(including any release or compromise of any liability under) or termination of
this Deed.

 

2.Repayment of the Seller Notes

 

(a)GSE shall use at least US$3,000,000 of the proceeds received from the issue
of the Convertible Notes (the Repayment Amount) to partially repay or settle the
Seller Indebtedness, such that the outstanding amount payable under the Seller
Notes after such repayment or settlement shall be US$1,000,000 or less. The
Sellers and Grom shall enter into an amending agreement with respect to the
Seller Notes on or around the Repayment Date to reflect, among other things, the
partial repayment of the Seller Notes, in such form and substance satisfactory
to the Sellers and Grom.

 

(b)Each New Lender agrees, confirms and acknowledges that the New Lender
Subscription Amount shall be used to partially repay or settle the Seller
Indebtedness as set out in Clause 2(a) (Repayment of the Seller Notes).

 

(c)Subject to the performance of Clause 2(a) on the Closing Date as evidenced by
the receipt of the Payment Instruction by the Seller Security Agent in
accordance with Clause 3.1(a), each of the Sellers and the Seller Security Agent
consents to the creation of the indebtedness (whether actual or contingent)
under the Convertible Notes in the aggregate principal amount of no more than
US$3,000,000 by GSE on the Closing Date, and agrees that the creation of such
indebtedness is not a breach of, or default under, the Seller Security, any
Seller Transaction Document or this Deed.

 

3.Closing Obligations

 

3.1Closing obligations of GSE and the Security Providers

 

(a)On the Closing Date, GSE shall deliver or cause to be delivered to the Seller
Security Agent a copy of the irrevocable payment instruction (the Payment
Instruction) duly executed by The Crone Law Group, P.C. (as the accountholder of
the Company Account) and acknowledged by the Account Bank instructing the
Account Bank to transfer the Repayment Amount in immediately available US Dollar
funds from the Company Account to the Seller Account.

 

(b)On the Closing Date, the Security Providers shall:

 

 

 

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(i)deliver or cause to be delivered by way of electronic means to the Escrow
Agent (to be held in escrow for the benefit of the Security Providers, the
Sellers and the Seller Security Agent):

 

(A)at least two (2) undated counterparts of the Seller TDH Share Charge duly
executed by Grom;

 

(B)such ancillary documents duly executed by the relevant Security Provider as
scheduled to the Seller TDH Share Charge (except for such signature pages to
those ancillary documents that are to be executed by Mr. Wayne Edward Dearing in
his capacity as a director of TDH);

 

(C)at least two (2) undated counterparts of the Seller TDAHK Share Charge duly
executed by TDH; and

 

(D)such ancillary documents duly executed by the relevant Security Provider as
scheduled to the Seller TDAHK Share Charge (except for such signature pages to
those ancillary documents that are to be executed by Mr. Wayne Edward Dearing in
his capacity as a director of TDAHK);

 

(ii)deliver or cause to be delivered by way of electronic means to the Seller
Security Agent (or its Authorised Representative) (and the Security Providers
undertake to deliver or cause to be delivered the originals to the Seller
Security Agent (or its Authorised Representative) in accordance with Clause
5.4(c)(ii)):

 

(A)the share certificate as required under the Seller TDH Share Charge, with the
common seal of TDH affixed thereto; and

 

(B)the share certificate as required under the Seller TDAHK Share Charge, with
the common seal of TDAHK affixed thereto;

 

(iii)deliver or cause to be delivered by way of electronic means to the Escrow
Agent (to be held in escrow for the benefit of the Security Providers, the New
Lenders and the New Lender Security Agent):

 

(A)at least two (2) undated counterparts of the New Lender TDH Share Charge duly
executed by Grom, together with the share certificate as required under the New
Lender TDH Share Charge;

 

(B)at least two (2) undated counterparts of the New Lender TDAHK Share Charge
duly executed by TDH, together with the share certificate as required under the
New Lender TDAHK Share Charge;

 

(C)at least two (2) undated counterparts of the New Lender TDH Debenture duly
executed by TDH; and

 

(D)at least two (2) undated counterparts of the New Lender TDAHK Debenture duly
executed by TDAHK.

 

3.2Closing obligations of the New Lender Security Agent

 

On the Closing Date, the New Lender Security Agent shall deliver or cause to be
delivered by way of electronic means to the Escrow Agent (to be held in escrow
for the benefit of the Security Providers, the New Lenders and the New Lender
Security Agent):

 

(a)at least two (2) undated counterparts of the New Lender TDH Share Charge duly
executed by the New Lender Security Agent;

 

 

 

 16 

 

 

(b)at least two (2) undated counterparts of the New Lender TDAHK Share Charge
duly executed by the New Lender Security Agent;

 

(c)at least two (2) undated counterparts of the New Lender TDH Debenture duly
executed by the New Lender Security Agent; and

 

(d)at least two (2) undated counterparts of the New Lender TDAHK Debenture duly
executed by the New Lender Security Agent.

