Exhibit 10.6


 


SECURITY AGREEMENT


 


This SECURITY AGREEMENT, dated
as of September 14, 2021 (this “Agreement”), is among Grom Social Enterprises, Inc., a Florida corporation (the “Company”),
all of the Subsidiaries of the Company (such subsidiaries, the “Guarantors” and together with the Company, the “Debtors”)
and the holders of the Company’s 10.0% Senior Secured Original Issue Discount Convertible Notes due 18 months following their issuance,
in the original aggregate principal amount of $4,400,000.00 (collectively, the “Notes”) signatory hereto, their endorsees,
transferees and assigns (collectively, the “Secured Parties”).


 


W I T N E S S E T H:


 


WHEREAS, pursuant to the Purchase
Agreement (as defined in the Notes), the Secured Parties have severally agreed to extend the loans to the Company evidenced by the Notes;


 


WHEREAS, pursuant to a certain
Subsidiary Guarantee, dated as of the date hereof (the “Guarantee”), the Guarantors have jointly and severally agreed
to guarantee and act as surety for payment of such Notes; and


 


WHEREAS, in order to induce
the Secured Parties to extend the loans evidenced by the Notes, each Debtor has agreed to execute and deliver to the Secured Parties this
Agreement and to grant the Secured Parties, pari passu with each other Secured Party and through the Agent (as defined in Section
18 hereof), a security interest in certain property of such Debtor to secure the prompt payment, performance and discharge in full of
all of the Company’s obligations under the Notes and the Guarantors’ obligations under the Guarantee.


 


NOW, THEREFORE, in consideration
of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:


 


1.        Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel paper”,
“commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment property”,
“letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have the respective meanings
given such terms in Article 9 of the UCC.


 


(a)        “Collateral”
means the collateral in which the Secured Parties are granted a security interest by this Agreement and which shall include the following
personal property of the Debtors, whether presently owned or existing or hereafter acquired or coming into existence, wherever situated,
and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any
tort claims in connection therewith, and all dividends, interest, cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange for, any or all of the Pledged Securities
(as defined below):


 


(i) All goods, including,
without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever situated, together
with all documents of title and documents representing the same, all additions and accessions thereto, replacements therefor, all parts
therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with any Debtor’s businesses
and all improvements thereto; and (B) all inventory;


 


(ii)        All
contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests, stock or
other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses, distribution
and other agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed by any Debtor),
computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual
Property and income tax refunds;


 


 






    	 	 	 



     


    

 


(iii)        All
accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect to
each account, including any right of stoppage in transit;


 


(iv)        All
documents, letter-of-credit rights, instruments and chattel paper;


 


(v)       All
commercial tort claims;


 


(vi)       All
deposit accounts and all cash (whether or not deposited in such deposit accounts);


 


(vii)       All
investment property;


 


(viii)       All
supporting obligations; and


 


(ix)       All
files, records, books of account, business papers, and computer programs; and


 


(x)       the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.


 


Without limiting the
generality of the foregoing, the “Collateral” shall include all investment property and general intangibles respecting
ownership and/or other equity interests in each Guarantor, including, without limitation, the shares of capital stock and the other equity
interests listed on Schedule H hereto (as the same may be modified from time to time pursuant to the terms hereof), and any other
shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of any Debtor obtained in the future,
and, in each case, all certificates representing such shares and/or equity interests and, in each case, all rights, options, warrants,
stock, other securities and/or equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged
for, any of the foregoing and all rights arising under or in connection with the Pledged Securities, including, but not limited to, all
dividends, interest and cash.


 


Notwithstanding the
foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes void
by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent that such
applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided, however,
that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to the extent
permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.


 


(b)        “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights arising under
the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation,
all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names and other source
or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common
law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision
thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and
(vii) all causes of action for infringement of the foregoing.


 


(c)       “Majority
in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal amounts of Notes
at the time of such determination) of the Secured Parties.


 


 






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(d)       “Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and such other
instruments or documents as the Agent (as that term is defined below) may reasonably request.


 


(e)        “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or
that are now or may be hereafter contracted or acquired, or owing to, of any Debtor to the Secured Parties, including, without limitation,
all obligations under this Agreement, the Notes, the Guarantee and any other instruments, agreements or other documents executed and/or
delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to
the extent all or any part of such payment is avoided or recovered directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.
Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation: (i) principal
of, and interest on the Notes and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and
liabilities of the Debtors from time to time under or in connection with this Agreement, the Notes, the Guarantee and any other instruments,
agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such
amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving any Debtor.


 


(f)        “Organizational
Documents” means with respect to any Debtor, the documents by which such Debtor was organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation for
preferred stock or other forms of preferred equity) and which relate to the internal governance of such Debtor (such as bylaws, a partnership
agreement or an operating, limited liability or members agreement).


 


(g)        “Pledged
Interests” shall have the meaning ascribed to such term in Section 4(j).


 


(h)        “Pledged
Securities” shall have the meaning ascribed to such term in Section 4(i).


 


(i)       “UCC”
means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that defined
terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed in its broadest
sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones shall be controlling.