 

3.3Closing obligations of the Seller Security Agent

 

On the Closing Date, the Seller Security Agent shall:

 

(a)deliver or cause to be delivered by way of electronic means to the Escrow
Agent (to be held in escrow for the benefit of the Security Providers, the
Sellers and the Seller Security Agent) (and the Seller Security Agent undertakes
to deliver or cause to be delivered the originals to the Escrow Agent in
accordance with Clause 5.4(c)(iii)):

 

(i)at least two (2) undated counterparts of the Seller TDH Share Charge duly
executed by the Seller Security Agent; and

 

(ii)at least two (2) undated counterparts of the Seller TDAHK Share Charge duly
executed by the Seller Security Agent; and

 

(b)execute in his capacity as a director of TDH the signature pages to such
ancillary documents to be executed by Mr. Wayne Edward Dearing as a director of
TDH as scheduled to the Seller TDH Share Charge, and to hold such documents in
his capacity as Seller Security Agent; and

 

(c)execute in his capacity as a director of TDAHK the signature pages to such
ancillary documents to be executed by Mr. Wayne Edward Dearing as a director of
TDAHK as scheduled to the Seller TDAHK Share Charge, and to hold such documents
in his capacity as Seller Security Agent.

 

4.Escrow Arrangement

 

4.1Escrow Documents

 

(a)The Escrow Agent shall immediately notify all Parties in writing upon receipt
of all Escrow Documents on the Closing Date.

 

(b)The Escrow Agent shall hold the Escrow Documents on trust for the benefit of
the relevant Security Providers and the Security Holders from the Closing Date
to the Repayment Date.

 

(c)On the Repayment Date, the Seller Security Agent shall notify the Escrow
Agent in writing confirming the fulfilment of the conditions precedent under
Clause 5.1 (Conditions precedent) (the Confirmation). Upon receipt of the
Confirmation, the Escrow Agent shall effect and deliver the Seller Share Charges
and the New Lender Security Documents in accordance with Clause 5.3
(Effectiveness of this Deed) and Clause 5.4 (Delivery of Security Documents).

 

 

 

 17 

 

 

4.2Authorisations

 

(a)With respect to the Seller Share Charges, each of the Security Providers, the
Sellers and the Seller Security Agent hereby authorises the Escrow Agent to,
upon receipt of the Confirmation, (i) date the original counterparts of each
Seller Share Charge to which it/he is a party; and (ii) deliver the Seller Share
Charges to the Security Providers and the Seller Security Agent on the Repayment
Date. The e-mailed copies of the documents referred to in Clause 3 (Closing
Obligations) shall be deemed to be originals for the purposes of this Clause
4.2(a) and Clause 5.3 (Effectiveness of this Deed).

 

(b)With respect to the New Lender Security Documents, each of the Security
Providers, the New Lenders and the New Lender Security Agent hereby authorises
the Escrow Agent to, upon receipt of the Confirmation, (i) date the original
counterparts of each New Lender Security Document to which it/he is a party; and
(ii) deliver the New Lender Security Documents to the Security Providers and the
New Lender Security Agent on the Repayment Date. The e-mailed copies of the
documents referred to in Clause 3 (Closing Obligations) shall be deemed to be
originals for the purposes of this Clause 4.2(b) and Clause 5.3 (Effectiveness
of this Deed).

 

4.3Return of Escrow Documents

 

If the Seller Security Agent notifies the Escrow Agent in writing that the
conditions precedent under Clause 5.1 (Conditions precedent) have not been
fulfilled, the Escrow Agent shall, within three (3) Business Days of such
notice:

 

(a)return to Grom the originals of the Escrow Documents received by it pursuant
to Clause 5.4(b)(i); and

 

(b)return to the New Lender Security Agent the originals of the Escrow Documents
received by it pursuant to Clause 5.4(b)(ii).

 

5.Consent

 

5.1Conditions precedent

 

The granting of the consent under Clause 5.2 (Consent) is subject to the
fulfilment of each of the following conditions:

 

(a)on the Closing Date, the Seller Security Agent shall have received a written
confirmation in writing from the Escrow Agent confirming that the Escrow Agent
has received the Escrow Documents in accordance with Clause 3 (Closing
Obligations); and

 

(b)the Repayment Amount shall have been transferred to the Seller Account in
accordance with the Payment Instruction and received by the Sellers, and the
Seller Notes shall have been partially repaid or settled in accordance with
Clause 2 (Repayment of Seller Notes) such that the outstanding amount payable
under the Seller Notes will be US$1,000,000 or less.

 

5.2Consent

 

Subject to the fulfilment of the conditions precedent under Clause 5.1
(Conditions precedent), each of the Sellers and the Seller Security Agent
consents to the creation of the New Lender Security and agrees that the creation
and existence of the New Lender Security is not a breach of, or default under,
the Seller Security, any Seller Transaction Document or this Deed.

 

 

 

 18 

 

 

5.3Effectiveness of this Deed

 

Upon the granting of consent under Clause 5.2 (Consent), (i) the Escrow Agent
shall date and deliver the Seller Share Charges and the New Lender Security
Documents in accordance with Clause 4.2 (Authorisations), and the Seller Share
Charges and the New Lender Security Documents shall take effect on the Repayment
Date; and (ii) the Seller Security and the New Lender Security shall be subject
to the provisions of Clause 6 (Securities and distributions) and Clause 7
(Dealings between Security Holders). For the purposes of this Clause 5.3, the
e-mailed copies of the documents referred to in Clause 3 (Closing Obligations)
shall be deemed to be originals for the purposes of the effectiveness of the
Seller Share Charges and the New Lender Security Documents.

 

5.4Delivery of Security Documents

 

(a)On the Repayment Date, the Escrow Agent shall deliver a copy of each of (i)
the Seller Share Charges dated as of the Repayment Date and duly executed by all
parties thereto; and (ii) the New Lender Security Documents dated as of the
Repayment Date and duly executed by all parties thereto, to the Security
Providers and the Security Holders.

 

(b)As soon as practicable and in any event within three (3) Business Days after
the Repayment Date:

 

(i)the Security Providers shall deliver or cause to be delivered to the Escrow
Agent the originals of the Escrow Documents as set out in Clause 3.1(b)(i) and
Clause 3.1(b)(iii); and

 

(ii)the New Lender Security Agent shall deliver or cause to be delivered to the
Escrow Agent the originals of the Escrow Documents set out in Clause 3.2.

 

(c)As soon as practicable and in any event within ten (10) Business Days after
the Repayment Date:

 

(i)the Escrow Agent shall:

 

(A)deliver or cause to be delivered to the Seller Security Agent (or its
Authorised Representative):

 

(I)one (1) original counterpart of the Seller TDH Share Charge duly executed by
Grom, together with the originals of the documents as set out in Clause
3.1(b)(i)(B);

 

(II)one (1) original counterpart of the Seller TDAHK Share Charge duly executed
by TDH, together with the originals of the documents as set out in Clause
3.1(b)(i)(D);

 

(III)a certified true copy of each of the Convertible Notes and the Convertible
Notes Subscription Agreements dated as of the Closing Date and duly executed by
all parties thereto, in such form and substance satisfactory to the Seller
Security Agent; and

 

(IV)a certified true copy of each New Lender Security Document dated as of the
Repayment Date and duly executed by all parties thereto, in such form and
substance satisfactory to the Seller Security Agent;

 

 

 

 19 

 

 

(B)deliver or cause to be delivered to the Security Providers one (1) original
of each New Lender Security Document dated as of the Repayment Date and duly
executed by all parties thereto;

 

(C)deliver or cause to be delivered to the New Lender Security Agent:

 

(I)one (1) original of each New Lender Security Document dated as of the
Repayment Date and duly executed by all parties thereto, together with the share
certificates as required under the respective New Lender Security Documents; and

 

(II)a certified true copy of each Seller Share Charge dated as of the Repayment
Date and duly executed by all parties thereto, in such form and substance
satisfactory to the New Lender Security Agent; and

 

(ii)the Security Providers shall deliver or cause to be delivered to the Seller
Security Agent (or its Authorised Representative) the originals of the share
certificates as set out in Clause 3.1(b)(ii); and

 

(iii)the Seller Security Agent (or its Authorised Representative) shall deliver
or cause to be delivered to the Escrow Agent one (1) original counterpart of
each Seller Share Charge duly executed by the Seller Security Agent set out in
Clause 3.3(a).

 

6.Securities and distributions

 

6.1Application of this Clause

 

The application of this Clause 6 is subject to the granting of consent under
Clause 5 (Consent).

 

6.2Equal ranking

 

In respect of all Secured Assets, the Seller Security ranks equally with the New
Lender Security for all Secured Obligations under the respective Securities,
without priority of one over the other.

 

6.3Application of money and proceeds

 

All money and proceeds received or recovered from the disposal of, or other
dealing with, the Secured Assets (whether or not arising from the enforcement of
any Security including any insurance or compensation proceeds for loss or damage
to the Secured Assets payable to a Security Holder), must be applied and
distributed:

 

(a)in the case of an enforcement of any Security, first to pay costs, charges,
liabilities and expenses of any Receiver appointed by a Security Holder under
the Security in exercising or performing any Power (or attempting to do so)
relating to the enforcement and the Secured Assets, and any remuneration of that
Receiver; and

 

(b)in any case after payment of amounts referred to in Clause 6.3(a)
(Application of money and proceeds), to each of Security Holder A and Security
Holder B to pay Secured Obligations rateably based on the proportion which each
of Security Holder A's Secured Obligations and Security Holder B's Secured
Obligations bears to the aggregate of the Secured Obligations of Security Holder
A and Security Holder B,

 

or as otherwise agreed by the Security Holders in writing.