 


2.        Grant
of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Notes and to
secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, each Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a security interest in and to, a lien upon
and a right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the Collateral
(a “Security Interest” and, collectively, the “Security Interests”).


 


3.       Delivery
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, each Debtor shall deliver or cause to be delivered
to the Agent (a) any and all certificates and other instruments representing or evidencing the Pledged Securities, and (b) any and all
certificates and other instruments or documents representing any of the other Collateral, in each case, together with all Necessary Endorsements.
The Debtors are, contemporaneously with the execution hereof, delivering to Agent, or have previously delivered to Agent, a true and correct
copy of each Organizational Document governing any of the Pledged Securities.


 


4.        Representations,
Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure schedules
delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall
be deemed a part hereof, each Debtor represents and warrants to, and covenants and agrees with, the Secured Parties as follows:


 


 






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(a) Each Debtor
has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement and otherwise
to carry out its obligations hereunder. The execution, delivery and performance by each Debtor of this Agreement and the filings contemplated
therein have been duly authorized by all necessary action on the part of such Debtor and no further action is required by such Debtor.
This Agreement has been duly executed by each Debtor. This Agreement constitutes the legal, valid and binding obligation of each Debtor,
enforceable against each Debtor in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors and by general principles
of equity.


 


(b)        The
Debtors have no place of business or offices where their respective books of account and records are kept (other than temporarily at the
offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A attached
hereto. Except as specifically set forth on Schedule A, each Debtor is the record owner of the real property where such Collateral
is located, and there exist no mortgages or other liens on any such real property except for Permitted Liens (as defined in the Notes).
Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or
processor.


 


(c)        Except
for Permitted Liens (as defined in the Notes) and except as set forth on Schedule B attached hereto, the Debtors are the sole owner
of the Collateral (except for non-exclusive licenses granted by any Debtor in the ordinary course of business), free and clear of any
liens, security interests, encumbrances, rights or claims, and are fully authorized to grant the Security Interests. Except as set forth
on Schedule C attached hereto, there is not on file in any governmental or regulatory authority, agency or recording office an
effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that will
be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as set forth
on Schedule C attached hereto and except pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtors
shall not execute and shall not knowingly permit to be on file in any such office or agency any other financing statement or other document
or instrument (except to the extent filed or recorded in favor of the Secured Parties pursuant to the terms of this Agreement).


 


(d)        No
written claim has been received that any Collateral or any Debtor's use of any Collateral violates the rights of any third party. There
has been no adverse decision to any Debtor's claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction
or to any Debtor's right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving said rights
pending or, to the best knowledge of any Debtor, threatened before any court, judicial body, administrative or regulatory agency, arbitrator
or other governmental authority.


 


(e)        Each
Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and
its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and records
or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate financing statements
under the UCC and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interests
to create in favor of the Secured Parties a valid, perfected and continuing perfected first priority lien in the Collateral.


 


(f)        This
Agreement creates in favor of the Secured Parties a valid security interest in the Collateral, subject only to Permitted Liens (as defined
in the Notes) securing the payment and performance of the Obligations. Upon making the filings described in the immediately following
paragraph, all security interests created hereunder in any Collateral which may be perfected by filing Uniform Commercial Code financing
statements shall have been duly perfected. Except for the filing of the Uniform Commercial Code financing statements referred to in the
immediately following paragraph, the recordation of the Intellectual Property Security Agreement (as defined in Section 4(p) hereof) with
respect to copyrights and copyright applications in the United States Copyright Office referred to in paragraph (m), the execution and
delivery of deposit account control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit
account of the Debtors, and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create,
perfect or protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the filing of
said financing statements, the recordation of said Intellectual Property Security Agreement, and the execution and delivery of said deposit
account control agreements, no consent of any third parties and no authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for (i) the execution, delivery and performance of this Agreement, (ii)
the creation or perfection of the Security Interests created hereunder in the Collateral or (iii) the enforcement of the rights of the
Agent and the Secured Parties hereunder.


 


 






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(g)        Each
Debtor hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests, with
the proper filing and recording agencies in any jurisdiction deemed proper by it.


 


(h)        The
execution, delivery and performance of this Agreement by the Debtors does not (i) violate any of the provisions of any Organizational
Documents of any Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law, rule
or regulation applicable to any Debtor or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing any Debtor's debt or otherwise)
or other understanding to which any Debtor is a party or by which any property or asset of any Debtor is bound or affected. If any, all
required consents (including, without limitation, from stockholders or creditors of any Debtor) necessary for any Debtor to enter into
and perform its obligations hereunder have been obtained.


 


(i)        The
capital stock and other equity interests listed on Schedule H hereto (the “Pledged Securities”) represent all
of the capital stock and other equity interests of the Guarantors, and represent all capital stock and other equity interests owned, directly
or indirectly, by the Company. All of the Pledged Securities are validly issued, fully paid and nonassessable, and the Company is the
legal and beneficial owner of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the
security interests created by this Agreement and other Permitted Liens (as defined in the Notes).


 


(j)        The
ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not held
in a securities account or by any financial intermediary.