 

 

 

 20 

 

 

6.4Contingent liabilities

 

If a Security secures a contingent liability owed to a Security Holder, until
that Security Holder is satisfied that the contingent liability has been
extinguished, that Security Holder may retain from the proceeds of the exercise
of any Power an amount consistent with the arrangements established under
Clause 6.2 (Equal ranking) and Clause 6.3 (Application of money and proceeds)
which it reasonably estimates to be the amount of the contingent liability.

 

6.5Arrangements paramount

 

This Deed and the arrangements in it apply despite anything which might
otherwise affect them, including:

 

(a)anything contained in any Security;

 

(b)the order of creation, execution, attachment, perfection, filing for
registration or registration of any Security;

 

(c)the order in which any Secured Obligations secured by any Security was made
available or came into existence;

 

(d)an increase or decrease in the amount secured by any Security for any reason;

 

(e)the order in which any Powers are exercised (including the appointment of a
Receiver), whether under a Security or any other document relating to any
Secured Obligations secured by any Security;

 

(f)any partial discharge or release of any Security or Secured Assets;

 

(g)any notice received by a Security Holder pursuant to a Security, or of an
Encumbrance; or

 

(h)any law, rule of equity or order or decision of any Governmental Authority to
the contrary.

 

6.6Continuation

 

Subject to Clause 14.4 (Reinstating avoided transaction), the priority
arrangements in this Deed will continue until:

 

(a)there is no longer any Secured Assets; or

 

(b)agreed otherwise by the Security Holders in writing.

 

6.7Other property

 

Nothing in this Deed affects the operation of a Security to the extent it
secures property or assets other than the Secured Assets.

 

 

 

 21 

 

 

7.Dealings between Security Holders

 

7.1Application of this Clause

 

The application of this Clause 7 is subject to the granting of consent under
Clause 5 (Consent).

 

7.2Title documents

 

Unless otherwise agreed between the Security Holders:

 

(a)subject to the provisions of the Seller Share Charges and the New Lender
Share Charges, the Seller Security Agent has the right to possession of each
document of title to the Seller Secured Assets, and each other document
evidencing or conferring any right or benefit on or in relation to the Seller
Secured Assets;

 

(b)the New Lender Security Agent has the right to possession of each document of
title to the New Lender Secured Assets (other than the Seller Secured Assets),
and each other document evidencing or conferring any right or benefit on or in
relation to the New Lender Secured Assets (other than the Seller Secured
Assets); and

 

(c)if the Seller Security Agent fully releases all Seller Secured Assets from
the Seller Security and the New Lender Security remains outstanding at that
time, the Seller Security Agent agrees to deliver to the New Lender Security
Agent all documents of title within the Seller Security Agent's possession or
control to the Seller Secured Assets which then remains subject to the New
Lender Security.

 

7.3Distribution

 

If a Security Holder (Recipient) receives or recovers an amount pursuant to its
Security which the other Security Holder (Claimant) has a right to receive
pursuant to this Deed, the Recipient must:

 

(a)promptly notify the Claimant of the amount received or recovered; and

 

(b)promptly pay an equivalent amount (net of its reasonable enforcement and
costs incurred in obtaining the amount) to, or as directed by, the Claimant.

 

On the Claimant's receipt of the Recipient's payment under Clause 7.3(b)
(Distribution), each Security Provider acknowledges that the Recipient will be
taken to not have received the relevant amount, and the Security Provider's
liability to the Recipient will not be reduced or discharged by that amount.

 

This Clause 7.3 (other than Clause 7.3(a)) (Distribution) applies to any amount
received by the Recipient from the Claimant which the Claimant subsequently
claims because of Clause 14.4 (Reinstating avoided transaction).

 

7.4Dealing with a Security

 

A Security Holder must not transfer, assign or otherwise deal with any of its
Security except:

 

(a)for the purpose of enforcement of a Security in accordance with this Deed;

 

(b)where any Person taking a transfer or assignment of that Security first
enters into a deed with the other Parties on the same terms as this Deed; or

 

(c)where the other Security Holder first agrees in writing.

 

 

 

 22 

 

 

7.5Increasing the Secured Obligation

 

Each Security Holder agrees not to increase the amount of, or grant additional,
financial accommodation comprising Secured Obligations without the other
Security Holder's prior written consent.

 

7.6Default under Security

 

Each Security Holder must notify the other Security Holder at least three (3)
Business Days in advance of any decision or wish on its part to enforce its
Security, together with:

 

(a)reasonable details of any Event of Default that has occurred under its
Security; and

 

(b)a breakdown of the Secured Obligations owed to it and secured by its
Security.

 

7.7Exercise of Powers and enforcement

 

(a)No Security Holder is required to obtain the consent of the other Security
Holder before exercising a Power in relation to the Secured Obligations.

 

(b)The Security Holders will consult with each other in good faith and
co-operate to the extent possible, with a view to determining what action is to
be taken before enforcing their respective Powers under a Security and as to the
enforcement of those Powers and any Security.

 

7.8Sale of Secured Assets

 

On the sale of any Secured Assets pursuant to an enforcement by a Security
Holder of its Security, the other Security Holder must provide to the enforcing
Security Holder duly executed releases of the other Security Holder's Security
concerning that Secured Assets in registrable form (if applicable), together
with any other necessary documents to enable registration of, the releases.

 

8.Representations and warranties

 

8.1General representations and warranties

 

Each Party represents and warrants to each other Party that:

 

(a)in respect of each of GSE, Grom, TDH and TDAHK, it is a corporation or
company (as the case may be) duly incorporated under the Laws of its
jurisdiction of incorporation and is validly existing, in good standing and
solvent, and has full power, authority and legal right to own its property and
assets and to carry on its businesses;

 

(b)it/he/she has full power, authority and legal right to enter into and engage
in the transactions contemplated by this Deed and have taken or obtained all
necessary corporate and other action to authorise the execution and performance
of this Deed;

 

 

 

 23 

 

 

(c)the obligations expressed to be assumed by it/him/her under this Deed are
legal, valid and binding and enforceable obligations and no limit on its powers
will be exceeded as a result of the performance by it/him/her of any of
its/his/her obligations hereunder;

 

(d)neither the execution of this Deed nor the performance by it/him/her of any
of its/his/her obligations or the exercise of any of its/his/her rights
hereunder will conflict with or result in a breach of any Law, Governmental
Order, Approval, agreement or obligation applicable to it/him/her or (where
applicable) its constitutional documents or cause any limitation placed on it or
the powers of its directors to be exceeded;

 

(e)in any proceedings (whether arbitration or otherwise) taken in Hong Kong in
relation to this Deed, the choice of Hong Kong Law as the governing law of this
Deed will be recognised and enforced in Hong Kong after compliance with the
applicable procedural rules in Hong Kong;

 

(f)all Approvals required from any Governmental Authority or any other Person:

 

(i)for or in connection with the execution, validity, performance and
enforcement of this Deed;

 

(ii)for it to enter into, exercise its rights and comply with or perform
its/his/her obligations in this Deed and the transactions contemplated by
it/him/her; and

 

(iii)in respect of each of GSE, Grom, TDH and TDAHK, to make this Deed
admissible in evidence in its jurisdiction of incorporation,

 

have been duly obtained and/or effected and are in full force and effect.

 

8.2By the Security Providers

 

Each Security Provider:

 

(a)represents and warrants to each Security Holder that:

 

(i)it has given each Security Holder true and complete copies of all the Seller
Security and the New Lender Security, and those documents evidence all terms of
Encumbrances held by the Security Holders over the Secured Assets;

 

(ii)it has fully disclosed in writing to each Security Holder all facts,
documents or other information known to it and material to the assessment of the
nature and amount of risk undertaken by each Security Holder in entering into
and performing this Deed; and

 

(iii)all information it provided to each Security Holder in connection with this
Deed is accurate in all material respects and not deficient, misleading or
deceptive in any material respect (whether by its inclusion or by omission of
other information); and

 

(b)repeats each of the above representations and warranties with reference to
the facts and circumstances at the time, on each day until this Deed terminates.

 

 

 

 24 

 

 

8.3Reliance and survival

 

Each Party giving a representation and warranty in this Clause 8
(Representations and warranties) acknowledges that:

 

(a)each Security Holder has entered into this Deed in reliance on those
representations and warranties; and

 

(b)those representations and warranties survive execution and delivery of the
Security and the provision of financial accommodation under them.

 

9.Security Provider provisions

 

9.1Acknowledgment

 

Each Security Provider acknowledges that:

 

(a)its obligations under or in relation to each Security given to a Security
Holder are not in any way affected by this Deed (other than as expressly
provided in this Deed) or by any failure by a Security Holder to comply with
this Deed; and

 

(b)this Deed is for the benefit of the Security Holders, and not for the benefit
of any Security Provider.

 

9.2Co-operation

 

Each Security Provider undertakes to each Security Holder to co-operate and do
everything necessary for the effective implementation of this Deed.

 

9.3Cross default

 

Each Security Provider agrees that, irrespective of the terms of any Security,
if an Event of Default occurs under a Security Holder's Security, an Event of
Default is taken to have occurred under the other Security Holder's Security.

 

9.4No subrogation

 

Each Security Provider irrevocably and unconditionally waives its rights to, and
must not, claim or exercise a right of subrogation or contribution in respect
of, request a transfer or assignment of, or otherwise directly or indirectly
claim the benefit of, a Security Holder's Power or a Security, unless:

 

(a)all Secured Obligations have been fully and finally repaid and each Security
Holder is satisfied that no Avoidance will occur; or

 

(b)each Security Holder has first consented in writing.