 


(k)        Except
for Permitted Liens (as defined in the Notes), each Debtor shall at all times maintain the liens and Security Interests provided for hereunder
as valid and perfected first priority liens and security interests in the Collateral in favor of the Secured Parties until this Agreement
and the Security Interest hereunder shall be terminated pursuant to Section 14 hereof. Each Debtor hereby agrees to defend the same against
the claims of any and all persons and entities. Each Debtor shall safeguard and protect all Collateral for the account of the Secured
Parties. At the request of the Agent, each Debtor will sign and deliver to the Agent on behalf of the Secured Parties at any time or from
time to time one or more financing statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the cost of
filing the same in all public offices wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the rights
and obligations provided for herein. Without limiting the generality of the foregoing, each Debtor shall pay all fees, taxes and other
amounts necessary to maintain the Collateral and the Security Interests hereunder, and each Debtor shall obtain and furnish to the Agent
from time to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority
of the Security Interests hereunder.


 


(l)        No
Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive
licenses granted by a Debtor in its ordinary course of business and sales of inventory by a Debtor in its ordinary course of business)
without the prior written consent of a Majority in Interest.


 


(m)       Each
Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.


 


 


 






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(n)       Each
Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter
acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation having
similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other such entities
and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement cost
thereof. Each Debtor shall cause each insurance policy issued in connection herewith to provide, and the insurer issuing such policy to
certify to the Agent, that (a) the Agent will be named as lender loss payee and additional insured under each such insurance policy; (b)
if such insurance be proposed to be cancelled or materially changed for any reason whatsoever, such insurer will promptly notify the Agent
and such cancellation or change shall not be effective as to the Agent for at least thirty (30) days after receipt by the Agent of such
notice, unless the effect of such change is to extend or increase coverage under the policy; and (c) the Agent will have the right (but
no obligation) at its election to remedy any default in the payment of premiums within thirty (30) days of notice from the insurer of
such default. If no Event of Default (as defined in the Notes) exists and if the proceeds arising out of any claim or series of related
claims do not exceed $100,000, loss payments in each instance will be applied by the applicable Debtor to the repair and/or replacement
of property with respect to which the loss was incurred to the extent reasonably feasible, and any loss payments or the balance thereof
remaining, to the extent not so applied, shall be payable to the applicable Debtor; provided, however, that payments received
by any Debtor after an Event of Default occurs and is continuing or in excess of $100,000 for any occurrence or series of related occurrences
shall be paid to the Agent on behalf of the Secured Parties and, if received by such Debtor, shall be held in trust for the Secured Parties
and immediately paid over to the Agent unless otherwise directed in writing by the Agent. Copies of such policies or the related certificates,
in each case, naming the Agent as lender loss payee and additional insured shall be delivered to the Agent at least annually and at the
time any new policy of insurance is issued.


 


(o)        Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of any material
adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value of the Collateral
or on the Secured Parties’ security interest, through the Agent, therein.


 


(p)        Each
Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time request and
may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security interest in the Collateral
including, without limitation, if applicable, the execution and delivery of a separate security agreement with respect to each Debtor’s
Intellectual Property (“Intellectual Property Security Agreement”) in which the Secured Parties have been granted a
security interest hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual Property Security Agreement,
other than as stated therein, shall be subject to all of the terms and conditions hereof.


 


(q)        Each
Debtor shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon reasonable
prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent from time to time.


 


(r)        Each
Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes
of action and accounts receivable in respect of the Collateral.


 


(s)        Each
Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution or
other legal process levied against any Collateral and of any other information received by such Debtor that may materially affect the
value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.


 


(t)        All
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of any Debtor with respect to the Collateral
is accurate and complete in all material respects as of the date furnished.


 


 






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(u)        The
Debtors shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any rights
and franchises material to its business.


 


(v)        No
Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one),
legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written notice to
the Secured Parties of such change and, at the time of such written notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.


 


(w)       Except
in the ordinary course of business, no Debtor may consign any of its inventory or sell any of its inventory on bill and hold, sale or
return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably withheld.


 


(x)        No
Debtor may relocate its chief executive office to a new location without providing 30 days prior written notification thereof to the Secured
Parties and so long as, at the time of such written notification, such Debtor provides any financing statements or fixture filings necessary
to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.


 


(y)       Each
Debtor was organized and remains organized solely under the laws of the state set forth next to such Debtor’s name in Schedule
D attached hereto, which Schedule D sets forth each Debtor’s organizational identification number or, if any Debtor does
not have one, states that one does not exist.


 


(z)       
(i) The actual name of each Debtor is the name set forth in Schedule D attached hereto; (ii) no Debtor has any trade names except
as set forth on Schedule E attached hereto; (iii) no Debtor has used any name other than that stated in the preamble hereto or
as set forth on Schedule E for the preceding five years; and (iv) no entity has merged into any Debtor or been acquired by any
Debtor within the past five years except as set forth on Schedule E.


 


(aa)       At
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require or permit
possession by the secured party to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral to
the Agent.


 


(bb)        Each
Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Agent regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of any Debtor as contemplated by Section 8-106 (or any successor
section) of the UCC. Further, each Debtor agrees that it shall not enter into a similar agreement (or one that would confer “control”
within the meaning of Article 8 of the UCC) with any other person or entity.