 

 

 

 25 

 

 

9.5Provide copies of Security and variations

 

Each Security Provider must provide to each Security Holder a certified true
copy of:

 

(a)each Security of the other Security Holder to which it is a party, on the
same day that the Security is created (or on the date of this Deed if already in
existence); and

 

(b)any variation or replacement to such Security, on the same day that the
variation or replacement comes into effect.

 

10.Payments

 

10.1Manner of payment

 

All payments by a Security Provider or a Security Holder under this Deed must be
made in immediately available funds, in US Dollars and in full without set-off,
counterclaim or, unless prohibited by law, deduction or withholding.

 

10.2Payments and receipts in foreign currency

 

If for any reason a Security Holder receives or recovers any amount (Paid
Amount) under or in relation to this Deed in a currency other than US Dollars,
the amount which the Security Holder will be taken to have received or recovered
for the purposes of this Deed will be the US Dollar amount to which the Security
Holder could have converted the Paid Amount, in accordance with its normal
procedures, at the time of the receipt or recovery less the costs of the
conversion.

 

10.3Due day for payment

 

If the due date for payment of any amount under this Deed is not a Business Day,
the due date for that payment shall instead be the next Business Day in the same
calendar month (if there is one) or the preceding Business Day (if there is
not).

 

11.Costs, expenses and Taxes

 

11.1Costs and expenses of Security Providers

 

Each Security Provider will pay its own costs and expenses in connection with
this Deed.

 

11.2Amendment costs

 

If a Security Provider requests an amendment, waiver or consent under this Deed,
the Security Provider shall on demand reimburse the relevant Security Holder all
costs and expenses (including legal fees) reasonably incurred by such Security
Holder in responding to, evaluating, negotiating or complying with that request
or requirement.

 

 

 

 26 

 

 

11.3Enforcement costs

 

Each Security Provider shall on demand pay to each Security Holder the amount of
all costs and expenses (including legal fees) reasonably incurred by such
Security Holder in connection with the exercise, enforcement or protection of,
or the attempt to exercise, enforce or protect, a Power under this Deed.

 

11.4Taxes, fees and charges

 

Each Security Provider must pay all:

 

(a)Taxes, fees and charges in connection with this Deed or any payment, receipt,
supply or other transaction carried out pursuant to, or contemplated by, this
Deed, including Taxes passed onto a Security Holder by another financial
institution or supplier of goods and services; and

 

(b)fines and penalties for late payment or non-payment of those amounts, except
where the Security Provider places a Security Holder in cleared funds to make
the payment not less than five (5) Business Days before the due date and the
Security Holder fails to make the payment.

 

Each Security Provider must pay or reimburse each Security Holder on demand for
all such amounts which are payable or which the Security Holder determines in
good faith to be payable.

 

12.Notices and other communications

 

12.1Service of notices

 

A notice, demand, consent, approval, service of proceedings or other
communication under this Deed (Notice) must be:

 

(a)in writing, in English and signed by a Person duly authorised by the sender;
and

 

(b)(i) hand delivered; or (ii) sent by prepaid post or internationally
recognised courier service; or (iii) sent by email; or (iv) sent by facsimile,
to the recipient's address, facsimile number or email address for Notices
specified in the 'Details' section of this Deed, in each case as varied by any
Notice given by the recipient to the sender.

 

12.2Effective on receipt

 

A Notice given in accordance with Clause 12.1 (Service of notices) takes effect
when received (or at a later time specified in it), and is taken to be received:

 

(a)if hand delivered, on delivery; or

 

(b)if sent by prepaid post or internationally recognised courier service, two
(2) Business Days after the date of posting (or seven (7) Business Days after
the date of posting if posted to or from a place outside Hong Kong); or

 

 

 

 27 

 

 

(c)if sent by way of email to the recipient's email address for Notices
specified in the 'Details' section of this Deed, upon such email being sent by
the sender and no transmission error message being received by the sender; or

 

(d)if sent by facsimile, when the sender's facsimile system generates a message
confirming successful transmission of the entire Notice unless, within eight (8)
Business Hours after the transmission, the recipient informs the sender that it
has not received the entire Notice,

 

but if the delivery, receipt or transmission is not on a Business Day or is
after 5.00pm on a Business Day, the Notice is taken to be received at 9.00am on
the next Business Day.

 

13.Assignment

 

13.1By Security Holder

 

A Security Holder may not assign, transfer or dispose of its Security to or in
favour of any Person unless that Person enters into a deed with the other
Parties by which it undertakes that it is bound by all of the terms of this Deed
as a Security Holder the rights and obligations of the Security Holder are
transferred by novation to that Person. In addition to any rights a Security
Holder may have under this Clause 13.1 (By Security Holder), each Party agrees
with each Security Holder that is a security trustee that:

 

(a)a Security Holder may assign its rights and novate or otherwise transfer its
obligations under this Deed to any replacement or successor security trustee
that is appointed in accordance with the Seller Security Trust Deed or the New
Lender Security Agent Agreement, as the case may be (New Security Trustee); and

 

(b)if requested, it will enter in to a novation deed with that Security Holder
and any New Security Trustee in a form acceptable to the Security Holder and the
New Security Trustee.