 


(cc)       Each
Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is not possible,
then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created by this Agreement.
To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying chattel paper
to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).


 


(dd)       If
there is any investment property or deposit account included as Collateral that can be perfected by “control” through an account
control agreement, the applicable Debtor shall cause such an account control agreement, in form and substance in each case satisfactory
to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties.


 


(ee)        To
the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured Parties.


 


(ff)        To
the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Agent in notifying such
third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement
and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.


 


 






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(gg)       If
any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Parties in a writing
signed by such Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent.


 


(hh)       Each
Debtor shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with any governmental
authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and proceeds
thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate with the Agent in taking any other
steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or local statute or rule to
perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.


 


(ii)       Each
Debtor shall cause each subsidiary of such Debtor to immediately become a party hereto (an “Additional Debtor”), by executing
and delivering an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with the provisions
hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules for, or supplements
to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede, or supplements
shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions,
good standing certificates, incumbency certificates, organizational documents, financing statements and other information and documentation
as the Agent may reasonably request. Upon delivery of the foregoing to the Agent, the Additional Debtor shall be and become a party to
this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as fully and to the same extent as if it were
an original signatory hereto and shall be deemed to have made the representations, warranties and covenants set forth herein as of the
date of execution and delivery of such Additional Debtor Joinder, and all references herein to the “Debtors” shall be deemed
to include each Additional Debtor.


 


(jj) Each Debtor
shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Notes.


 


(kk)Each Debtor
shall register the pledge of the applicable Pledged Securities on the books of such Debtor. Each Debtor shall notify each issuer of Pledged
Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of such issuer.
Further, except with respect to certificated securities delivered to the Agent, the applicable Debtor shall deliver to Agent an acknowledgement
of pledge (which, where appropriate, shall comply with the requirements of the relevant UCC with respect to perfection by registration)
signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (a) it has registered the pledge
on its books and records; and (b) at any time directed by Agent during the continuation of an Event of Default, such issuer will transfer
the record ownership of such Pledged Securities into the name of any designee of Agent, will take such steps as may be necessary to effect
the transfer, and will comply with all other instructions of Agent regarding such Pledged Securities without the further consent of the
applicable Debtor.


 


(ll) In the
event that, upon an occurrence of an Event of Default, Agent shall sell all or any of the Pledged Securities to another party or parties
(herein called the “Transferee”) or shall purchase or retain all or any of the Pledged Securities, each Debtor shall,
to the extent applicable: (i) deliver to Agent or the Transferee, as the case may be, the articles of incorporation, bylaws, minute books,
stock certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account, financial
records and all other Organizational Documents and records of the Debtors and their direct and indirect subsidiaries; (ii) use its best
efforts to obtain resignations of the persons then serving as officers and directors of the Debtors and their direct and indirect subsidiaries,
if so requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental or regulatory body in order
to permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities by Agent and allow
the Transferee or Agent to continue the business of the Debtors and their direct and indirect subsidiaries.


 


 






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(mm)Without
limiting the generality of the other obligations of the Debtors hereunder, each Debtor shall promptly (i) cause to be registered at the
United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect to all
Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly recorded
at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license) or creates any additional
material Intellectual Property.


 


(nn)       Each
Debtor will from time to time, at the joint and several expense of the Debtors, promptly execute and deliver all such further instruments
and documents, and take all such further action as may be necessary or desirable, or as the Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Parties to exercise and enforce
their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.


 


(oo)       Schedule
F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and domain
names owned by any of the Debtors as of the date hereof. Schedule F lists all material licenses in favor of any Debtor for the
use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the Debtors
have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors have been duly recorded
at the United States Copyright Office.


 


(pp)       Except
as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of the Collateral
is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local statute or rule in
respect of such Collateral.


 


(qq)Until the
Obligations shall have been paid and performed in full, the Company covenants that it shall promptly direct any direct or indirect subsidiary
of the Company formed or acquired after the date hereof to enter into a Subsidiary Guarantee in favor of the Secured Party, in the form
of Exhibit F to the Purchase Agreement.


 


5.       Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon the occurrence
of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets of the issuer), it is agreed
that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of Agent’s rights hereunder
shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding any provisions in the Organizational
Documents or agreements to which any Debtor is subject or to which any Debtor is party.


 


6.        Defaults.
The following events shall be “Events of Default”:


 


(a) The occurrence
of an Event of Default (as defined in the Notes) under the Notes;


 


(b) Any representation
or warranty of any Debtor in this Agreement shall prove to have been incorrect in any material respect when made;


 


(c) The failure
by any Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to such Debtor of notice of such
failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such time frame and such
Debtor is using best efforts to cure same in a timely fashion; or


 


(d) If any provision
of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be
contested by any Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority having jurisdiction over any
Debtor, seeking to establish the invalidity or unenforceability thereof, or any Debtor shall deny that any Debtor has any liability or
obligation purported to be created under this Agreement.


 


 






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7.        Duty
To Hold In Trust.


 


(a)       Upon
the occurrence of any Event of Default and at any time thereafter, each Debtor shall, upon receipt of any revenue, income, dividend, interest
or other sums subject to the Security Interests, whether payable pursuant to the Notes or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Parties and shall
forthwith endorse and transfer any such sums or instruments, or both, to the Secured Parties, pro-rata in proportion to their respective
then-currently outstanding principal amount of Notes for application to the satisfaction of the Obligations (and if any Note is not outstanding,
pro-rata in proportion to the initial purchases of the remaining Notes).


 


(b)       If
any Debtor shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares of
Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants, rights or
other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization, reclassification
or increase or reduction of capital, or issued in connection with any reorganization of such Debtor or any of its direct or indirect subsidiaries)
in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange for, such Pledged Securities or otherwise),
such Debtor agrees to (i) accept the same as the agent of the Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
of the Secured Parties; and (iii) to deliver any and all certificates or instruments evidencing the same to Agent on or before the close
of business on the fifth business day following the receipt thereof by such Debtor, in the exact form received together with the Necessary
Endorsements, to be held by Agent subject to the terms of this Agreement as Collateral.


 


8.        Rights
and Remedies Upon Default.


 


(a)       Upon
the occurrence of any Event of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have the right
to exercise all of the remedies conferred hereunder and under the Notes, and the Secured Parties shall have all the rights and remedies
of a secured party under the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall have the following rights
and powers:


 


(i) The Agent shall
have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall assemble the Collateral and
make it available to the Agent at places which the Agent shall reasonably select, whether at such Debtor's premises or elsewhere, and
make available to the Agent, without rent, all of such Debtor’s respective premises and facilities for the purpose of the Agent
taking possession of, removing or putting the Collateral in saleable or disposable form.


 


(ii)       Upon
notice to the Debtors by Agent, all rights of each Debtor to exercise the voting and other consensual rights which it would otherwise
be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise be authorized to
receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of the Secured Parties, any
interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise in such Agent’s discretion
all voting rights pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right (but not the obligation)
to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof, including, without limitation, to
vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral or any Debtor or any of its direct or indirect subsidiaries.


 


(iii) The Agent shall
have the right to operate the business of each Debtor using the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without special conditions
or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times and at such place or
places, and upon such terms and conditions as the Agent may deem commercially reasonable, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or demand upon or notice to any Debtor or right of redemption of a Debtor, which
are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the Agent, for the benefit of the
Secured Parties, may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the Collateral being sold,
free from and discharged of all trusts, claims, right of redemption and equities of any Debtor, which are hereby waived and released.


 


 






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(iv)       The
Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts to make
payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’ rights against such account debtors
and obligors.


 


(v)       The
Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person or
entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.


 


(vi)       The
Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of any Debtor at the United States
Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser of any Collateral.


 


(b)       The
Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving any warranties
and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtors will only be credited with
payments actually made by the purchaser. In addition, each Debtor waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without limitation, its right following
an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.


 


(c)       For
the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement or applicable
law, each Debtor hereby grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to such Debtor) to use, license or sublicense following an Event of Default,
any Intellectual Property now owned or hereafter acquired by such Debtor, and wherever the same may be located, and including in such
license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used
for the compilation or printout thereof.


 


9.        Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on account
of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs incurred in connection
therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent in enforcing the Secured Parties’
rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction of the Obligations
pro rata among the Secured Parties (based on then-outstanding principal amounts of Notes at the time of any such determination), and to
the payment of any other amounts required by applicable law, after which the Secured Parties shall pay to the applicable Debtor any surplus
proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts
to which the Secured Parties are legally entitled, the Debtors will be liable for the deficiency, together with interest thereon, at the
rate of 18% per annum or the lesser amount permitted by applicable law (the “Default Rate”), and the reasonable fees
of any attorneys employed by the Secured Parties to collect such deficiency. To the extent permitted by applicable law, each Debtor waives
all claims, damages and demands against the Secured Parties arising out of the repossession, removal, retention or sale of the Collateral,
unless due solely to the gross negligence or willful misconduct of the Secured Parties as determined by a final judgment (not subject
to further appeal) of a court of competent jurisdiction.


 


10.       Securities
Law Provision. Each Debtor recognizes that Agent may be limited in its ability to effect a sale to the public of all or part of the
Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state securities laws
(collectively, the “Securities Laws”), and may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof. Each Debtor agrees that sales so made may be at prices and on terms less favorable than if the Pledged
Securities were sold to the public, and that Agent has no obligation to delay the sale of any Pledged Securities for the period of time
necessary to register the Pledged Securities for sale to the public under the Securities Laws. Each Debtor shall cooperate with Agent
in its attempt to satisfy any requirements under the Securities Laws (including, without limitation, registration thereunder if requested
by Agent) applicable to the sale of the Pledged Securities by Agent.


 


 






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11.        Costs
and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial releases
and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent. The Debtors shall also
pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice, imperil or otherwise
affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Agent the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Agent, for the
benefit of the Secured Parties, may incur in connection with the creation, perfection, protection, satisfaction, foreclosure, collection
or enforcement of the Security Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement and
pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts
and agents, which the Agent, for the benefit of the Secured Parties, and the Secured Parties may incur in connection with (i) the enforcement
of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral,
or (iii) the exercise or enforcement of any of the rights of the Secured Parties under the Notes. Until so paid, any fees payable hereunder
shall be added to the principal amount of the Notes and shall bear interest at the Default Rate.