 

13.2By Security Providers

 

A Security Provider may not assign, transfer or otherwise deal with its rights,
interests or obligations under this Deed without the prior written consent of
all Security Holders.

 

14.Protection provisions

 

14.1Security Holder not liable

 

To the extent permitted by Law, a Security Holder will not be liable to anyone
for any Loss in relation to an exercise or attempted exercise of a Power, or a
failure or delay in doing so.

 

14.2Security Holder not restricted

 

A Security Holder need not:

 

(a)exercise a Power, give a consent or make a decision under a Security unless
the Security expressly provides otherwise; or

 

(b)resort to an Encumbrance, guarantee or Power before resorting to any other of
them.

 

 

 

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14.3Indemnities and reimbursement obligations

 

A Security Holder need not incur an expense or make a payment before enforcing
an indemnity or reimbursement obligation in this Deed. Unless otherwise stated,
each such indemnity or reimbursement obligation is separate and independent of
each other obligation of the Party giving it, is absolute, irrevocable,
unconditional and payable on demand and continues despite any settlement of
account, termination of this Deed or any Security or anything else.

 

14.4Reinstating avoided transaction

 

If a payment or other transaction relating to this Deed or a Security is void,
voidable, unenforceable or defective for any reason or a related claim is
upheld, conceded or settled (each an Avoidance), then even though any Party knew
or should have known of the Avoidance:

 

(a)the liability of the Parties and each Security Holder's Powers will be what
it would have been, and will continue, as if the payment or transaction had not
occurred; and

 

(b)the Parties will immediately execute and do anything required by a Security
Holder to restore the Parties to the position they were in immediately before
the Avoidance (including reinstating this Deed).

 

This Clause 14.4 (Reinstating avoided transaction) survives any termination or
full or partial discharge or release of any Security.

 

14.5Authorised Representatives and communications

 

Each Security Provider:

 

(a)irrevocably authorises each Security Holder to rely on a certificate by any
Person purporting to be its director or company secretary as to the identity and
signatures of its Authorised Representatives, and to rely on any notice or other
document contemplated by this Deed which bears the purported signature (whether
given by facsimile or otherwise) of its Authorised Representative; and

 

(b)warrants that those Persons have been authorised to give notices and
communications under or in connection with this Deed.

 

15.General provisions

 

15.1Consideration

 

Each Party acknowledges entering into this Deed for valuable consideration
received from the other Parties.

 

15.2Prompt performance

 

If a time is not specified for the performance of an obligation under this Deed,
it must be performed promptly.

 

 

 

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15.3Powers

 

Powers under this Deed are cumulative and do not limit or exclude Powers under
Law. Full or partial exercise of a Power does not prevent a further exercise of
that or any other Power. No failure or delay in exercising a Power operates as a
waiver or representation. Unless expressly provided in this Deed, no Power nor
any Security merges in, limits, adversely affects or is adversely affected by
any other Power, Security or judgment which a Security Holder (or anyone
claiming through it) may have or obtain.

 

15.4Consent and waivers

 

A consent or waiver by a Security Holder in relation to this Deed is effective
only if in writing. If given subject to conditions, the consent or waiver only
takes effect subject to compliance with those conditions to the Security
Holder's satisfaction.

 

15.5Notices or demands as evidence

 

A notice or certificate from or demand by a Security Holder stating that a
default or Event of Default has occurred under its Security, or that a specified
sum of money is owing or payable under its Security, is taken to be correct
unless proved incorrect.

 

15.6Severability

 

If, at any time, any provision of this Deed is or becomes illegal, invalid or
unenforceable in any respect under the Law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions of this Deed
under the Law of that jurisdiction nor the legality, validity or enforceability
of that or any other provision of this Deed under the Law of any other
jurisdiction shall in any way be affected or impaired thereby.

 

15.7Amendments

 

Any amendment or waiver of any provision of this Deed and any waiver of any
default (in whole or in part) under this Deed shall only be effective if and to
the extent that it is made in writing and signed by the Parties. Any amendment
or waiver effected in accordance with this Clause 15.7 (Amendments) shall be
binding upon each of the Parties.

 

15.8Termination

 

Without prejudice to the termination of this Deed under any applicable Laws,
this Deed shall terminate upon the payment and discharge in full of the Secured
Obligations owed to either (i) the Sellers, to the satisfaction of the Seller
Security Agent; or (ii) the New Lenders, to the satisfaction of the New Lender
Security Agent.

 

15.9Governing law

 

This Deed and any non-contractual obligations arising out of or in connection
with it are governed by and shall be construed in accordance with the Laws of
Hong Kong.