 


12.        Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability
for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i) has any duty (either
before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to the Collateral,
or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor shall remain obligated and liable
under each contract or agreement included in the Collateral to be observed or performed by such Debtor thereunder. Neither the Agent nor
any Secured Party shall have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement
or the receipt by the Agent or any Secured Party of any payment relating to any of the Collateral, nor shall the Agent or any Secured
Party be obligated in any manner to perform any of the obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the Agent or any Secured Party in respect of the Collateral
or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent
or any Secured Party may be entitled at any time or times.


 


13.        Security
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement, the Notes or any agreement entered into in connection with
the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Notes or any other
agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release
or amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or any other security, for all or any
of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any insurance claims
or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal
or equitable defense available to a Debtor, or a discharge of all or any part of the Security Interests granted hereby. Until the Obligations
shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations or bankruptcy. Each Debtor expressly waives presentment,
protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction
to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be
deemed to be otherwise due to any party other than the Secured Parties, then, in any such event, each Debtor’s obligations hereunder
shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. Each
Debtor waives all right to require the Secured Parties to proceed against any other person or entity or to apply any Collateral which
the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. Each Debtor waives any defense arising
by reason of the application of the statute of limitations to any obligation secured hereby.


 


14.        Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Notes have been
indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities of the Debtors
contained in this Agreement (including, without limitation, Annex B hereto) shall survive and remain operative and in full force and effect
regardless of the termination of this Agreement.


 


 






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15.        Power
of Attorney; Further Assurances.


 


(a)        Each
Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns with
full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of the Agent or such Debtor,
to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts, money orders or other
instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the Collateral that may
come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the UCC or any invoice, freight or express
bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with
accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests or other encumbrances
at any time levied or placed on or threatened against the Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue
for monies due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting any Intellectual
Property; and (vi) generally, at the option of the Agent, and at the expense of the Debtors, at any time, or from time to time, to execute
and deliver any and all documents and instruments and to do all acts and things which the Agent deems necessary to protect, preserve and
realize upon the Collateral and the Security Interests granted therein in order to effect the intent of this Agreement and the Notes all
as fully and effectually as the Debtors might or could do; and each Debtor hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be outstanding. The designation set forth herein shall be deemed to amend and supersede
any inconsistent provision in the Organizational Documents or other documents or agreements to which any Debtor is subject or to which
any Debtor is a party. Without limiting the generality of the foregoing, after the occurrence and during the continuance of an Event of
Default, each Secured Party is specifically authorized to execute and file any applications for or instruments of transfer and assignment
of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark Office and the United
States Copyright Office.


 


(b)        On
a continuing basis, each Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing
and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C attached hereto,
all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the Agent,
to perfect the Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement, or for assuring
and confirming to the Agent the grant or perfection of a perfected security interest in all the Collateral under the UCC.


 


(c)        Each
Debtor hereby irrevocably appoints the Agent as such Debtor’s attorney-in-fact, with full authority in the place and instead of
such Debtor and in the name of such Debtor, from time to time in the Agent’s discretion, to take any action and to execute any instrument
which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole discretion,
of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without the signature of
such Debtor where permitted by law, which financing statements may (but need not) describe the Collateral as “all assets”
or “all personal property” or words of like import, and ratifies all such actions taken by the Agent. This power of attorney
is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall
be outstanding.


 


16.        Notices.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Notes).


 


17.        Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right, in its sole discretion,
to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any
of the Secured Parties’ rights and remedies hereunder.


 


18.        Appointment
of Agent. The Secured Parties hereby appoint L1 Capital Global Opportunities Master Fund to act as their agent (“L1”
or “Agent”) for purposes of exercising any and all rights and remedies of the Secured Parties hereunder. Such appointment
shall continue until revoked in writing by a Majority in Interest, at which time a Majority in Interest shall appoint a new Agent, provided
that L1 may not be removed as Agent unless L1 shall then hold less than $2,000,000 in principal amount of Notes; provided, further,
that such removal may occur only if each of the other Secured Parties shall then hold not less than an aggregate of $2,000,000 in principal
amount of Notes. The Agent shall have the rights, responsibilities and immunities set forth in Annex B hereto.


 


 






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19.        Miscellaneous.


 


(a)        No
course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the part of
the Secured Parties, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.


 


(b)        All
of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Notes or by any
other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.


 


(c)        This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors and the Secured Parties
[holding 67% or more of the principal amount of Notes then outstanding, or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought.


 


(d)        If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void
or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find
and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant
or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.


 


(e)        No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.


 


(f)        This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company and the
Guarantors may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party
(other than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Purchase
Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound, with
respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”


 


(g)        Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry
out the provisions and purposes of this Agreement.


 


(h) Except to the
extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law thereof. Except to the extent mandatorily governed by the
jurisdiction or situs where the Collateral is located, each Debtor agrees that all proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and the Notes (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and
federal courts sitting in the City of New York, Borough of Manhattan. Except to the extent mandatorily governed by the jurisdiction or
situs where the Collateral is located, each Debtor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any
claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby.