 

15.10Jurisdiction

 

The courts of Hong Kong have exclusive jurisdiction to settle any dispute
arising out of or in connection with this Deed (including a dispute regarding
the existence, validity or termination of this Deed) and any non-contractual
obligations arising out of or in connection with it (a Dispute). The Parties
agree that the courts of Hong Kong are the most appropriate and convenient
courts to settle any Dispute and accordingly no Party will argue to the
contrary. This Clause 15.10 (Jurisdiction) is for the benefit of the Security
Holders and the Receiver(s) only. As a result, none of the Security Holders
and/or the Receiver(s) shall be prevented from taking proceedings relating to a
Dispute in any other courts with jurisdiction. To the extent allowed by law,
each Security Holder or Receiver may take concurrent proceedings in any number
of jurisdictions.

 

 

 

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15.11Service of process

 

(a)Without preventing any other mode of service, any document in an action or
process may be served on any Party by being delivered to or left for that Party
at its address for service of notices specified in the 'Details' section of this
Deed.

 

(b)Each of the Sellers and the Seller Security Agent irrevocably appoints
Fansway Secretaries Limited of Rooms 1009-1012, 10/F, K. Wah Centre, 191 Java
Road, North Point, Hong Kong as its agent to accept service of process under or
in connection with this Deed, and Fansway Secretaries Limited accepts the
appointment. If for any reason Fansway Secretaries Limited shall cease to be its
process agent, the Seller Security Agent (for himself and on behalf of the
Sellers) shall forthwith appoint a new process agent and deliver to each Party a
copy of the new process agent's acceptance of that appointment within three (3)
Business Days of such appointment.

 

(c)Each of the New Lenders and the New Lender Security Agent shall appoint a
process agent in Hong Kong to accept service of process under or in connection
with this Deed (the Process Agent) as soon as possible, and in any event no
later than thirty (30) days from the date of this Deed, and the New Lender
Security Agent (on behalf of the New Lenders) shall deliver to each Party a copy
of the Process Agent's acceptance of that appointment within three (3) Business
Days of such appointment. If for any reason the Process Agent shall cease to be
its process agent, the New Lender Security Agent (on behalf of the New Lenders)
shall forthwith appoint a new process agent and deliver to each Party a copy of
the new process agent's acceptance of that appointment within three (3) Business
Days of such appointment.

 

(d)Each of GSE and Grom irrevocably appoints TDH as its agent to accept service
of process under or in connection with this Deed, and TDH accepts the
appointment. If for any reason TDH shall cease to be its process agent, GSE and
Grom shall forthwith appoint a new process agent and deliver to each Party a
copy of the new process agent's acceptance of that appointment within three (3)
Business Days of such appointment.

 

(e)Nothing in this Deed shall affect the right to serve process in any other
manner permitted by the applicable Laws.

 

15.12No Presumption

 

Each Party acknowledges that any applicable Law that would require
interpretation of any claimed ambiguities in this Deed against the Party that
drafted it has no application and is expressly waived. If any claim is made by a
Party relating to any conflict, omission or ambiguity in the provisions of this
Deed, no presumption or burden of proof or persuasion will be implied because
this Deed was prepared by or at the request of any Party or its counsel.

 

15.13Counterparts

 

This Deed may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Facsimiled or e-mailed copies of signatures shall be deemed to be
originals for purposes of the effectiveness of this Deed.

 

This Deed is executed as a deed and delivered on the date stated at the
beginning of this Deed.

 

 

 

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Signing page

 

EXECUTED as a deed.

 

Sellers

 

SIGNED, SEALED AND DELIVERED by

WAYNE EDWARD DEARING

  [image_001.gif]

 

 

 

 

SIGNED, SEALED AND DELIVERED by

DAVID ARDEN PEABODY

  [image_002.gif]

 

 

 

 

SIGNED, SEALED AND DELIVERED by

MICHAEL ALLARDICE GORDON HISCOCK

  [image_003.gif]

 

 

 

 

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Seller Security Agent

 

SIGNED, SEALED AND DELIVERED by

WAYNE EDWARD DEARING

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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New Lenders

 

EXECUTED AND DELIVERED AS A DEED by

 

The Crone Law Group, P.C., being the lawful attorney of New Lenders

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

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New Lender Security Agent

 

EXECUTED AND DELIVERED AS A DEED by

The Crone Law Group, P.C.

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 37 

 

 

GSE

 

EXECUTED AND DELIVERED AS A DEED by

GROM SOCIAL ENTERPRISES, INC.

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Security Provider

 

EXECUTED AND DELIVERED AS A DEED by

GROM HOLDINGS, INC.

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Security Provider

 

EXECUTED AND DELIVERED AS A DEED by TD HOLDINGS LIMITED, acting by two
directors, in accordance with section 127 and 128 of the Companies Ordinance
(Cap. 622)

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 40 

 

 

Security Provider

 

EXECUTED AND DELIVERED AS A DEED

 by TOP DRAW ANIMATION HONGKONG LIMITED,

acting by two directors, in accordance with

section 127 and 128 of the Companies Ordinance (Cap. 622)

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Escrow Agent

 

EXECUTED AND DELIVERED AS A DEED by

The Crone Law Group, P.C.

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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