 


 






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(i)        This
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of
which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission,
such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original thereof.


 


(j)       All
Debtors shall jointly and severally be liable for the obligations of each Debtor to the Secured Parties hereunder.


 


(k)       Each
Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members, shareholders,
officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively, “Indemnitees”)
from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature, (including
fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee
in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not in
limitation of, any other indemnification provision in the Notes, the Purchase Agreement (as such term is defined in the Notes) or any
other agreement, instrument or other document executed or delivered in connection herewith or therewith.


 


(l)       Nothing
in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in any Debtor or any if its direct
or indirect subsidiaries that is a partnership or as a member in any Debtor or any of its direct or indirect subsidiaries that is a limited
liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations under any partnership agreement or limited
liability company agreement, as applicable, of any such Debtor or any of its direct or indirect subsidiaries or otherwise, unless and
until any such Secured Party exercises its right to be substituted for such Debtor as a partner or member, as applicable, pursuant hereto.


 


(m)        To
the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent, approval
or action of any partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or compliance with
any provisions of any of the Organizational Documents, the Debtors hereby grant such consent and approval and waive any such noncompliance
with the terms of said documents.


 


[SIGNATURE PAGES FOLLOW]




 


 






    	 	15	 



     


    

 


IN WITNESS WHEREOF, the parties
hereto have caused this Security Agreement to be duly executed on the day and year first above written.


 


 


	
    GROM SOCIAL ENTERPRISES,
    INC.

     

	
    By:__________________________________________

    Name:

    Title:

     

	 
	
    INSERT NAMES OF SubsidiarIES

     

     

	
    By:__________________________________________

    Name:

    Title:

     



 


 


 


 


 


 


[SIGNATURE PAGE OF HOLDERS FOLLOWS]


 






    	 	16	 



     


    

 


[SIGNATURE PAGE OF HOLDERS TO GROM SA]


 


Name of Investing Entity: __________________________


 


Signature of Authorized Signatory of Investing
entity: _________________________


 


Name of Authorized Signatory: _________________________


 


Title of Authorized Signatory: __________________________


 


 


 


 


[SIGNATURE PAGE OF HOLDERS FOLLOWS]


 


 


 



    	 	17	 



     


    




 


 


SCHEDULE A


 


 


Principal Place of Business of Debtors:


 


 


Locations Where Collateral is Located or Stored:


 


 


SCHEDULE B


 


 


 


SCHEDULE C


 


 


 


SCHEDULE D


Legal Names and Organizational Identification
Numbers


 


 


 


SCHEDULE E


Names; Mergers and Acquisitions


 


 


 


SCHEDULE F


Intellectual Property


 


 


 


SCHEDULE G


Account Debtors


 


 


 


SCHEDULE H


Pledged Securities


 






    	 	18	 



     


    

 


ANNEX A


to


SECURITY


AGREEMENT


 


FORM OF ADDITIONAL
DEBTOR JOINDER


 


Security Agreement dated as of September 14, 2021
made by


GROM SOCIAL ENTERPRISES, INC.


and its subsidiaries party thereto from time to
time, as Debtors


to and in favor of


the Secured Parties identified therein (the “Security
Agreement”)


 


Reference is made to the Security
Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms
in, or by reference in, the Security Agreement.


 


The undersigned hereby agrees
that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned shall (a) be an Additional
Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtors under the Security Agreement as fully and
to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to have made the representations and warranties
set forth therein as of the date of execution and delivery of this Additional Debtor Joinder. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY
AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.


 


Attached hereto are supplemental
and/or replacement Schedules to the Security Agreement, as applicable.


 


An executed copy of this Joinder
shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth herein on or after the date hereof.
This Joinder shall not be modified, amended or terminated without the prior written consent of the Secured Parties.


 


 


 






    	 	 	 



     


    

 


IN WITNESS WHEREOF, the undersigned
has caused this Joinder to be executed in the name and on behalf of the undersigned.


 


[Name of Additional Debtor


 


By:


 


Name:


Title:


 


Address:


 


 


 


 


 


 Dated:


 


 






    	 	 	 



     


    

 




 


ANNEX B


to


SECURITY


AGREEMENT


 


THE AGENT


 


1. Appointment. The Secured
Parties (all capitalized terms used herein and not otherwise defined shall have the respective meanings provided in the Security Agreement
to which this Annex B is attached (the "Agreement")), by their acceptance of the benefits of the Agreement, hereby designate
L1 Global Opportunities Master Fund (“L1” or “Agent”) as the Agent to act as specified herein and
in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its behalf under the provisions
of the Agreement and any other Transaction Document (as such term is defined in the Purchase Agreement) and to exercise such powers and
to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof
and such other powers as are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or through its agents
or employees.


 


2. Nature of Duties.
The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement. Neither the Agent nor any of its
partners, members, shareholders, officers, directors, employees or agents shall be liable for any action taken or omitted by it as such
under the Agreement or hereunder or in connection herewith or therewith, be responsible for the consequence of any oversight or error
of judgment or answerable for any loss, unless caused solely by its or their gross negligence or willful misconduct as determined by a
final judgment (not subject to further appeal) of a court of competent jurisdiction. The duties of the Agent shall be mechanical and administrative
in nature; the Agent shall not have by reason of the Agreement or any other Transaction Document a fiduciary relationship in respect of
any Debtor or any Secured Party; and nothing in the Agreement or any other Transaction Document, expressed or implied, is intended to
or shall be so construed as to impose upon the Agent any obligations in respect of the Agreement or any other Transaction Document except
as expressly set forth herein and therein.


 


3. Lack of Reliance on the
Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial condition and affairs of the Company and its subsidiaries in connection
with such Secured Party’s investment in the Debtors, the creation and continuance of the Obligations, the transactions contemplated
by the Transaction Documents, and the taking or not taking of any action in connection therewith, and (ii) its own appraisal of the creditworthiness
of the Company and its subsidiaries, and of the value of the Collateral from time to time, and the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Secured Party with any credit, market or other information with respect thereto,
whether coming into its possession before any Obligations are incurred or at any time or times thereafter. The Agent shall not be responsible
to the Debtors or any Secured Party for any recitals, statements, information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of the Agreement or any other Transaction Document, or for the financial condition
of the Debtors or the value of any of the Collateral, or be required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of the Agreement or any other Transaction Document, or the financial condition of the Debtors,
or the value of any of the Collateral, or the existence or possible existence of any default or Event of Default under the Agreement,
the Notes or any of the other Transaction Documents.


 


4. Certain Rights of the
Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf of all of the Secured Parties.
To the extent practical, the Agent shall request instructions from the Secured Parties with respect to any material act or action (including
failure to act) in connection with the Agreement or any other Transaction Document, and shall be entitled to act or refrain from acting
in accordance with the instructions of a Majority in Interest; if such instructions are not provided despite the Agent’s request
therefor, the Agent shall be entitled to refrain from such act or taking such action, and if such action is taken, shall be entitled to
appropriate indemnification from the Secured Parties in respect of actions to be taken by the Agent; and the Agent shall not incur liability
to any person or entity by reason of so refraining. Without limiting the foregoing, (a) no Secured Party shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the terms of the Agreement
or any other Transaction Document, and the Debtors shall have no right to question or challenge the authority of, or the instructions
given to, the Agent pursuant to the foregoing and (b) the Agent shall not be required to take any action which the Agent believes (i)
could reasonably be expected to expose it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable
law.


 


 






    	 	 	 



     


    

 


5. Reliance. The Agent
shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement, certificate, telex,
teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by the proper
person or entity, and, with respect to all legal matters pertaining to the Agreement and the other Transaction Documents and its duties
thereunder, upon advice of counsel selected by it and upon all other matters pertaining to this Agreement and the other Transaction Documents
and its duties thereunder, upon advice of other experts selected by it. Anything to the contrary notwithstanding, the Agent shall have
no obligation whatsoever to any Secured Party to assure that the Collateral exists or is owned by the Debtors or is cared for, protected
or insured or that the liens granted pursuant to the Agreement have been properly or sufficiently or lawfully created, perfected, or enforced
or are entitled to any particular priority.


 


6. Indemnification.
To the extent that the Agent is not reimbursed and indemnified by the Debtors, the Secured Parties will jointly and severally reimburse
and indemnify the Agent, in proportion to their initially purchased respective principal amounts of Notes, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder or under the Agreement
or any other Transaction Document, or in any way relating to or arising out of the Agreement or any other Transaction Document except
for those determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction to have resulted solely
from the Agent's own gross negligence or willful misconduct. Prior to taking any action hereunder as Agent, the Agent may require each
Secured Party to deposit with it sufficient sums as it determines in good faith is necessary to protect the Agent for costs and expenses
associated with taking such action.


 


7. Resignation by the Agent.


 


(a) The Agent may
resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents at any time by giving
30 days' prior written notice (as provided in the Agreement) to the Debtors and the Secured Parties. Such resignation shall take effect
upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.


 


(b) Upon any such
notice of resignation, the Secured Parties, acting by a Majority in Interest, shall appoint a successor Agent hereunder.


 


(c) If a successor
Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent who shall serve as Agent
until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor Agent has not been appointed
within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead the Debtors and the Secured Parties
in a proceeding for the appointment of a successor Agent, and all fees, including, but not limited to, extraordinary fees associated with
the filing of interpleader and expenses associated therewith, shall be payable by the Debtors on demand.


 


8. Rights with respect to
Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that it shall not, and shall not attempt
to, exercise any rights with respect to its security interest in the Collateral, whether pursuant to any other agreement or otherwise
(other than pursuant to this Agreement), or take or institute any action against the Agent or any of the other Secured Parties in respect
of the Collateral or its rights hereunder (other than any such action arising from the breach of this Agreement) and (ii) that such Secured
Party has no other rights with respect to the Collateral other than as set forth in this Agreement and the other Transaction Documents.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations under the Agreement.  After any retiring Agent’s resignation or removal hereunder as Agent, the provisions
of the Agreement including this Annex B shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent.